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Remarks Made In the Course of Litigation Privileged

The Second Department determined that the allegedly defamatory remarks were privileged because they were made during the course of litigation:

To properly state a cause of action alleging defamation, a plaintiff must allege that, without privilege or authorization, and with fault as judged, at minimum, by a negligence standard, the defendant published to a third party a false statement … . Additionally, unless the defamatory statement fits within one of the four “per se” exceptions …, a plaintiff must allege that he or she suffered “special damages”—–“the loss of something having economic or pecuniary value” … . Where an allegedly false statement is defamatory per se, the law presumes that damages will result, so the plaintiff need not allege or prove them … . An otherwise defamatory statement may be “privileged” and therefore not actionable … . Generally, as relevant here, statements made at all stages of a judicial proceeding in communications among the parties, witnesses, counsel, and the court are accorded an absolute privilege, so long as the statements may be considered in some way “pertinent” to the issue in the proceeding … . This privilege, or “immunity” …, applies to statements made in or out of court, on or off the record, and regardless of the motive with which they were made… . El Jamal v Weil, 2014 NY Slip Op 02408, 2nd Dept 4-9-14

 

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Neglect Finding Can Be Based Upon a Single Incident of Excessive Corporal Punishment

The Second Department noted that a finding of neglect can be based upon a single incident of excessive corporal punishment:

Neglect may be established by even a single incident of excessive corporal punishment … . The Family Court’s assessment of the credibility of witnesses is entitled to considerable deference … .Here, contrary to the appellant’s contention, the Family Court’s finding of neglect of the child Shervon M., based on excessive corporal punishment, was supported by a preponderance of the evidence (see Family Ct Act § 1012[f][i][B]…). The Family Court’s finding that the appellant engaged in excessive corporal punishment when he struck the child Shervon M. several times with a belt, causing raised red marks on her arm and legs, is supported by the evidence presented at the fact-finding hearing. Shervon’s out-of-court statements that the appellant struck her with a belt were sufficiently corroborated by the caseworker’s observations of Shervon’s injuries and the appellant’s admission to the caseworker that he had struck Shervon with a belt in the past (see Family Ct Act § 1046[a][vi]…).  Matter of Nurridin B, 2-14 NY Slip Op 02431, 2nd Dept 4-9-14

 

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Mother’s Interference With Relationship Between Father and Child Warranted Modification of Custody Arrangement Entered Into by Stipulation

The Second Department determined father had made a sufficient showing of a change in circumstances to justify a modification of custody arrangements created by stipulation:

Here, the father established that there had been a sufficient change in circumstances since the time of the stipulation. Specifically, he demonstrated that the mother had interfered with his relationship with the child, such that a modification in the custody arrangement was in the best interests of the child. The mother’s unfounded allegations of sexual abuse of a child that she made against the father were an act of interference with the parent-child relationship so inconsistent with the best interests of the child as to raise a strong probability that the mother is unfit to act as custodial parent … . The mother’s conduct here in making these unfounded allegations demonstrated a purposeful placement of her self-interest above the interests of others … . The record shows that the father is more likely than the mother to foster a relationship between the child and the noncustodial parent … . The mother’s unfounded allegations of sexual abuse of a child, along with her other acts of interference in the relationship between the father and child since the stipulation, established a sound and substantial basis for the Family Court’s determination that there had been a sufficient change in circumstances warranting a modification of the custody arrangement in the child’s best interests. Matter of Fargasch v Alves, 2014 NY Slip Op 02435, 2nd Dept 4-9-14

 

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Children’s Out-Of-Court Statements May Corroborate One Another

The Second Department noted that out-of-court statements by children can corroborate one another in a sexual abuse case:

The Family Court’s determination that the maternal stepgrandfather sexually abused the subject children was supported by a preponderance of the evidence (see Family Ct Act §§ 1012[e], [g]; 1046[b][i]…).  “It is well established that the out-of-court statements of siblings may properly be used to cross-corroborate one another” … . Here, the evidence presented at the fact-finding hearing established that, in May 2011, then-10-year-old Naziya D. and 3-year-old Jada A. made independent and consistent out-of-court statements to several individuals describing similar incidents of sexual abuse by the maternal stepgrandfather. Further, the children’s statements were corroborated by the petitioner’s progress notes and the mother’s testimony as to the children’s statements … .Additionally, where, as here, the Family Court is primarily confronted with issues of credibility, its findings must be accorded deference on appeal, as they were supported by the record … .The Family Court, upon a finding of abuse pursuant to Family Court Act § 1012(e), must make a further finding of the specific sex offenses that were committed, as defined in Penal Law article 130 … .  Even if the Family Court fails to make such a finding, this Court can make the finding that the Family Court should have made… . Matter of Jada A, 2014 Slip Op 02430, 2nd Dept 4-9-14

 

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No Duty Owed by Agent to Client—Client Never Requested Type of Insurance At Issue

The Second Department determined an insurance agent was not obligated to indemnify the plaintiffs in the underlying action because the client never requested the specific (automobile) coverage at issue. The court explained the nature of a duty owed by an agent to the agent’s client:

“An insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time or to inform the client of the inability to do so” … . This “duty is defined by the nature of the client’s request” … . “Absent a specific request for coverage not already in a client’s policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional coverage” … . Here, Ginsberg, a Nationwide insurance agent who sold the plaintiff … the subject policies of insurance, established, prima facie, that the plaintiffs did not specifically request automobile coverage, either in connection with their initial 2003 insurance applications, or in connection with subsequent renewal applications. Maxwell Plumb Mech Corp v Nationwide Prop & Cas Ins Co, 2014 NY Slip Op 02412, 2nd Dept 4-9-14

 

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Plaintiff Did Not Demonstrate Standing—No Proof Underlying Debt Was Transferred to the Plaintiff Along with the Mortgage

The Second Department determined the plaintiff in a mortgage foreclosure proceeding did not demonstrate standing because there was no proof the underlying debt was transferred to the plaintiff along with the mortgage:

Where, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief… .  In a mortgage foreclosure action, “[a] plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced” … . ” Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation'” … . “Where a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity” . Here, the evidence submitted by the plaintiff in support of its motion did not demonstrate that the note was physically delivered to it prior to the commencement of the action, and the plaintiff similarly failed to submit a written assignment of the note. Bank of NY Mellon v Gales, 2014 NY Slip Op 02402, 2nd Dept 4-9-14

 

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Open and Obvious Condition Precluded Slip and Fall Suit

The Second Department determined a slip and fall case was properly dismissed because the condition which caused the fall, seed pods which had fallen on the steps from a tree, was open and obvious:

The plaintiff allegedly was injured when she slipped and fell on the back steps of the defendant’s residence. The plaintiff testified that, prior to her fall, she felt a “hard cone” or “ball” underneath her foot. After her fall, she observed a crushed seed ball, about the size of a golf ball, on the step. Two or three other seed balls and some leaves were scattered about the steps and landing. The seed balls and leaves apparently had fallen from a nearby tree belonging to the defendant’s neighbor.

The defendant made a prima facie showing that the complained-of condition was both open and obvious, i.e., readily observable by those employing the reasonable use of their senses, and not inherently dangerous … . In opposition, the plaintiff failed to raise a triable issue of fact. Scalice v Braisted, 2014 NY Slip Op 02421, 2nd Dept 4-9-14

 

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Although “Imprudent” in Hindsight, ​Insurer Did Not Breach Duty of Good Faith by Refusing to Offer a Settlement at the Policy Limit

The First Department determined the insurer’s failure to make a settlement offer at the policy limit was “imprudent” in hindsight, but did not constitute a breach of its duty of good faith:

We reject plaintiffs’ argument that defendant avoided acknowledging the underlying plaintiff’s potential damages such that a refusal to offer the policy limit constituted a reckless or conscious disregard of the excess insurer’s rights. While there was some indication that damages could be significant if the medical records substantiated the underlying plaintiff’s claim of a loss of smell from a severe blow to the head, the record established that defendant’s investigation presented a great deal of medical evidence tending to show that the underlying plaintiff’s injuries were primarily preexisting soft tissue injuries unrelated to the automobile accident on April 24, 1994. Defendant’s investigation included the medical opinion of four physicians that conducted independent medical examinations; one psychologist who conducted a review of the extensive medical records; experienced defense counsel; and separate monitoring counsel for the damages trial. The review of the numerous medical records, which included contradicting evaluations of the underlying plaintiff’s treating physicians, provided a justifiable basis to fairly evaluate potential damages and assess the relative risks of declining to offer a settlement of the policy limit.

Given this evaluation, defendant’s actions do not amount to bad faith. In hindsight, it is evident that defendant’s failure to make a settlement offer of the policy limit was not prudent. However, “[a]n insurer does not breach its duty of good faith when it makes a mistake in judgment or behaves negligently” … . Here, the assessment of the insured’s exposure and the failure to make a settlement offer of the policy limit was a mistake in judgment. It does not demonstrate that defendant acted in bad faith by failing to heed contrary evidence. Instead, the record shows defendant’s reasonable belief that, under the No Fault Law, the underlying plaintiff did not sustain a serious injury causally related to the accident. Thus, we find that the record does not demonstrate any pattern of reckless or conscious disregard for plaintiffs’ rights.  General Motors Acceptance Corp v New York Cent Mut Fire Ins Co, 2014 NY Slip Op 02384, 1st Dept 4-8-14

 

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Aeration Tank Constituted an Unventilated Confined Area Requiring Air Quality Monitoring

The First Department determined plaintiff had stated a cause of action under Labor Law 241(6) based upon his inhalation of toxic fumes inside an aeration tank, finding the tank constituted an unventilated confined area requiring air quality monitoring:

The court properly denied the portion of defendants’ motion seeking dismissal of plaintiffs’ Labor Law § 241(6) claim as predicated on 12 NYCRR 23-1.7(g). We find that, as a matter of law, the aeration tank is an unventilated confined area requiring air quality monitoring … . Pursuant to 12 NYCRR 23-1.7(g), the atmosphere of an unventilated confined area must be monitored “where dangerous air contaminants may be present or where there may not be sufficient oxygen to support life.” Here, the cement tank is a large container used to aerate and clean sewage. Entering the tank poses a potential hazard since, as admitted by a deputy superintendent for the DEP in his deposition, a person could experience oxygen depletion as gases “displace the oxygen.” Defendants contend that in order for an area to be a confined space, as defined by 12 NYCRR 12-1.3(f), it must have a restricted means of access, such as a trap door or a manhole. We reject this argument. An area does not need to be accessible only by a narrow opening in order to have a “restricted means of egress” (12 NYCRR 12-1.3[f]). Although the top of the tank was open to the air, access was still restricted as [plaintiff] needed to use a 20-foot ladder to enter and exit the tank. Therefore, given the tank’s use in the process of filtering sewage and its restricted means of access, 12 NYCRR 23-1.7(g) is applicable.  Cerverizzo v City of New York, 2014 NY Slip Op 02385, 1st Dept 4-8-14

 

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Tax Law Amendment Allowing New York to Collect Capital Gains Tax from a Nonresident Shareholder in an S Corporation Should Not Have Been Applied Retroactively to a Transaction Which Took Place Three and a Half Years Before the Amendment

In a full-fledged opinion by Justice Richter, over a dissenting opinion, the First Department determined an amendment to the tax law should not be applied retroactively.  The amendment allowed New York to collect capital gains tax from a nonresident shareholder in an S corporation which has distributed an installment obligation under section 453 (h)(1)(A) of the Internal Revenue Code:

Determining whether the retroactive application of a tax statute violates a taxpayer’s due process rights “is a question of degree” and “requir[es] a balancing of [the] equities”… . In James Sq. [21 NY3d 233], the Court of Appeals recently reaffirmed a three-prong test to determine whether the retroactive application of a tax statute passes constitutional muster. “The important factors in determining whether a retroactive tax transgresses the constitutional limitation are (1) the taxpayer’s forewarning of a change in the legislation and the reasonableness of . . . reliance on the old law,’ (2) the length of the retroactive period,’ and 3) the public purpose for retroactive application'”… .

…[P]laintiffs had “no warning and no opportunity [in 2007] to alter their behavior in anticipation of the impact of the [2010 amendment]”…. . * * *

In James Sq., the Court concluded that a retroactive period of 16 months “should be considered excessive and weighs against the State” (21 NY3d at 249). Here, the period of retroactivity was 3 1/2 years — nearly three times longer than the period found excessive in James Sq. As in James Sq., we conclude that this excessive period was “long enough . . . so that plaintiffs gained a reasonable expectation that they would secure repose in the existing tax scheme” … . * * *

The legislative history indicates that enactment of the legislation was necessary to implement the 2010-2011 executive budget by raising tax revenues by $30 million in that fiscal year. Indeed, defendants expressly state in their brief that the legislature made the law retroactive to prevent revenue loss. But “raising money for the state budget is not a particularly compelling justification” and “is insufficient to warrant retroactivity in a case [as here] where the other factors militate against it” (James Sq., 21 NY3d at 250). Caprio v New York State Dept of Taxation & Finance, 2014 NY Slip Op 02399l 1st Dept 4-8-14

 

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