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Surrogate’s Court Has Jurisdiction to Determine the Legal Fees Owed to Out-Of-State Counsel for Services to the Estate

In a full-fledged opinion by Justice Austin, the Second Department determined Surrogate’s Court erred when it held that Surrogate’s Court did not have jurisdiction to determine the legal fees due out-of-state counsel and Surrogate’s Court further erred when it ordered that the fees already paid to out-of-state counsel be returned.  The out-of-state firm (Choate Hall) represented the executor who, at the time the firm was hired, lived in Massachusetts (where the firm is located).  The opinion includes a detailed discussion of the jurisdiction of Surrogate’s Court, as well as the relevant statutory and case law (not summarized here):

…[W]e find that the Surrogate’s Court erred in concluding that it lacked subject matter jurisdiction to fix and determine the compensation owed to Choate Hall for services rendered to the estate. Further, the court should have made a determination as to the fair value of Choate Hall’s services, rather than direct that the entire fee be returned. Thereafter, the court should have directed only a refund of such fees paid to Choate Hall that it considered to have been paid in excess of what it determined to be the fair value of Choate Hall’s services to the estate pursuant to SCPA 2110.  Matter of Askin, 2013 NY Slip Op 07963, 2nd Dept 11-27-13

 

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Tax Lien Foreclosure Upheld Despite Alleged Lack of Notice

The Third Department determined a motion to vacate a tax lien foreclosure was properly denied in the face of claimed lack of notice, finding the motion untimely and finding the statutory notice requirements had been met and the owner had been afforded due process:

Respondent’s motion to vacate was untimely as it was brought more than one month after entry of the judgment of foreclosure (see RPTL 1131…).  Notably, “the statute of limitations set forth in RPTL 1131 applies even where, as here, the property owner asserts that he or she was not notified of the foreclosure proceeding”… . …

“[N]otice shall be deemed received unless both the certified mailing and the ordinary first class mailing are returned by the United States postal service within [45] days after being mailed,” and the foreclosing agent is required to seek an alternative mailing address for the property owner only when both such notices are returned (RPTL 1125 [1] [b] [i] …).  Accordingly, inasmuch as the notice sent by first class mail to respondent at the 8th Avenue address was not returned, such notice was deemed received …, and “petitioner was not obligated to take additional steps to notify respondent of the foreclosure proceeding”… .

…”[D]ue process does not require actual notice by the property owner, only reasonable efforts to provide notice under the circumstances” …, and petitioner discharged its obligations in this regard by fulfilling the requirements of RPTL 1125 … .  Finally, we note that”[o]wnership carries responsibilities” …, which includes an obligation to apprise the tax enforcing officer of a change in address (see RPTL 1125 [1] [d]…).  There is nothing in the record to suggest that respondent fulfilled that obligation here.  Simply put, “respondent was responsible for protecting his ownership interests and chargeable with notice that failure to pay his taxes could result in foreclosure” … . Matter of Foreclosure of Tax Liens by County of Sullivan…, 516658, 3rd Dept 11-27-13

 

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Tax Exempt Status of Non-Profit Public Parking Lots Should Not Have Been Revoked

The Second Department ruled the tax exempt status of non-profit public parking lots should not have been revoked:

“The crucial issue in determining whether property is tax exempt pursuant to [RPTL 420-a] is whether the primary or principal use of the property is a tax-exempt purpose of its owner” … . The general rule is that the taxpayer bears the burden of proving that a property is tax exempt … . However, where, as here, a municipality seeks ” to withdraw a previously granted tax exemption, the municipality bears the burden of proving that the real property is subject to taxation'” … . * * *

Here, the respondents failed to meet their burden of proof for revocation of the tax exemption on the grounds that the petitioners’ activity did not conform to a charitable purpose within the meaning of RPTL 420-a. Absent a precise statutory definition of “charitable purpose,” courts have interpreted this category to include relief of poverty, advancement of governmental and municipal purposes, and other objectives that are beneficial to the community… . Matter of Greater Jamaica Dev Corp v NYC Tax Comm, 2013 NY Slip Op 07972, 2nd Dept 11-27-13

 

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Broker Entitled to Commission Based Upon Defendant’s Refusal of a Purchase Offer/Copy of Purchase Offer Properly Put in Evidence

The Third Department determined plaintiff real estate broker was entitled to a commission because he presented a willing buyer at the price agreed to in the listing agreement and one of the property owners, the defendant, refused the offer because he no longer wanted to sell. In the course of the decision, the court noted that a copy of the purchase offer was properly received in evidence (in the absence of the original):

“In the absence of an agreement to the contrary, a real estate broker will be deemed to have earned his [or her] commission when he [or she] produces a buyer who is ready, willing and able to purchase at the terms set by the seller” … . The listing agreement identified the parties, the property, the asking price, and an agreement to pay an 8% commission in exchange for plaintiff producing a buyer.  This was sufficient information to create a valid listing agreement … .  Defendant asserts that the listing agreement is invalid because not all of the property owners signed it … .  However, a contract to pay compensation to a real estate broker or salesperson need not be in writing to be effective (see General Obligations Law § 5-701 [a] [10]).  …

Supreme Court did not err in accepting into evidence a copy of a second version of the offer to purchase.  Although the best evidence rule “requires the production of an original writing where its contents are in dispute and sought to be proven” …, secondary evidence of the contents of an unproduced original document may be admitted where the court finds a sufficient explanation for the absence of the original, that the proponent “has not procured its loss or destruction in bad faith,” and that the secondary evidence accurately reflects the original … .  Posson … v Przestrzelski, 516677, 3rd Dept 11-27-13

 

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Strict Foreclosure and Reforeclosure Actions Not Available Against Easement Holder

The Second Department determined that neither a strict foreclosure action (RPAPL 1352) nor a reforeclosure action (RPAPL 1503) can be brought to extinguish an easement where the easement holder was not named in the foreclosure action:

A purchaser of foreclosed property may, under certain circumstances, commence a strict foreclosure action pursuant to RPAPL 1352 … . RPAPL 1352 “authorizes the court to issue a judgment that fixes a time period within which any person having a right of redemption or right to foreclose a subordinate lien must act to redeem or begin a foreclosure action” (id.; see RPAPL 1352). If the person with a right of redemption or subordinate lien fails to redeem the property or commence a foreclosure action within the fixed time period, “all title or interest” this person has in or against “such property shall thereby be extinguished and terminated” (RPAPL 1352…).

A purchaser of a foreclosed property may, under certain circumstances, also commence a reforeclosure action pursuant to RPAPL 1503 … . “When real property has been sold pursuant to a judgment in an action to foreclose a mortgage,” a purchaser of a foreclosed property may maintain a reforeclosure action “to determine the right of any person to set aside such judgment, sale or conveyance or to enforce an equity of redemption or to recover possession of the property, or the right of any junior mortgagee to foreclose a mortgage” (RPAPL 1503). * * *

An easement holder, unlike a mortgagee … or a tenant …, does not fall within the class of persons against whom a strict foreclosure or reforeclosure action may be brought (see RPAPL 1352, 1503). An easement is not a lien or a mortgage… . Moreover, an easement holder that is not named in the foreclosure action does not have a right of redemption. An easement holder, unlike a tenant, does not have a possessory interest in the burdened land (…Property § 450; 1 Rasch, New York Law and Practice of Real Property § 18.8 [2d ed]). Thus, such actions cannot be maintained against an easement holder. Bass v D Ragno Realty Corp, 2013 NY Slip Op 07924, 2nd Dept 11-27-13

 

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Driver’s Statement In a Plea Proceeding that She Did Not Have Permission to Use Defendant-Owner’s Vehicle at the Time of the Accident Insufficient to Overcome Statutory Presumption Of Operation with Owner’s Consent

The Second Department determined defendant (Tumbiolo) had not overcome the presumption that the driver (Commisso) of Tumbiolo’s vehicle was operating the vehicle with Tumbiolo’s permission:

Vehicle and Traffic Law § 388 creates a strong presumption that the driver of a vehicle is operating it with the owner’s consent, which can only be rebutted by substantial evidence demonstrating that the vehicle was not operated with the owner’s permission” … . “Although the rule is not absolute or invariable, in most cases uncontradicted disavowals of permission by both the owner of the vehicle and the driver will constitute substantial evidence negating permissive use and entitle the owner to summary judgment”… . * *

…[T]o the extent that Tumbiolo seeks to utilize a transcript of a plea proceeding dated October 21, 2011, wherein Commisso answered “[n]o” when asked if she had “permission” to “take” the subject vehicle, Commisso’s prior statement is not admissible under the provisions of CPLR 4517. Further, Commisso’s prior statement would be admissible as an “admission by a party” only as against Commisso, not as against the plaintiff … . Additionally, Tumbiolo failed to show that Commisso’s prior statement would be admissible as a declaration against pecuniary, proprietary, or penal interest, which are exceptions to the rule against hearsay (… Jerome Prince, Richardson on Evidence § 8-403 [Farrell 11th ed 2008]). Diaz v Tumbiolo, 2013 NY Slip Op 07930, 2nd Dept 11-27-13

 

 

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Defendant Not Prejudiced by Disposal of Damaged Goods (Spoliation)/Lost Profits Recoverable Where Purchase Price Set at Time of Damage

The Second Department affirmed several rulings made by the trial court in the damages aspect of a trial in which plaintiff alleged defendant’s malfunctioning sprinkler system ruined over $1 million worth of clothing stored in the building. The fact that plaintiff disposed of some of the damaged clothes and sold the remainder for salvage (spoliation) did not prejudice the defendant. And, the fact that a purchase price for some of the goods had already been set at the time of the loss allowed recovery for lost profits because the loss was not speculative:

The Supreme Court providently exercised its discretion in denying that branch of the defendant’s motion which was pursuant to CPLR 3126 to preclude the plaintiff from offering at trial any evidence of damages based upon spoliation of evidence. The defendant failed to establish that it was severely prejudiced by the disposal and sale of the damaged goods, fatally compromising its ability to mount a defense and necessitating such relief as a matter of fundamental fairness… . * * *

“Generally, where property is damaged but not destroyed, the measure of damages is the difference between the market value before the damage and the market value afterwards” … . The market value of a merchant’s goods is the price at which they could be replaced in the market, not the retail price at which they could be sold … . This is because allowing recovery of the retail value of damaged goods “would in effect overcompensate the merchant by allowing recovery of unearned profits” (2-248 Warren’s Negligence in New York Courts § 248.01[3][b] [2013]).

Here, however, the plaintiff was not holding the goods in stock in anticipation of trying to sell them at retail for “uncertain and indefinite profits which the plaintiff might have made” from their sale … . Rather, the goods were already under contract for a specified price and awaiting delivery. “[W]here . . . a loss of profits is the natural and probable consequence of the [defendant’s negligence], and their amount is shown with reasonable or sufficient certainty, there may be a recovery” … .  Ever Win Inc v 1-10 Indus Assoc, 2013 NY Slip Op 07933, 2nd Dept 11-27-13

 

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Defendant Presented No Evidence When Defective Bar Stool Was Last Inspected and No Evidence the Defect Was Latent—Summary Judgment Properly Denied

The Second Department determined the defendant was not entitled to summary judgment in a premises liability case.  Part of plaintiff’s finger was severed when he sat down on a bar stool.  There was a gap when the stool was lifted by the seat because the screws connecting the seat to the frame were either missing or loose:

In a premises liability case, the defendant property owner who moves for summary judgment has the initial burden of establishing that it did not create the defective condition or have actual or constructive notice of its existence … . To provide constructive notice, “a defect must be visible and apparent and it must exist for a sufficient length of time prior to the accident to permit defendant’s employees to discover and remedy it… . “[C]onstructive notice will not be imputed where a defect is latent and would not be discoverable upon reasonable inspection” … .

Here, the Supreme Court properly denied the defendant’s motion for summary judgment dismissing the complaint since the defendant failed to establish, prima facie, that it maintained its premises in a reasonably safe condition and that it did not create the alleged defective condition or have actual or constructive notice of it … . The defendant failed to specify when it last inspected the subject stool prior to the accident. Additionally, the defendant failed to show that the alleged defective condition of the stool was latent. McGough v Cryan Inc, 2013 NY Slip Op 07944, 2nd Dept 11-27-13

 

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Questions of Fact About Whether Amusement Ride On Sidewalk Created an Inherently Dangerous Condition and Whether the Hazard Was Latent or Open and Obvious

The Second Department determined a question of fact had been raised about whether the placement of an amusement ride on the sidewalk created an inherently dangerous condition.  Plaintiff turned a corner and was injured when he bumped into the machine

[Defendants’] submissions failed to establish that the Mickey Mouse ride had been placed on the sidewalk in such a manner as to comply with the New York City Administrative Code (see Administrative Code of City of NY § 19-136[a], [j]). Hence, they failed to exclude the possibility that the ride obstructed the sidewalk or otherwise created an inherently dangerous condition. Moreover, “the issue of whether a hazard is latent or open and obvious is generally fact-specific and thus usually a jury question” …. . “A condition that is ordinarily apparent to a person making reasonable use of his or her senses may be rendered a trap for the unwary where the condition is obscured or the plaintiff is distracted” … . Here, in view of the alleged circumstances of the plaintiff’s accident, a triable issue of fact exists as to whether the condition was open and obvious. Toro v Friedland Props Inc, 2013 NY Slip Op 07960, 2nd Dept 11-27-13

 

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Reimbursement Cuts for Profit-Making Nursing Homes Did Not Violate Takings or Equal Protection Clauses

The Third Department determined the plaintiffs—profit-making businesses operating nursing homes—did not raise questions of fact about whether reductions in Medicaid reimbursement rates instituted in 2011 violated the Takings Clause and the Equal Protection Clause:

…”‘[W]here a service provider voluntarily participates in a price-regulated program or activity, there is no legal compulsion to provide service and thus there can be no taking'”… . * * *

Given [the] fundamental difference in the underlying economic purposes and incentives of proprietary and voluntary facilities, they are not similarly situated as they must be to sustain plaintiffs’ equal protection claim … . Bay Park Center for Nursing and Rehabilitation LLC v Shah, 516654, 3rd Dept 11-27-13

 

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