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PLAINTIFF DID NOT DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff in this foreclosure action did not demonstrate she had standing to bring it:

“A plaintiff has standing to maintain a mortgage foreclosure action where it is the holder or assignee of the underlying note at the time the action is commenced” … . The plaintiff can establish standing by attaching a properly endorsed note to the complaint when commencing the action . However, where an endorsement is on an allonge and not on the note itself, the plaintiff must establish that the allonge was “so firmly affixed to the note so as to become a part thereof” as required by UCC 3-202(2) at the time the action was commenced … . “Where there is no allonge or note that is either endorsed in blank or specially endorsed to the plaintiff, mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note” … .

Here, the plaintiff failed to establish her status as holder of the note at the time the action was commenced. Although the note was executed in favor of the decedent, the copy of the note attached to the complaint contains two purported endorsements in favor of nonparties, and the plaintiff failed to show that an allonge containing an additional endorsement back to the decedent was firmly affixed to the note … . Thompson v Seay, 2023 NY Slip Op 06072, Second Dept 11-22-23

Practice Point: Where the note and the endorsements do not comply with the requirements of UCC 3-202, plaintiff has not demonstrated standing to bring the foreclosure action.

 

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A DRIVER WHO HAS THE RIGHT-OF-WAY IS ENTITLED TO ANTICIPATE OTHER DRIVERS WILL OBEY THE TRAFFIC LAWS REQUIRING THEM TO YIELD; HERE DEFENDANT ENTERED AN INTERSECTION WITH A GREEN LIGHT AND PLAINTIFF MADE A LEFT TURN IN FRONT OF HIM; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the defendant driver demonstrated he had the right-of-way when he entered the intersection with and green light and plaint made a left turn in front of him. Defendant’s motion for summary judgment should have been granted:

“A driver who has the right-of-way is entitled to anticipate that other drivers will obey the traffic laws requiring them to yield to the driver with the right-of-way” … . “Although a driver with a right-of-way also has a duty to use reasonable care to avoid a collision, . . . a driver with the right-of-way who has only seconds to react to a vehicle which has failed to yield is not comparatively negligent for failing to avoid the collision” … .

Here, the defendant established his prima facie entitlement to judgment as a matter of law by demonstrating that he had the right-of-way, the plaintiff failed to yield the right-of-way, and the defendant did not have sufficient time to react in order to avoid the collision … . The defendant, as the driver with the right-of-way, was entitled to anticipate that the plaintiff would obey the traffic laws which required her to yield … . Smith v Trail, 2023 NY Slip Op 06070, Second Dept 11-22-23

Practice Point: A driver who fails to take evasive action can be contributorily negligent. But here defendant entered the intersection with a green light and plaintiff made a left turn in front of him. Plaintiff did not raise a question of fact whether defendant had time to take evasive action.

 

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THE UNION’S CHALLENGE TO THE DEDUCTION OF THE COST OF HEALTH INSURANCE FROM A VILLAGE POLICE OFFICER’S PAYCHECK WAS A BREACH-OF-CONTRACT ACTION FOR WHICH THE STATUTE OF LIMITATIONS BEGAN RUNNING ANEW FOR EACH PAYCHECK (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, in a full-fledged opinion by Justice Brathwaite Nelson, determined the action by the union on behalf of a village police officer challenging the deduction of health insurance costs from each paycheck was a breach-of-contract action and the statute of limitations began running anew for each paycheck:

Teamsters Local 445 (hereinafter the Union) filed a demand for arbitration of a grievance against the Village of Maybrook alleging that the Village breached the parties’ collective bargaining agreement (hereinafter CBA) by deducting a certain amount from each paycheck of Sergeant Michael Maresca for health insurance costs. The Supreme Court granted the Village’s petition to permanently stay arbitration on the ground that the claim sought to be arbitrated was barred by the four-month statute of limitations applicable to CPLR article 78 proceedings. The principal issues raised on this appeal are (1) whether the underlying claim is in the nature of CPLR article 78 seeking review of an administrative determination or in the nature of breach of contract, and (2) if the latter, whether the claim is predicated on a single breach or a series of breaches that occurred with each paycheck. … [W]e determine that the nature of the claim is breach of contract and that the claim is predicated on a series of independent alleged breaches. Since the statute of limitations began anew as to each breach, we find that the claim to be arbitrated was not wholly time-barred. We therefore modify the order appealed from by … granting the Union’s cross-motion to the extent of compelling arbitration of so much of the grievance as was not time-barred. Matter of Village of Maybrook v Teamsters Local 445, 2023 NY Slip Op 06051, Second Dept 11-22-23

Practice Point: Here the union’s challenge to the deduction of the cost of health insurance from a village police officer’s paycheck was governed by the six-year statute of limitations for a breach of contract action, not the four-month statute of limitations for an Article 78 proceeding. The statute began running anew for each paycheck.

 

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UNSUBSTANTIATED COMPLAINTS AGAINST POLICE OFFICERS ARE NOT CATEGORICALLY EXEMPT FROM FOIL REQUESTS (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Brathwaite Nelson, determined “unsubstantiated complaints” against police officers are not categorically exempt from a FOIL request:

The petitioner publishes a daily newspaper in Long Island. Following the Legislature’s repeal of Civil Rights Law § 50-a, the petitioner made requests to the Nassau County Police Department (hereinafter the NCPD) pursuant to the Freedom of Information Law … to obtain certain law enforcement disciplinary records. … [T]he NCPD … withheld all documents relating to complaints that were not determined to be substantiated on the ground that such documents were categorically exempt from disclosure as an “unwarranted invasion of personal privacy” pursuant to Public Officers Law § 87(2)(b). We hold that records concerning unsubstantiated complaints or allegations of misconduct are not categorically exempt from disclosure as an unwarranted invasion of personal privacy, and the NCPD is required to disclose the requested records, subject to redactions with particularized and specific justification under Public Officers Law § 87(2) … . …

Former Civil Rights Law § 50-a provided a blanket shield from public disclosure for police officer personnel records, including records relating to disciplinary proceedings arising out of allegations of misconduct … . Effective June 12, 2020, the Legislature repealed Civil Rights Law § 50-a and amended the Public Officers Law to make specific provisions relating to the disclosure of law enforcement disciplinary records and the types of redactions to be made thereto prior to disclosure. Matter of Newsday, LLC v Nassau County Police Dept., 2023 NY Slip Op 06050, Second Dept 11-22-23

Practice Point: Pursuant to the repeal in 2020 of Civil Rights Law 50-a, unsubstantiated complaints against police officers are not categorically exempt from FOIL requests.

 

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THE PETITIONER MAKING THE FOIL REQUEST IS A LAW FIRM; THE FACT THAT THE FIRM’S CLIENT ALSO HAD STANDING TO MAKE THE FOIL REQUEST DID NOT DEPRIVE THE LAW FIRM OF STANDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the Article 78 proceeding contesting the denial of petitioner’s FOIL request should not have been dismissed for lack of standing. Petitioner is a law firm seeking information on behalf of a client. The fact that the client could also make the FOIL request did not deprive the law firm of standing:

Supreme Court erred in concluding that the petitioner lacked standing to pursue this proceeding. The petitioner submitted the FOIL request to the Agency and its request was denied, both initially and on administrative appeal. Since the petitioner’s FOIL request was denied, it had standing to seek judicial review of the Agency’s determination … , regardless of whether it submitted the FOIL request, in whole or in part, on behalf of a client … . The petitioner’s standing was not extinguished by the fact that its client also would have had standing to commence a proceeding challenging the denial of the FOIL request … . Matter of Law Offs. of Cory H. Morris v Suffolk County, 2023 NY Slip Op 06046, Second Dept 11-22-23

Practice Point: Here a law firm made FOIL requests that were denied. The law firm then brought an Article 78 proceeding which was erroneously dismissed for lack of standing. The fact that the firm’s client had standing to bring the FOIL proceedings did not deprive the law firm of standing.

 

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FATHER IGNORED COMPULSORY DISCOVERY OF HIS FINANCIAL ABILITY TO PAY SUPPORT; FATHER IS PRECLUDED FROM OFFERING SUCH EVIDENCE IN THE SUPPORT PROCEEDINGS (SECOND DEPT).

The Second Department, reversing Family Court, determined father should be precluded from presenting any evidence of his financial ability to pay support because he submitted no financial evidence in the discovery phase:

Family Court Act § 424-a “mandates the compulsory disclosure by both parties to a support proceeding of ‘their respective financial states,’ through the provision of tax returns, pay stubs, and sworn statements of net worth” … . “Where a respondent in a child support proceeding fails, without good cause, to comply with the compulsory financial disclosure mandated by Family Court Act § 424-a, ‘the court on its own motion or on application shall grant the relief demanded in the petition or shall order that, for purposes of the support proceeding, the respondent shall be precluded from offering evidence as to [the] respondent’s financial ability to pay support'” … .

Here, the father failed to provide a sworn statement of net worth, a tax return, or a pay stub, and he did not offer an explanation for his failure to do so. Since the father failed, without good cause, to comply with the compulsory financial disclosure mandated by Family Court Act [*2]§ 424-a, the Family Court was required to either grant the relief demanded in the petition or preclude the father from offering evidence as to his financial ability to pay support … . Under the circumstances of this case, the court should have precluded the father from offering evidence regarding his financial ability to pay support, and should have determined the amount of child support based on the needs of the child, as requested by the mother … . Matter of Grant v Seraphin, 2023 NY Slip Op 06044, Second Dept 11-22-23

Practice Point: In support proceedings, discovery of a party’s financial ability to pay support is compulsory. A party who fails to provide such discovery may be precluded from presenting any financial evidence.

 

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THERE WAS A SURPLUS AFTER THE FORECLOSURE SALE OF DEFENDANT’S PROPERTY; DEFENDANT HAD ENTERED A HOME EQUITY LINE OF CREDIT WITH CITIBANK; CITIBANK, NOT DEFENDANT, WAS ENTITLED TO THE SURPLUS FUNDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant, owner of the equity of redemption after a foreclosure sale of defendant’s property, was not entitled to the surplus funds after the sale. Defendant had entered a home equity line of credit with Citibank. Citibank was entitled to the surplus funds:

“‘[S]urplus money proceedings . . . are not collateral to the foreclosure, but are in the action itself[,] [a]nd the rights of lienors subsequent to the mortgage under foreclosure are before the court and must be protected as much as those of the owner of the property'” … . “‘Surplus money from a foreclosure sale is not a general asset of the owner of the equity of redemption, but stands in the place of the property for the purpose of distribution among those having vested interests in or liens on the property. The rights of the parties are fixed at the time of the foreclosure sale, and the rights of a second lienholder are transferred to any surplus'” … . “Under New York law, the lien of a junior mortgagee who is made a party to a foreclosure action brought by a senior mortgagee, although cut-off and extinguished as to the land, continues as a lien upon the surplus funds arising from the foreclosure” … . “‘[U]pon the foreclosure of the first mortgage, the lien of the second mortgage follow[s] the surplus into the hands of the [municipality’s] financial officer, and the remedy of the second mortgagee is to enforce his or her claim in the court by whose direction the foreclosure had taken place'” … . Maspeth Fed. Sav. & Loan Assn. v O’Connell, 2023 NY Slip Op 06037, Second Dept 11-22-23

Practice Point: In addition to the mortgage which was foreclosed, defendant property-owner had entered a home equity line of credit with Citibank. There were surplus funds after the foreclosure sale. Citibank, not defendant, was entitled to the surplus funds.

 

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PLAINTIFF DID NOT DEMONSTRATE THE RELEASE WAS PROCURED BY FRAUD, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff did not demonstrate the release plaintiff agreed to was procured by fraud. Therefore the motion to dismiss the causes of action covered by the release should have been granted:

“Generally, a valid release constitutes a complete bar to an action on a claim which is the subject of the release” … . “If the language of a release is clear and unambiguous, the signing of a release is a jural act binding on the parties” … . “Notably, a release may encompass unknown claims, including unknown fraud claims, if the parties so intend and the agreement is fairly and knowingly made” … .

“A release should never be converted into a starting point for . . . litigation except under circumstances and under rules which would render any other result a grave injustice” … . “A release may be invalidated, however, for any of the traditional bases for setting aside written agreements, namely, duress, illegality, fraud, or mutual mistake” … . “Although a defendant has the initial burden of establishing that it has been released from any claims, a signed release shifts the burden of going forward . . . to the [plaintiff] to show that there has been fraud, duress or some other fact which will be sufficient to void the release” …  “A plaintiff seeking to invalidate a release due to fraudulent inducement must establish the basic elements of fraud, namely a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury” … . “[A] party that releases a fraud claim may later challenge that release as fraudulently induced only if it can identify a separate fraud from the subject of the release” … . JM UC Group, LLC v Precious Care Mgt., LLC, 2023 NY Slip Op 06034, Second Dept 11-22-23

Practice Point: The decision includes the text of a detailed release which is worth reading. A release can even cover unknown claims, even unknown fraud claims. Here plaintiff did not demonstrate the release was procured by fraud and the relevant causes of action should have been dismissed.

 

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THE 90-DAY TIME-LIMIT IN RPAPL 1371 FOR BRINGING A MOTION FOR A DEFICIENCY JUDGMENT AGAINST THE PURCHASER OF PROPERTY AT A FORECLOSURE SALE FUNCTIONS AS A STATUTE OF LIMITATIONS; THE MOTION HERE WAS UNTIMELY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the mortgagor’s order to show cause seeking a deficiency judgment against defendant, the purchaser of the property at the foreclosure sale, should have been dismissed as untimely pursuant to RPAPL 1371:

RPAPL 1371(2) states that “[s]imultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action.” “The courts have uniformly treated the 90-day period contained in RPAPL 1371(2) as a provision in the nature of a statute of limitations, so that the plaintiff’s failure to serve notice within the 90-day period is a complete bar to the entry of a deficiency judgment, and the proceeds of the sale will be deemed to be in full satisfaction of the mortgage debt” … . JDRMDBP-SM, LLC v Hossain, 2023 NY Slip Op 06033, Second Dept 11-22-23

Practice Point: The 90-day time-limit in RPAPL 1371 for bringing a motion for a deficiency judgment against the purchaser of property at a foreclosure sale functions as a statute of limitations. A late motion must be dismissed.

 

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TWO PRIOR POSSESSION OF A WEAPON INCIDENTS IN 2006 AND 2007, WHERE DEFENDANT CLAIMED THE WEAPONS BELONGED TO ANOTHER AND HE WAS UNAWARE OF THEIR PRESENCE, SHOULD NOT HAVE BEEN ADMITTED UNDER MOLINEUX IN THIS 2017 POSSESSION OF A WEAPON PROSECUTION, WHERE DEFENDANT CLAIMED THEY WERE PLACED IN THE VEHICLE BY ANOTHER WITHOUT HIS KNOWLEDGE; THERE WAS A CONCURRENCE AND A THREE-JUDGE DISSENT (CT APP). ​

The Court of Appeals, reversing the Appellate Division, in a full-fledged opinion by Judge Halligan, over a concurrence and a three-judge dissent, determined evidence of two prior possession-of-a-weapon incidents in 2006 and 2007, one uncharged and one misdemeanor, should not have been admitted under Molineux in the instant 2017 weapons-possession prosecution. In the 2006 and 2007 cases, defendant claimed the weapons belonged to another and he wasn’t aware of their presence. In the 2017 case defendant claimed someone else put the weapons in his vehicle without his knowledge. The weapons were legally purchased and registered to the defendant in Florida:

During an inventory search, the police recovered various items, including two small bags of marijuana and cash. They also found a loaded .45 caliber gun in the truck’s center console, as well as three handguns and ammunition in the flatbed area; each firearm was legally purchased and registered in Telfair’s name in Florida. The defendant was charged with several crimes related to possession of weapons and ammunition, as well as various vehicle and traffic violations.

The People moved under People v Molineux, 168 NY 264 (1901) to introduce evidence of two prior incidents involving Telfair’s possession of a weapon: a 2006 uncharged crime and a 2007 misdemeanor conviction for weapon possession. The People expected that Telfair would claim at trial that someone else had packed his truck and unbeknownst to him, placed his guns inside it, and the prior acts would show the defendant actually knew he possessed the firearms on the day of his arrest. Defense counsel responded that given the temporal remoteness and dissimilarity of the prior incidents, they had “little, if any, probative value” and were highly prejudicial, in part because the 2007 conviction concerned the same charge for which Telfair was now on trial. When asked whether he would assert that Telfair did not know the guns were in his car, defense counsel did not disclaim the defense. * * *

The 2006 and 2007 incidents were neither very similar nor close in time to the 2017 incident. Just the opposite: they involved different guns, different sets of circumstances, different excuses, and occurred more than 10 years earlier. People v Telfair, 2023 NY Slip Op 05965, CtApp 11-21-23

Practice Point: This case must be read carefully and repeatedly, as it illustrates subtle but profoundly important restrictions on the admissibility of Molineux evidence.

 

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