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PURSUANT TO UCC 9-406 A LENDER’S SECURITY INTEREST IN A DEBTOR’S ACCOUNTS-RECEIVABLES IS AN ASSIGNMENT SUCH THAT A THIRD-PARTY WHICH HAS NOTICE OF THE ASSIGNMENT MUST MAKE ANY PAYMENTS OWED TO THE DEBTOR DIRECTLY TO THE LENDER (CT APP). ​

​The Court of Appeals, reversing the appellate division, in a full-fledged opinion by Judge Wilson, determined that UCC 9-406 allowed the lender to collect the accounts-receivables owed to the debtor by third-parties. The lender (Worthy) had a security interest in payments made by a third-party (New Style) to the debtor (Checkmate) after the New Style received notice of the assignment:

We are called upon to determine whether, for purposes of New York’s Uniform Commercial Code § 9-406, an “assignee” includes the holder of a presently exercisable security interest in an assignor’s receivables. We hold that it does. Under UCC 9-406, a security interest is an assignment and the UCC is purposefully structured to permit a debtor to grant creditors security interests in a debtor’s receivables so that the secured creditor can direct account debtors to pay it directly. * * *

Worthy filed a UCC-1 Financing Statement against Checkmate with the Secretary of State of New Jersey, perfecting its secured position regarding Checkmate’s assets. … Worthy sent New Style a notice of its security interest and collateral assignment in the New Style accounts and directed New Style that “[a]ll remittances for Accounts shall be made payable only to Worthy.” … . * * *

An account debtor who receives a secured creditor’s notice asserting its right to receive payment directly can pay the secured creditor and receive a complete discharge (UCC 9-406 [a]) or, if in doubt, can seek proof from the secured creditor that it possesses a valid assignment and withhold payment in the interim (UCC 9-406 [c]). Worthy Lending LLC v New Style Contrs., Inc., 2022 NY Slip Op 06631, CtApp 11-22-22

Practice Point: Pursuant to UCC 9-406 a lender’s security interest in a debtor’s accounts-receivable is an assignment of the accounts-receivables to the lender such that, after notice of the assignment, a party owing payments to the debtor is obligated to make those payments directly to the lender.

 

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DEFENSE COUNSEL INEFFECTIVE FOR FAILING TO FILE A SUPPRESSION MOTION; THE FAILURE “INFECTED” THE GUILTY PLEA BECAUSE SUPPRESSION COULD HAVE LED TO DISMISSAL OF SOME OF THE INDICTMENT (FOURTH DEPT).

The Fourth Department, reversing defendant’s conviction, determined defense counsel’s failure to make a suppression motion constituted ineffective assistance:

… [W]e conclude that the record establishes that defense counsel could have presented a colorable argument that defendant’s detention was illegal and thus that any evidence obtained as a result thereof should have been suppressed as the fruit of the poisonous tree. One of the officers who initially detained defendant testified at a Huntley/Wade hearing that, prior to defendant’s arrest, one of the victims of a home invasion had described the suspects as two black men in their twenties, one of whom was wearing a hoodie “with some kind of emblem on the front.” About a half-hour later, the officer heard a broadcast of a tip from an unidentified retired police officer. The tip, as testified to at the hearing, reported “two [black] males [in their twenties] inside [a] corner store that possibly looked suspicious” with one that “might” have had “a handgun on his side” and another that was wearing a “teddy bear type hoodie,” which was later described as a hoodie with a teddy bear on the front. Based on that tip, officers responded to the corner store, entered with weapons drawn, and immediately ordered the two men, one of whom was defendant, to raise their hands. The officer testified, however, that the men were not acting suspiciously nor did she observe a weapon when she and her partner entered the store. While handcuffing defendant, the officer for the first time observed a handgun in defendant’s waistband, saw blood on defendant’s hoodie, and obtained statements from defendant. Defendant was thereafter taken for show-up identifications, during which the victims of the prior home invasion identified him as one of the men involved in that incident.

… [I]t cannot be said that a motion seeking suppression on the ground that defendant was unlawfully detained would have had “little or no chance of success” … , and instead those facts demonstrate that defense counsel failed to pursue a “colorable claim[]” that could have led to suppression … . …

… [D]efense counsel prepared such a motion to suppress evidence on that basis, indicated an intent to make that motion, and simply failed to file the motion despite having been twice informed by the court of the need to do so given the People’s refusal to consent to a hearing regarding the legality of the detention without such a motion. …

… [D]efendant’s contention survives his guilty plea inasmuch as the error in failing to seek suppression on that basis infected the plea bargaining process because suppression of the challenged evidence would have resulted in dismissal of at least some of the indictment … . People v Roots, 2022 NY Slip Op 06617, Fourth Dept 11-18-22

Practice Point: Defense counsel was deemed ineffective for failing to file a suppression motion. It worth noting that defense counsel had prepared a motion but failed to file it despite requests by the court and the prosecutor. The failure “infected” the guilty plea because suppression could have resulted in dismissal of some of the indictment.

 

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A MALFUNCTION OF THE AUDIO RECORDING DEVICE MADE IT IMPOSSIBLE TO TRANSCRIBE PORTIONS OF THE TRIAL; THE APPELLATE COURT SENT THE MATTER BACK FOR A RECONSTRUCTION HEARING (FOURTH DEPT). ​

The Fourth Department, sending the matrimonial action back for a reconstruction hearing, determined the inability to transcribe portions of the audio recording prejudiced the parties:

“Parties to an appeal are entitled to have that record show the facts as they really happened at trial, and should not be prejudiced by an error or omission of the stenographer” or the audio recording device … . Here, contrary to the court’s determination, the record establishes that significant portions of the testimony of plaintiff and defendant, including testimony related to child custody and certain other issues, could not be transcribed due to malfunctions of the audio recording system, which would preclude meaningful appellate review of those issues . To the extent that they are properly before us, we have considered and rejected the parties’ remaining contentions. We therefore reverse the order, grant the motion, and remit the matter to Supreme Court to hold a reconstruction hearing with the parties and any witnesses or evidence the court deems helpful in reconstructing, if possible, those portions of the testimony of plaintiff and defendant that could not be transcribed … . Wagner v Wagner, 2022 NY Slip Op 06600, Fourth Dept 11-18-22

Practice Point: If a recording device malfunctions making it impossible to transcribe portions of a trial, the appellate court may send the matter back to reconstruct the missing parts of the record.

 

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ALTHOUGH THE ISSUE WAS NOT PRESERVED FOR APPEAL, THE FAILURE TO GIVE THE CIRCUMSTANTIAL-EVIDENCE JURY INSTRUCTION WAS REVERSIBLE ERROR (FOURTH DEPT).

The Fourth Department, reversing defendant’s conviction of criminal possession of a weapon, determined the evidence was entirely circumstantial requiring that the jury be instructed on the circumstantial-evidence standard of proof. The issued had not been preserved for appeal:

Supreme Court erred in failing to give a circumstantial evidence instruction. The evidence against defendant with respect to his possession of the .22 caliber revolver was entirely circumstantial, and the court’s jury instructions “failed to convey to the jury in substance that it must appear that the inference of guilt is the only one that can fairly and reasonably be drawn from the facts, and that the evidence excludes beyond a reasonable doubt every reasonable hypothesis of innocence” … . Inasmuch as the proof of defendant’s guilt is not overwhelming, the inadequacy of the charge was prejudicial error requiring reversal of those parts of the judgment convicting defendant under counts one and two of the superseding indictment and a new trial with respect thereto, notwithstanding defendant’s failure to request such a charge or to except to the charge as given … . People v Soto, 2022 NY Slip Op 06589, Fourth Dept 11-18-22

Practice Point: Here the failure to give the circumstantial-evidence jury instruction required reversal despite the failure to preserve the issue.

 

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SUPREME COURT PROPERLY DISMISSED DEFENDANTS’ SOLE-PROXIMATE-CAUSE AFFIRMATIVE DEFENSE IN THIS LABOR LAW 240(1) LADDER-FALL CASE; TWO JUSTICE DISSENT (FOURTH DEPT).

The Fourth Department, over a two-justice dissent, determined plaintiff was entitled to summary judgment dismissing defendants’ sole-proximate-cause affirmative defense to the Labor Law 240(1) cause of action. Plaintiff used an eight-foot A-frame ladder to work on an overhead door mechanism and stood on the second to the highest step. The dissenters argued there was a question of fact whether the plaintiff’s own negligence (standing on the second to the highest step) was the sole proximate cause of the fall. The majority found Supreme Court properly dismissed the sole-proximate-cause affirmative defense. Plaintiff submitted expert evidence that the eight-foot ladder was not an adequate safety device. And plaintiff’s standing on the second to the highest step spoke to comparative negligence, which is not a defense to a Labor Law 240(1) cause of action. With respect to plaintiff’s motion for summary judgment on liability, Supreme Court properly held there was a question of fact whether plaintiff was performing routine maintenance, which is not covered under Labor Law 240(1):

… [T]here is no evidence in the record that contradicts the opinion of plaintiff’s expert that the eight-foot A-frame ladder provided to plaintiff was inadequate because it could not have been placed so as to provide proper protection to plaintiff during his work on the bearing and shaft of the car wash overhead door at the time of the accident (see generally Labor Law § 240 [1]). Plaintiff therefore established his entitlement to judgment as a matter of law dismissing the sole proximate cause affirmative defense; any failure by plaintiff to refrain from standing on the top steps of the ladder amounts to no more than comparative negligence, which is not a defense under Labor Law § 240 (1) … . * * *

From the dissent:

Inasmuch as unnecessarily standing on the second step from the top of an A-frame ladder constitutes misuse of such a ladder, and plaintiff was depicted standing on the ladder in that manner just before the fall, we conclude that plaintiff’s submissions raised an issue of fact whether it was necessary for plaintiff to be on that step in order to perform his work on the 10-foot overhead door and, if not, whether plaintiff’s own actions were the sole proximate cause of the accident … . Green v Evergreen Family Ltd. Partnership, 2022 NY Slip Op 06588, Fourth Dept 11-18-22

Practice Point: Here the majority concluded the A-frame ladder was inadequate for the job and plaintiff’s standing on the second to the highest step amounted to comparative negligence, which is not a defense to a Labor Law 240(1) cause of action. Two dissenters argued there was a question of fact whether standing on the second to the highest step constituted plaintiff’s misuse of the ladder which was the sole proximate cause of the fall.

 

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A CHILD IN A CUSTODY PROCEEDING IS ENTITLED TO EFFECTIVE ASSISTANCE OF COUNSEL BY THE ATTORNEY-FOR-THE-CHILD (AFC), WHICH INCLUDES ADVOCATING THE CHILD’S POSITION EVEN IF THE AFC DISAGREES (FOURTH DEPT). ​

The Fourth Department, reversing Family Court, determined the child received ineffective assistance in this modification of custody proceeding. With a couple of exceptions, even if the attorney-for-the-child (AFC) doesn’t agree with it, he or she must argue the child’s position:

… [T]he AFC “must zealously advocate the child’s position” (22 NYCRR 7.2 [d]). “[I]n ascertaining the child’s position, the [AFC] must consult with and advise the child to the extent of and in a manner consistent with the child’s capacities, and have a thorough knowledge of the child’s circumstances” (22 NYCRR 7.2 [d] [1]). “[I]f the child is capable of knowing, voluntary and considered judgment, the [AFC] should be directed by the wishes of the child, even if the [AFC] believes that what the child wants is not in the child’s best interests” (22 NYCRR 7.2 [d] [2]). There are two exceptions, not relevant here, where the child lacks the capacity for knowing, voluntary and considered judgment, or following the child’s wishes is likel… y to result in a substantial risk of imminent, serious harm to the child (see 22 NYCRR 7.2 [d] [3]).

… [A] child in an article 6 custody proceeding is entitled to effective assistance of counsel … , which requires the AFC to take an active role in the proceeding … .

Here, the AFC at trial made his client’s wish that there be a change in custody known to the court, but he did not “zealously advocate the child’s position” (22 NYCRR 7.2 [d] …). He did not cross-examine the mother, the police officers, or the school social worker called by the father, and we agree with the AFC on appeal that the trial AFC’s cross-examination of the father was designed to elicit unfavorable testimony related to the father, thus undermining the child’s position . His questioning also seemed designed to show that there was no change in circumstances since the entry of the last order. Further, he submitted an email to the court in response to the mother’s motion to dismiss in which he stated his opinion that there had been no change in circumstances, which again went against his client’s wishes  … . Matter of Sloma v Saya, 2022 NY Slip Op 06587, Fourth Dept 11-18-22

Practice Point: The attorney-for-the-child (AFC), absent two exceptions not relevant to this case, must argue the child’s position in a modification of custody proceeding even if he or she disagrees. Here the AFC didn’t cross-examine witnesses whose testimony was unfavorable to the child’s position and questioned witnesses in a manner which elicited testimony against the child’ position. The child was not afforded effective assistance of counsel.

 

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PLAINTIFF BICYCLIST ALLEGED HE STRUCK A FALLEN SIGNPOST WHICH WAS OBSTRUCTING THE SIDEWALK; THE TOWN DID NOT DEMONSTRATE IT DID NOT HAVE NOTICE OF THE CONDITION; PLAINTIFF DEMONSTRATED HE WAS ENTITLED TO DISCOVERY OF TOWN DOCUMENTS RELATED TO THE REPAIR OF TOWN SIGNS (FOURTH DEPT). ​

The Fourth Department, reversing (modifying) Supreme Court, determined (1) the town did not demonstrate it did not have written notice of the fallen signpost on the sidewalk (which plaintiff bicyclist allegedly struck), and (2) plaintiff demonstrated the town should comply with discovery demands for documents relating to the existence and repair of signs by the town:

The Town had the initial burden on the motion of establishing that no prior written notice of the alleged condition was given to either the Town Clerk or the Town Superintendent of Highways … . In support of its motion, the Town submitted, inter alia, the deposition testimony of an administrative aide in the Town Highway Department and the Town’s sign shop fabricator, each of whom testified that he did not learn of the fallen sign until he received the police report for the incident. However, neither employee testified that he searched the Highway Department’s or the Town Clerk’s records. Thus, the Town failed to establish as a matter of law that neither the Town Clerk nor the Town Superintendent of Highways received prior written notice of the alleged condition … . * * *

… [W]e conclude that plaintiff met his burden of establishing that the discovery documents were material and necessary to the prosecution of the action (see generally CPLR 3101 [a]). In opposing the motion, the Town failed to establish that the discovery requests were unduly burdensome … . Garcia v Town of Tonawanda, 2022 NY Slip Op 06584, Fourth Dept 11-18-22

Practice Point: Because the town did not demonstrate that it searched the highway department and town clerk’s records it did not demonstrate it had not received notice of the fallen signpost plaintiff bicyclist allegedly struck. Plaintiff was entitled to discovery of town documents relating to the repair of signs.

 

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THE MAJORITY HELD THE INSTALLATION OF AN AIR TANK ON A FLATBED TRAILER WAS NOT A COVERED ACTIVITY UNDER LABOR LAW 240(1); THE DISSENT ARGUED THE TRAILER WAS A “STRUCTURE” WITHIN THE MEANING OF THE STATUTE (FOURTH DEPT). ​

The Fourth Department, over a two-justice dissent, determined plaintiff was not engaged in an activity protected by Labor Law 240(1) when he was injured. Plaintiff, a diesel technician, was injured installing an air tank on a flatbed trailer at a recycling plant. The majority concluded the plaintiff was not involved in construction, renovation or alteration of the recycling plant. The two dissenting justices argued that the truck was a “structure” within the meaning of the Labor Law:

… [P]laintiff, a certified diesel technician, was injured while installing an air tank on a flatbed trailer on the premises of a recycling plant. Inasmuch as plaintiff was “engaged in his ‘normal occupation’ of repairing [vehicles] . . . , a task not a part of any construction project or any renovation or alteration to the [recycling plant] itself,” he was not engaged in a protected activity within Labor Law § 240 (1) at the time of the accident … .

From the dissent:

“Labor Law § 240 (1) provides special protection to those engaged in the ‘erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure’ ” … . “Over a century ago, the Court of Appeals made clear that the meaning of the word ‘structure,’ as used in the Labor Law, is not limited to houses or buildings . . . The Court stated, in pertinent part, that ‘the word “structure” in its broadest sense includes any production or piece of work artificially built up or composed of parts joined together in some definite manner’ ” … .. … [W]e [have] held that it was error to dismiss a Labor Law § 240 (1) claim because the crane upon which the plaintiff’s decedent was working fit “squarely within” the definition of a “structure” as set forth by the Court of Appeals … . We have also held that a plaintiff engaged in the conversion of a utility van into a cargo van “was engaged in a protected activity at the time of the accident” and that the van was “a structure” … . “Indeed, courts have applied the term ‘structure’ to several diverse items such as a utility pole with attached hardware and cables . . . , a ticket booth at a convention center . . . , a substantial free-standing Shell gasoline sign . . . , a shanty located within an industrial basement used for storing tools . . . , a power screen being assembled at a gravel pit . . . , a pumping station . . . , and a window exhibit at a home improvement show” … . Here, the flatbed trailer upon which plaintiff was working also fits “squarely within” the definition of a “structure” … . Stoneham v Joseph Barsuk, Inc., 2022 NY Slip Op 06583, Fourth Dept 11-18-22

Practice Point: Plaintiff was installing an air tank on a flatbed trailer when injured. Because the activity was not connected to a construction site, the majority concluded the accident was not covered under Labor Law 240(1). The two dissenters argued the flatbed trailer met the definition of a “structure” within the meaning of Labor Law 240(1).

 

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THE JUDGE IN THIS POST-DIVORCE PROCEEDING ENCOMPASSING FIVE APPEALS, WAS DEEMED TO HAVE MADE MANY RULINGS NOT SUPPORTED BY THE RECORD, IN PART BECAUSE NECESSARY HEARINGS WERE NOT HELD; THE IMPROPER RULINGS INCLUDED A RESTRICTION OF THE ATTORNEY-FOR-THE-CHILD’S (AFC’S) INTERACTIONS WITH THE CHILDREN (FOURTH DEPT).

The Fourth Department, reversing (and modifying) Supreme Court in this post-divorce proceeding encompassing several appeals, determined many of the court’s rulings were not supported by the record, due in part to the court’s failure to hold hearings. The court had imposed “house rules” for the children, refused to hold a Lincoln hearing, made contempt findings, modified father’s visitation, suspended father’s child support obligations, ordered family unification therapy, limited the attorney-for-the-child’s interactions with the children, and made several other rulings with which the appellate division found fault. The decision is far too detailed to fairly summarize here:

The mother and the AFC contend in appeal Nos. 1, 3, and 5 that the court erred in altering the terms of the parties’ custody and visitation arrangement and in imposing its house rules without conducting a hearing to determine the children’s best interests. We agree. We therefore modify the orders in appeal Nos. 1, 3, and 5 accordingly, and we reinstate the provisions of the agreement and remit the matter to Supreme Court for a hearing, including a Lincoln hearing, to determine whether modification of the parties’ custody and visitation arrangement is the children’s best interests.

Where there is “a dispute between divorced parents, the first concern of the court is and must be the welfare and the interests of the children” … , and “[a]ny court in considering questions of child custody must make every effort to determine what is for the best interest of the child[ren], and what will best promote [their] welfare and happiness” … . Consequently, visitation and “custody determinations should ‘[g]enerally’ be made ‘only after a full and plenary hearing and inquiry’ “… , “[u]nless there is sufficient evidence before the court to enable it to undertake a comprehensive independent review of” the children’s best interests … . Burns v Grandjean, 2022 NY Slip Op 06577, Fourth Dept 11-18-22

Practice Point: Here the Fourth Department took issue with many, many rulings made by Supreme Court in this post-divorce proceeding. The decision encompassed five appeals and too many issues to fairly summarize. Many of Supreme Court’s rulings were deemed to have been unsupported by record, in large part because necessary hearings were not held.

 

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THE JUDGE SHOULD NOT HAVE LOOKED BEYOND THE PLEADINGS IN CONSIDERING THE MOTION TO AMEND THE COMPLAINT; THE MOTION SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the court abused its discretion by denying the motion to amend the complaint:

“Leave to amend a pleading should be freely granted in the absence of prejudice to the nonmoving party where the amendment is not patently lacking in merit” ( … see CPLR 3025 [b]). “A court should not examine the merits or legal sufficiency of the proposed amendment unless the proposed pleading is clearly and patently insufficient on its face” … . Here, we conclude that the court erred in denying the motion inasmuch as there was no showing of prejudice arising from the proposed amendments … and the proposed amended complaint adequately asserts causes of action for slander of title … and removal of a cloud on title by reformation or cancellation of a deed … . In making its determination that the proposed causes of action were palpably insufficient, the court improperly looked beyond the face of the proposed pleading to the documents establishing the chain of title to plaintiffs’ properties and a 2011 deed from the Trustees of Grenell Island Chapel to defendant. DiGiacco v Grenell Is. Chapel, 2022 NY Slip Op 06576, Fourth Dept 11-18-22

Practice Point: Here Supreme Court abused its discretion in denying the motion to amend the complaint. The judge should not have looked beyond the pleading in deciding the motion to amend.

 

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