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DEFENDANTS DID NOT DEMONSTRATE ACTUAL NOTICE OF THE SUMMONS WAS NOT RECEIVED IN TIME TO DEFEND THE ACTION, AND DID NOT PROVIDE A REASONABLE EXCUSE FOR THE DEFAULT; DEFENDANTS’ MOTION TO VACATE THE DEFAULT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s did not demonstrate they did not receive notice of the summons in time to defend the action, and did not demonstrate a reasonable excuse for the default. Therefore defendants’ motion to vacate the default judgment should not have been granted:

Pursuant to CPLR 317, a defaulting defendant that was “served with a summons, other than by personal delivery” may be permitted to defend the action upon a finding by the court that the defendant did not personally receive notice of the summons in time to defend and has a meritorious defense … . Service on a limited liability company by delivery of the pleadings to the Secretary of State does not constitute personal delivery … . “The mere denial of receipt of the summons and complaint is not sufficient to establish lack of actual notice of the action in time to defend for the purpose of CPLR 317” … .

The affidavit … submitted by the … defendants in support of their motion, amounted to nothing more than a mere denial of receipt of the summons and complaint … . … [T]he … defendants did not contend that the address it had on file with the Secretary of State was incorrect … .

… [T]he … defendants’ mere denial of receipt of the summons and complaint, without more, was insufficient to demonstrate a reasonable excuse for its default pursuant to CPLR 5015(a)(1) … .Andrews v Wartburg Receiver, LLC, 2022 NY Slip Op 01980, Second Dept 2-23-22

Practice Point: A denial of the receipt of the summons and complaint, without more, does not demonstrate actual notice of the summons was not received in time to defend, and does not demonstrate a reasonable excuse for a defaulting.

 

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ALTHOUGH NONPARTY JP MORGAN DID NOT APPEAR IN THE UNDERLYING FORECLOSURE, IT COULD RECOVER SURPLUS FUNDS BASED UPON DEFENDANTS’ DEFAULT ON A CREDIT-LINE LOAN SECURED BY THE PROPERTY; JP MORGAN’S ACTION WAS NOT TIME-BARRED BECAUSE THE CREDIT-LINE DEBT WAS NEVER UNEQUIVOCALLY ACCELERATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined nonparty JP Morgan was entitled to the surplus funds remaining after a foreclosure sale based upon the defendants’ (Breuers’) default on a credit-line loan secured by the property. The defendants’ argument that the credit-line action was time-barred was rejected because the debt was never accelerated. Pursuant to RPAPL 1361, JP Morgan did not have to appear in the underlying foreclosure action to preserve a claim to the surplus funds:

Where, as here, “the acceleration of the maturity of a mortgage debt on default is made optional with the holder of the note and mortgage, some affirmative action must be taken evidencing the holder’s election to take advantage of the accelerating provision, and until such action has been taken the provision has no operation” … .

… [T]he Breuers failed to demonstrate … that the statute of limitations began to run on JP Morgan’s entire claim at the time of the Breuers’ initial default in 2010. A letter introduced into evidence during the hearing, in which JP Morgan informed the Breuers of its intent to accelerate the maturity of the loan and to commence foreclosure proceedings if the Breuers’ default was not cured, was not sufficient to accelerate the debt, because it did not reflect a “clear and unequivocal” election to accelerate … . …

… [T]he applicable statute which governs proceedings to recover surplus funds from a foreclosure sale, RPAPL 1361, did not require JP Morgan to appear in the action to foreclose the primary mortgage prior to the entry of the judgment of foreclosure and sale, in order to preserve its claim to surplus funds … . Wells Fargo Bank, N.A. v Breuer, 2022 NY Slip Op 02037, Second Dept 3-23-22

Practice Point: Although nonparty JP Morgan did not appear in the underlying foreclosure proceedings, it was entitled to the surplus funds remaining after the foreclosure sale based upon defendants’ default on a credit-line loan secured by the property.

 

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IF THE 2008 FORECLOSURE ACTION COMMENCED BY AEGIS WAS VALID, THE INSTANT FORECLOSURE ACTION BY A DIFFERENT BANK WOULD BE TIME-BARRED; PLAINTIFF BANK RAISED A QUESTION OF FACT BY SUBMITTING EVIDENCE THAT AEGIS DID NOT POSSESS THE NOTE AND MORTGAGE AT THE TIME THE 2008 ACTION WAS COMMENCED AND THEREFORE DID NOT HAVE STANDING TO FORECLOSE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff raised a question of fact whether Aegis, the company which started a foreclosure action in 2008, had standing to commence that action. Therefore there was a question of fact whether the Aegis action accelerated the debt and started the running of the six-year statute of limitations:

… [P]laintiff proffered the affidavit of Sherry Benight, a document control officer for Select Portfolio Servicing, Inc. (hereinafter SPS), the servicer and attorney-in-fact for the plaintiff. Based upon her review of SPS’s business records, Benight averred that pursuant to a pooling and servicing agreement (hereinafter PSA), dated January 1, 2006, the original note was transferred to SPS, in its capacity as servicer and attorney-in-fact, on May 14, 2008, and SPS has remained in physical possession of the note since that date. Benight attached to her affidavit copies of the PSA, and a mortgage loan schedule listing the subject loan, note, and mortgage. This evidence was sufficient to raise triable issues of fact as to whether Aegis lacked standing to commence the prior action, and whether this action is time-barred … . U.S. Bank N..A. v Nail, 2022 NY Slip Op 02034, Second Dept 3-23-22

Practice Point: If a bank did not possess the note and mortgage at the time it commenced a foreclosure action, the action is a nullity.

 

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THE COMPANY WHICH STAFFED THE HOSPITAL EMERGENCY ROOM DID NOT DEMONSTRATE THE PHYSICIANS WHO TREATED PLAINTIFF IN THIS MEDICAL MALPRACTICE ACTION WERE INDEPENDENT CONTRACTORS, AS OPPOSED TO EMPLOYEES FOR WHOM THE COMPANY WOULD BE VICARIOUSLY LIABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant NES, which staffed the hospital emergency room, should not have been granted summary judgment in this medical malpractice action. NES alleged the emergency room physicians who treated plaintiff (Perez) were independent contractors, not employees, and therefore NES was not vicariously liable for the acts or omissions of the physicians:

… [T]he evidence submitted in support of NES’s motion did not eliminate all triable issues of fact as to whether the emergency room physicians who treated Perez were independent contractors … . Although the physician agreement between NES and one of the physicians who treated Perez designated the physician an independent contractor, among other things, NES’s contract with Lutheran [the hospital] raises triable issues of fact regarding NES’s involvement in the training of the physicians with whom it contracted and the extent of NES’s obligation to participate in quality assurance and peer review activities and implement quality improvement plans … . Additionally, NES failed to submit any evidence regarding how the physicians with whom it contracted were paid … . Perez v NES Med. Servs. of N.Y., P.C., 2022 NY Slip Op 02031, Second Dept 3-23-22

Practice Point: In this medical malpractice action, the plaintiff sued the company which staffed the emergency room under a contract with the hospital. The staffing company moved for summary judgment arguing the treating physicians were independent contractors, not employees, and, therefore, the company was not vicariously liable for the acts or omissions of the physicians. The motion should not have been granted. The decision lays out the criteria for the independent-contractor versus employee analysis.

 

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BRADY MATERIAL WAS WITHHELD, CROSS-EXAMINATION ABOUT A COMPLAINANT’S INCONSISTENT STATEMENTS WAS NOT ALLOWED; THE INQUIRY AFTER A POLLED JUROR INDICATED SHE MAY NOT HAVE AGREED WITH THE VERDICT WAS INSUFFICIENT (SECOND DEPT).

The Second Department, vacating the assault second conviction and dismissing the count, and reversing the gang assault and assault first convictions, determined: (1) Brady material was withheld by redacting the name of a 911 caller who indicated defendant was not involved in the assault; (2) cross-examination of a police officer about a discrepancy between a complainant’s testimony and a statement attributed to the complainant in a police report should have been allowed; and (3) the judge should have inquired further after a juror indicated she “was not sure” about some of the convictions when the jury was polled:

While the contents of the 911 call may have provided some clues as to the identity of the caller, the defendant should not be forced to guess as to the identity of this caller. In addition, we are satisfied that there was a reasonable possibility that disclosure of the caller’s identity and contact information would have led to evidence that would have changed the result of the proceedings … . …

… [T]he court erred in precluding defense counsel from questioning the police witness about the contents of the report and the alleged prior inconsistent statement of complainant one …  . …

… [W]hen the jury was polled and asked if the verdict was theirs, juror number nine stated, “Um, I’m not sure, with some, but most of them, yes.” Although the Supreme Court thereafter inquired of juror number nine if the verdict announced to the court was her own, it did so by asking her “is that a yes or a no” in the presence of the remaining jurors, despite evidence before the court suggesting that juror number nine may have succumbed to pressure to vote with the majority even though she did not agree with the verdict as to certain counts. The court’s inquiry was therefore not sufficient … . People v Ramunni, 2022 NY Slip Op 02022, Second Dept 3-23-22

Practice Point: Here Brady material, the identity of a 911 caller, was withheld, cross-examination about inconsistent statements attributed to a complainant was not allowed, and a juror who, when polled, said she may not have agreed with verdict was not sufficiently questioned by the judge. One count of the indictment was dismissed, and a new trial was ordered on the gang assault and assault first counts.

 

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DEFENDANT WAS DEPRIVED OF HIS RIGHT TO CONFRONT A WITNESS AGAINST HIM AND WAS PENALIZED FOR REJECTING THE JUDGE’S PLEA OFFER AND GOING TO TRIAL; THE ISSUES WERE NOT PRESERVED BUT WERE CONSIDERED IN THE INTEREST OF JUSTICE (SECOND DEPT).

The Second Department, vacating one conviction and reducing the sentence for another, exercising its interest of justice jurisdiction over the unpreserved errors, determined defendant had been deprived of his right to confront a witness against him and the judge imposed a harsher sentence because defendant exercised his right to a trial:

… [T]he defendant was not afforded the opportunity to cross-examine a DMV employee who was directly involved in sending out the suspension notices or who had personal familiarity with the mailing practices of the DMV’s central mail room or with the defendant’s driving record … . Thus, the testimony of the DMV employee was improperly admitted in order to establish an essential element of the crime of aggravated unlicensed operation of a motor vehicle in the third degree in violation of the defendant’s right of confrontation … . …

… [P]rior to trial, the Supreme Court made its own plea offer to the defendant of an aggregate term of 1½ years of imprisonment to be followed by a period of 2 years of postrelease supervision in full satisfaction of the 16-count indictment … .The court … stated to the defendant: “You should understand the way I operate is as follows: Before trial with me you get mercy; after trial you get justice” … . The defendant declined the plea offer and proceeded to trial, after which he was acquitted of the top counts of criminal sale of a controlled substance in the third degree and criminal possession of a controlled substance in the third degree. The court then sentenced the defendant on the conviction of criminal possession of a controlled substance in the fourth degree to a term of 5 years of imprisonment to be followed by a period of postrelease supervision of 2 years. People v Ellerbee, 2022 NY Slip Op 02016, Second Dept 3-23-22

Practice Point: Here the DMV employee who had personal knowledge of the mailing of the license suspension notice to defendant and the defendant’s driving record apparently was not called as a witness. Therefore defendant was deprived of his right to confront the witness about an essential element of the offense. In addition, the judge imposed a much harsher sentence than that offered as part of a plea bargain. The judge thereby penalized the defendant because he chose to go the trial. Both of these errors were not preserved for appeal but were considered in the interest of justice.

 

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DEFENDANTS’ PARTICIPATION IN A SETTLEMENT CONFERENCE DID NOT WAIVE THEIR RIGHT TO MOVE TO DISMISS THE FORECLOSURE ACTION AS ABANDONED PURSUANT TO CPLR 3215 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the foreclosure complaint should have been dismissed as abandoned because the plaintiff did not move for a default judgment within a year (CPLR 3215(c)). The fact that the defendants participated in a settlement conference did not waive their right to move to dismiss the complaint as abandoned:

… [T]he plaintiff failed to take steps to initiate proceedings for the entry of a default judgment against the defendants within one year after their default in the action, and has set forth no reasonable excuse for said failure … .

Contrary to the plaintiff’s contention, the defendants did not waive their right to seek dismissal pursuant to CPLR 3215(c). The defendants’ participation in a settlement conference did not result in a waiver of their right to seek dismissal pursuant to CPLR 3215(c) since they did not actively litigate the action before the Supreme Court or participate in the action on the merits … . Moreover, the defendants’ failure to move to vacate their default in answering the complaint or appearing in this action did not operate as a waiver of their right to seek dismissal of the complaint pursuant to CPLR 3215(c) … . PennyMac Corp. v Weinberg, 2022 NY Slip Op 02010, Second Dept 3-23-22

Practice Point: Participation in a settlement conference does not waive a defendant’s right to move to dismiss a foreclosure action as abandoned based on plaintiff bank’s failure to move for a default judgment within a year.

 

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CIVIL SERVICE LAW 75-B SERVES THE SAME PURPOSE AS THE EMPLOYMENT ANTI-RETALIATION STATUTES IN THE NEW YORK STATE AND NEW YORK CITY HUMAN RIGHTS LAW; EVEN THOUGH PLAINTIFF HAD RESIGNED AT TIME OF THE SUIT, HIS RETALIATION CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s retaliation claim pursuant to Civil Service Law 75-b should not have been dismissed. Plaintiff, an employee of the NYC Department of Buildings (DOB), alleged he was denied a job because of a poor reference allegedly made in retaliation for his reporting a conflict of interest to the City’s Department of Investigation. At the time plaintiff brought this action he had retired, but his retirement did not preclude his Civil Service Law cause of action:

… [W]e reject the motion’s court determination that Civil Service Law § 75-b does not apply to actions taken by a public employer after an employee has resigned. Civil Service Law § 75-b prohibits a public employer from dismissing or taking any “other disciplinary or other adverse personnel action against a public employee regarding the employee’s employment” because the employee discloses information of either (1) a violation of rule or law, which presents a substantial and specific danger to public health and safety, or (2) improper governmental action … . Section 75-b serves a purpose similar to that of other anti-retaliation statutes, including the New York State Human Rights Law (Executive Law § 296) and the New York City Human Rights Law (Administrative Code of City of NY § 8-107), in that they “‘remediat[e] adverse employment actions which, if allowed, would undermine important public policy'” … . Thus, an analogous reading of the term “employee” under Civil Service Law § 75-b to include former employees alleging post-employment retaliation for reports made in the course of their prior employment, is appropriate … . Moreover, blacklisting and providing negative references to an individual’s prospective employers in retaliation for prior reports of government misconduct may constitute adverse personnel action under the statute, in the same way that the State Human Rights Law has been found to cover such acts … . DaCosta v New York City Dept. of Bldgs., 2022 NY Slip Op 01963, First Dept 3-22-22

Practice Point: Civil Service Law 75-b serves the same purpose as the employment anti-retaliation statutes in the New York State and New York City Human Rights Law. The NYC employee’s Civil Service Law 75-b cause of action, alleging he was given a poor reference in retaliation for reporting a conflict of interest, should not have been dismissed, even though he had resigned at the time the suit was filed.

 

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PLAINTIFFS’ LEGAL MALPRACTICE ACTION SHOULD NOT HAVE BEEN DISMISSED; PLAINTIFFS’ 2010 BREACH OF A CONDOMINIUM-SALE CONTRACT ACTION WAS DISMISSED ON STATUTE OF FRAUDS GROUNDS; WHEN A WRITTEN CONTRACT SUBSEQUENTLY SURFACED, DEFENDANT ATTORNEYS DID NOT MOVE TO RENEW, VACATE OR APPEAL THE ORDER (FIRST DEPT).

The First Department, reversing Supreme Court, determined the legal malpractice action should not have been dismissed. Plaintiffs, apparently represented by defendant attorneys, brought a 2010 action for breach of a condominium-sale contract which was dismissed on statute of frauds grounds (no written contract). When the written contract for the condominium sale surfaced, the defendants did not move to renew, vacate or appeal the order:

Regardless of whether the dismissal on statute of frauds grounds was ultimately correct, defendants should have known that the condominium claims, which involved the sale of real property, would be subject to the statute of frauds and thus would require reference to a written contract (General Obligations Law § 5-703[2]); that the statute of frauds could be raised and adjudicated on a motion to dismiss under CPLR 3211(a)(5); and that a dismissal under the statute of frauds would be on the merits, thus precluding any future claim for damages on the sale of the condominium … . As a result, with respect to the condominium sale, it cannot be determined as a matter of law that plaintiffs failed to plead a claim for legal malpractice based upon defendants’ actions in litigating the breach of contract claim. Komolov v Popik, 2022 NY Slip Op 01966, First Dept 3-22-22

Practice Point: The defendant attorneys apparently represented plaintiffs in their 2010 action for breach of a condominium-sale contract. The 2010 action was dismissed on statute of frauds grounds. Subsequently a written contract surfaced and defendant attorneys did not move to renew, vacate or appeal the order. Plaintiffs’ legal malpractice complaint should not have been dismissed.

 

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DEFENDANT VIDEO-HOSTING SERVICE, VIMEO, DID NOT BREACH ITS CONTRACT WITH PLAINTIFF BY REMOVING FIVE VIDEOS POSTED BY PLAINTIFF CLAIMING CHILDHOOD VACCINATION LEADS TO AUTISM; THE COMMUNICATIONS DECENCY ACT AUTHORIZES INTERNET PROVIDERS TO REMOVE “OBJECTIONABLE” MATERIAL (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined defendant video-hosting service, Vimeo, did not breach its contract with plaintiff by removing five videos posted by plaintiff which Vimeo concluded made false or misleading claims about vaccine safety. The videos claimed that childhood vaccines lead to autism:

This appeal concerns whether a video-hosting service may be held liable for its decision to remove videos that it determines violate its terms of service. Defendant Vimeo, Inc. prohibits users from posting videos that make false or misleading claims about vaccine safety. It removed five videos, posted by a commercial user, because the videos claimed that childhood vaccination leads to autism. The user sued, claiming that Vimeo had breached the parties’ contract. The motion court held that liability was precluded by section 230 of the Communications Decency Act. We agree. Section 230 prevents lawsuits against Internet service providers for their good-faith decisions to remove content that they consider objectionable. If service providers had to justify those decisions in court, or if plaintiffs could circumvent immunity through unsupported accusations of bad faith, section 230 would be a dead letter. This is as true for commercial users as for any other plaintiff. Therefore, we affirm dismissal of the complaint.

… [S]ection 230(c)(2) prohibits holding an interactive computer service provider liable for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider . . . considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable” (47 USC § 230[c][2][A]). Word of God Fellowship, Inc. v Vimeo, Inc., 2022 NY Slip Op 01978, First Dept 3-22-22

Practice Point: The Communications Decency Act allows Internet providers to take down posted material the providers deem “objectionable.” Here a video-hosting service, Vimeo, took down five videos posted by plaintiff which claimed childhood vaccination leads to autism. Plaintiff’s breach of contract action was dismissed.

 

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