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THE MILD PENALTY IMPOSED BY THE ARBITRATOR ON AN EMPLOYEE WHO SEXUALLY HARASSED A FELLOW EMPLOYEE VIOLATED PUBLIC POLICY; MATTER REMITTED FOR IMPOSITION OF A PENALTY BY A NEW ARBITRATOR (THIRD DEPT).

The Third Department determined the mild penalty imposed by the arbitrator in this place-of-employment sexual harassment case violated public policy. The matter was remitted for imposition of a penalty by a different arbitrator. The employee, Dominie, committed several egregious acts of sexual harassment targeting another employee which led to his pleading guilty to harassment second degree. The arbitrator reinstated Dominie’s employment without conditions:

… [T]he situation here does not involve a single act of misconduct as in Barnard College. In defined contrast, we have a series of four separate, escalating and outrageous sexual harassment incidents. The events are particularly troublesome considering that Dominie engaged in annual sexual harassment training since 2013 and, when confronted by his supervisors after the two January 2017 incidents, promised not to re-offend. The events that followed were even more egregious and rise to the level of criminal conduct, as memorialized in Dominie’s guilty plea to the harassment charge. Given the extremely inappropriate nature of Dominie’s conduct, we conclude that the arbitrator’s decision violates public policy. The award fails to account for the rights of other employees to a non-hostile work environment and conflicts with the employer’s obligation to eliminate sexual harassment in the workplace … . The fact that the victimized coworker no longer worked in the office is hardly a mitigating factor. Nor is the penalty consistent with the arbitrator’s “significant concern” that Dominie failed to acknowledge his own wrongdoing. As such, we find that Supreme Court properly vacated the award as violative of the public policy prohibiting sexual harassment. We also conclude that the court was authorized to remit the matter to a different arbitrator for the imposition of a new penalty (see CPLR 7511 [d]). Matter of New York Off. for People with Dev.al Disabilities (Civil Serv. Empls. Assn., Inc., Local 1000, AFSCME, AFL-CIO), Third Dept 4-29-21

 

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THE ACTION CONTESTING THE AMENDMENT TO THE BY-LAWS OF A NOT-FOR-PROFIT CORPORATION WHICH OWNS RECREATIONAL LAND AND COLLECTS DUES FROM LOT OWNERS MUST BE BROUGHT AS AN ARTICLE 78 PROCEEDING, NOT AN ACTION FOR A DECLARATORY JUDGMENT; THE ACTION IS THEREFORE TIME-BARRED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the amendment to the by-laws defendant not-for-profit corporation which owns land underneath a man-made lake must be contested in an Article 78 action, not a declaratory judgment action. Therefore the four-month Article 78 statute of limitations applied and the action was time-barred. The underlying dispute involved the assessment of annual dues for lots which had been exempt from dues. Plaintiffs are the owners of those lots:

Supreme Court concluded that the action being challenged was a legislative act, which cannot be challenged in a CPLR article 78 proceeding but must be maintained in a declaratory judgment action. However, the cases addressing legislative acts deal with challenges to “governmental activity,” rather than the activity of nonpublic corporations … . This is an important distinction as the rule prohibiting the use of CPLR article 78 proceedings to challenge acts of legislative bodies “is derived from the separation-of-powers doctrine,” and so “has no application to the quasi-legislative acts of administrative agencies” … . Similarly, it does not apply to the actions or decisions of nonpublic corporations. * * *

Whether defendant’s alleged interest in plaintiffs’ property is based on the imposition of restrictive covenants or the possibility of a lien if plaintiffs fail to pay dues on multiple lots, any such alleged interest would be based on the amended bylaws. Accordingly, though all of plaintiffs’ causes of action are couched in declaratory judgment language, they can be distilled to challenges to defendant’s enactment of the amended bylaws that could have been raised in a CPLR article 78 proceeding and are therefore subject to a four-month statute of limitations … . Indeed, other courts have held that a challenge to a corporation’s amendment of its bylaws must be raised via a CPLR article 78 proceeding commenced within four months of such amendment … . Doyle v Goodnow Flow Assn., Inc., 2021 NY Slip Op 02580, Third Dept 4-29-21

 

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THE DEPARTMENT OF FINANCIAL SERVICES’ AMENDMENT TO AN INSURANCE REGULATION DESIGNED TO PROTECT CONSUMERS OF LIFE INSURANCE AND ANNUITY PRODUCTS IS VOID FOR VAGUENESS (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Egan, reversing Supreme Court, determined the Department of Financial Services’ (DFS’s) amendment to an Insurance Regulation was void for vagueness:

The amendment was promulgated to address concerns with respect to the growing complexities involved with life insurance and annuity products, the corresponding need for consumers to increasingly rely on the advice of professionals in order to comprehend the widening market of products available and to mitigate abuses with respect to the compensation of agents and brokers (hereinafter collectively referred to as producers [see 11 NYCRR 224.3 (c)]) who have incentive to manipulate consumers into purchasing financial products that result in higher commissions but ultimately fail to meet their needs. * * *

… [W]hile the consumer protection goals underlying promulgation of the amendment are laudable, as written, the amendment fails to provide sufficient concrete, practical guidance for producers to know whether their conduct, on a day-to-day basis, comports with the amendment’s corresponding requirements for making recommendations and compiling and evaluating the relevant suitability information of the consumer … . Although the amendment provides certain examples of what a recommendation does not include (i.e., “general factual information to consumers, such as advertisements, marketing materials, general education information” and “use of . . . interactive tool[s]” (11 NYCRR 224.3 [e] [2]), the remaining definitional language is so broad that it is difficult to discern what statements producers could potentially make that would not be reasonably interpreted by the consumer to constitute advice regarding a potential sales transaction and therefore fall within the purview of the amendment (see 11 NYCRR 224.3 [e] [1], [2]). Matter of Independent Ins. Agents & Brokers of N.Y., Inc. v New York State Dept. of Fin. Servs., 2021 NY Slip Op 02574, Third Dept 4-29-21

 

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PLAINTIFF WAS STRUCK BY A PIECE OF SHEETROCK, THE LADDER HE WAS STANDING ON SHOOK, AND PLAINTIFF FELL TO THE GROUND; THERE WAS NO NEED TO PROVE THE LADDER WAS DEFECTIVE; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON HIS LABOR LAW 240 (1) CAUSE OF ACTION SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment on his Labor Law 240 (1) cause of action should have been granted, Plaintiff stood on an A-frame ladder while attempting to put up a piece of sheetrock on the ceiling. His arm which was holding up the sheetrock became tired, the sheetrock fell striking plaintiff’s head and then the ladder shook and moved and he fell to the ground. There was no need to prove the ladder was defective:

The undisputed facts establish that defendants violated Labor Law § 240(1) by failing to properly secure the ladder against movement or slippage and to ensure that it remained steady and erect … . Defendants failed to guard against plaintiff’s risk of falling from a ladder while using one hand over his head to hold the sheetrock in place and the other hand over his head to operate a drill … .

Because we find that the ladder did not provide adequate protection, it is irrelevant that it appeared “very sturdy” to plaintiff. A plaintiff is not required to demonstrate that a ladder is defective in order to establish prima facie entitlement to summary judgment under Labor Law § 240 (1) … . Ping Lin v 100 Wall St. Prop. L.L.C., 2021 NY Slip Op 02605, First Dept 4-29-21

 

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PETITIONER’S APPLICATION FOR ACCESS TO RESPONDENT’S NEIGHBORING PROPERTY PURSUANT TO RPAPL 881 SHOIULD NOT HAVE BEEN GRANTED; MATTER REMITTED TO DETERMINE WHETHER LESS INTRUSIVE METHODS FOR ROOF PROTECTION OF RESPONDENT’S PROPERTY COULD BE USED TO FACILITATE FACADE WORK ON PETITIONER’S BUILDING (FIRST DEPT).

The First Department, reversing Supreme Court, determined all the relevant factors had not been considered when granting petitioner’s application for access to respondent’s neighboring property to install roof and terrace protection related to work on the facade of petitioner’s building. The matter was remitted for a determination whether less intrusive methods of roof protection could be used:

Supreme Court improvidently granted petitioner’s application for access to respondent’s neighboring property in order to effectuate repairs to petitioner’s property pursuant to RPAPL 881. “Although the determination of whether to award a license fee is discretionary, in that RPAPL 881 provides that a ‘license shall be granted by the court in an appropriate case upon such terms as justice requires,’ the grant of licenses pursuant to RPAPL 881 often warrants the award of contemporaneous license fees” … . This is because “‘the respondent to an 881 petition has not sought out the intrusion and does not derive any benefit from it. . .Equity requires that the owner compelled to grant access should not have to bear any costs resulting from the access'” … . Furthermore, “[c]ourts are required to balance the interests of the parties and should issue a license when necessary, under reasonable conditions, and where the inconvenience to the adjacent property owner is relatively slight compared to the hardship of his neighbor if the license is refused” … .

In granting access, Supreme Court permitted petitioner to designate a controlled access zone and to place roof protection on respondent’s terraces. The roof protection petitioner seeks to install is placed directly on top of the floors of respondent’s terraces and according to respondent would completely prohibit the tenants of the terraced apartments from using any portion of their terraces. Prior to the granting petitioner’s application, Supreme Court must consider and resolve the issue as to whether there are less intrusive and equally effective methods of roof protection … . Matter of 400 E57 Fee Owner LLC v 405 E. 56th St. LLC, 2021 NY Slip Op 02587, First Dept 4-29-21

 

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THE PROCESS SERVER IN THIS FORECLOSURE ACTION MET THE DUE DILIGENCE REQUIREMENTS OF CPLR 308 (4); THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED FOR LACK OF PERSONAL JURISDICTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ motion to dismiss for lack of personal jurisdiction should not have been granted. The process server for the bank in this foreclosure action satisfied the due diligence requirement for service pursuant to CPLR 308 (4):

There were four attempts to serve the defendants at their residence at times when they could reasonably have been expected to be found there, including attempts on a late weekday evening, an early weekday morning, a weekend evening, and a weekday afternoon … . As the plaintiff established by a preponderance of the credible evidence that personal jurisdiction was acquired over the defendants, the Supreme Court should have denied the defendants’ motion to dismiss the complaint insofar as asserted against them … and decided the plaintiff’s motion, inter alia, for summary judgment on the merits instead of, in effect, denying it as academic. Wilmington Trust Co. v Gewirtz, 2021 NY Slip Op 02562, Second Dept 4-28-21

 

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SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DETERMINED DEFENDANT IN THIS FORECLOSURE ACTION WAIVED DISMISSAL FOR FAILURE TO TIMELY MOVE FOR A DEFAULT JUDGMENT BECAUSE THE ISSUE WAS DISPOSITIVE AND NEVER LITIGATED; THE BANK’S FAILURE TO TIMELY MOVE FOR A DEFAULT JUDGMENT PURSUANT TO CPLR 3215 (C) REQUIRED DISMISSAL OF THE BANK’S ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff-bank’s failure to move for a default judgment within one year required dismissal of the complaint pursuant to CPLR 3215 (c). The court noted that Supreme Court should not have, sua sponte, held defendant waived dismissal pursuant to CPLR 3215 (c) because the issue had never been litigated:

Although the Supreme Court keenly observed that the defendants had filed a notice of appearance in the first action in October 2014, it should not have, sua sponte, determined that such notice of appearance constituted a waiver of their right to seek dismissal of the complaint pursuant to CPLR 3215(c), as the parties never litigated the issue of waiver. Since that branch of the defendants’ cross motion which was pursuant to CPLR 3215(c) to dismiss the complaint had “‘dispositive import'” … , the court should have notified the parties of the waiver issue and afforded them an opportunity to be heard prior to determining the cross motion on a ground neither side argued. …

“The language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned” … . “‘Failure to take proceedings for entry of judgment may be excused, however, upon a showing of sufficient cause,’ which requires the plaintiff to ‘demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action'” … . Wells Fargo Bank v Aucapina, 2021 NY Slip Op 02561, Second Dept 4-28-21

 

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AFTER WALKING OVER A TRAP DOOR, PLAINTIFF STEPPED BACK AND FELL THROUGH THE OPEN DOOR; DEFENDANT OUT-OF-POSSESSION LANDLORD DEMONSTRATED IT DID NOT HAVE ACTUAL OR CONSTRUCTIVE NOTICE OF THE DANGEROUS CONDITION (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined that, although the lease did not unambiguously insulate the out-of-possession landlord from liability for plaintiff’s fall through an open trap door in a deli, the landlord demonstrated it did not have actual or constructive notice of the dangerous condition. Apparently plaintiff walked over the closed trap door but then stepped back and fell through the open door:

… [T]he owner failed to demonstrate, prima facie, that it was an out-of-possession landlord that did not have a contractual duty under the lease to maintain and repair the subject trapdoor … . “‘[W]hile the meaning of a contract is ordinarily a question of law, when a term or clause is ambiguous and the determination of the parties’ intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact'” … . Although paragraph 46 of the rider to the lease effectively limits the owner’s responsibility to “structural portions” of the deli, that phrase is only partially described in the lease, and is not so clear and unambiguous as to be subject only to the interpretation that it excludes the trapdoor … .

However, the owner established, prima facie, that it did not create the allegedly dangerous condition or have actual or constructive notice of its existence … . At his deposition, the plaintiff testified that he walked over the trapdoor, and then “seconds” later when he stepped back, he fell through a hole caused by the open trapdoor. Accordingly, even though the owner did not present evidence of the last time it inspected the trapdoor, the plaintiff’s testimony establishes lack of constructive notice as a matter of law … . In opposition, the plaintiff failed to raise a triable issue of fact. Although the owner’s representative testified at his deposition that he was aware of the existence and location of the trapdoor and went into the deli once a month to collect rent, a general awareness that customers could fall through an open trapdoor in the aisle of the deli is legally insufficient to constitute constructive notice of the particular condition that caused the plaintiff’s accident … . Vaughan v Triumphant Church of Jesus Christ, 2021 NY Slip Op 02560, Second Dept 4-28-21

 

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IN A FORECLOSURE ACTION A DISMISSAL FOR LACK OF STANDING IS NOT A DISMISSAL ON THE MERITS RE: RES JUDICATA; A SECOND DISCONTINUANCE WHICH IS NOT ON NOTICE IS NOT A DISCONTINUANCE WITH PREJUDICE RE: CPLR 3217 (C) (SECOND DEPT).

The Second Department noted that a foreclosure action dismissed for lack of standing is not a dismissal on the merits. The court further noted that a second discontinuance is not with prejudice, i.e., on the merits, unless it is on notice:

“‘Under the doctrine of res judicata, a final disposition on the merits bars litigation between the same parties of all other claims arising out of the same transaction or out of the same or related facts, even if based upon a different theory involving materially different elements of proof'” … . However, “a dismissal premised on lack of standing is not a dismissal on the merits for res judicata purposes” … .. Here, the instant action was not barred by the doctrine of res judicata because the 2014 action was dismissed for, inter alia, lack of standing, and that does not qualify as a dismissal on the merits for res judicata purposes … .

CPLR 3217(c) provides that “[u]nless otherwise stated in the notice, stipulation or order of discontinuance, the discontinuance is without prejudice, except that a discontinuance by means of notice operates as an adjudication on the merits if the party has once before discontinued by any method an action based on or including the same cause of action.” The dismissal of the second action after a previous discontinuance only operates as an adjudication on the merits if that second discontinuance is achieved by means of notice … . Here, after the 2010 action was discontinued by means of notice, the 2014 action was dismissed after the defendant’s motion to dismiss was granted. Since the 2014 action was not discontinued by means of notice, CPLR 3217(c) is inapplicable to this instant action. US Bank Trust, N.A. v Loring, 2021 NY Slip Op 02559, Second Dept 4-28-21

 

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ALTHOUGH THE COMPLAINT STATED CAUSES OF ACTION FOR NEGLIGENT MISREPRESENTATION AND FRAUD, THE JUDICIARY LAW 487 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE IT WAS NOT ALLEGED THE DECEIT OCCURRED DURING A JUDICIAL PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant-attorney’s motion to dismiss the Judiciary Law 487 cause of action should have been granted because the deceit or fraud was not alleged to have occurred during a judicial proceeding. Plaintiff alleged the misrepresentation concerned a guaranty for payment on a note related to the sale of plaintiff’s business:

Supreme Court should have granted that branch of the defendant’s motion which was to dismiss the fourth cause of action. “[A] Judiciary Law § 487 cause of action requires that the alleged deceit occurred during a judicial proceeding in which the plaintiff was a party” … . Here, the complaint failed to allege that the deceit occurred during a judicial proceeding or before any court … . Pszeniczny v Horn, 2021 NY Slip Op 02553, Second Dept 4-28-21

 

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