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THE PROFESSIONAL LIABILITY INSURANCE POLICYHOLDERS (DOCTORS), NOT THE POLICYHOLDERS’ EMPLOYER WHICH PAID THE PREMIUMS, ARE ENTITLED TO THE PAYMENTS ASSOCIATED WITH THE CONVERSION OF THE MUTUAL INSURANCE COMPANY TO A STOCK INSURANCE COMPANY (SECOND DEPT).

The Second Department, in a full-fledged decision by Justice Scheinkman, reversing Supreme Court, determined the policyholders (doctors), not the policyholders’ employer which paid the professional liability insurance premiums, were entitled the payments associated with the conversion of a mutual insurance company to a stock insurance company. The Second Department further held that the doctors were not unjustly enriched from the standpoint of their employer because the payments to the doctors were not being made by the employer:

We agree with the Third and Fourth Departments that Insurance Law § 7307 makes clear that the policyholder is entitled to the consideration … . Thus, the defendants [doctors] are “legally entitled to receive the cash consideration” … .

In reaching this conclusion, we also note that the First Department … did not express any contrary views as to the import of the statute, the conversion plan, and the DFS [New York Department of Financial Services] approval decision. Rather, the First Department’s determination to award the cash consideration to the employer medical group was predicated entirely upon the theory of unjust enrichment … . Maple Med., LLP v Scott, 2020 NY Slip Op 07366, Second Dept 12-9-20

 

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THE NOT-FOR-PROFIT CORPORATION LAW CREATES A PRIVATE RIGHT OF ACTION AGAINST AN EMPLOYER FOR RETALIATION FOR WHISTLEBLOWING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff had stated a cause of action pursuant to Not-For-Profit Corporation Law 715-b alleging her employer retaliated against her for reporting two instances of improper fundraising by her employer. The question on appeal was whether Not-For-Profit Corporation Law 725-b gave rise to a private right of action:

This inquiry involves three factors: “‘(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme'” … . …

Not-For-Profit Corporation Law § 715-b is intended to protect, among others, employees who in good faith report any action or suspected action taken by or within the corporation that is illegal, fraudulent, or in violation of any adopted policy of the corporation from retaliation or adverse employment consequences. Here, the plaintiff is one of the class for whose particular benefit the statute was enacted … . Moreover, the legislative purpose is promoted by holding corporations accountable by allowing whistleblowers to commence civil actions to recover damages for retaliation or adverse employment consequence … . …

… [W]here there is no regulatory agency to otherwise enforce compliance with a statute, “the recognition of a private right of action would do no harm” … .

… [T]here is no regulatory agency to enforce compliance with Not-For-Profit Corporation Law § 715-b on behalf of an employee … . Ferris v Lustgarten Found., 2020 NY Slip Op 07357, Second Dept 12-9-20

 

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THE LOST NOTE AFFIDAVITS SUBMITTED BY THE PLAINTIFF IN THIS FORECLOSURE ACTION WERE INVALID; PLAINTIFF’S MOTION FOR LEAVE TO ENTER A DEFAULT JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank’s motion to leave to enter a default judgment in this foreclosure action should not have been granted. The lost note affidavits were invalid:

Pursuant to UCC 3-804, “[t]he owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his [or her] own name and recover from any party liable thereon upon due proof of his [or her] ownership, the facts which prevent his [or her] production of the instrument and its terms.”

Here, although the plaintiff submitted sufficient evidence establishing that it was the owner and holder of the note and establishing the note’s terms, the lost note affidavits submitted by the plaintiff failed to establish the facts that prevent the production of the original note … . Neither affidavit identifies who conducted the search for the lost note or explains “when or how the note was lost” … . Capital One, N.A. v Gokhberg, 2020 NY Slip Op 07345, Second Dept 12-9-20

 

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THE WIFE’S COUNTERCLAIM FOR ADULTERY IN THIS DIVORCE ACTION, WHICH, IF PROVEN, WOULD HAVE HAD SUBSTANTIAL FINANCIAL CONSEQUENCES FOR THE HUSBAND, SHOULD HAVE BEEN DISMISSED; THE HUSBAND AND THE WOMAN WHO WAS THE SUBJECT OF THE WIFE’S ALLEGATIONS SUBMITTED AFFIDAVITS DENYING ANY SEXUAL RELATIONSHIP; THE WIFE’S AFFIDAVIT WAS BASED ENTIRELY ON PROXIMITY–THE WOMAN WAS THE FAMILY’S BABYSITTER–AND WAS OTHERWISE UNSUPPORTED (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Dillon, determined the husband’s motion for summary judgment dismissing the wife’s adultery counterclaim should have been granted in this divorce action. Whether the husband committed adultery was an important issue because of the significant financial consequences agreed to in the post-nuptial agreement, including the award to the wife of 80% of the husband’s future gross income and 80% of all marital assets. The wife alleged the husband committed adultery with the family’s babysitter, R.I. The husband and R.I. submitted affidavits denying any sexual relationship:

… [T]he wife’s focus on the husband’s “opportunity” to commit adultery amounts to the husband’s mere proximity to R.L. at various times and places. Clearly, R.L. was the family babysitter and, in that capacity, could be expected to be in the husband’s presence on many occasions, including occasional overnight stays. The wife offers no facts or evidence — whether objective, inferential, or otherwise — of any adulterous conduct between the husband and R.L. beyond their mere physical proximity to one another. The wife’s affidavit provides no dates, describes no suspicious circumstance with any detail or particularity, identifies no particular relevant social event, and identifies no witness who observed conduct or heard comments between the husband and R.L. that might inferentially support a claim of adultery against the husband. There is no investigator, no photograph, and no suspicious documents, texts, emails, or social media posts. Put another way, the wife’s opposition to summary judgment amounts to mere unilateral speculation, conjecture, guess, and surmise stemming from the husband’s and R.L.’s mere proximity to one another, without anything more. The wife’s conclusory affidavit cannot substitute for admissible evidence even recognizing, as we do, that the adultery counterclaim is premised upon circumstantial evidence and the court’s role in determining summary judgment is that of issue-finding … . Agulnick v Agulnick, 2020 NY Slip Op 07335, Second Dept 12-9-20

 

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THE CRITERIA FOR THE HARSH REMEDY OF ATTACHMENT WERE NOT MET (SECOND DEPT).

The Second Department determined the criteria for an order of attachment were not met. The court noted that suspicion of an intent to defraud and the removal, assignment or disposition of property is not enough to warrant the harsh remedy of attachment:

CPLR 6212(a) provides that, on a motion for an order of attachment, “the plaintiff shall show, by affidavit and such other written evidence as may be submitted, that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist, and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff.” “Attachment is considered a harsh remedy and CPLR 6201 is strictly construed in favor of those against whom it may be employed” … .

The plaintiffs failed to make an adequate evidentiary showing that each of the defendants is a nondomiciliary residing without the state (see CPLR 6201[1]; see also General Construction Law § 35). Moreover, the plaintiffs’ contention that the defendants were attempting to defraud creditors or frustrate enforcement of a possible judgment against them (see CPLR 6201[3]) “was devoid of evidentiary support” … . “The fact that the affidavits in support of an attachment contain allegations raising a suspicion of an intent to defraud is not enough. It must appear that such fraudulent intent really existed in the defendant’s mind” … , and “the mere removal, assignment or other disposition of property is not grounds for attachment” … . 651 Bay St., LLC v Discenza, 2020 NY Slip Op 07331, Second Dept 12-9-20

 

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THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s summary judgment motion should not have been granted because the bank did not demonstrate compliance with the notice requirements of RPAPL 1304:

“In a residential foreclosure action, a plaintiff moving for summary judgment must tender sufficient evidence demonstrating the absence of material issues as to its strict compliance with RPAPL 1304” … . RPAPL 1304(1) provides that “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” “The statute further provides the required content for the notice and provides that the notice must be sent by registered or certified mail and also by first-class mail to the last known address of the borrower” … . Strict compliance with RPAPL 1304 is a condition precedent to the commencement of a foreclosure action … . Proof of the requisite mailings “can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure” … . …

… [W]ith respect to the mailing by first-class mail, “[t]he presence of 20-digit numbers on the copies of the 90-day notices submitted by the plaintiff, standing alone, did not suffice to establish, prima facie, proper mailing under RPAPL 1304” … . As to Babik’s [the loan servicer’s employee’s] affidavit, not only did Babik “not attest to personal knowledge of the mailing [or] set forth any details regarding … [the loan servicer’s] mailing practices or procedures” … , she did not aver that a 90-day notice was sent in accordance with the statute … . Wilmington Sav. Fund Socy., FSB v Hershkowitz, 2020 NY Slip Op 07427, Second Dept 12-9-20

 

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THE SECOND MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN DENIED; SUCCESSIVE SUMMARY JUDGMENT MOTIONS ARE GENERALLY PROHIBITED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the prohibition against successive summary judgment motions applied and the second motion should have been denied:

“Generally, successive motions for summary judgment should not be entertained, absent a showing of newly discovered evidence or other sufficient cause” … . “Evidence is not newly discovered simply because it was not submitted on the previous motion” … . “Rather, the evidence that was not submitted in support of the previous summary judgment motion must be used to establish facts that were not available to the party at the time it made its initial motion for summary judgment and which could not have been established through alternative evidentiary means” … . “Successive motions for summary judgment should not be made based upon facts or arguments which could have been submitted on the original motion for summary judgment” … . Wells Fargo Bank, NA v Carpenter, 2020 NY Slip Op 07426, Second Dept 12-9-20

 

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THE NEGLIGENT SUPERVISION ACTION AGAINST PHYSICAL-THERAPY DEFENDANTS SOUNDED IN MEDICAL MALPRACTICE REQUIRING EXPERT OPINION EVIDENCE; THE DOCTRINE OF OSTENSIBLE OR APPARENT AGENCY RAISED A QUESTION OF FACT WHETHER THE PHYSICAL-THERAPY FACILITY WAS VICARIOUSLY LIABLE FOR THE ALLEGED NEGLIGENCE OF THE THERAPIST, WHO WAS AN INDEPENDENT CONTRACTOR (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined: (1) the negligent supervision cause of action against defendants’ physical therapy services sounded in medical malpractice and therefore required expert opinion evidence; and (2) the defendant physical therapist (Gonikman) was an independent contractor but the doctrine of ostensible or apparent agency raised a question of fact about the facility’s (KCM’s) vicarious liability for Gonikman’s alleged negligence. Plaintiff’s infant daughter, who was receiving physical therapy, fell off a scooter and was injured:

Though a medical facility can be held liable for the negligence or malpractice of its employees, it is not generally held liable when the treatment is provided by an independent contractor, even if the facility affiliates itself with that independent contractor … . However, the facility may be held vicariously liable under a theory of apparent or ostensible agency by estoppel … . “In order to create such apparent agency, there must be words or conduct of the principal, communicated to a third party, which give rise to the appearance and belief that the agent possesses the authority to act on behalf of the principal” … . “The third party must reasonably rely on the appearance of authority, based on some misleading words or conduct by the principal, not the agent” … . “Moreover, the third party must accept the services of the agent in reliance upon the perceived relationship between the agent and the principal, and not in reliance on the agent’s skill” … . …

… [S]ince the conduct at issue in the complaint stems from Gonikman’s generalized treatment plan and alleged negligent supervision of the infant daughter during her physical therapy session, the allegation sounds in medical malpractice, not ordinary negligence, because Gonikman’s duty towards the infant daughter derived from the physical therapist-patient relationship … . In support of his cross motion, Gonikman merely submitted a conclusory statement that his therapy plan of activities was consistent with the accepted standard of care, and he failed to submit an expert’s affidavit to establish that he did not deviate from the accepted standard of care for physical therapy … . Weiszberger v KCM Therapy, 2020 NY Slip Op 07425, Second Dept 12-9-20

 

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PLAINTIFF’S REQUEST FOR A 30-DAY ADJOURNMENT TO SEEK THE APPOINTMENT OF THE PUBLIC ADMINISTRATOR TO REPRESENT A DECEASED DEFENDANT SHOULD HAVE BEEN GRANTED; THE MOTION TO DISMISS THE COMPLAINT FOR FAILURE TO SUBSTITUTE A REPRESENTATIVE SHOULD HAVE BEEN DENIED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s request for a 30-day adjournment to petition or move to have the public administrator appointed for a deceased defendant’s (Conrad’s) estate should have been granted. Supreme Court had granted the motion to dismiss the complaint for failure to substitute a representative of the deceased defendant pursuant to CPLR 1021:

A motion to substitute a party “may be made by the successors or representatives of a party or by any party” and is to be made within a reasonable time after the death of the party (CPLR 1021). “[I]f the event requiring substitution is the death of a party and timely substitution has not been made, the court, before proceeding further, shall, on such notice as it may in its discretion direct, order the persons interested in the decedent’s estate to show cause why the action or appeal should not be dismissed.” (id).

CPLR 1015(a) provides that “[i]f a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.” … . Moreover, “[i]t is well settled that the death of a party divests the court of jurisdiction to render a judgment until a proper substitution has been made, so that any step taken without it may be deemed void, including an appellate decision” … . …

In light of the relatively short passage of time between Conrad’s death and the time defendants’ motion was made, the allegation in plaintiff’s complaint that the reverse mortgage upon which this case is premised was obtained fraudulently and is null and void, and the fact that the defendant banks had not even moved for substitution in the related foreclosure action, it was an abuse of discretion for the motion court not to allow plaintiff, at a minimum, the additional 30 days requested to seek to have the public administrator appointed so that the case could move forward and be decided on the merits. Dugger v Conrad, 2020 NY Slip Op 07313, First Dept 12-8-20

 

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DEFENDANTS FAILED TO DEMONSTRATE A LACK OF ACTUAL OR CONSTRUCTIVE NOTICE OF THE CONDITION WHICH CAUSED PLAINTIFF TO SLIP AND FALL; PLAINTIFF ADEQUATELY IDENTIFIED THE CAUSE OF HER FALL; DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendants’ motion for summary judgment in this slip and fall case should not have been granted because they failed to establish they lacked actual or constructive notice of the alleged hump in a runner over which plaintiff tripped. The First Department noted that plaintiff had adequately identified the cause of her fall:

Defendants’ failure to establish prima facie entitlement to judgment as a matter of law requires the denial of the motion regardless of the strength of plaintiff’s opposition … . They failed to offer evidence of their inspection routines, including evidence regarding the last time the accident site was inspected … .

In any event, plaintiff raises factual issues. Although plaintiff did not actually observe what caused her to trip and fall over an inclement weather runner in the lobby of defendants’ building, her evidence, together with reasonable inferences drawn therefrom, including that she felt the toebox of her right foot slide under what felt to be a hump in the runner, causing her foot to get caught, and her to lose her balance and fall, sufficiently identified the cause of her fall … . Mandel v 340 Owners Corp., 2020 NY Slip Op 07316, First Dept 12-8-20

 

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