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NONSIGNATORY NOT BOUND BY ARBITRATION CLAUSE IN ENGAGEMENT LETTER (FIRST DEPT).

The First Department, noting that Supreme Court should have decided whether a nonsignatory was bound by an arbitration clause and deciding the issue in the interest of judicial economy, determined the nonsignatory was not bound:

Millennium Lab Holdings, Inc. and Millennium Lab Holdings II, LLC (Millennium Holdings, LLC), pursuant to an engagement letter, retained petitioner KPMG LLP to audit their financial statements for certain time periods. The engagement letter contained a clause requiring arbitration of “[a]ny dispute or claim arising out of or relating to this Engagement Letter or the services provided hereunder.” * * *

The parties agree that the only theory under which respondent, as a nonsignatory to the engagement letter containing the arbitration clause, can be required to arbitrate is on the equitable estoppel/direct benefits grounds. We find that petitioner has not met its “heavy burden” … under that theory.

The benefits that the investors whose interests respondent represents derived from the engagement letters between petitioner and nonparty Millennium were “merely indirect” … . Here … respondent pleaded solely common-law claims and did not invoke the engagement letter … . …

Millennium and petitioner did not contemplate that the investors represented by respondent would benefit from the engagement letter. …

… [T]here is no indication in the record that the investors whom respondent represents had actual knowledge of the engagement letters between petitioner and Millennium … . Matter of KPMG LLP v Kirschner, 2020 NY Slip Op 02286, First Dept 4-16-20

 

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OWNER OF A SOLAR ENERGY SYSTEM INSTALLED ON SCHOOL DISTRICT PROPERTY WAS ENTITLED TO THE STATUTORY EXEMPTION FROM REAL PROPERTY TAX DESPITE THE SCHOOL DISTRICT’S RESOLUTION OPTING OUT OF THE EXEMPTION; THE RESOLUTION WAS NEVER FILED AS REQUIRED BY THE REAL PROPERTY TAX LAW (THIRD DEPT).

The Third Department determined the petitioner, Laertes Solar, the owner of a solar energy system installed on school district property, was entitled to the statutory exemption from property tax on the system. The school district had adopted a resolution opting out of the exemption. But the resolution had never been filed with the NYS Department of Taxation and Finance (Department) or the NYS Energy and Research Development Authority (NYSEARDA) as required by the Real Property Tax Law (RPTL 487):

The … examination of “the language of the statute and the legislative intent underlying it” … leads us to agree with Supreme Court that the filing requirements of RPTL 487 (8) are mandatory and that the 2014 resolution was inapplicable to the system given the school district’s failure to meet those requirements during the relevant period (see RPTL 487 [8] [a]). Indeed, although we need not defer to the Department’s interpretation of RPTL 487 given that this case presents a question “of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent”… , it is notable that the Department has also taken the position that an opt-out resolution “must be filed” with both it and NYSERDA … . It follows that — even assuming that the system may be viewed as a distinct parcel of real property that may be taxed — Laertes was entitled to the RPTL 487 exemption for which it applied (see RPTL 487 [6]). Matter of Laertes Solar, LLC v Assessor of the Town of Harford, 2020 NY Slip Op 02302, Third Dept 4-16-20

 

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PLAINTIFF ENTITLED TO WORKERS’ COMPENSATION BENEFITS FOR INJURIES CAUSED BY A CO-EMPLOYEE’S INTENTIONAL TORT (ASSAULT) (FIRST DEPT).

The First Department determined plaintiff was entitled to workers’ compensation benefits for injuries from an intentional tort (assault) by an employee:

Plaintiff alleged that he was injured when, as he was attempting to sit down, defendant, his coworker, pulled his chair out from under him, causing him to fall to the ground. After plaintiff’s accident, the Workers’ Compensation Board determined that he was entitled to benefits for a work-related injury.

An employee’s rights to Workers’ Compensation benefits is the employee’s exclusive remedy against his employer or coemployee for injuries sustained during his employment (see Workers’ Compensation Law §§ 11, 29[6]) … ). The Workers’ Compensation Law, however, does not prevent an employee from recovering for intentional torts, such as an assault … .

Here, the motion court properly denied defendant’s motion for summary judgment dismissing the claim for assault. There are issues of fact as to whether defendant’s conduct placed plaintiff in “imminent apprehension of harmful contact” … . Donnelly v Christian. 2020 NY Slip Op 02279, First Dept 4-16-20

 

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THE APPEAL WAS RENDERED MOOT BY DEFENDANT’S TRANSFER OF THE PROPERTY AFTER SUPREME COURT RULED DEFENDANT HAD TITLE TO THE PROPERTY (THIRD DEPT).

The Third Department dismissed the appeal as moot. Property which had been validly foreclosed by defendant was transferred to a third party. Plaintiff had brought an action pursuant to Real Property Actions and Proceedings Law (RPAPL) Article 15 to determine its rights to a portion of the foreclosed property. Supreme Court granted defendant’s motion for summary judgment on its counterclaim for strict foreclosure (RPAPL 1352) and plaintiff appealed. The appeal was deemed moot and dismissed because defendant had a right to transfer the property after Supreme Court’s ruling:

[T]he jurisdiction of this Court extends only to live controversies and, as such, an appeal will be considered moot unless an adjudication of the merits will result in immediate and practical consequences to the parties” … . “Since the ability to transfer clear title is a natural incident of [property] ownership, it follows that when a complaint involving title to or the right to possess and enjoy real property has been dismissed on the merits and there is no outstanding notice of pendency or stay, the property owner has a right to transfer or otherwise dispose of the property unrestricted by the dismissed claim” … . “‘[A] purchaser’s actual knowledge of litigation and a pending appeal is not legally significant and[,] absent a validly recorded notice of pendency, an owner has the ability to transfer clear title'” … .

Here, Supreme Court canceled plaintiff’s notice of pendency and this Court denied his motion for a stay pending appeal. Therefore, defendants had the right to transfer the property when they did, and the purchaser obtained clear title despite its knowledge of the pending appeals. Govel v Trustco Bank, 2020 NY Slip Op 02306, Third Dept 4-16-20

 

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MOTION TO VOLUNTARILY DISCONTINUE THE FORECLOSURE ACTION WAS PROPERLY GRANTED WITHOUT PREJUDICE (THIRD DEPT).

he Third Department determined plaintiff’s motion to voluntarily discontinue the foreclosure action (CPLR 3217(b)) was properly granted without prejudice. The litigation was still in the early stages and, although defendant had interposed a counterclaim, defendant did not move for a default judgment within a year and thereby abandoned the counterclaim:

Although this action had been pending for approximately three years at the time of the motion, the litigation itself remained in its early stages. In addition, the record confirms that defendant never sought default nor moved to compel discovery. Furthermore, the parties had not yet participated in the mandatory settlement conference (see CPLR 3408). Indeed, determination of plaintiff’s motion was the first occasion where Supreme Court was called upon to intervene in this action. Although defendant alleged that she would sustain prejudice if her discovery went unanswered, Supreme Court correctly determined that there was no evidence of prejudice to defendant or other improper consequences flowing from the discontinuance, as the parties can engage in necessary discovery in a subsequent foreclosure action … . …

… [T]he interposition of a counterclaim in and of itself is not dispositive with respect to the discontinuance. The discontinuance must work a particular prejudice against a defendant. Here, defendant is not prejudiced, as she will be able to assert her counterclaim in a subsequent foreclosure action. Although defendant argues that “one’s home is an interest that is unquantifiable,” she will be able to continue to reside in the mortgaged premises pending another action and will have the same rights available to her as were in the discontinued action … . Green Tree Servicing LLC v Shiow Fei Ju, 2020 NY Slip Op 02307, Third Dept 4-16-20

 

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LABOR LAW 200, 241(6) AND COMMON LAW NEGLIGENCE CAUSES OF ACTION PROPERLY SURVIVED SUMMARY JUDGMENT IN THIS WORKPLACE SLIP AND FALL CASE (FIRST DEPT).

The First Department determined plaintiff’s Labor law 200, 241(6)  and common law negligence causes action properly survived summary judgment in this workplace slip and fall case. Plaintiff fell going down a staircase and there was evidence that dust and perhaps paint was on the stairway associated with sanding and painting the walls. Although the stairway was not a passageway pursuant to the Industrial Code, there was a question of fact whether the stairway was a work area, even though no work was being done at the time of the fall. The defendant responsible for cleaning up, Magnetic, could be liable as a statutory agent:

… [P]laintiff’s identification of the cause of his slip and fall is not merely speculation. He testified that after he fell down the stairs, the steps he could see from the bottom of the staircase were dusty, his clothes were dusty, and his jacket was wet with paint. Further, there is testimony in the record that the walls of the stairway had been sanded and painted before plaintiff’s accident. * * *

Industrial Code § 23-1.7(e)(2) may serve as a predicate for plaintiff’s Labor Law § 241(6) claim, as it applies to slipping as well as tripping hazards … . …

Industrial Code § 23-1.7(d) is applicable to plaintiff’s accident. While a staircase used to provide access to a job site is not a passageway or other working surface within the meaning of the provision unless it is the sole means of access … , the provision is applicable if the staircase was a work area … . …

Insofar as Magnetic was delegated authority for the injury-producing work, retained subcontractors to perform the injury-producing work, and was responsible for clean-up at the site, it may be held liable under Labor Law § 241(6) as a statutory agent … . Ohadi v Magnetic Constr. Group Corp., 2020 NY Slip Op 02278, First Dept 4-16-20

 

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AFTER THE INITIAL INVESTIGATION AT THE SCENE AND AFTER DEFENDANT WAS HANDCUFFED AND SEATED IN THE BACK OF THE POLICE CAR, THE OFFICER ASKED DEFENDANT “WHAT HAPPENED?”; DEFENDANT’S RESPONSE SHOULD HAVE BEEN SUPPRESSED; CONVICTION REVERSED (THIRD DEPT).

The Third Department, reversing defendant’s conviction, determined statements made by defendant when he was handcuffed in the back of a police car should have been suppressed. The officer (Nellis) asked the defendant “What happened?” after the initial investigation was over:

After Nellis arrived at the scene and discovered defendant in the driveway, he entered the residence and found the victim being treated by defendant’s mother. The victim was convulsing and making gurgling sounds, and Nellis observed bruises and dried blood on her face. Nellis radioed emergency services to respond immediately, exited the residence and informed defendant that he was being detained for questioning. The officer did not immediately ask defendant what happened, but, after defendant was handcuffed and placed in the backseat of the patrol car, Nellis asked defendant, “What happened?” In response, defendant told him that he “snapped” and he “wanted her to feel the pain he had.” Defendant also admitted, “I choked her with a rope but never struck her in the face.” County Court allowed the statements, reasoning that the purpose of Nellis’ questioning was to clarify the nature of the volatile situation rather than to elicit evidence of a crime. We disagree.

The incident had been completed, the parties had been identified and medical assistance requested; defendant had been cooperative and responsive. “[W]here criminal events have been concluded and the situation no longer requires clarification of the crime or its suspects, custodial questioning will constitute interrogation” … . …

We cannot say beyond a reasonable doubt that these statements did not contribute to defendant’s conviction and, as such, the error was not harmless. People v McCabe, 2020 NY Slip Op 02288, Third Dept 4-16-20

 

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DEFENDANT WAS NOT GIVEN TIME TO EXERCISE HIS RIGHT TO APPEAR BEFORE THE GRAND JURY; INDICTMENT WAS PROPERLY DISMISSED (THIRD DEPT).

The Third Department determined defendant was not accorded a reasonable time to exercise his right to appear before the grand jury and affirmed the dismissal of the indictment:

… [T]he People were required pursuant to CPL 190.50 (5) (a) to “accord . . . defendant a reasonable time to exercise his right to appear as a witness” before the grand jury. The statute “does not mandate a specific time period for notice; rather ‘reasonable time’ must be accorded to allow a defendant an opportunity to consult with counsel and decide whether to testify before a [g]rand [j]ury” … . As County Court duly recognized, defendant had no such opportunity, for the order assigning counsel was not initially provided to [the conflict defender] by the local court. Defendant, who remained incarcerated, was in no position to know that the appointment order had been misdirected. Nor did the generic presentment notice issued by the People … clarify matters, as it was sent to a number of attorneys, including [the conflict defender]. The People contend, nonetheless, that defendant had an opportunity to testify after the grand jury vote but before the indictment was filed pursuant to CPL 150.5 (5) (a). That contention is unavailing because, under the circumstances presented, defendant was deprived of an opportunity to testify before the grand jury voted … . People v Clark, 2020 NY Slip Op 02204, Third Dept 4-9-20

 

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QUESTION OF FACT WHETHER PLAINTIFF ACTED TO MITIGATE ITS DAMAGES FROM THE BREAKDOWN OF EQUIPMENT IN THIS BUSINESS INTERRUPTION INSURANCE CASE (THIRD DEPT).

The Third Department, reversing Supreme Court, determined there was a question of fact about whether plaintiff did enough to mitigate damages stemming from the two-day breakdown of a concrete mixer. Plaintiff manufactured and sold precast concrete products:

… [D]efendant relied upon a policy provision that required plaintiff to reduce its losses by undertaking efforts to “[m]ake up for lost business within a reasonable period of time” and “[m]ake use of every reasonable means to reduce or avert loss, including . . . [w]orking extra time or overtime.” Defendant argued that plaintiff failed to make up for the lost production by scheduling extra shifts or weekend work and, thus, failed to mitigate its losses as required by the policy.

Like any other policy provision, mitigation requirements in business interruption insurance policies must be enforced according to their terms … . Here, plaintiff’s president testified that it could not use extra shifts during the work week to make up for lost production due to the nature of its manufacturing process, and that various constraints related to that process and plaintiff’s labor force made it so difficult to schedule weekend work that plaintiff rarely did so. Plaintiff thus limited most of the weekend work that it did schedule to small projects requiring only a few employees. Viewing the evidence in the light most favorable to defendant, we find that the reasonableness of plaintiff’s decision to make up for the lost production during its normal work hours rather than by scheduling overtime shifts on subsequent weekends, as well as the effect of this decision on the amount of its damages, present factual issues that must be resolved by a factfinder … . Binghamton Precast & Supply Corp. v Liberty Mut. Fire Ins. Co., 2020 NY Slip Op 02214, Third Dept 4-9-20

 

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CLAIMANT WAS ENTITLED TO MORE COMPENSATION FOR THE 3.86 ACRES TAKEN FOR AN AIRPORT RUNWAY AND THE 80.72 ACRES TAKEN FOR AN AVIGATION (RUNWAY APPROACH) EASEMENT; PURSUANT TO THE ISSUES OF CONTIGUITY, UNITY OF USE AND UNITY OF TITLE. THE ENTIRE PARCEL, NOT A SINGLE SMALLER PARCEL, WAS AFFECTED BY THE TAKING (THIRD DEPT).

The Third Department, in a comprehensive decision too detailed to fairly summarize here, determined claimant was entitled to more compensation for 3.86 acres for an airport runway and 80.72 acres for an avigation easement appropriated by the County. The court considered the following issues: (1) the entire 97.48 acres, as opposed to a 12.9 acre portion, was affected by the taking because there was contiguity, unity of use, and unity of title or ownership; (2) the pretaking value of the land; and (3) the diminution of value based on the avigation easement which affected the height of buildings which could be constructed on the easement. With respect to contiguity, unity of use and unity of title, the court wrote:

Contiguity will be found between parcels when they are “adjacent and lack[] any physical boundary . . . [and are] capable of being traversed” … . “A public highway actually traveled . . . running through a large tract devoted to one purpose does not necessarily divide it into independent parcels, provided the owner has the legal right to cross the intervening strip of land” … . Given the adjacent nature of the parcels and that claimant has a 200-foot right-of-way to cross the power line fee, we find that the parcels meet the element of contiguity … .* * *

… [C]laimant’s planned development, which included retail on the southern parcel and a technology park on the northern parcel, was not merely a “prospective use existing only in the mind’s eye of [claimant] or based upon claimant’s history as a developer” … , but rather a bona fide development, planned thoroughly, whose progress was cut short by the condemnation. As such, the evidence has established that the elements of contiguity, unity of use and unity of ownership have been met … . Matter of County of Warren, 2020 NY Slip Op 02217, Third Dept 4-9-20

 

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