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RESPONDENT’S FAILURE TO ATTEND INDEPENDENT MEDICAL EXAMS RENDERED THE NO-FAULT INSURANCE POLICY VOID AB INITIO (FIRST DEPT).

The First Department, vacating the arbitrator’s award, determined the no-fault policy was void because respondent failed to attend independent medical examinations:

The master arbitrator’s award was arbitrary in that it irrationally ignored well-established precedent that “the no-fault policy issued by petitioner was void ab initio due to respondent’s assignor’s failure to attend duly scheduled independent medical exams” … . Matter of Global Liberty Ins. Co. of N.Y. v Capital Chiropractic, P.C., 2020 NY Slip Op 01466, First Dept 3-3-20

 

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THE LANGUAGE OF THE POLICY IS NOT AMBIGUOUS AND CAN NOT BE INTERPRETED TO MEAN THE POLICY COVERED A PREMISES AT WHICH THE INSURED DID NOT RESIDE (FIRST DEPT).

The First Department, reversing Supreme Court, determined the language of the policy was not ambiguous and could not be interpreted to mean the policy covered a premises at which the insured did not reside:

Plaintiff demonstrated, via defendant’s admission in a statement to its investigator and the investigator’s inspection of the insured premises, that defendant did not reside at the premises and was therefore not covered by the policy … .

Contrary to defendant’s argument, the policy endorsement that amends the definition of “residence premises” — previously, “[t]he one-family dwelling … where you reside” — to include three- and four-family dwellings without repeating the phrase “where you reside” is not ambiguous. The endorsement also states that “[a]ll other provisions of this policy apply,” which gives effect to those portions of the policy that define “residence premises” as the place “where [the insured] reside[s]” … . MIC Gen. Ins. Corp. v Campbell, 2020 NY Slip Op 01465, First Dept 3-3-20

 

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A CORPORATION DOES NOT OWE A FIDUCIARY DUTY TO ITS MEMBERS OR SHAREHOLDERS (FIRST DEPT).

The First Department, dismissing the complaint, noted that the breach-of-a-fiduciary-duty action was brought solely against the corporation, which does not owe its members or shareholders a fiduciary duty:

“[I]t is well settled that a corporation does not owe fiduciary duties to its members or shareholders” … . Here, while the complaint alleges that defendant’s board of directors breached its fiduciary duty to plaintiff in refusing to approve the sale of certain units in the cooperative market to plaintiff, plaintiff brought this action solely against the cooperative corporation and thus, the complaint is dismissed. C & J Bros., Inc. v Hunts Point Term. Produce Coop. Assn., Inc., 2020 NY Slip Op 01454, First Dept 3-3-20

 

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COMMUNICATIONS BETWEEN PLAINTIFFS’ FINANCIAL ADVISOR AND COUNSEL DURING THE SALE OF PLAINTIFFS’ BUSINESS TO DEFENDANT ARE PRIVILEGED (FIRST DEPT).

The First Department, reversing Supreme Court, determined communications between plaintiffs’ financial advisor (KDC) and plaintiffs’ counsel in connection with the sale of plaintiffs’ company to defendant were privileged:

It is true that KDC was not retained to assist plaintiffs’ counsel in providing legal advice. However, the unrebutted evidence reflects that KDC spent some portion of its time helping counsel to understand various aspects of the transaction for that purpose. As such, KDC’s presence was necessary to enable attorney-client communication … .

Plaintiffs also had a reasonable expectation that the confidentiality of communications between their counsel and KDC would be maintained. Plaintiffs’ counsel attested that KDC promised to keep all such communications confidential. The governing Purchase and Sale Agreement also specified that all privileged documents related to the transaction would remain protected from disclosure to defendant even after closing … .

Contrary to defendant’s contention, the Cooperation Clause in KDC’s engagement letter did not undermine the reasonableness of this expectation of confidentiality, as it only required “reasonabl[e]” assistance to the Company (now owned by defendant), and should thus not be read to require KDC to turn over privileged documents … . Spicer v GardaWorld Consulting (UK) Ltd., 2020 NY Slip Op 01448, First Dept 3-3-20

 

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PLAINTIFF ALLEGED THE LANDLORD’S FAILURE TO REPAIR SHOWER-CURTAIN BRACKETS CREATED THE DANGEROUS WATER-ON-THE-FLOOR CONDITION WHICH CAUSED THE SLIP AND FALL; AN OPEN AND OBVIOUS CONDITION CAN STILL BE A DANGEROUS CONDITION; LANDLORD’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant landlord’s motion for summary judgment in this wet-bathroom-floor slip and fall case should not have been granted. Plaintiff alleged the landlord failed to repair brackets for the shower curtain. The fact that the water on the floor was an open and obvious condition relieved landlord of the duty to warn, but not the duty to keep the property safe:

Supreme Court erred in granting summary judgment to defendants on the basis that plaintiff failed to identify the condition of water on the floor before he slipped and fell. Supreme Court incorrectly found that any conclusion that plaintiff slipped and fell because of water accumulation would be based on speculation. Plaintiff argues correctly that, even if in his deposition testimony he did not explicitly state that he noticed water on the floor before he stepped out of the shower, a jury could reasonably infer that he slipped and fell on water on the floor due to the absence of a shower curtain … . Defendants’ proof failed to negate this reasonable inference … .

“[E]ven if a hazard qualifies as open and obvious’ as a matter of law, that characteristic merely eliminates the property owner’s duty to warn of the hazard, but does not eliminate the broader duty to maintain the premises in a reasonably safe condition” … .

… Defendants argue that the broken brackets were not an inherently dangerous condition but rather a benign condition. However, as plaintiff correctly observes, the purpose of the shower brackets was to hold up the shower curtain, and the purpose of a shower curtain is to prevent the accumulation of water when the shower is in use. Matos v Azure Holdings II, L.P., 2020 NY Slip Op 01441, First Dept 3-3-20

 

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PLAINTIFFS STATED A CAUSE OF ACTION FOR FRAUD AND PROPERLY ALLEGED A CIVIL CONSPIRACY (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiffs had, inter alia, stated a cause of action for fraud and properly alleged a related civil conspiracy. Plaintiffs are owners of commercial buildings and defendants included an employee of one of the plaintiffs and several contractors who did work for the plaintiffs. Plaintiffs alleged invoices for work were inflated and the excess payments were split among defendants. With respect to the fraud and civil conspiracy causes of action, the First Department wrote:

To state a cause of action for fraud, a plaintiff must allege “a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages” … . Such a claim must be pleaded with particularity (CPLR 3016[b] …). “[A]ctual knowledge[, however,] need only be pleaded generally, [given], particularly at the prediscovery stage, that a plaintiff lacks access to the very discovery materials which would illuminate a defendant’s state of mind” … . …

Here, we find that plaintiffs sufficiently pleaded fraud causes of action with the information available to them in a pre-discovery posture … . They alleged the creation and presentation for payment to plaintiffs of false, forged or inflated purchase orders; that defendants “knew that the work described on the bogus purchase orders or invoices and other contract forms was either falsely stated, overcharged or not provided, and knew that Plaintiffs would rely on these falsified or doctored purchase orders to make unwarranted payments”; that plaintiffs “relied on these purchase orders, invoices and other contract forms in making unnecessary payments to . . . defendants” to their detriment; that such reliance was “justifiable” and “reasonable”; and that plaintiffs were damaged as a result of defendants’ fraud. After discovery, plaintiffs can amplify their pleadings and defendants can renew their motions. But at this stage, plaintiffs should be allowed to probe defendants’ knowledge of the alleged fraudulent scheme. …

Although New York does not recognize an independent cause of action for civil conspiracy, allegations of civil conspiracy are permitted “to connect the actions of separate defendants with an otherwise actionable tort” … . To establish a claim of civil conspiracy, the plaintiff must demonstrate the primary tort, plus the following four elements: an agreement between two or more parties; an overt act in furtherance of the agreement; the parties’ intentional participation in the furtherance of a plan or purpose; and resulting damage or injury … . Plaintiffs pleaded the underlying fraud against defendants …, as well as an agreement that “[d]efendants acted in concert and conspired to defraud [p]laintiffs’ business.” As a result, plaintiffs were damaged because they paid monies to the defendants “for non-existent, unnecessary, and/or overpriced construction and maintenance services.” Cohen Bros. Realty Corp. v Mapes, 2020 NY Slip Op 01440, First Dept 3-3-20

 

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PROTECTIVE ORDER DELAYING DISCOVERY UNTIL 45 DAYS BEFORE TRIAL GRANTED BY THE APPELLATE COURT (SECOND DEPT).

The Second Department, reversing Supreme Court, granted the People’s application for a protective order delaying release of discovery until 45 days before trial:

Pursuant to CPL 245.70(6), a party who has unsuccessfully sought, or opposed the granting of, a protective order relating to the name, address, contact information, or statements of a person may obtain expedited review by an individual justice of the intermediate appellate court to which an appeal from a judgment of conviction would be taken. Where, as here, “the issue involves balancing the defendant’s interest in obtaining information for defense purposes against concerns for witness safety and protection, the question is appropriately framed as whether the determination made by the trial court was a provident exercise of discretion” … .

Applying the factors set forth in CPL 245.70(4), including concerns for witness safety and protection, I conclude that the Supreme Court improvidently exercised its discretion in directing immediate disclosure of the subject materials to counsel for the defendant and his investigator. Under the particular facts and circumstances of this case, the Supreme Court should have delayed disclosure of the subject materials to counsel for the defendant and his investigator until 45 days before trial. People v Brown, 2020 NY Slip Op 01439, Second Dept 2-28-20

 

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PLAINTIFF WAS ENGAGED IN REPAIR WORK WHEN A PERMANENT LADDER IN AN ELEVATOR SHAFT ALLEGEDLY VIBRATED CAUSING HIM TO FALL; EVEN IF A HARNESS WERE AVAILABLE, COMPARATIVE NEGLIGENCE IS NOT A DEFENSE TO A LABOR LAW 240(1) ACTION; DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s Labor Law 240(1) cause of action should not have been dismissed. Plaintiff was engaged in a long-term project to repair elevator cables which were striking objects in the elevator shaft. While using a ladder that was permanently affixed in the shaft when it allegedly vibrated causing him to fall:

… [W]hile an unsecured ladder that moves or shifts constitutes a prima facie violation of Labor Law § 240(1) … , the ladder from which plaintiff fell was secured to the structure, and, other than allegedly vibrating, it did not move, shift or sway. Under the circumstances, an issue of fact exists whether the secured, permanently affixed ladder that allegedly vibrated provided proper protection for plaintiff.

The record demonstrates, contrary to defendants’ contention, that at the time of his accident plaintiff was performing not routine maintenance but repair work, which falls within the protective ambit of Labor Law § 240(1) … . …

Defendants failed to establish that plaintiff was the sole proximate cause of his accident, as they submitted no evidence that plaintiff knew that he was supposed to use a harness for climbing ladders or that he disregarded “specific instructions” to do so … . Further, to the extent the ladder failed to provide proper protection, plaintiff’s failure to use a harness amounts at most to comparative negligence, which is not a defense to a Labor Law § 240(1) claim … . Kehoe v 61 Broadway Owner LLC, 2020 NY Slip Op 01391, First Dept 2-27-20

 

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PLAINTIFF ALLEGED THE FAILURE OF DEFENDANT ATTORNEYS TO PROPERLY PREPARE THE EYEWITNESS TO THE ACCIDENT RESULTED IN THE WITNESS’S INCONSISTENT TESTIMONY AT TRIAL AND A DEFENSE VERDICT; ARGUING THAT THERE WOULD HAVE BEEN A PLAINTIFF’S VERDICT ABSENT THE ATTORNEYS’ MALPRACTICE IS TOO SPECULATIVE TO SUPPORT A LEGAL MALPRACTICE ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determent defendant attorneys’ motion for summary judgment in this legal malpractice action should have been granted. Plaintiff was allegedly struck by a garbage truck and seriously injured. Plaintiff could not describe the truck and plaintiff’s case depended upon the testimony of an eyewitness, Arenas. Arenas’s descriptions of the truck were not consistent and there was a defense verdict. Plaintiff alleged defendant attorneys failed to properly prepare Arenas for his deposition, which resulted in Arenas’s inconsistent testimony at trial:

“[M]ere speculation of a loss resulting from an attorney’s alleged omissions . . . is insufficient to sustain a claim” for legal malpractice” … . Plaintiff’s assertion that, had Arenas been better prepared, the jury would have returned a favorable verdict is pure speculation … . Defendants met their burden of showing that plaintiff cannot establish causation, in that plaintiff cannot prove that it would have prevailed in the underlying action “but for” defendant’s alleged negligence in preparing Arenas for his deposition … .

Although there are issues of fact regarding whether defendants may have departed from the applicable standard of care, any claim that the jury would have reached a different result in the personal injury action is wholly speculative. First, it is wholly speculative that Arenas would have testified to a different description of the truck either at his deposition or at trial had he been shown the investigative reports. Although the investigative reports were read to him line by line at his deposition, his description of the truck did not change and he adhered to his belief, that the front of the truck he saw strike and run over plaintiff was bullnosed. Even if Arenas’s statement in support of plaintiff’s motion in this case is accurate, that he would have testified differently had he been differently prepared, this, at best, creates an issue of fact about what he would have said at trial. It does not eliminate speculation about what the jury’s verdict would have been, given that Arenas’s description of the truck otherwise lacked detail, and the absence of any additional proof identifying defendants’ truck and driver as being involved in underlying accident. Caso v Miranda Sambursky Slone Sklarin Verveniotis LLP, 2020 NY Slip Op 01384, First Dept 2-27-20

 

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DRIVERS FOR A LIMOUSINE SERVICE WERE NOT ENTITLED TO UNEMPLOYMENT INSURANCE BENEFITS, UNEMPLOYMENT INSURANCE APPEAL BOARD REVERSED (THIRD DEPT).

The Third Department, reversing the Unemployment Insurance Appeal Board, determined the drivers for the Park West limousine service were not employees and were not entitled to receive unemployment insurance benefits:

A driver apparently had full flexibility in deciding how much and how often to work; drivers would log on to the mobile application at the time and in the geographic zone in which they wanted to work, without an apparent requirement or expectation as to frequency or duration in any given period. The dispatch system would match the driver with work once the driver decided when and where to work … . The drivers determined the routes they wanted to take in transporting the passengers. Drivers had the freedom to utilize substitutes and to work for competitors while working for Park West, and they risked nonpayment of both fares and reimbursement of expenses in the event that the corporate client did not remit payment … . A witness for Park West testified that it encouraged drivers to attend informational sessions to learn how the dispatch system and application operated, as well as to dress and act professionally, so that drivers could maximize their own profits and have success in their entrepreneurial activity, but there was no set dress code … . Although Park West offered window signs to the drivers so that passengers could identify their rides, their use was not required.

… [T]he day-to- day activities of the drivers, including when and where they worked, were controlled by the decisions the drivers made themselves. The drivers had ultimate control over their vehicles and were solely responsible for maintenance and other related expenses in the ownership of their respective vehicles … . The requirements that Park West imposed with respect to licensing, registration and safety were necessitated by laws governing the industry and the rules of the New York City Taxi and Limousine Commission … . Although Park West acted as a liaison between drivers and clients when complaints arose, managing complaints from clients is not conclusive as to the type of employment relationship, as the “requirement that the work be done properly is a condition just as readily required of an independent contractor as of an employee” … . As such, we find that Park West’s control over the drivers was, at most, incidental … . Matter of Escoffery (Park W. Exec. Servs. Inc.–Commissioner of Labor), 2020 NY Slip Op 01422, Third Dept 2-27-20

 

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