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THERE WAS A DE FACTO MERGER SUCH THAT THE SUCCESSOR CORPORATION WAS LIABLE FOR THE TORTS OF ITS PREDECESSOR; THE CORPORATE VEIL WAS PROPERLY PIERCED TO FIND THE OWNER OF THE CORPORATION LIABLE (SECOND DEPT).

The Second Department determined Supreme Court properly found there was a de factor merger such that the successor corporation is liable for the torts of its predecessor, and further found that Supreme Court properly found the owner of the corporation was personally liable for damages awarded against the corporation. The facts are too complex to fairly summarize here:

“Generally, a corporation which acquires the assets of another is not liable for the torts of its predecessor'” … . “However, such liability may arise if the successor corporation expressly or impliedly assumed the predecessor’s tort liability, there was a consolidation or merger of seller and purchaser, the purchaser corporation was a mere continuation of the seller corporation, or the transaction was entered into fraudulently to escape such obligations” … . Accordingly, “[a] transaction structured as a purchase of assets may be deemed to fall within this exception as a de facto merger” … .

“The hallmarks of a de facto merger are the continuity of ownership; cessation of ordinary business and dissolution of the [predecessor] as soon as possible; assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and, continuity of management, personnel, physical location, assets, and general business operation'” … . Where the acquired corporation is “shorn of its assets” and becomes a “shell,” legal dissolution is not required to support a finding of de facto merger … . “[I]n non-tort actions, continuity of ownership is the essence of a merger'” … . * * *

[Re: piercing the corporate veil:] It is the plaintiff’s burden to demonstrate ” that the corporation was dominated as to the transaction attacked and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences'” … . Factors to be considered in determining whether the owner has abused the privilege of doing business in the corporate form include whether there was a failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use” … . Bonanni v Horizons Invs. Corp., 2020 NY Slip Op 00563, Second Dept 1-29-20

 

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DEFENDANT DRIVER HAD THE BURDEN TO PROVE FREEDOM FROM COMPARATIVE NEGLIGENCE IN THIS TRAFFIC ACCIDENT CASE; DEFENDANT FAILED TO ELIMINATE QUESTIONS OF FACT ABOUT WHETHER HE WAS TRAVELLING TOO FAST AND WHETHER HE KEPT A PROPER LOOKOUT FOR PLAINTIFF BICYCLIST; DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant driver, Perrone, did not eliminate questions of fact concerning whether he was negligent in travelling too fast for conditions or in keeping a proper lookout. Plaintiff bicyclist was struck while trying to see around a construction wall separating the bicyclist from the traffic:

Since there can be more than one proximate cause of an accident, a defendant moving for summary judgment has the burden of establishing freedom from comparative negligence as a matter of law … . “In order for a defendant driver to establish entitlement to summary judgment on the issue of liability in a motor vehicle collision case, the driver must demonstrate, prima facie, inter alia, that he or she kept the proper lookout, or that his or her alleged negligence, if any, did not contribute to the accident” … . The issue of comparative fault is generally a question for the trier of fact … .

Here, the defendants failed to establish, prima facie, that Perrone was free from comparative fault in the happening of the accident. In particular, the defendants failed to eliminate triable issues of fact as to whether Perrone kept a proper lookout or was traveling at a reasonable and prudent speed as he approached the intersection in light of the conditions then present … . Ballentine v Perrone, 2020 NY Slip Op 00562, Second Dept 1-29-20

 

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PLAINTIFFS CAN NOT RAISE A NEW THEORY OF LIABILITY IN OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT, SUPREME COURT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant hospital’s motion for summary judgment in this medical malpractice action should have been granted. The plaintiffs attempted to raise an evidentiary issue and theory of liability for the first time in opposition to the motion:

… [T]he plaintiffs improperly alleged, for the first time, a new theory claiming that other employees of the hospital were negligent in failing to properly administer Decadron and Heparin in accordance with the prescription of the plaintiff’s attending physician. ” A plaintiff cannot, for the first time in opposition to a motion for summary judgment, raise a new or materially different theory of recovery against a party from those pleaded in the complaint and the bill of particulars'” … . Bacalan v St. Vincents Catholic Med. Ctrs. of N.Y., 2020 NY Slip Op 00561, Second Dept 1-29-20

 

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CONTRACTUAL PROVISION LIMITING DAMAGES IS ENFORCEABLE, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the contractual provision limiting damages was enforceable. Plaintiff, Astoria, owned a power station and hired defendant, Rileu, to overhaul a steam boiler, which exploded. The contract limited Riley’s damages to one and a half times the contract price:

A clear contractual provision limiting damages is enforceable, unless there is a special relationship between the parties, there is a statutory prohibition against it, or it is against public policy because the conduct of the party seeking to enforce it was grossly negligent … . Here, Riley established, prima facie, that the clear limitation of liability provision contained in the addendum to the contract was part of an arm’s length transaction between the parties, two sophisticated commercial entities, and is thus valid and enforceable … . Riley further established, prima facie, that there was no special relationship between it and Astoria, that there was no statutory prohibition against the limitation of liability provision, and that the provision was not against public policy … . Astoria Generating Co., LP v Riley Power, Inc., 2020 NY Slip Op 00560, Second Dept 1-29-20

 

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TRIAL COURT’S DECLARING A MISTRIAL VIOLATED THE PARTIES’ STIPULATION PURSUANT TO THE SUMMARY JURY TRIAL RULES (FIRST DEPT).

The First Department, reversing Supreme Court, determined the trial should not have, sua sponte, declared a mistrial in this summary jury trial (SJT) in an attempt to correct an evidentiary error. The mistrial violated the parties’ STJ stipulation which constitutes a binding contract:

The SJT rules to which the parties stipulated provide, among other things, that “[p]arties agree to waive any motions for directed verdicts as well as any motions to set aside the verdict or any judgment rendered by said jury” and that the “Court shall not set side any verdict or any judgment entered thereon, nor shall it direct that judgment be entered in favor [of] a party entitled to judgment as a matter of law, nor shall it order a new trial as to any issues where the verdict is alleged to be contrary to the weight of the evidence” … .

The court erred in sua sponte declaring a mistrial and setting aside the verdict. While this was an attempt to correct an admittedly erroneous evidentiary ruling, the parties’ stipulation to a summary jury trial, subject to the applicable rules and procedures for Bronx County, was a legally binding contract … . Since the summary jury trial rules for Bronx County do not provide for any means to correct errors of law committed during trial, the court exceeded the boundaries of the parties’ agreement by setting aside the verdict, regardless of whether it in fact did so on its own initiative in the interest of justice … .

… [T]his holding does not proscribe post-trial motions of any kind in connection with summary jury trials; rather, it abides by the parties’ own proscriptions made at the time that they stipulated to proceed with a summary jury trial. There was nothing barring the parties from stipulating to reserve their right to appeal or move to set aside the verdict on the ground of an error of law. Vargas v LaMacchia, 2020 NY Slip Op 00556, First Dept 1-28-2o

 

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QUESTIONS OF FACT WHETHER THE ASSAILANT WAS AN INTRUDER AND WHETHER THE LANDLORD HAD NOTICE OF THE DEFECTIVE DOOR LOCK IN THIS THIRD-PARTY ASSAULT CASE; LANDLORD’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant NYC Housing Authority’s (NYCHA’s) motion for summary judgment in this third-party assault case should not have been granted. Plaintiff raised questions of fact whether the assailant was an intruder and whether the NYCHA had notice of the defective entrance door to the apartment building:

NYCHA failed to eliminate an issue of fact as to whether it was ” more likely or more reasonable than not'” that the man who shot plaintiff in the leg in front of his apartment door was an intruder ” who gained access to the premises through a negligently maintained entrance'” … . Plaintiff testified that a man spoke to him on the sidewalk just outside the building, asking where he could find drugs, and that, after plaintiff entered through the unlocked front entrance and walked up the stairs to his floor and along the hall 10 feet to his apartment, he saw the man again when he heard the door to the stairwell open, and the man held him up at gunpoint.

From plaintiff’s familiarity with building residents, the history of ongoing criminal activity, and the assailant’s failure to conceal his or her identity a jury could reasonably infer “that the assailant was more likely than not an intruder” … . Plaintiff informed the police that he could identify the assailant if shown a photograph … . NYCHA’s evidence also showed that there was a robbery inside the building about 18 months before plaintiff’s incident, requiring repairs to the front door lock, and various shootings on the grounds … .

Contrary to NYCHA’s contention, there is enough evidence as to how the assailant gained entry to the building to require consideration of whether NYCHA had actual or constructive notice of the nonfunctioning door lock … . A jury could infer from plaintiff’s testimony that the assailant entered the building himself and did not need to wait for anyone in the lobby to open the door for him.

Nor does its evidence demonstrate that NYCHA did not have constructive notice of the nonfunctioning door lock, since plaintiff testified that the lock was not functioning the day before and the day of the incident, but the last daily maintenance checklist produced by NYCHA, which included the front door lock, was dated two days before the incident … . Clotter v New York City Hous. Auth., 2020 NY Slip Op 00554, First Dept 1-28-20

 

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BUILDING OWNER NOT LIABLE FOR ALLEGED FAILURE TO ENSURE A SMOKE DETECTOR WAS FUNCTIONAL, DESPITE THE ALLEGATION THE OWNER REGULARLY INSPECTED THE SMOKE DETECTORS (FIRST DEPT).

The First Department determined the defendant landlord could not be held liable for the failure to ensure a smoke detector was functional:

In this action where plaintiff alleges that he was injured as a result of a fire in his apartment due to defendant building owner’s negligent failure to provide an operable smoke detector, defendant demonstrated prima facie that he satisfied his statutory duty to provide a functional smoke detector in the apartment, and accordingly, the obligation to maintain the smoke detector was assumed by plaintiff (see Administrative Code of City of NY § 27-2045[a][1], [b][1], [2]).

Plaintiff’s argument that defendant voluntarily assumed a duty to ensure his smoke detector was in good working condition by regularly inspecting tenants’ smoke detectors, is unavailing. “Liability under this theory may be imposed only if defendant’s conduct placed plaintiff in a more vulnerable position than he would have been in had defendant done nothing” … . Here, however, plaintiff provided no evidence that he relied on defendant’s inspection of his smoke detector to ensure its functionality, and instead testified that he never saw the building superintendent inspect his smoke detector. Figueroa v Parkash, 2020 NY Slip Op 00525, First Dept 1-28-20

 

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TRIAL JUDGE SHOULD NOT HAVE, SUA SPONTE, DECLARED A MISTRIAL TO ACCOMMODATE A JUROR’S WEEKEND PLANS; WRIT OF PROHIBITION GRANTED; RETRIAL BARRED; INDICTMENT DISMISSED (FIRST DEPT).

The First Department, granting petitioner’s application for a writ of prohibition and dismissing the indictment, determined the trial court should not have, sua sponte, declared a mistrial to accommodate a juror’s weekend travel plans. Retrial was barred:

The trial court was not compelled by manifest necessity to declare a mistrial and terminate the proceedings …, and accordingly, retrial is barred under the Double Jeopardy Clauses of the Federal and New York State Constitutions … . It was an abuse of discretion to declare a mistrial in order to accommodate a juror’s weekend travel plans, including a Friday, which she belatedly informed the court about during deliberations, where the court, as requested by defendant, reasonably could have directed the juror to report for deliberations the following day, and the court also failed to confirm that the jury was hopelessly deadlocked at the time … . Matter of Bannister v Wiley, 2020 NY Slip Op 00522, First Dept 1-28-20

 

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THE INTERIM DECISION ISSUED BY SUPREME COURT WAS NOT THE EQUIVALENT OF AN ORDER; THE FIRST DEPARTMENT, THEREFORE, DISMISSED THE APPEAL FOR LACK OF JURISDICTION (FIRST DEPT).

The First Department, dismissing the appeal in this Freedom of Information Law (FOIL) case, determined the “interim decision” was not an appealable paper, depriving the First Department of jurisdiction:

This proceeding stems from Spectrum News NY1’s (Spectrum) attempts to gain access to video files from the voluntary body camera experiment. Specifically, Spectrum filed a FOIL request for unredacted videos from the NYPD’s voluntary body camera program begun in 2014. NYPD denied the request, claiming that unredacted files were exempt from disclosure under FOIL. Spectrum then commenced this article 78 proceeding seeking a judgment compelling respondent NYPD to comply with its request. …

… [T]he parties stipulated that out of a disputed 328 videos, only 30 would be the subject of the hearing. Supreme Court then issued “an interim decision,” which was not the product of a motion for relief. Instead, the “interim decision,” among other things, permitted respondents to redact the faces of persons other than officers from any video footage recorded by the body cameras and to redact certain communications between officers … . …Supreme Court granted petitioner leave to appeal from the “interim decision.”

This appeal is thus taken from an “interim decision,” which is not an appealable paper. The lack of an appealable paper here deprives the Court of jurisdiction and requires dismissal of Spectrum’s appeal, albeit without prejudice. Where, as here, a party brings an appeal from a nonappealable paper, this Court regularly dismisses the appeal for lack of jurisdiction … . While there are instances where this Court has deemed a paper denominated as a “decision” to nonetheless be appealable because it contained all the hallmarks of an order … , that is not the situation here. Matter of Spectrum News NY1 v New York City Police Dept., 2020 NY Slip Op 00521, First Dept 1-28-20

 

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PROTECTIVE ORDER VACATED UPON EXPEDITED REVIEW (SECOND DEPT).

The Second Department, vacating the protective order issued by Supreme Court, determined defense counsel should have been heard in opposition to the application for the protective order:

… [T]he matter is remitted to the Supreme Court, Nassau County, to afford the defendant an opportunity to make arguments to that court with respect to the People’s application for a protective order.

Under the circumstances of this case, the Supreme Court should have granted defense counsel’s request for an opportunity to be heard with respect to the People’s application for a protective order pursuant to CPL 245.70 … . … [T]he People advised this Court that they no longer oppose the application. People v Belfon, 2020 NY Slip Op 00519, Second Dept 1-27-20

 

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