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PLAINTIFF WAS A NONMEMBER PURCHASER OF A MEMBER’S INTEREST IN THE LIMITED LIABILITY COMPANY (LLC) AND THEREFORE COULD NOT BRING DERIVATIVE CAUSES OF ACTION ON BEHALF OF THE LLC (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff, who was a nonmember purchaser of a member’s interest in the limited liability company (LLC), could not bring derivative causes of action on behalf of the LLC:

A “[m]ember” is a person who has been admitted as a member of a limited liability company in accordance with the terms and provisions of the Limited Liability Company Law and the limited liability company’s operating agreement, and who has a membership interest in the limited liability company with the rights, obligations, preferences, and limitations specified under the Limited Liability Company Law and the operating agreement (Limited Liability Company Law § 102[q]). A “[m]embership interest” means “a member’s aggregate rights in a limited liability company, including, without limitation: (i) the member’s right to a share of the profits and losses of the limited liability company; (ii) the member’s right to receive distributions from the limited liability company; and (iii) the member’s right to vote and participate in the management of the limited liability company” (Limited Liability Company Law § 102[r]).

Here, the plaintiff does not dispute that she failed to obtain the consent of the nonselling members to be admitted as a member of the LLC when she acquired her membership interest. Paragraph 8 of the LLC’s operating agreement provides that “[n]ew members may be admitted only upon the unanimous consent of the Members and upon compliance with the provisions of this agreement,” and paragraph 32(e) of the operating agreement provides that “[a] non-member purchaser of a member’s interest cannot exercise any rights of a Member unless, by unanimous vote, the non-selling Members consent to him becoming a Member” (see Limited Liability Company Law § 602). Therefore, contrary to the Supreme Court’s determination, the plaintiff, as a nonmember purchaser who had not been admitted as a member of the LLC, lacks standing to pursue derivative causes of action on behalf of the LLC … . Kaminski v Sirera, 2019 NY Slip Op 01067, Second Dept 2-13-19

 

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PLAINTIFF, A PASSENGER ON A MOTORCYCLE, WAS ENTITLED TO SUMMARY JUDGMENT AGAINST THE VAN DRIVER AND THE EMPLOYER OF THE VAN DRIVER WHO MADE A LEFT TURN INTO THE MOTORCYCLE’S PATH, THE GRAVES AMENDMENT MAY APPLY TO THE LESSOR OF THE VAN, PLAINTIFF DID NOT HAVE TO DEMONSTRATE SERIOUS INJURY AS SHE WAS NOT A COVERED PERSON UNDER THE NO-FAULT INSURANCE LAW (SECOND DEPT).

The Second Department addressed several issues in this motorcycle-vehicle accident case. Plaintiff was a passenger on a motorcycle that collided with a van which attempted to make a left turn across the motorcycle’s path. The court held: (1) plaintiff was entitled to summary judgment against the van driver who violated Vehicle and Traffic Law 1146 and 1126 in making the turn; (2) the van driver’s employer was vicariously liable because the driver was operating the van during the course of his employment, the employer leased the van for more than 30 days and therefore was the owner of the van under Vehicle and Traffic Law 388; (3) the Graves Amendment may insulate the lessor of the van from liability; (4) plaintiff was not a covered person under the no fault provisions of the Insurance Law and therefore did not have to demonstrate serious injury before bringing suit. Jung v Glover, 2019 NY Slip Op 01066, Second Dept 2-13-19

 

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PLAINTIFF’S PRO SE MOTION TO DISQUALIFY DEFENDANT’S LAW FIRM PROPERLY GRANTED, AN ATTORNEY FROM THE FIRM RETAINED BY PLAINTIFF WORKED ON PLAINTIFF’S CASE AND SUBSEQUENTLY JOINED THE LAW FIRM REPRESENTING DEFENDANT (SECOND DEPT).

The Second Department determined plaintiff’s pro se motion to disqualify the law firm representing defendant (Ray, Mitiv) was properly granted. An attorney who worked for a law firm retained by plaintiff and who worked almost exclusively on plaintiff’s case left the firm retained by plaintiff and joined Ray, Mitev:

“A party seeking disqualification of its adversary’s counsel based on counsel’s purported prior representation of that party must establish (1) the existence of a prior attorney-client relationship between the moving party and opposing counsel, (2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse” … . “A party’s entitlement to be represented in ongoing litigation by counsel of his or her own choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted, and the movant bears the burden on the motion”… . However, doubts as to the existence of a conflict of interest are resolved in favor of disqualification in order to avoid even the appearance of impropriety … .

Here, the plaintiff’s showing satisfied all three of the relevant factors, giving rise to an irrebuttable presumption of disqualification … . Accordingly, based on the appearance of impropriety, disqualification was warranted … . Janczewski v Janczewski, 2019 NY Slip Op 01062, Second Dept 2-13-19

 

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LOCK BOX ON THE OUTSIDE OF A BUILDING ON WHICH PLAINTIFF STRUCK HIS HEAD WAS OPEN AND OBVIOUS AND NOT INHERENTLY DANGEROUS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the key lock box on the outside of building, on which plaintiff struck his head, was open and obvious and not inherently dangerous:

The plaintiff alleges that …, as he was walking out of the defendants’ Wendy’s restaurant, he turned right and struck his head on a black Fire Department key lock box that was affixed to the exterior of the red brick wall of the building. The plaintiff commenced this action against the defendants, alleging negligence in, among other things, the maintenance of their premises. In his pleadings, the plaintiff alleged that the presence and positioning of the lock box on the exterior wall constituted a dangerous condition. …

On their motion for summary judgment, the defendants made a prima facie showing of their entitlement to judgment as a matter of law by demonstrating that the subject condition was both open and obvious, and not inherently dangerous  … . In opposition, the plaintiff failed to raise a triable issue of fact … . Erario v Wen Shirley, LLC, 2019 NY Slip Op 01059, Second Dept 2-13-19

 

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MOTION TO EXTEND TIME TO SERVE THE SUMMONS AND COMPLAINT PROPERLY GRANTED IN THE INTEREST OF JUSTICE, THE STATUTE OF LIMITATIONS HAD RUN AT THE TIME THE MOTION TO EXTEND WAS MADE (SECOND DEPT).

The Second Department determined plaintiff was entitled to an extension of time to serve the summons and complaint in the interest of justice, noting that the statute of limitations had expired when plaintiff made her motion to extend:

The interest of justice standard “requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties” … . “Unlike an extension request premised on good cause, a plaintiff [seeking an extension in the interest of justice] need not establish reasonably diligent efforts at service as a threshold matter” … . “However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the [potentially] meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff’s request for the extension of time, and prejudice to defendant” … .

We agree with the Supreme Court’s determination granting, in the interest of justice, that branch of the plaintiff’s motion which was pursuant to CPLR 306-b to extend the time to serve the summons and complaint upon the defendant. The statutory 120-day period for service of process commenced in November 2016… . In December 2016, the plaintiff attempted service on the defendant on multiple occasions. Moreover, she promptly moved, inter alia, for an extension of time to serve the summons and complaint after the defendant challenged the service on the ground that it was defective … . The statute of limitations had expired at the time the plaintiff made her motion, and there was no demonstrable prejudice to the defendant. Darko v Guerrino, 2019 NY Slip Op 01058, Second Dept 2-13-19

 

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NISSAN, AS THE LESSOR OF THE VEHICLE, WAS ENTITLED TO DISMISSAL OF THE COMPLAINT IN THIS TRAFFIC ACCIDENT CASE PURSUANT TO THE GRAVES AMENDMENT, THE COMPLAINT ALLEGED NEGLIGENT MAINTENANCE OR MECHANICAL MALFUNCTION, NISSAN DEFENDANTS DEMONSTRATED THEY DO NOT INSPECT, REPAIR, MAINTAIN OR SERVICE THE VEHICLES THEY LEASE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Nissan’s motion to dismiss the complaint in this traffic accident case should have been granted pursuant to the Graves Amendment:

Under the Graves Amendment, in order for recovery to be barred, the owner, or an affiliate of the owner, must be engaged in the trade or business of renting or leasing motor vehicles, and the owner, or its affiliate, must not be negligent … .

Here, the Nissan defendants demonstrated that they were the owners of the subject vehicle and were engaged in the business of renting or leasing motor vehicles… . Additionally, to the extent that the plaintiff’s theory of negligent maintenance or mechanical malfunction was supported by factual allegations, the Nissan defendants established that the allegations were not facts at all through its submissions showing that the Nissan defendants never possess, inspect, repair, maintain, or service the vehicles they lease and that it was the sole responsibility of the lessee of the subject vehicle … to maintain that vehicle … . Cukoviq v Iftikhar, 2019 NY Slip Op 01057, Second Dept 2-13-19

 

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PLAINTIFF, WHO WAS HIRED TO MONITOR ASBESTOS LEVELS AT THE WORK SITE, AND WHO FELL AT THE SITE, WAS ENGAGED IN AN ACTIVITY COVERED BY THE LABOR LAW (SECOND DEPT).

The Second Department determined defendant’s motion for summary judgment on the Labor Law 240 (1) and 200 causes of action should not have been granted. Plaintiff was hired to test the air for asbestos at the construction site. He fell when he stepped on a milk crate which was allegedly used by workers to access a scaffold. The court noted that the type of inspection work done by the plaintiff was covered by the Labor Law:

Whether inspection work falls within the purview of Labor Law §§ 240(1) and 241(6) “must be determined on a case-by-case basis, depending on the context of the work” … . Here, the plaintiff, an environmental technician tasked with ensuring that asbestos was properly removed from the school, was a “covered” person under Labor Law §§ 240(1) and 241(6) because “his inspections were essential, ongoing, and more than mere observation” … . Channer v ABAX Inc., 2019 NY Slip Op 01053, Second Dept 2-13-19

 

 

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CONTRACT WAS SUBJECT TO THE STATE FINANCE LAW AND WAS NOT VALID UNTIL APPROVED BY THE STATE COMPTROLLER, NO RECOVERY FOR DELAYS IN THE PERIOD BEFORE THE CONTRACT WAS APPROVED (SECOND DEPT).

The Second Department determined claimant, a company hired by defendant City University to install fire alarms, could not recover damages for alleged delays caused by the defendant prior to the approval of the contract by the comptroller. No contract with the state is valid until approval:

The parties’ contract was subject to State Finance Law § 112(2)(a), which, at the time, provided that any contract exceeding $15,000 made by “any state agency, department, board, officer, commission, or institution . . . shall first be approved by the comptroller and filed in his or her office” “[b]efore . . . be[ing] executed or becom[ing] effective” … . Moreover, the contract itself provided that it would “not be valid, effective or binding upon the State until it ha[d] been approved by the State Comptroller and filed in his [or her] office.” In light of these provisions, the claimants may not recover damages based on delay occurring before the contract was approved by the Comptroller … . C & L Elec., Inc. v City Univ. of N.Y., 2019 NY Slip Op 01051, Second Dept 2-13-19

 

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MEMORANDUM PREPARED BY PLAINTIFF’S GENERAL COUNSEL PROTECTED FROM DISCLOSURE BY COMMON INTEREST PRIVILEGE (FIRST DEPT).

The First Department determined the common interest privilege applied to a memorandum by plaintiff’s general counsel:

The motion court properly held that a legal memorandum prepared by plaintiff’s General Counsel, and addressed to its Chief Executive Officer, which provided a summary and analysis of its pending litigation matters, including the litigation at issue, and subsequently shared with potential merger partners during the due diligence period pursuant to a common interest agreement, was privileged and protected from disclosure.

The common interest privilege is an exception to the traditional rule that the presence of a third-party at a communication between counsel and client is sufficient to deprive the communication of confidentiality. The common interest doctrine is a limited exception to waiver of the attorney-client privilege, and requires that: (1) the underlying material qualify for protection under the attorney-client privilege, (2) the parties to the disclosure have a common legal interest, and (3) the material must pertain to pending or reasonably anticipated litigation for it to be protected. The record, here, demonstrates that the common interest agreement was entered into in reasonable anticipation of litigation … .  Kindred Healthcare, Inc. v SAI Global Compliance, Inc., 2019 NY Slip Op 01164, First Dept 2-14-19

 

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TEACHER ACQUIRED TENURE BY ESTOPPEL (FIRST DEPT).

The First Department determined petitioner, a special education teacher, acquired tenure by estoppel:

“Tenure may be acquired by estoppel when a school board accepts the continued services of a teacher or administrator, but fails to take the action required by law to either grant or deny tenure prior to the expiration of the teacher’s probationary term” … . Here, petitioner obtained tenure by estoppel when she continued to be employed by the DOE and failed to receive any notice regarding the DOE’s decision regarding her future by the expiration of her probationary period … . In addition, the DOE failed to indicate to petitioner that the temporary assignment to perform clerical duties for the Committee on Special Education would not count toward her probationary period. Thus, petitioner’s decision to accept the temporary reassignment did not “serve to disrupt that teacher’s probationary period, nor . . . lead to an increase in the length of that probationary period” … . Matter of Wilson v Department of Educ. of the City of N.Y., 2019 NY Slip Op 01161, First Dept 2-14-19

 

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