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COUNTERCLAIM ALLEGING PLAINTIFFS’ BREACH OF A HOME IMPROVEMENT CONTRACT WAS NOT VIABLE BECAUSE DEFENDANT CONTRACTORS DID NOT COMPLY WITH THE MECHANIC’S LIEN NOTICE REQUIREMENT OF GENERAL BUSINESS LAW 771, PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON THEIR LIEN LAW CAUSE OF ACTION SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that defendants-contractors’ breach of contract counterclaim should have been dismissed because defendants did not provide the mechanic’s lien notice required by General Business Law 771 and summary judgment on plaintiffs’ Lien Law cause of action should have been granted. The action concerned home improvement work done by defendants. The notice failure did not preclude defendants’ recovery pursuant to quantum meruit:

… [P]laintiffs established that the contract at issue failed to comply with General Business Law § 771 inasmuch as it did not “contain the following notice to the owner in clear and conspicuous bold face type: Any contractor, subcontractor, or materialman who provides home improvement goods or services pursuant to your home improvement contract and who is not paid may have a valid legal claim against your property known as a mechanic’s lien’ ” … [The] failure “to enter into a signed written home improvement contract in conformity with General Business Law § 771 bars recovery based upon breach of contract” … . …

Plaintiffs met their initial burden [on their Line Law cause of action] … by establishing that … defendants possessed trust funds within the meaning of the Lien Law and failed to keep the records required by that statute. Lien Law § 75 (4) provides that the “[f]ailure of the trustee to keep the books or records required by th[at] section shall be presumptive evidence that the trustee has applied or consented to the application of trust funds actually received by him [or her] . . . for purposes other than a purpose of the trust as specified in section seventy-one of this chapter”  The evidence submitted by … defendants in opposition to the motion … supported the conclusion that they neglected to comply with the … .requirements of Lien Law § 75 … . Weiss v Zellar Homes, Ltd., 2019 NY Slip Op 01024, Fourth Dept 2-8-19

 

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DEFENDANT WAS ENTITLED TO A JURY INSTRUCTION ON THE JUSTIFICATION DEFENSE IN THIS ASSAULT CASE, EVEN THOUGH THE DEFENDANT DENIED ASSAULTING THE VICTIM AT TRIAL (FOURTH DEPT).

The Fourth Department determined defendant was entitled to a new trial on the assault count because the jury was not instructed on the justification defense. The court noted that the instruction was required even though the defendant denied the assault:

Here, defendant testified at trial that the altercation was an unprovoked attack by a number of correction officers in retaliation for earlier grievances he had lodged against prison staff. Defendant testified that he felt “trapped” by the attack and started biting another correction officer in self-defense. Correction officers who witnessed the altercation testified that the two officers involved in the altercation were engaged in a prolonged “struggle” with defendant, during which the three men “wrestl[ed] pretty hard.” Although defendant denied causing the injuries of the subject correction officer, that officer testified that defendant did cause his injuries.

Contrary to the People’s contention, defendant was entitled to a justification charge, even though at trial he denied assaulting the subject correction officer, and argued that the People failed to prove that he possessed the pen used to injure the subject correction officer. “[A] defendant’s entitlement to a charge on a claimed defense is not defeated solely by reason of its inconsistency with some other defense raised or even with the defendant’s outright denial that he was involved in the crime” … . Rather, “[a] jury may believe portions of both the defense and prosecution evidence . . . and still find . . . that defendant acted justifiably” … . People v Brown, 2019 NY Slip Op 01023, Fourth Dept 2-8-19

 

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PETITIONERS DID NOT TAKE STEPS TO PRESERVE THE STATUS QUO AND THE POWER PLANT BECAME OPERATIONAL AT THE OUTSET OF THE MOTION PRACTICE SEEKING TO VACATE CERTAIN PERMITS WHICH ALLOWED THE PLANT TO RESUME OPERATIONS, THE APPEAL WAS DEEMED MOOT AND THE PETITION WAS DISMISSED (FOURTH DEPT).

The Fourth Department determined that Sierra Club’s petition seeking to vacate permits issued to allow respondents to operate a natural gas and biomass power plant, which was formerly coal-powered, was properly dismissed as moot. Petitioner’s did not seek a temporary restraining order or other measures to preserve the status quo. The plant became operational while the motion seeking temporary injunctive relief was pending:

We agree with respondents that the appeal should be dismissed as moot … . Litigation over construction is rendered moot when the progress of the work constitutes a change in circumstances that would prevent the court from ” rendering a decision that would effectively determine an actual controversy’ ” … . In addition to the progress of the construction, other factors relevant to evaluating claims of mootness are whether the party challenging the construction sought injunctive relief, whether the “work was undertaken without authority or in bad faith” …, and whether “substantially completed work” can be undone without undue hardship… . The primary factor in the mootness analysis is “a challenger’s failure to seek preliminary injunctive relief or otherwise preserve the status quo to prevent construction from commencing or continuing during the pendency of the litigation”… . Generally, a petitioner seeking to halt a construction project must “move for injunctive relief at each stage of the proceeding” … .

The plant has been operating lawfully since March 2017. The failure to preserve the status quo is entirely the fault of petitioners, who waited until the last possible day to commence this proceeding, failed to request a TRO, failed to pursue an injunction with any urgency, waited until the last possible day to take an appeal, spent nine months perfecting the appeal, and failed to seek injunctive relief from this Court until approximately one year after the entry of the judgment, in a transparent attempt to avoid dismissal of this appeal. Matter of Sierra Club v New York State Dept. of Envtl. Conservation, 2019 NY Slip Op 01022, Fourth Dept 2-8-19

 

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ALLEGATIONS OF COMPENSABLE DAMAGES INSUFFICIENT, MOTION TO DISMISS FRAUD COMPLAINT SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the motion to dismiss fraud causes of action should have been granted because the allegation of compensable damages was deficient. “Plaintiff, a debt buying company, commenced this action alleging … [defendants] fraudulently induced it to purchase additional debt portfolios pursuant to its agreements with a third party by misrepresenting the terms of the financing arrangement secured by defendants to facilitate the purchase of such portfolios;”

“To allege a cause of action based on fraud, plaintiff must assert a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury’ ” … . ” The true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong’ or what is known as the out-of-pocket’ rule” … . “Under this rule, the loss is computed by ascertaining the difference between the value of the bargain which . . . plaintiff was induced by fraud to make and the amount or value of the consideration exacted as the price of the bargain’ ” … .

Here, we conclude that, even as supplemented by the affidavit of plaintiff’s president … , “plaintiff’s pleading is fatally deficient because [it] did not assert compensable damages resulting from defendants’ alleged fraud” … . With respect to the purchase of the subject portfolios, plaintiff received an interest therein worth more than the amount of its alleged investment … . Further, contrary to plaintiff’s contention, the allegation that it lost the enhanced collections on the portfolios that defendants purportedly told it that it could receive under the terms of the financing arrangement is a “quintessential lost opportunity, which is not a recoverable out-of-pocket loss”… . “Damages are to be calculated to compensate plaintiff[] for what [was] lost because of the fraud, not to compensate . . . for what . . . might have [been] gained . . . [T]here can be no recovery of profits which would have been realized in the absence of fraud” … . Southwestern Invs. Group, LLC v JH Portfolio Debt Equities, LLC, 2019 NY Slip Op 01035, Fourth Dept 2-8-19

 

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CLASSIFICATION OF THE PROPERTY AS COMMERCIAL IN TAX FILINGS DID NOT PRECLUDE THE APPLICABILITY OF THE ONE-OR-TWO-FAMILY HOME EXEMPTION TO LABOR LAW 240 (1) (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that defendant’s (Artifact’s) motion for summary judgment on the Labor Law 240 (1) cause of action should have been granted. The one-or-two-family home exemption applied, even though the property was classified as commercial in tax filings:

Contrary to plaintiff’s contention, Artifact’s classification of the property as commercial in certain tax filings does not estop it from relying upon the exemption in this action … . The Internal Revenue Code’s definition of a residential property is considerably narrower than the scope of the one- or two-family home exemption to liability under section 240 (1) … , and, as such, Artifact’s tax declarations are not ” logically incompatible’ ” with its current reliance upon that exemption … . Wood v Artifact Props., LLC, 2019 NY Slip Op 01030, Fourth Dept 2-8-19

 

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EXTENSION OF TIME TO FILE A MOTION TO VACATE A TAX FORECLOSURE JUDGMENT SHOULD NOT HAVE BEEN GRANTED, CPLR 2004 DOES NOT APPLY TO TIME LIMITS SPECIFICALLY CALLED FOR IN THE REAL PROPERTY TAX LAW (RPTL) (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined respondents’ motion to vacate a tax foreclosure judgment should not have been granted. The court noted that an extension of time pursuant to CPLR 2004 should not be granted where the Real Property Tax Law addresses the issue:

We further … with petitioner that the court erred in granting respondents’ implicit request for an extension of time to bring the motion (see CPLR 2004). The Court of Appeals has emphasized that, ” [a]s a general rule, there should be no resort to the provisions of the CPLR in instances where the [RPTL] expressly covers the point in issue’ “… . We conclude that RPTL article 11 comprehensively addresses the situation where a default judgment of foreclosure is properly obtained and the defaulting property owner seeks to reopen the default and, therefore, such property owner “may not reach outside of the RPTL to [reopen] such a proceeding”… . More particularly, RPTL 1131 expressly covers the point in issue here inasmuch as it provides, in unambiguous and prohibitory language, that “[a] motion to reopen any such default may not be brought later than one month after entry of the judgment” … . To countenance resort to CPLR 2004 under these circumstances would undermine the statutory scheme established by the legislature and erode the finality of foreclosure proceedings even after a defaulting property owner has been afforded due process … . Matter of Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The County of Wayne Relating To The 2015 Town & County Tax (Schenk), 2019 NY Slip Op 01029, Fourth Dept 2-8-19

 

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PERSONAL PROPERTY LOCATED ON REAL PROPERTY SUBJECT TO A TAX FORECLOSURE WAS NOT ABANDONED BY THE OWNER OF THE PERSONAL PROPERTY (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice Troutman, reversing Supreme Court, determined respondent’s application to vacate “that portion of a judgment of [tax} foreclosure that deemed respondent’s personal property located at a foreclosed property to be abandoned to petitioner” should have been vacated. The petitioner-city foreclosed on real property which was not owned by the respondent. The respondent owned hundreds of auto parts which were on the foreclosed property:

… [W]e agree with respondent that the court lacked jurisdiction to dispose of personal property. Supreme Court may exercise in rem jurisdiction over real property in a proceeding to foreclose a tax lien (see RPTL 1120 et seq.). A proceeding of that kind “produces a judgment binding only on those who have been named as parties and duly notified—the usual understanding of what due process requires”… . ” [T]he failure to substantially comply with the requirement of providing the taxpayer with proper notice constitutes a jurisdictional defect which operates to invalidate the sale or prevent the passage of title’ “… . Here, petitioner did not provide notice to respondent with respect to respondent’s personal property and could not have done so. The notice procedures in the statute relate to real property only, not personal property (see RPTL 1122-1125). Moreover, RPTL article 11 does not contain a mechanism by which the tax district may obtain a party’s personal property upon that party’s default. In the event of a default, the tax district is awarded “possession of any parcel of real property described in the petition of foreclosure” and is entitled to a deed conveying to the tax district full and complete title to the parcel (RPTL 1136 [3] [emphasis added]). Upon the execution of the deed, any person with a right or interest “in or upon such parcel shall be barred and forever foreclosed” of that right or interest (id. [emphasis added]).

Nothing in RPTL article 11 confers upon Supreme Court in rem jurisdiction over personal property. Matter of The Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The City of Utica (Suprunchik), 2019 NY Slip Op 01020, Fourth Dept 2-8-19

 

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PLAINTIFF’S ACTION WAS NOT FRIVOLOUS WITHIN THE MEANING OF 42 USC 1988, PREVAILING PARTY SHOULD NOT HAVE BEEN AWARDED ATTORNEY’S FEES (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the award of attorney’s fees to the prevailing party pursuant to 42 USC 1988 based upon the finding that plaintiff’s action was frivolous should not have been granted. Plaintiff sued the county claiming that her employment was terminated in retaliation for her complaints about the special education provided to her son:

The court granted the motion on the basis of 42 USC § 1988, which authorizes the award of attorneys’ fees to a prevailing defendant “upon a finding that the plaintiff’s action was frivolous, unreasonable, or without foundation” … . Nonetheless, it remains ” very rare [for] victorious defendants in civil rights cases [to] recover attorneys’ fees’ “… .

Here, in determining that plaintiff’s claim against Whittemore [the county personnel director] was frivolous, the court relied on plaintiff’s testimony during her deposition. During her deposition, however, plaintiff specifically stated that the factual basis for her claim against Whittemore was that he was the personnel director and his conduct caused injury to her because he allowed someone else to be placed in the position to which she sought to be reinstated. Contrary to the court’s determination, any inability of plaintiff to provide further elaboration during her deposition, which was taken early in the litigation shortly after commencement of the action, did not establish that her claim against Whittemore was frivolous. Moreover, a claim may not “be deemed groundless where [, as here,] the plaintiff has made a sufficient evidentiary showing to forestall summary judgment and has presented sufficient evidence at trial to prevent the entry of judgment against him [or her] as a matter of law” … . Although the civil rights allegations against Whittemore may have been weak, we cannot deem plaintiff’s claim “frivolous, unreasonable, or without foundation” … . Calhoun v County of Herkimer, 2019 NY Slip Op 01025, Fourth Dept 2-8-19

 

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PLAINTIFF’S DEPOSITION TESTIMONY DEEMED INCREDIBLE AS A MATTER OF LAW IN THIS TRAFFIC ACCIDENT CASE, DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, over a two-justice dissent, made the unusual finding that certain testimony did not raise a question of fact in this traffic accident case because it was incredible as a matter of law. Defendant’s motion for summary judgment should have been granted:

Although we agree with the dissent that as a general premise “the contradictions in the testimony of the respective parties raise issues of credibility for the trier of fact to resolve,” there are rare instances where credibility is properly determined as a matter of law … . This Court is not “required to shut its eyes to the patent falsity of a claim]” … . Here … we conclude that plaintiff’s deposition testimony was demonstrably false and should be rejected as incredible as a matter of law, permitting summary judgment in favor of defendant. Carthen v Sherman, 2019 NY Slip Op 00954, First Dept 2-7-19

 

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CLAIMANT’S MATTER WAS FULLY CLOSED AND WAS PROPERLY TRANSFERRED TO THE SPECIAL FUND FOR REOPENED CASES, DESPITE CONTINUING PAYMENTS FOR MEDICAL CARE AND TREATMENT (THIRD DEPT).

The Third Department determined claimant’s matter had been fully closed and was properly transferred to the Special Fund for Reopened Cases, despite continuing payments for medical care and treatment:

There is no dispute that the statutory time periods set forth in Workers’ Compensation Law § 25-a were satisfied; claimant was injured in September 2005 and the last payment of compensation was made in October 2006. Accordingly, the sole issue is whether the Board’s finding of a true closure in this matter is supported by substantial evidence. In this regard, “compensation” is defined as “the money allowance payable to an employee or to his [or her] dependents”… . As this Court previously has held, such allowance “does not include payments for medical treatment or care” …  Further, “the payment for continuing medical care does not bar the transfer of liability under Workers’ Compensation Law § 25-a”… , and neither the potential liability for future treatment nor the possibility that claimant’s condition could deteriorate — resulting in the subsequent reopening of the case — “mean[s] that the matter was not fully closed” … . Matter of Guillen v Tulley Constr., 2019 NY Slip Op 00945, Third Dept 2-7-19

 

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