Page 826 – New York Appellate Digest

/ Banking Law, Conversion, Fraud

COMPLAINT ALLEGED VALID CAUSES OF ACTION FOR AIDING AND ABETTING FRAUD AND AIDING AND ABETTING CONVERSION AGAINST A BANK WHICH PROVIDED A LETTER TO PLAINTIFF STATING DEFENDANT MAINTAINED ENOUGH IN HIS BANK ACCOUNTS TO COVER A POST-DATED CHECK FOR OVER $400,000 (FIRST DEPT).

The First Department, reversing Supreme Court, over a dissent, determined that plaintiff auction house stated causes of action for aiding and abetting fraud and aiding and abetting conversion against defendant bank HSBC. Defendant Stettner bid over $425,000 for antique jewelry and sought to pay with a post-dated check. At plaintiff’s request HSBC provided a letter attesting to Stettner’s good standing at the bank and stating that Stettner maintained a balance of between $1 and $20 million. Stettner’s check bounced. The dissent argued that the complaint did not allege the bank’s knowledge of the fraud and conversion:

“A plaintiff alleging an aiding-and-abetting fraud claim must allege the existence of the underlying fraud, actual knowledge, and substantial assistance” … . In turn, the elements of an underlying fraud are “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” … . …

Aiding and abetting conversion requires the existence of a conversion by the primary tortfeasor, actual knowledge, and substantial assistance… . “A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession” … . William Doyle Galleries, Inc. v Stettner, 2018 NY Slip Op 08743, First Dept 12-20-18

December 20, 2018

/ Evidence, Insurance Law, Negligence

IN THIS TRAFFIC ACCIDENT CASE, AN AFFIDAVIT FROM A LICENSED CLINICAL SOCIAL WORKER (LCSW) CONSTITUTED COMPETENT EVIDENCE PLAINTIFF SUFFERS FROM POST-TRAUMATIC STRESS DISORDER (PTSD), PTSD IS A ‘SERIOUS INJURY’ WITHIN THE MEANING OF INSURANCE LAW 5102 (THIRD DEPT).

The Third Department, reversing Supreme Court, determined an affidavit from a licensed clinical social worker (LCSW) was competent evidence that plaintiff in this traffic accident case suffered from post-traumatic stress disorder (PTSD) which is recognized as a “serious injury” within the meaning of Insurance Law 5102 (d):

Under Education Law § 7701 (2), an LCSW can diagnose “mental, emotional, behavioral, addictive and developmental disorders and disabilities” and can administer and interpret tests of psychological functioning, create assessment-based treatment plans and provide “short-term and long-term psychotherapy and psychotherapeutic treatment.” These are functions comparable to those of a psychologist (see Education Law § 7601-a [1], [2]). For licensing purposes, an LCSW must “have at least three years full-time supervised postgraduate clinical social work experience in diagnosis, psychotherapy, and assessment-based treatment plans, or its part-time equivalent, obtained over a continuous period not to exceed six years, under the supervision . . . of a psychiatrist, a licensed psychologist, or [an LCSW] in a facility setting” … . Given the above, we conclude that an LCSW is competent to render an opinion as to whether a person has PTSD for purposes of establishing a serious injury under the Insurance Law. …

Iantorno [the LCSW] averred that she “personally witnessed physical anxiety exhibited by . . . Vergine [plaintiff]. This was visible to me and further validated diagnosis of PTSD.” Such clinical observations qualify as objective medical evidence for purposes of establishing a serious injury … . Iantorno opined that Vergine was significantly limited in her ability to drive and even distressed as a passenger, conditions that impacted her independence and imposed a significant limitation of her psychological function. We find that this submission presents an issue of fact as to whether Vergine sustained causally-related PTSD, constituting a “significant limitation of use of a body function or system” (Insurance Law § 5102 [d]). Vergine v Phillips, 2018 NY Slip Op 08740, Third Dept 12-20-18

December 20, 2018

/ Account Stated, Contract Law

ALTHOUGH THERE WAS NO ENFORCEABLE CONTRACT TO INSTALL SOLAR PANELS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS ACCOUNT STATED CAUSE OF ACTION BASED ON INVOICES SENT TO DEFENDANT FOR THE SOLAR PANELS (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined plaintiff’s breach of contract action was properly dismissed but plaintiff should have been granted summary judgment on its account stated cause of action based upon the submission of invoices for $1.9 million. There was no executed agreement between plaintiff and defendant for the installation of solar panels. However, defendant did not object to the invoices for the solar panels:

Plaintiff attempted to raise “material questions of fact” with proof that it had already entered into an agreement to install one solar system at the complex, that defendants expressed interest in having plaintiff install the two additional systems, and that plaintiff purchased solar cells and performed other work in the expectation that it would do so … . These submissions did not, however, raise any question on the dispositive issue of whether the parties reached agreement on the material terms of a contract to install the additional systems … . …

We reach a different result with regard to plaintiff’s claim for an account stated, which is “an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due, and may be implied from the retention of an account rendered for an unreasonable period of time without objection and from the surrounding circumstances” … . In the course of the unsuccessful negotiations over an agreement to install the two proposed systems, plaintiff purchased approximately $1.9 million worth of solar cells for one of the projects and, beginning in December 2011, periodically invoiced defendants for the purchase price and storage costs of the cells. The initial invoice stated that the solar cells were “purchased and held pursuant to agreement with” defendants, and noted that defendants’ representative had “acknowledge[d] receipt of [defendants’] inventory.” Plaintiff’s chairperson averred that defendants’ chief executive officer and a consultant had acknowledged receipt of the solar cells on behalf of defendants, and attached purchase documents for the solar cells bearing what plaintiff’s chairperson stated were the initials of those two individuals.

In response, defendants admitted that they had never objected to the invoices, which “is deemed acquiescence and warrants enforcement of the implied agreement to pay” … . Solartech Renewables, LLC v Techcity Props., Inc., 2018 NY Slip Op 08739, Third Dept 12-20-18

December 20, 2018

/ Civil Procedure, Trusts and Estates, Workers' Compensation

COUNTERCLAIMS AGAINST INDIVIDUAL TRUSTEES RELATED BACK TO THE COUNTERCLAIMS AGAINST THE TRUST AND THEREFORE WERE NOT TIME-BARRED, SUPREME COURT REVERSED (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined the counterclaims against the trustees of the plaintiff workers’ compensation self-insurance trust should not have been dismissed as time-barred because they related back to the counterclaims against the trust:

Supreme Court determined that, because defendant was aware of the identity of the trustees when it interposed its original answer and counterclaims in September 2010, its failure to assert claims against the individual trustees between September 2010 and December 2016 represented “either a strategic litigation decision on its part or a mistake of law,” neither of which it found would entitle defendant to application of the doctrine. We disagree.

There is nothing in the record before us demonstrating that defendant intentionally elected not to assert its counterclaims against the individual trustees and/or that it did so to obtain “a tactical advantage in the litigation” … . A review of defendant’s pleadings demonstrates that it intended to sue the individual trustees … . Although the specific names of the individual trustees could have been ascertained from certain documentation that the trust provided to defendant on an annual basis, “we need no longer consider whether [such a] mistake was excusable” … . Rather, as the Court of Appeals has recognized, the primary question — and “the linchpin of the relation back doctrine” — is whether the newly added party had actual notice of the claim … . As trustees of the trust, we find it implausible that the individual trustees were not aware of the trust’s commencement of this action and the counterclaims that defendant asserted against the trust — such knowledge being imputed to them as trustees … . NYAHSA Servs., Inc., Self-Ins. Trust v People Care Inc., 2018 NY Slip Op 08735 [167 AD3d 1305], Third Dept 12-20-18

December 20, 2018

/ Appeals, Workers' Compensation

THE WORKERS’ COMPENSATION BOARD DID NOT PROVIDE AN EXPLANATION FOR DISQUALIFYING CLAIMANT FROM FUTURE WAGE REPLACEMENT BENEFITS, MATTER REMITTED SO THAT ASPECT OF THE PENALTY CAN BE REVIEWED ON APPEAL (THIRD DEPT).

The Third Department, remitting the matter to the Workers’ Compensation Board, determined the Board must provide some explanation of the discretionary sanction against claimant disqualifying him from future benefits. The Board had found that claimant misrepresented his physical condition, based upon video surveillance evidence. The Third Department held there was sufficient evidence to support the Board’s finding on the misrepresentation claim before it, but an explanation for prohibiting future claims was required before that aspect of the penalty could be reviewed on appeal:

Claimant also challenges the Board’s imposition of the discretionary sanction disqualifying him from receiving future wage replacement benefits. By not providing any reason for its imposition of this discretionary penalty, the Board failed to satisfy its obligation to “provide some basis for appellate review” … . Accordingly, the matter must be remitted so that the Board can fulfill its obligation and “provide some explanation for its determination in this regard” … . Matter of Papadakis v Fresh Meadow Power NE LLC, 2018 NY Slip Op 08728, Third Dept 12-29-18

December 20, 2018

/ Contract Law, Landlord-Tenant

LEASE INCLUDED AN EXPRESS PROVISION ALLOWING TENANT TO WITHHOLD RENT IF THE PREMISES IS DAMAGED AND NOT REPAIRED, THEREFORE WITHHOLDING RENT WAS NOT AN ELECTION OF REMEDIES AND THE TENANT COULD WITHHOLD RENT AND SUE FOR DAMAGES (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that an express lease provision allowed the tenant to withhold rent when the property is damaged, and therefore the withholding of rent did not constitute an election of remedies:

The second affirmative defense stated that the tenant elected a remedy by not paying rent, and therefore the tenant is not entitled to damages. However, the lease contained an express provision that the tenant could withhold rent if the premises were damaged and not repaired. Generally, a tenant’s duty to continue to pay rent is not suspended if the tenant remains in possession of the leased premises, even if the landlord breaches its obligations under the lease, unless there is an express provision in the lease declaring the circumstances under which the tenant may withhold rent … . Such an express provision was present here. Therefore, the withholding of rent was not an election of remedies. Fifth Line, LLC v Fitch, 2018 NY Slip Op 08630, Second Dept 12-19-18

December 19, 2018

/ Appeals, Attorneys, Civil Procedure, Foreclosure

NOTICE OF APPEARANCE FILED BY DEFENDANT’S ATTORNEY WAIVED ANY SUBSEQUENT OBJECTION TO PERSONAL JURISDICTION IN THIS FORECLOSURE ACTION, ISSUE HEARD ON APPEAL ALTHOUGH NOT RAISED BELOW (SECOND DEPT).

The Second Department, reversing Supreme Court on a ground not raised below, determined that defendant’s attorney’s notice of appearance waived any objection to personal jurisdiction over defendant:

“The filing of a notice of appearance in an action by a party’s counsel serves as a waiver of any objection to personal jurisdiction in the absence of either the service of an answer which raises a jurisdictional objection, or a motion to dismiss pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction” … . Here, in November 2014, the defendant’s attorney appeared in the action on her behalf by filing a notice of appearance dated October 31, 2014, and did not move to dismiss the complaint on the ground of lack of personal jurisdiction at that time, or assert lack of personal jurisdiction in a responsive pleading… . The defendant did not move to dismiss the complaint until September 2015, 10 months after filing a notice of appearance. Under those circumstances, the defendant waived any claim that the Supreme Court lacked personal jurisdiction over her in this action … .

Although the plaintiff raises this issue for the first time on appeal, it involves a question of law that appears on the face of the record, and could not have been avoided if brought to the attention of the Supreme Court … . Deutsche Bank Natl. Trust Co. v Vu, 2018 NY Slip Op 08629, Second Dept 12-19-18

December 19, 2018

/ Evidence, Negligence

DEFENDANT PROPERTY MANAGER AND DEFENDANT OWNER DID NOT DEMONSTRATE A LACK OF CONSTRUCTIVE KNOWLEDGE OF THE ICE AND SNOW CONDITION WHERE PLAINTIFF FELL IN THIS STRIP MALL PARKING LOT SLIP AND FALL CASE, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT FOR SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ motion for summary judgment in this parking lot slip and fall case should not have been granted. The defendant Benderson managed the strip mall where the slip and fall occurred, and defendant Fitzgerald owned the property. The defendants did not demonstrate they did not have construction notice of the snow and ice condition:

A defendant who moves for summary judgment in a slip-and-fall case has the initial burden of making a prima facie showing that it neither created the hazardous condition nor had actual or constructive notice of its existence for a sufficient length of time to discover and remedy it … . This burden cannot be satisfied merely by pointing out gaps in the plaintiff’s case, as the defendants did here… . The defendants failed to show what the accident site actually looked like within a reasonable time after the cessation of the prior snowstorm and what the accident site actually looked like within a reasonable time prior to the incident. The defendants also failed to submit any meteorological data to show that the alleged ice condition that caused the plaintiff to fall was not the product of a prior storm. Bronstein v Benderson Dev. Co., LLC, 2018 NY Slip Op 08625, Second Dept 12-19-18

December 19, 2018

/ Civil Procedure, Foreclosure

CROSS-MOTION TO EXTEND THE TIME FOR SERVICE OF PROCESS PURSUANT TO CPLR 306-b IN THIS FORECLOSURE ACTION PROPERLY GRANTED, THE JUDGMENT OF FORECLOSURE HAD BEEN VACATED BECAUSE DEFENDANT WAS NOT PROPERLY SERVED INITIALLY (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the judgment of foreclosure should have been vacated because defendant was not served and therefore the court did not acquire personal jurisdiction. However, plaintiff’s timely cross-motion to extend the time for service pursuant to CPLR 306-b was properly granted:

“If service is not made upon a defendant within the time provided in [CPLR 306-b], the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service” … . Good cause requires the plaintiff to demonstrate, as a threshold matter, “reasonably diligent efforts” in attempting to effect service … . In deciding whether, in the interest of justice, to grant an extension of time to serve a summons and complaint, “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” … . “A determination of whether to grant the extension in the interest of justice is generally within the discretion of the motion court” … . Bank United, FSB v Verbitsky, 2018 NY Slip Op 08623, Second Dept 12-19-18

December 19, 2018

/ Evidence, Family Law

EVIDENCE DID NOT SUPPORT TEMPORARY REMOVAL OF CHILD FROM FATHER’S CUSTODY DURING THE PENDENCY OF A CHILD PROTECTIVE PROCEEDING (SECOND DEPT).

The Second Department, reversing Family Court, determined the evidence did not support temporary removal of the child from father’s custody during the pendency of a child protective proceeding:

“[O]nce a child protective petition has been filed, Family Court Act § 1027(a)(iii) authorizes the court to conduct a hearing to determine whether the child’s interests require protection, including whether the child should be removed from his or her parent”… . Upon such a hearing, temporary removal is only authorized where the court finds it necessary “to avoid imminent risk to the child’s life or health” … . “In determining a removal application pursuant to Family Court Act § 1027, the court must engage in a balancing test of the imminent risk with the best interests of the child and, where appropriate, the reasonable efforts made to avoid removal or continuing removal'” … .

Here, the petitioner failed to establish that Chloe would be subject to imminent risk if she remained in the father’s care pending the outcome of the neglect proceeding … . The hearing evidence showed that at no time did the father inflict excessive corporal punishment upon Chloe. In addition, the evidence showed that Dasanie may have been coached by Chloe’s mother, and Dasanie recanted, before several individuals, the allegations that the father inflicted excessive corporal punishment upon her. Matter of Chloe-Elizabeth A.T. (Albert T.), 2018 NY Slip Op 08666, Second Dept 12-19-18

December 19, 2018

Search Results

COMPLAINT ALLEGED VALID CAUSES OF ACTION FOR AIDING AND ABETTING FRAUD AND AIDING AND ABETTING CONVERSION AGAINST A BANK WHICH PROVIDED A LETTER TO PLAINTIFF STATING DEFENDANT MAINTAINED ENOUGH IN HIS BANK ACCOUNTS TO COVER A POST-DATED CHECK FOR OVER $400,000 (FIRST DEPT).

IN THIS TRAFFIC ACCIDENT CASE, AN AFFIDAVIT FROM A LICENSED CLINICAL SOCIAL WORKER (LCSW) CONSTITUTED COMPETENT EVIDENCE PLAINTIFF SUFFERS FROM POST-TRAUMATIC STRESS DISORDER (PTSD), PTSD IS A ‘SERIOUS INJURY’ WITHIN THE MEANING OF INSURANCE LAW 5102 (THIRD DEPT).

ALTHOUGH THERE WAS NO ENFORCEABLE CONTRACT TO INSTALL SOLAR PANELS, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON ITS ACCOUNT STATED CAUSE OF ACTION BASED ON INVOICES SENT TO DEFENDANT FOR THE SOLAR PANELS (THIRD DEPT).

COUNTERCLAIMS AGAINST INDIVIDUAL TRUSTEES RELATED BACK TO THE COUNTERCLAIMS AGAINST THE TRUST AND THEREFORE WERE NOT TIME-BARRED, SUPREME COURT REVERSED (THIRD DEPT).

THE WORKERS’ COMPENSATION BOARD DID NOT PROVIDE AN EXPLANATION FOR DISQUALIFYING CLAIMANT FROM FUTURE WAGE REPLACEMENT BENEFITS, MATTER REMITTED SO THAT ASPECT OF THE PENALTY CAN BE REVIEWED ON APPEAL (THIRD DEPT).

LEASE INCLUDED AN EXPRESS PROVISION ALLOWING TENANT TO WITHHOLD RENT IF THE PREMISES IS DAMAGED AND NOT REPAIRED, THEREFORE WITHHOLDING RENT WAS NOT AN ELECTION OF REMEDIES AND THE TENANT COULD WITHHOLD RENT AND SUE FOR DAMAGES (SECOND DEPT).

NOTICE OF APPEARANCE FILED BY DEFENDANT’S ATTORNEY WAIVED ANY SUBSEQUENT OBJECTION TO PERSONAL JURISDICTION IN THIS FORECLOSURE ACTION, ISSUE HEARD ON APPEAL ALTHOUGH NOT RAISED BELOW (SECOND DEPT).

DEFENDANT PROPERTY MANAGER AND DEFENDANT OWNER DID NOT DEMONSTRATE A LACK OF CONSTRUCTIVE KNOWLEDGE OF THE ICE AND SNOW CONDITION WHERE PLAINTIFF FELL IN THIS STRIP MALL PARKING LOT SLIP AND FALL CASE, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT FOR SUMMARY JUDGMENT (SECOND DEPT).

CROSS-MOTION TO EXTEND THE TIME FOR SERVICE OF PROCESS PURSUANT TO CPLR 306-b IN THIS FORECLOSURE ACTION PROPERLY GRANTED, THE JUDGMENT OF FORECLOSURE HAD BEEN VACATED BECAUSE DEFENDANT WAS NOT PROPERLY SERVED INITIALLY (SECOND DEPT).

EVIDENCE DID NOT SUPPORT TEMPORARY REMOVAL OF CHILD FROM FATHER’S CUSTODY DURING THE PENDENCY OF A CHILD PROTECTIVE PROCEEDING (SECOND DEPT).

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