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ABSENT FRAUD, COLLUSION OR A MALICIOUS OR TORTIOUS ACT, DEFENDANT ATTORNEYS COULD NOT BE LIABLE FOR ACTING WITHIN THE SCOPE OF THEIR AUTHORITY AS AGENTS OF THE CLIENTS AND ALLEGEDLY ADVISING THEIR CLIENTS TO BREACH A CONTRACT WITH PLAINTIFFS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant attorneys (Jin Hu defendants) could not be liable to third parties (plaintiffs) for allegedly advising their clients (DeVito defendants) to breach a real estate purchase contract:

… “[I]nasmuch as the relationship created between an attorney and his client is that of principal and agent, an attorney is not liable for inducing his [or her] principal to breach a contract with a third person, at least where he [or she] is acting on behalf of his principal within the scope of his [or her] authority” … . “Absent a showing of fraud or collusion, or of a malicious or tortious act, an attorney is not liable to third parties for purported injuries caused by services performed on behalf of a client or advice offered to that client” … .

Here, the allegations in the complaint regarding the conduct of the Jin Hu defendants were impermissibly vague and conclusory … . Additionally, the complaint failed to sufficiently allege that the Jin Hu defendants acted outside the scope of their authority as counsel for the DeVito defendants or engaged in any conduct that could make them liable to the plaintiffs … . Asamblea De Iglesias Christianas, Inc. v DeVito, 2022 NY Slip Op 06456, Second Dept 11-16-22

Practice Point: Absent fraud, collusion of a malicious of tortios act, an attorney, as the agent for the principal (the client) acting within the scope of the attorney’s authority, cannot be liable to the plaintiff for advising the client to breach a contract with the plaintiff.

 

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THE TOWN CONTRACTED FOR THE CONSTRUCTION PROJECT ON WHICH PLAINTIFF WAS INJURED; DEFENDANT CONTRACTED WITH THE TOWN TO HANDLE BIDS FOR THE PROJECT; DEFENDANT WAS NOT AN AGENT FOR THE TOWN AND THE LABOR LAW 240(1), 241(6), 200 AND NEGLIGENCE ACTIONS AGAINST DEFENDANT SHOULD HAVE BEEN DISMISSED (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court in this Labor Law 240(1), 241(6), 200 and negligence action, determined the defendant was not an agent for the town which had contracted for the work plaintiff was doing when injured. Defendant had contracted with the town to prepare a bid package, solicit bids, obtain grant money and review bids for the construction project:

“An agency relationship for the purposes of section 240 (1) arises only when work is delegated to a third party who obtains the authority to supervise and control the job” … . “Thus, unless a defendant has supervisory control and authority over the work being done when the plaintiff is injured, there is no statutory agency conferring liability under the Labor Law” … . Pursuant to the express terms of the contract between the Town and the nonparty contractor—i.e., plaintiff’s employer—as well as the terms of the contract between the Town and defendant, defendant had no control over the means or methods of the performance of the work by the contractor, and it also had no control over safety precautions for the workers at the construction site … .

For those same reasons, it was error to deny defendant’s motion with respect to the Labor Law § 241 (6) cause of action … . Defendant also established that it did not actually direct or control the work that brought about plaintiff’s injuries, and plaintiff raised no issue of fact with respect thereto. Therefore, it was error to deny defendant’s motion with respect to the Labor Law § 200 and common-law negligence causes of action … . Smith v MDA Consulting Engrs., PLLC, 2022 NY Slip Op 06389, Fourth Dept 11-10-22

Practice Point: In order for a party to be liable as an agent for the owner in a Labor Law action, the party must have some control over the work the injured plaintiff was engaged in. Here the defendant was in charge of bids for the town’s construction project and exercised no control over the work. The Labor Law causes of action against defendant should have been dismissed.

 

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PETITIONER SOUGHT TO DEMONSTRATE THAT HIS DECEASED MOTHER DID NOT HAVE THE CAPACITY TO EXECUTE A DOCUMENT DESIGNATING RESPONDENT AS HER AGENT TO CONTROL THE DISPOSITION OF HER REMAINS; PETITIONER SUBMITTED PROOF HIS MOTHER HAD BEEN DIAGNOSED WITH DEMENTIA, BUT DEMENTIA IS NOT THE EQUIVALENT OF INCOMPETENCE OR INCAPACITY; THE PETITION SHOULD HAVE BEEN DISMISSED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, held that the petition pursuant to Public Health Law 4201 for a determination concerning the disposition of petitioner’s deceased mother’s remains should have been dismissed. The deceased was also the mother of the respondent in this action. The issue was whether the deceased had the capacity to execute a document designating the respondent as her agent to control the disposition of her remains. The proceeding under the Public Health Law is handled like a motion for summary judgment. Although petitioner demonstrated his mother was diagnosed with dementia in 2014, dementia is not the equivalent of incompetence:

Every dispute relating to the disposition of the remains of a decedent shall be resolved . . . pursuant to a special proceeding” (Public Health Law § 4201 [8]). Upon the return date of the petition in a special proceeding, “[t]he court shall make a summary determination upon the pleadings, papers and admissions to the extent that no triable issues of fact are raised,” and “may make any orders permitted on a motion for summary judgment” (CPLR 409 [b] …). “[E]very hearing of a special proceeding is equivalent to the hearing of a motion for summary judgment” … . …

Even assuming, arguendo, that the heightened contractual capacity standard is applicable in this case … , we conclude that petitioner failed to establish that the decedent was incapable “of comprehending and understanding the nature of the transaction at issue” … .  Although petitioner submitted evidence establishing that the decedent had been diagnosed with dementia in 2014, “there is no presumption that a person suffering from dementia is wholly incompetent” … . “Rather, it must be demonstrated that, because of the affliction, the individual was incompetent at the time of the challenged transaction” … . Here, petitioner failed to set forth any evidence that the decedent was without capacity to execute the designating document in September 2017 … . Matter of Hurlbut v Leo M. Bean Funeral Home, Inc., 2022 NY Slip Op 04439, Fourth Dept 7-8-22

Practice Point: A proceeding pursuant to the Public Health Law to determine the disposition of the remains of a decedent is in the nature of a special proceeding and is handled like a summary judgment motion. Here the petitioner did not raise a question of fact about whether the decedent had the capacity to designate the respondent as her agent to control the disposition of her remains. Proof decedent had been diagnosed with dementia did not raise a question of fact about decedent’s competence or capacity.

 

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HERE THE FRAMING COMPANY HIRED BY THE GENERAL CONTRACTOR AND GIVEN SUPERVISORY CONTROL OVER PLAINTIFF’S WORK WAS LIABLE FOR PLAINTIFF’S INJURY AS A “STATUTORY AGENT” OF THE GENERAL CONTRACTOR WITHIN THE MEANING OF THE LABOR LAW 240 (1) (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant South Ocean Framing was a statutory agent liable for plaintiff’s injury pursuant to  Labor Law 240(1). The general contractor hired South Ocean Framing, which in turn subcontracted the framing work to plaintiff’s employer. Plaintiff stepped on a beam which flipped out from under him and he fell 15 feet. He was entitled to summary judgment. With respect to the statutory-agent question, the court wrote:

Contrary to South Ocean’s … contention, it is liable under Labor Law § 240(1) as a statutory agent of the owner or general contractor, since it had the authority to supervise and control the particular work in which the plaintiff was engaged at the time of his injury .. . Once South Ocean became such an agent, it could not escape liability by delegating its work to another entity [i.e., plaintiff’s employer]. Mogrovejo v HG Hous. Dev. Fund Co., Inc., 2022 NY Slip Op 04299, Second Dept 7-6-22

Practice Point: The general contractor hired the framing company. The framing company hired plaintiff’s employer to do the framing. Because the framing company had supervisory control over plaintiff’s work, it was liable for plaintiff’s injury as a statutory agent under Labor Law 240 (1) and could not escape liability by delegating its supervisory role.

 

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EACH TIME PLAINTIFF’S MARKETING DIRECTOR ENTERED A CONTRACT WITH A COMPANY IN WHICH THE DIRECTOR HAD AN OWNERSHIP INTEREST CONSTITUTED A SEPARATE WRONG UNDER THE CONTINUING WRONG DOCTRINE; THE COMPLAINT STATED CAUSES OF ACTION FOR FRAUD AND BREACH OF FIDUCIARY DUTY (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the continuing wrong doctrine applied to each time defendant hired Exit for video editing services within six years of filing the complaint. In addition, the complaint stated a cause of action for breach of a fiduciary duty:

This action arises from the conduct of plaintiff’s former director of marketing, Taufiq, in repeatedly contracting with Exit Editorial, Inc. (Exit), owned by Tristan Kneschke (together with Exit, the Exit defendants), for video editing services. Plaintiff claims that Taufiq falsely represented to it that he negotiated with Exit at arms length and that Exit’s prices were reasonable, when in fact its prices were well above market rate, he had an ownership interest in Exit, and he received a cash finder’s fee for each contract with Exit.

Plaintiff’s allegations and supporting affidavits were sufficient to permit an inference that a separate exercise of judgment, and thus a separate wrong, was committed each time Exit was hired, thereby enabling application of the continuing wrong doctrine … . * * *

The breach of fiduciary duty claim against Taufiq should be reinstated, as an agent has a duty to make full disclosure to its principal of any conflicts of interest and there is no requirement of justifiable reliance for such a claim … .Manipal Educ. Ams., LLC v Taufiq, 2022 NY Slip Op 02200, First Dept 3-31-22

Practice Point: An allegation that an employee entered contracts on behalf of his employer with a company of which the employee was a part-owner, without so informing his employer, supports causes of action for fraud and breach of fiduciary duty. Each contract constituted a separate wrong pursuant to the continuing wrong doctrine.

 

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THE CONTRACTOR COULD NOT ESCAPE LIABILITY FOR PAYMENT OF THE SUBCONTRACTOR; THE PAY-WHEN-PAID CLAUSE IN THE CONTRACT IS INVALID; NOTHING IN THE CONTRACT INDICATED THE CONTRACTOR WAS ACTING SOLELY AS AN AGENT FOR THE OWNER (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, determined defendant Sweet was not an agent such that it could avoid responsibility for paying a subcontractor, Arenson, for the construction work done by Arenson. The First Department further held General Business Law 756-a did not invalidate the precedent prohibiting pay-when-paid clauses like the one in the contract between Sweet and Arenson:

The scope letter, which is on Sweet’s letterhead, contains the following clause:”Subcontractor understands that Contractor is acting as an agent for the Owner, and agrees to look only to funds actually received by the Contractor (from the Owner) as payment for the work performed under this Subcontract.” [This is the prohibited pay-when-paid clause.] * * *

… Sweet was not an agent for a disclosed principal. The clearest indicator of Sweet’s role, its signature, supports this conclusion. The signature line for “Sweet Construction Approval” and the signature do not indicate that Sweet signed the contract as agent on behalf of a disclosed principal or reflect any limitations … . …

In characterizing itself as “only a facilitator of payment” and “merely a conduit” Sweet ignores that the subcontract provides that the work is to be performed pursuant to the “SCC General Requirements.” Those requirements, which also appear in the scope letter, provide that Arenson will … indemnify and hold Sweet harmless with respect to Arenson’s work; obtain liability insurance in Sweet’s favor; and recognize Sweet’s authority to issue safety violations and correct unsafe conditions. These general requirements, on their face, apply to Sweet in its own capacity, and not in its capacity as an agent. Bank of Am., N.A. v ASD Gem Realty LLC, 2022 NY Slip Op 01379, First Dept 3-3-22

 

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DEFENDANT TITLE INSURANCE COMPANY WAS ABLE TO DEMONSTRATE DEFENDANT AGENCY DID NOT HAVE ACTUAL AUTHORITY TO ISSUE THE TITLE INSURANCE POLICY TO PLAINTIFF; HOWEVER IT DID NOT DEMONSTRATE THE AGENCY DID NOT HAVE APPARENT AUTHORITY TO ISSUE THE POLICY; THEREFORE THE TITLE INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant WFG, a title insurance company, should not have been granted summary judgment on the “apparent authority” cause of action. WFG had terminated its agency relationship with NMR and had served a temporary restraining order on NMR prohibiting NMR from issuing any title insurance underwritten by WFG. The day after the restraining order was served, NMR issued a policy to plaintiff on property which turned out to have been encumbered with millions of dollars of liens. WFG was able to prove NMR did not have actual authority to issue the policy, but did not demonstrate NMR did not have apparent authority to issue the policy:

In the absence of actual authority, a principal may still be bound by the actions of a person who has apparent authority … . “Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction” … . The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact … . Failure to make such a showing requires a denial of the motion, regardless of the sufficiency of the opposing papers … .

Here, WFG failed to establish, prima facie, that NMR Realty lacked apparent authority to issue the policy. WFG merely pointed to gaps in the plaintiff’s proof, which was insufficient to meet its prima facie burden as the party moving for summary judgment … . Schwartz v WFG Natl. Tit. Ins. Co., 2021 NY Slip Op 01279, Second Dept 3-3-21

 

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ALTHOUGH THE PUBLIC HEALTH LAW GAVE THE DECEDENT’S DAUGHTER THE AUTHORITY TO EXECUTE THE NURSING HOME’S ADMISSION AGREEMENT ON BEHALF OF HER FATHER, THE PUBLIC HEALTH LAW DID NOT GIVE HER THE AUTHORITY TO SIGN A BINDING ARBITRATION AGREEMENT ON HER FATHER’S BEHALF; THEREFORE THE DECEDENT’S WIFE WAS NOT BOUND BY THE ARBITRATION AGREEMENT IN HER SUIT AGAINST THE NURSING HOME (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff wife’s adult daughter had the authority, pursuant to the Public Health Law, to execute the nursing home’s admission agreement on behalf of plaintiff’s husband (her father), who was deemed incapable of making health-care related decisions. In addition to the admission agreement, plaintiff’s daughter signed a binding arbitration agreement on her father’s behalf. After plaintiff’s husband died, plaintiff sued the nursing home which asserted that that the matter was subject to the arbitration agreement. The First Department held that, pursuant to the Public Health Law, plaintiff’s daughter had the authority to sign the admission agreement, because it related to her father’s health care, but she did not have the authority to sign the arbitration agreement:

The authority of the decedent’s daughter to act as a “surrogate” decision-maker pursuant to PHL 2994-d at the time decedent was admitted to JHL was limited to making decisions regarding “[a]ny treatment, service, or procedure to diagnose or treat an individual’s physical or mental condition” (PHL 2994-a[12]). Although she had authority, pursuant to PHL 2994-d, to execute the Agreement for purposes of admitting her father into the facility for health care treatment, she did not have the authority to execute the Binding Arbitration Agreement on his behalf. Such agreement was entirely optional and had no bearing on the father’s health care. Accordingly, it is entirely outside of the purview of surrogate decision-maker’s authority set forth in PHL 2994-d. Gayle v Regeis Care Ctr., LLC, 2021 NY Slip Op 01197, First Dept 2-25-21

 

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THE NEGLIGENT SUPERVISION ACTION AGAINST PHYSICAL-THERAPY DEFENDANTS SOUNDED IN MEDICAL MALPRACTICE REQUIRING EXPERT OPINION EVIDENCE; THE DOCTRINE OF OSTENSIBLE OR APPARENT AGENCY RAISED A QUESTION OF FACT WHETHER THE PHYSICAL-THERAPY FACILITY WAS VICARIOUSLY LIABLE FOR THE ALLEGED NEGLIGENCE OF THE THERAPIST, WHO WAS AN INDEPENDENT CONTRACTOR (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined: (1) the negligent supervision cause of action against defendants’ physical therapy services sounded in medical malpractice and therefore required expert opinion evidence; and (2) the defendant physical therapist (Gonikman) was an independent contractor but the doctrine of ostensible or apparent agency raised a question of fact about the facility’s (KCM’s) vicarious liability for Gonikman’s alleged negligence. Plaintiff’s infant daughter, who was receiving physical therapy, fell off a scooter and was injured:

Though a medical facility can be held liable for the negligence or malpractice of its employees, it is not generally held liable when the treatment is provided by an independent contractor, even if the facility affiliates itself with that independent contractor … . However, the facility may be held vicariously liable under a theory of apparent or ostensible agency by estoppel … . “In order to create such apparent agency, there must be words or conduct of the principal, communicated to a third party, which give rise to the appearance and belief that the agent possesses the authority to act on behalf of the principal” … . “The third party must reasonably rely on the appearance of authority, based on some misleading words or conduct by the principal, not the agent” … . “Moreover, the third party must accept the services of the agent in reliance upon the perceived relationship between the agent and the principal, and not in reliance on the agent’s skill” … . …

… [S]ince the conduct at issue in the complaint stems from Gonikman’s generalized treatment plan and alleged negligent supervision of the infant daughter during her physical therapy session, the allegation sounds in medical malpractice, not ordinary negligence, because Gonikman’s duty towards the infant daughter derived from the physical therapist-patient relationship … . In support of his cross motion, Gonikman merely submitted a conclusory statement that his therapy plan of activities was consistent with the accepted standard of care, and he failed to submit an expert’s affidavit to establish that he did not deviate from the accepted standard of care for physical therapy … . Weiszberger v KCM Therapy, 2020 NY Slip Op 07425, Second Dept 12-9-20

 

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DEFENDANT’S RIGHT TO COUNSEL ATTACHED AT THE PENNSYLVANIA ARRAIGNMENT; SUBSEQUENT QUESTIONING BY PENNSYLVANIA POLICE IN THE ABSENCE OF COUNSEL VIOLATED DEFENDANT’S RIGHT TO COUNSEL; NEW YORK POLICE DID NOT MAKE A REASONABLE INQUIRY INTO DEFENDANT’S REPRESENTATIONAL STATUS (FOURTH DEPT). ​

The Fourth Department, affirming the suppression of statements made by defendant, determined defendant had requested counsel at his arraignment in Pennsylvania and therefore subsequent questioning by Pennsylvania police about New York (Jamestown) offenses in the absence of counsel violated his right to counsel:

On March 28, 2017, defendant participated in a preliminary arraignment in Pennsylvania … , and the record supports the finding of County Court that defendant requested counsel during that proceeding. On April 4, 2017, members of the Jamestown Police Department traveled to Pennsylvania to interview defendant about the Jamestown arsons. Although the Jamestown police officers ultimately did not interview defendant themselves, they observed while Pennsylvania State Troopers interrogated defendant, in the absence of defense counsel, about the offenses allegedly committed in Pennsylvania. During that interrogation, the Pennsylvania State Troopers also questioned defendant about the New York offenses, and defendant made inculpatory statements about the Jamestown fires. * * *

…[E]even though the interview was carried out by Pennsylvania State Troopers, their interrogation is nevertheless subject to this state’s right to counsel jurisprudence inasmuch as they were agents of the Jamestown police officers … . ,,,

The Court of Appeals has held that “an officer who wishes to question a person in police custody about an unrelated matter must make a reasonable inquiry concerning the defendant’s representational status when the circumstances indicate that there is a probable likelihood that an attorney has entered the custodial matter, and the accused is actually represented on the custodial charge” … . Here, although the [Jamestown] captain asked whether defendant was represented by counsel, based on this record, we conclude that the captain’s inquiry was not reasonable inasmuch as he failed to ask whether defendant had requested counsel. People v Young, 2020 NY Slip Op 01825, Fourth Dept 3-13-20

 

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