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The Kinds of Damages Recoverable in a Property-Damage Action Stemming from Allegedly Defective Doors and Windows Explained in Some Depth—Economic Loss Rule Re: Strict Products Liability and Negligence—Consequential and Special Damages Re: Contract—When an Issue Can Be Raised for the First Time on Appeal Explained

In an action stemming from allegedly defective windows and doors which allowed the intrusion of water, the Second Department sorted out the interplay between tort claims and contract claims and the types of damages recoverable under each legal theory.  Among the issues discussed in some depth: the economic loss rule re: strict products liability and negligence; and consequential and special damages re: contract.  The court noted that the “economic loss rule” issue was raised for the first time on appeal and then explained why it still could consider the argument:

…[W]e note that the appellant did not raise before the Supreme Court its contention that the causes of action to recover damages for negligence and based on strict products liability insofar as asserted against it are barred by the economic loss rule. Nevertheless, this is a purely legal argument that appears on the face of the record and could not have been avoided had it been brought to the attention of the Supreme Court. Thus, the issue may be considered by this Court even though it is being raised for the first time on appeal… .

“The economic loss rule provides that tort recovery in strict products liability and negligence against a manufacturer is not available to a downstream purchaser where the claimed losses flow from damage to the property that is the subject of the contract and personal injury is not alleged or at issue” … . The rule is applicable to economic losses to the product itself as well as consequential damages resulting from the defect … . Therefore, when a plaintiff seeks to recover damages for purely economic loss related to the failure or malfunction of a product, such as the cost of replacing or retrofitting the product, or for damage to the product itself, the plaintiff may not seek recovery in tort against the manufacturer or the distributor of the product, but is limited to a recovery sounding in breach of contract or breach of warranty … .

Here, the plaintiff alleges, inter alia, that it sustained economic losses generated by the repair and replacement of the glass doors and windows of a building due to the failure of such doors and windows to properly prevent water intrusion. The fabrication and/or installation of those doors and windows were the subject of its agreement with the appellant. To the extent that the plaintiff seeks to recover losses generated by the repair and replacement of these doors and windows pursuant to causes of action sounding in negligence or strict products liability, such causes of action are prohibited by the economic loss rule. …

However, the plaintiff also claims that the intrusion of water caused by the defective windows and doors resulted in injury to other structural elements of the building, such as flooring and walls. These losses constitute damage to “other property” that was not the subject of the parties’ agreement and, accordingly, support a valid tort cause of action … . We note that, while the other structural elements of the building may have been damaged as a consequence of the infiltration of water through allegedly defective windows and doors, such losses do not constitute “consequential damages,” also known as “special damages,” as that term is used in contract law. Consequential or special damages usually refer to loss of expected profits or economic opportunity caused by a breach of contract … . ). Although the plaintiff may not recover such traditional consequential contract damages pursuant to a tort cause of action, the complaint does state causes of action against the appellant to recover damages for negligence and based on strict products liability to the extent that those causes of action seek to recover damages for injury to structural elements of the building other than the allegedly defective windows and doors themselves, which were the subject of the parties’ contract… . 126 Newton St LLC v Allbrand Commercial Windows and Doors Inc, 2014 NY Slip Op 06563, 2nd Dept 10-1-14

 

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Court’s Failure to Inquire to Ensure Guilty Plea Was Knowing and Voluntary Required Vacation of the Plea (In the Absence of Preservation)

The Fourth Department determined Supreme Court’s failure make an inquiry to determine whether defendant’s guilty plea was knowing and voluntary required reversal (in absence of preservation).  The defendant stated during the plea colloquy that the weapon he used was a BB gun, not a handgun.  Defense counsel explicitly waived any related affirmative defense:

At the outset of the plea colloquy, defense counsel stated that, although defendant told the police that he used a .45 caliber handgun in the robbery, the weapon he had used was actually a BB gun. Defense counsel further stated, however, that defendant would waive the affirmative defense set forth in Penal Law § 160.15 (4), which applies where the weapon used in the robbery “was not a loaded weapon from which a shot, readily capable of producing death or other serious physical injury, could be discharged.” During the ensuing plea colloquy, defendant stated that the gun he had used was a BB gun that looked like a revolver, not a .45 caliber handgun as he had told the police. At the end of the plea colloquy, defense counsel, in response to concerns expressed by the prosecutor, again stated that defendant was waiving the affirmative defense set forth in section 160.15 (4). The court then accepted defendant’s plea.

Although “no catechism is required in connection with the acceptance of a plea” …, it is well established that, “where the defendant’s recitation of the facts underlying the crime pleaded to clearly casts significant doubt upon the defendant’s guilt or otherwise calls into question the voluntariness of the plea, . . . the trial court has a duty to inquire further to ensure that [the] defendant’s guilty plea is knowing and voluntary” … . “Where the court fails in this duty and accepts the plea without further inquiry, the defendant may challenge the sufficiency of the allocution on direct appeal,” despite having failed to make that challenge in a “postallocution motion” directed to the plea court … . People v Dukes, 2014 NY Slip Op 06454, 4th Dept 9-26-14

 

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Annuity Purchased as Part of Settlement After Husband’s On-the-Job Accident Is Marital Property—Husband’s Pension Is Marital Property to the Extent It Represents Deferred Compensation—Wife Did Not Demonstrate Entitlement to Appreciation of Marital Residence (Which Was Husband’s Separate Property)

After noting that the appellate court has the same powers as the trial court in rendering a judgment in a matrimonial action, the Second Department determined that an annuity purchased pursuant to a settlement agreement stemming from the on-the-job injury to the plaintiff-husband should have been deemed marital, not separate, property.  The Second Department further determined that plaintiff’s pension was marital property subject to equitable distribution, and defendant did not demonstrate she was entitled to any portion of the appreciation of the marital residence (which was plaintiff’s separate property):

Although a settlement award emanating from a personal injury action commenced by the parties is partially the separate property of each party named in such action (…Domestic Relations Law § 236[B][1][d][2]), here, the parties’ conduct converted the separate property of the settlement into marital property. Specifically, the parties’ agreement to a settlement term that allowed the obligor or its successors to purchase an annuity, which provided for a right of survivorship to each party, to effectuate the terms of the settlement, manifests the parties’ intent to transfer the character of the property of each arising out of that settlement from separate to marital. * * *

With respect to the equitable distribution of this marital asset, “it is important to note that there is no requirement that the distribution of each item of marital property be on an equal basis” … . Here, equity dictates that the plaintiff should receive most of the annuity, as he is permanently disabled and unable to earn an income now or in the future, whereas the plaintiff is employed and has future income earning capacity. * * *

The Supreme Court also erred in finding that the plaintiff’s pension payments constituted separate property not subject to equitable distribution (cf. Domestic Relations Law § 236[B][5][b]). In New York, “pension benefits or vested rights to those benefits, except to the extent that they are earned or acquired before marriage or after commencement of a matrimonial action, constitute marital property” … . To the extent that a disability pension constitutes compensation for personal injuries, it is considered separate property not subject to equitable distribution … . However, to the extent that a disability pension represents deferred compensation, it is subject to equitable distribution … . Thus, here, the defendant is entitled to an equitable share of the marital portion of so much of the plaintiff’s pension as represents deferred compensation … . * * *

…[T]he defendant failed to provide any evidence tending to show an appreciation in the value of the marital residence due to her contributions that would entitle her to an equitable share of the increase in value of the marital property (see Domestic Relations Law § 236[B][1][d][3]…). The only evidence of the value of the marital residence was the plaintiff’s net worth statement, which indicated that he purchased it for $35,000. The defendant offered no evidence to establish the value of the home at the time of the commencement of the divorce action or whether it had appreciated in value during the marriage. Rizzo v Rizzo, 2014 NY Slip Op 06305, 2nd Dept 9-24-14

 

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Appellate Court Can Exercise Its Own Discretion Re: Scope of Discovery, Even in the Absence of Abuse

The First Department determined, over a dissent, that Supreme Court had improperly restricted the discovery of software code.  The court explained its power to overrule the trial court in this regard and the underlying principle allowing broad discovery:

New York strongly encourages open and full disclosure as a matter of policy … . To that end, CPLR 3101(a) provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action.”

A trial court is vested with broad discretion in its supervision of disclosure … . Indeed, “deference is afforded to the trial court’s discretionary determinations regarding disclosure” … . However, “[t]his Court is vested with the power to substitute its own discretion for that of the motion court, even in the absence of abuse” … . We have observed that we “rarely and reluctantly invoke” our power to substitute our own discretion for that of the motion court … . We find that this case presents one of those rare instances in which we are compelled to substitute our discretion for that of the motion court. MSCI Inc v Jacob, 2014 NY Slip Op 06239, 1st Dept 8-18-14

 

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Inadequate Waivers of Appeal Addressed In Depth—Detailed Advice to Judges Re: How to Obtain a Valid Waiver—Written Waiver Found Inadequate Here Because the Record Was Silent About Defendant’s Understanding Of It

The Second Department, in an important full-fledged opinion by Justice Skelos, broadly addressed the problem of inadequate waivers of appeal, giving specific advice to judges about how to obtain a valid waiver.  In the case before the court, the defendant had signed a written waiver.  But because the record was otherwise silent about the defendant’s understanding of the waiver, it was deemed invalid.  The opinion is too comprehensive and detailed to be fairly summarized here:

Generally, … a thorough explanation [of the waiver by the court]should include an advisement that, while a defendant ordinarily retains the right to appeal even after he or she pleads guilty, the defendant is being asked, as a condition of the plea agreement, to waive that right. Ideally, a defendant should then receive an explanation of the nature of the right to appeal, which essentially advises that this right entails the opportunity to argue, before a higher court, any issues pertaining to the defendant’s conviction and sentence and to have that higher court decide whether the conviction or sentence should be set aside based upon any of those issues. The defendant should also be told that appellate counsel will be appointed in the event that he or she were indigent. The trial courts should then explain the consequences of waiving the right to appeal, i.e., that the conviction and sentence will not receive any further review, and shall be final. The trial courts must be sure to obtain, on the record, an affirmative response from the defendant that he or she understands the rights as explained, that the defendant is giving up those rights, and that the defendant is doing so voluntarily after discussing same with counsel. The mere explanation of the right to appeal and the consequences of a waiver without an affirmative response from the defendant is insufficient to effect a valid waiver … . We are mindful of the time demands on our trial courts, which are burdened with heavy calendars, and recognize that such a thorough colloquy is not necessary in every case to secure a valid waiver of the right to appeal. Nevertheless, the benefit to be derived therefrom by defendants, who are asked to waive a fundamental right, by the People, who have bargained for a waiver of the defendant’s right to appeal, and by appellate courts faced with determining the validity of such waivers, outweighs any burden imposed on the trial courts by a slight increase in the length of the plea proceedings.  People v Brown, 2014 NY Slip Op 06101, 2nd Dept 9-10-14

 

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Even Though the Appeal Had Been Rendered Moot, It Was Appropriate for the Appellate Court to Vacate the Underlying Order

The Second Department explained that, although the appeal had been rendered academic, it was appropriate for the appellate court to vacate the underlying order in order to prevent the order from spawning any further legal proceedings:

While it is the general policy of New York courts to simply dismiss an appeal which has been rendered academic, vacatur of an order or judgment on appeal may be an appropriate exercise of discretion where necessary “in order to prevent a judgment which is unreviewable for mootness from spawning any legal consequences or precedent” … . Here, the plaintiffs sold the premises and satisfied the subject mortgage under threat of foreclosure. They ” ought not in fairness be forced to acquiesce in'” the unreviewable order, which could spawn adverse legal consequences due to its res judicata effect … . Accordingly, we vacate so much of the order … as awarded the defendants summary judgment dismissing the complaint. Mannino v Wells Fargo Home Mtge Inc, 2014 NY Slip Op 05846, 2nd Dept 8-20-14

 

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Clause in Appeal-Waiver Agreement Which Purported to Vacate Plea and Sentence Upon the Filing of a Notice of Appeal Unenforceable

The First Department determined defendant’s waiver of his right to appeal was not adequately explained by the sentencing court and further determined a clause in the waiver agreement is unenforceable.  The Clause purported to vacate the plea and sentence if a notice of appeal is filed:

,,,[W]e agree with defendant that the clause in the waiver agreement that purportedly treats the filing of a notice of appeal by defendant as a motion to vacate the judgment to be unenforceable. Specifically, the waiver form included the following clause:

“If the defendant or the defendant’s attorney files a notice of appeal that is not limited by a statement to the effect that the appeal is solely with respect to a constitutional speedy trial claim or legality of the sentence, they agree that the District Attorney and or Court may deemed such filing to be a motion by the defendant to vacate the conviction and sentence, and will result, upon the application and consent of the District Attorney, in the plea and sentence being vacated and this indictment being restored to its pre-pleading status.”

This clause is unenforceable because there is no statutory authority to vacate a judgment under these circumstances (CPL 440.10,,,).

Further, this language discourages defendants from filing notices of appeal even when they have claims that cannot be waived, such as one concerning the lawfulness of the waiver or the plea agreement itself. “[A]n agreement to waive appeal does not foreclose appellate review in all situations” … . If the agreement to waive were itself sufficient to foreclose appellate review, “the court would then be deprived of the very jurisdictional predicate it needs as a vehicle for reviewing the issues that survive the waiver” … . The language in the written waiver, in essence, purports to prevent appellate claims that have been found by the courts to be “unwaivable” precisely because of their constitutional import … . People v Santiago 2014 NY Slip Op 05493, 1st Dept 7-24-14

 

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Petitioner Did Not Demonstrate Need for Involuntary Assisted Outpatient Treatment/Case Presented an Exception to the Mootness Doctrine

The Second Department determined the petitioner did not demonstrate that Luis G met the criteria for involuntary assisted outpatient treatment (AOP).  By the time of the appeal, the order for involuntary AOP had expired.  The Second Department explained the exception to the mootness doctrine which allowed the court to rule in the matter:

Generally, “an appeal will be considered moot unless the rights of the parties will be directly affected by the determination of the appeal and the interest of the parties is an immediate consequence of the judgment” … . “However, an exception to the mootness doctrine permits courts to preserve for review important and recurring issues which, by virtue of their relatively brief existence, would be rendered otherwise nonreviewable” … .

* * * There is an issue as to whether the Supreme Court properly determined that the petitioner demonstrated that Luis G. met all the criteria for involuntary assisted outpatient treatment (hereinafter AOT), as set forth in Mental Hygiene Law § 9.60. This issue has a likelihood of recurrence, either between the petitioner and Luis G. due to his chronic mental illness, or between the petitioner and other patients who may be the subject of involuntary AOT proceedings. In addition, this issue would typically evade appellate review, as involuntary AOT orders have a maximum duration of six months unless extended by a subsequent court order (see Mental Hygiene Law § 9.60[j][2]; [k]). Further, the issue raised on appeal has not been the subject of prior appellate review and is substantial and novel … .

The petitioner failed to demonstrate by clear and convincing evidence that Luis G. met the criteria of Mental Hygiene Law § 9.60(c)(4), as no evidence indicated that he was hospitalized twice during the 36 months prior to the filing of the petition for involuntary AOT, as required by statute (see Mental Hygiene Law §§ 9.60[c][4][i], [j][2]). Moreover, the petitioner failed to establish by clear and convincing evidence that, during the 48 months prior to the filing of the petition for involuntary AOT, Luis G. engaged in any act of serious violent behavior toward himself or others, or threatened or attempted to cause serious physical harm to himself or others … . Matter of Walsh-Tozer v Luis G, 2014 NY Slip Op 04500, 2nd Dept 6-18-14

 

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Conditioning Plea Offer Upon Withdrawal of a Constitutional Speedy Trial Motion Is an Inherently Coercive Mode of Proceedings Error

The Third Department determined that the People’s conditioning of a plea bargain on the defendant’s withdrawal of his constitutional speedy trial motion was a mode of proceedings error requiring reversal:

…[T]he Court of Appeals has recently cited to People v Blakley (34 NY2d at 315) as an example of the “mode of proceedings” exception to the preservation rule (People v Hanley, 20 NY3d 601, 604, 605 n 2 [2013]). In that case, the Court held that conditioning a plea on a waiver of a constitutional speedy trial claim is “inherently coercive” (People v Blakley, 34 NY2d at 313). The narrow mode of proceedings exception speaks to fundamental flaws that implicate “rights of a constitutional dimension that go to the very heart of the process” … . Where, as in Blakley, the People condition a plea offer on the defendant’s waiver of his or her constitutional speedy trial claim, the integrity of the judicial process has been undermined … .

Here, the People expressly conditioned the plea offer on defendant’s withdrawal of his constitutional speedy trial motion, while the hearing on this issue was still pending. To make matters worse, the offer was set to expire as soon as the hearing resumed … . This is the type of prosecutorial bartering expressly prohibited as “inherently coercive” in People v Blakley (34 NY2d at 313). A trial court has a core obligation to recognize and prevent such an unfair tactic, but here the court simply reiterated the impermissible condition of the plea and waiver … . People v Wright, 2014 NY Slip Op 04976, 3rd Dept 7-3-14

 

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Court’s Erroneous Jury Instruction Re: State’s Territorial Jurisdiction Over the Alleged Crime Was Not a Mode of Proceedings Error—Objection Is Required to Preserve the Issue for Appeal

The First Department determined that the court’s erroneous jury instruction concerning the state’s terretorial jurisdiction over the case, as opposed to whether the state actually had territorial jurisdiction, required preservation by objection:

The trial court instructed the jury that the prosecution was required to establish the State’s territorial jurisdiction by a preponderance of evidence. As the People concede, the charge was erroneous in this regard . On the contrary, the People were required to establish the State’s territorial jurisdiction by proof beyond a reasonable doubt (see People v McLaughlin, 80 NY2d at 470). Moreover, territorial jurisdiction is not waivable (id. at 471). Our analysis, however, does not end with a citation to McLaughlin. The issue before us involves the trial court’s charge on jurisdiction as opposed to jurisdiction itself. Although a challenge to a court’s territorial jurisdiction cannot be waived, a claim of error in a court’s instructions on the subject requires preservation by way of an appropriate objection at the court of first instance. Nonetheless, the requirement of preservation is subject to an exception that exists for “mode of proceedings” errors that consist of the most fundamental flaws implicating jurisdictional matters or constitutional rights that go to the very heart of the criminal justice process … . Defendant asserts that the mode of proceedings exception applies here. People v Carvajal (6 NY3d 305 [2005]), a case involving an interstate drug operation, is illustrative. In Carvajal, the Court noted that the defendant had “relinquished his opportunity to hold the People to their burden of proof, and did not preserve his current contention that the jury should have decided whether the People proved jurisdiction beyond a reasonable doubt” (id. at 311-312). Citing People v Greenberg (89 NY2d 553 [1997]), the Carvajal Court aptly observed that “a defendant’s failure to request a jury charge on territorial jurisdiction amounts to a waiver of a jury charge claim, that failure does not amount to waiver of the fundamental question whether – as a matter of law – this State has the power to hear the case” (id. at 312). In this case, it is undisputed that defendant did not object to the trial court’s erroneous charge on the burden of proof with respect to territorial jurisdiction. Guided by Carvajal, we find that defendant was required, but failed, to preserve his present challenge to the trial court’s charge on jurisdiction.  People v Polk, 2014 NY Slip Op 04561, 1st Dept 6-19-14

 

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