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THE PETITION RAISED THE QUESTION WHETHER THE APPELLANT’S DAUGHTER AND THE FAMILY ATTORNEY CAUSED THE APPELLANT TO MISS THE DEADLINES FOR FILING A SPOUSAL ELECTION; ALTHOUGH THE STATUTORY DEADLINES CANNOT BE EXTENDED, THE MATTER OF FIRST IMPRESSION HERE ASKS WHETHER APPELLANT’S DAUGHTER IS EQUITABLY ESTOPPED FROM INVOKING THE DEADLINES (FIRST DEPT).

The First Department, reversing Surrogate’s Court, in a full-fledged opinion by Justice Shulman, in a matter of first impression, over an extensive dissenting opinion, determined the facts alleged, if proven, could support the application equitable estoppel to preclude respondent-daughter from invoking statutory deadlines preventing her mother (the appellant) from filing a spousal election. The petition raised the question whether respondent daughter and the family attorney caused appellant to miss the deadlines:

Appellant is the 88-year-old surviving spouse of the decedent, her husband of 64 years. Over the course of their marriage, they acquired, rehabilitated, and operated 14 East Village buildings forming the core of a family real estate enterprise ultimately valued at more than $45 million. Appellant handled day-to-day management while the decedent handled the financials. Their two children include respondent and a son, Carlo. * * *

Following the decedent’s death, appellant experienced significant medical challenges and cognitive vulnerability leading to hospitalization and rehabilitation. During this period, the family’s long-time attorney, nonparty Gregg Weiss, prepared a broad, highly customized power of attorney naming respondent as attorney-in-fact. This document granted wide authority, with powers far beyond those typically granted in the statutory form, including the power to engage in trust related transactions. It was brought to appellant in the rehabilitation facility, where she signed it without any discussion or explanation of its consequences. * * *

Despite representing appellant and decedent’s estate at the time, Weiss never provided appellant with any drafts beforehand, nor is there any indication Weiss reviewed drafts with her or discussed their legal significance. These are just some of the facts the petition alleges that were the product of fiduciary nondisclosure and conflict. Critically, a video recording in the record shows respondent presenting the documents to appellant, who mutely signs them while visibly medicated on Lorazepam and impaired, without reading or understanding their terms. Matter of Giurdanella, 2026 NY Slip Op 06234, First Dept 10-22-26

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THE BANK DID NOT DEMONSTRATE IT HAD STANDING TO FORECLOSE; THE PROOF OF POSSESSION OF THE NOTE AND MORTGAGE DOCUMENTS AT THE TIME THE ACTION WAS BROUGHT WAS DEFICIENT; CRITERIA EXPLAINED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the bank in this foreclosure proceeding was not entitled to summary judgment because it did not establish standing to foreclose:

Although plaintiff attached a copy of the underlying note to the complaint and affirmed therein that it was in possession of the note prior to commencement of the action, the copy of the note attached to the complaint was not endorsed in blank, specially endorsed to plaintiff or accompanied by an allonge containing the required endorsements … . “[W]here there is no allonge or note that is either endorsed in blank or specially endorsed to the plaintiff, mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note” … .

Plaintiff’s evidence in support of its summary judgment motion also did not establish its standing to foreclose the mortgage. In that regard, plaintiff submitted with its motion papers, among other things, a copy of the underlying note and two undated allonges, one of which contained a special endorsement that made the note payable to the order of plaintiff. However, mere possession of such allonges was insufficient to establish standing without evidence that they were “so firmly affixed” to the note “as to become a part thereof” at the time the action was commenced (UCC § 3-202 [2] … ). U.S. Bank N.A. v Sukljian, 2026 NY Slip Op 06191, Third Dept 10-22-26

Practice Point: Consult this decision for a detailed description of the documents the bank must possess to have standing to bring a foreclosure action.

 

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EVEN THOUGH DEFENDANT HAD THE RIGHT OF WAY, A JURY COULD FIND THAT PLAINTIFF’S VEHICLE WAS ALREADY IN THE INTERSECTION AND DEFENDANT FAILED TO USE REASONABLE CARE TO AVOID THE COLLISION; DEFENDANTS’ MOTION FOR A JUDGMENT AS A MATTER OF LAW DISMISSING THE COMPLAINT SHOULD NOT HAVE BEEN GRANTED; EVIDENCE OF DAMAGE TO THE VEHICLES SHOULD NOT HAVE BEEN PRECLUDED IN THE LIABLITY PORTION OF THE TRIAL BECAUSE THE NATURE OF THE DAMAGE HAD SOME RELEVANCE TO LIABILITY (SECOND DEPT).

The Second Department, reversing Supreme Court and ordering a new trial in this intersection traffic-accident case, determined defendants were not entitled to a judgment as a matter of law dismissing the complaint at the close of plaintiff’s case. The Second Department held that a jury could find that, although defendant (Capobianco) had the right of way, plaintiff was already in the intersection and Capobianco failed to exercise reasonable care to avoid the collision. In addition, the Second Department found that Supreme Court should not have excluded evidence of the damage to the vehicles because the damage was relevant to liability for failure to see what should have been seen:

Pursuant to Vehicle and Traffic Law § 1142(a), a driver entering an intersection controlled by a stop sign must yield the right-of-way to any other vehicle that is already in the intersection or that is approaching so closely as to constitute an immediate hazard … , and a driver with the right-of-way is entitled to assume that other drivers will obey the traffic law requiring them to yield … . A driver also has a common-law duty to see that which should have been seen through the proper use of the driver’s senses … . Thus, while a driver with the right-of-way who has only seconds to react to a vehicle that has failed to yield is not comparatively negligent for failing to avoid the collision … , he or she still has a duty to exercise reasonable care to avoid a collision with another vehicle already in the intersection … .

Here, affording the plaintiff every inference which may properly be drawn from the facts presented, and considering the facts in the light most favorable to the plaintiff, there is a rational process by which the jury could have found that even if Capobianco had the right-of-way, the plaintiff’s vehicle was already in the intersection, and that Capobianco failed to exercise reasonable care to avoid the collision … . Accordingly, the Supreme Court should have denied the defendants’ motion pursuant to CPLR 4401 for judgment as a matter of law dismissing the complaint.

In addition, the Supreme Court improvidently exercised its discretion in precluding photographs depicting the nature and extent of damage to the parties’ vehicles after the accident. Even where a trial is bifurcated, some evidence of damages may nevertheless be admitted, in the trial court’s discretion, to establish liability at the liability phase of the trial, so long as such evidence is probative of liability and accompanied by an appropriate limiting instruction … . Pruessen v Richard Capobianco, Inc., 2026 NY Slip Op 06155, Second Dept 10-21-26

Practice Point: A driver who had the right of way may still be liable in an intersection traffic accident if the other driver was already in the intersection and the driver who had the right of way did not exercise reasonable care to avoid the collision.

Practice Point: In a bifurcated traffic-accident trial, evidence of the nature of the damage to the vehicles may have relevance to liability and, if so, should be admitted.

 

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HERE THE ARBITRATOR’S AWARD BECAME DORMANT WHEN DE NOVO PROCEEDINGS WERE STARTED BUT WAS REVIVED WHEN THE DE NOVO PROCEEDINGS WERE DISMISSED FOR FAILURE TO COMPLY WITH DISCOVERY DEMANDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the arbitration award remained dormant when the de novo proceedings were brought but revived when the de novo proceedings were dismissed for failure to comply with discovery demands:

… [T]he commencement of the de novo action did not eliminate the master arbitration award but only placed it in a dormant state. An award by an arbitrator shall be binding, except for the grounds for review set forth in CPLR article 75, and except where a de novo review is sought (see Insurance Law § 5106[c]). Under certain circumstances, an arbitration award is presumed to be dormant while the de novo action is pending … . An arbitration award is revived when that action is dismissed for failure to prosecute or other similar basis not on the merits … . Here, the dismissal of the complaint in the instant action due to the plaintiff’s failure to comply with discovery demands revived the master arbitration award and made it binding on the parties. Thus, under the circumstances, the Supreme Court should have granted that branch of the defendant’s motion which was to confirm the master arbitration award … . American Tr. Ins. Co. v Bliss Acupuncture, P.C., 2026 NY Slip Op 06081, Second Dept 10-21-26

Practice Point: Here the arbitrator’s award became dormant when de novo proceedings were brought but was revived when the de novo proceedings were dismissed for failure to comply with discovery demands.

 

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DENIAL OF DEFENDANT’S MOTION TO SERVE A LATE ANSWER WAS AN ABUSE OF DISCRETION; THE DELAY WAS SHORT (18 DAYS), CREATED NO PREJUDICE, AND THE LAW OFFICE FAILURE WAS REASONABLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s (Husain’s) motion to serve a late answer should have been granted:

The 18-day delay in answering the complaint was relatively short and plaintiff suffered no prejudice from the delay; indeed, Husain has already been deposed by the wife’s counsel … . In addition, the law office failure that occasioned the delay was reasonable, and there is no evidence that it was due to willfulness. Husain’s counsel explained that he inadvertently missed the deadline for answering the amended complaint because of work obligations related to this action — namely, preparing for and participating in an April 10, 2025 arbitration hearing concerning related claims, as well as preparing for a June 2025 trial in this action — and because of a break for a religious holiday … . Given the surrounding circumstances, Supreme Court should have granted the motion, especially in light of the strong public policy in favor of resolving cases on the merits … .Dalessandro v Dalessandro, 2026 NY Slip Op 06000, First Dept 10-15-26

Practice Point: Consult this decision for insight into the factors a court should consider when ruling on a motion to serve a late answer.

 

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NEW GROUNDS OR EVIDENCE IN SUPPORT OF PLAINTIFFS’ MOTION TO DISMISS RAISED IN REPLY SHOULD NOT HAVE BEEN CONSIDERED (SECOND DEPT).

The Second Department, reversing Supreme Court, noted that new arguments or evidence presented in the reply papers should not have been considered:

… [P]laintiffs failed to establish that the defendant’s affirmative defense alleging the expiration of the statute of limitations was without merit as a matter of law. The plaintiffs’ moving papers did not support their conclusory allegations that the defendant’s treatment of the injured plaintiff beginning on May 11, 2021, and continuing through July 15, 2022, made their action timely based on the continuous treatment doctrine … . The plaintiffs’ attempt to remedy this deficiency by submitting portions of a purported medical chart through their counsel’s reply affirmation was improper. The function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new grounds or evidence in support of the motion … . Malone v Spaliviero, 2026 NY Slip Op 05948, Second Dept 10-14-26

Practice Point: Here new evidence submitted in reply papers should not have been considered by the court.

 

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A FEDERAL COURT APPOINTED PLAINTIFF-RECEIVER TO TAKE OVER A BUSINESS RUNNING A PONZI SCHEME; THE PLAINTIFF-RECEIVER SUED THE BROKER TO WHICH THE PONZI-SCHEME FUNDS WERE TRANSFERRED; BECAUSE PLAINTIFF-RECEIVER STEPPED INTO THE SHOES OF A WRONGDOER (THE PONZI SCHEME OPERATOR) TO SUE ANOTHER WRONGDOER (THE BROKER), THE “IN PARI DELICTO” (“IN EQUAL FAULT”) DOCTRINE APPLIED TO PROHIBIT THE SUIT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Michael, over a comprehensive dissenting opinion, determined the plaintiff-receiver (appointed by the federal court to takeover a business running a Ponzi scheme) was prohibited from suing the broker to which the Ponzi scheme funds were transferred by the doctrine of “in pari delicto” (“in equal fault”). Under the doctrine, the courts will not get involved in a suit between two wrongdoers. The issue in this case is whether the court-appointed receiver steps into the shoes of the “Ponzi scheme” wrongdoer. The First Department held that the doctrine applies to the receiver, over an extensive dissent:

The common law doctrine of in pari delicto “mandates that the courts will not intercede to resolve a dispute between two wrongdoers” … . In other words, the doctrine bars a corporation engaged in wrongdoing from suing its co-conspirators on the grounds of negligence or fraud … . “The justice of the in pari delicto rule is most obvious where a willful wrongdoer is suing someone who is alleged to be merely negligent” … . The notion that “a wrongdoer should not profit from his own misconduct is so strong in New York that we have said the defense applies even in difficult cases and should not be weakened by exceptions” … .

The wrongdoer’s misconduct is not only imputed to the corporation through the bad acts of its officers … , but also to the corporation’s successors … . …

Plaintiff [receiver] argues, and the dissent agrees, that the in pari delicto doctrine does not apply to plaintiff because he is not a derivative shareholder plaintiff or a bankruptcy trustee appointed pursuant to 11 USC § 541, but rather a receiver appointed pursuant to 28 USC § 3103. It is true that plaintiff, as a receiver, is not subject to section 541 of the Bankruptcy Code. Nevertheless, there is no significant difference between bankruptcy trustees and nonbankruptcy receivers for purposes of in pari delicto … . Castleman v Interactive Brokers LLC, 2026 NY Slip Op 05904, First Dept 10-13-26

Practice Point: Here the “in pari delicto” (“in equal fault”) doctrine was applied to prohibit a suit by a court-appointed receiver which had taken over a business running a Ponzi scheme. The receiver sued the broker to which the Ponzi-scheme funds had been transferred. Under the “in pari delicto” doctrine, a court will not get involved in a dispute between wrongdoers. The doctrine applies to a wrongdoer’s successor, even a court-appointed receiver.

 

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EQUIVOCAL AND CONTRADICTORY EVIDENCE DID NOT MEET THE “CLEAR AND CONVINCING” STANDARD FOR THE ISSUANCE OF AN “EXTREME RISK PROTECTION ORDER (ERPO)” (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Corcoran, determined the equivocal evidence submitted by the state police was not sufficient to warrant an Extreme Risk Protection Order (ERPO). Respondent, a Department of Motor Vehicles (DMV) employee, had expressed animosity toward his supervisor. During a videoconference meeting with DMV personnel and respondent, a rifle and a handgun were visible near the respondent. Respondent’s vague statements, which were interpreted as threats of violence, were equivocal, and may have referred to respondent’s intent to sue the DMV:

At the hearing, the DMV labor relations representative who conducted the first videoconference meeting testified that respondent appeared intense and aggravated and repeatedly expressed animosity toward his supervisor. The agency director who conducted the second meeting the next day described how respondent sat to the side of the video frame while a rifle, mounted on a stand, and a handgun were prominently displayed on a table behind him. A screenshot of the participants and the firearms display was received in evidence. According to the director, the placement of the firearms “felt very intentional.” He nevertheless completed the hearing without commenting on the firearms, explaining that he wanted to address respondent’s grievance without creating any unnecessary distraction. The following day, respondent called the labor relations representative, asserted that his supervisor had engaged in unlawful discrimination and suggested that he should be supervised by someone else during the investigation. The investigator’s report annexed to the petition reflected that respondent had acknowledged animosity in his “chain of command” and stated that “be[ing] under something that condescending is not going to go well. It’s not a good idea to work under someone in that matter [sic] and you’re going to see later that it’s not a good idea.” … The labor relations representative told the investigator that respondent may have been referring to his stated plan to sue DMV for defamation or discrimination. * * *

… [P]etitioner’s proof of respondent’s alleged threat was equivocal or contradictory, such that petitioner failed to satisfy the requisite burden of proof. Petitioner’s documentary evidence and the testimony adduced at the hearing suggest that respondent’s statement about things “not going to go well” connoted future litigation. … To be sure, Supreme Court acted well within its discretion in finding that respondent testified untruthfully about his knowing display of firearms and that petitioner’s witnesses were more credible. Nonetheless, based upon the equivocal characterizations of respondent’s implied threat contained within petitioner’s own documentary proof and the testimony adduced at the hearing, we are constrained to conclude that petitioner did not establish by clear and convincing evidence that respondent was likely to engage in conduct that would result in serious harm to others. Matter of New York State Police v Brian LL., 2026 NY Slip Op 05832, Third Dept 10-8-26

Practice Point: Consult this opinion for insight into the “clear and convincing” standard of proof in the context of a petition for an “Extreme Risk Protection Order (ERPO).” The standard is not met by equivocal and contradictory proof.

 

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A PUTATIVE CLASS ACTION SUIT ALLEGING MUSEUM ADMISSION TICKETS FAILED TO DISCLOSE THE FULL PRICE OF THE TICKET PROPERLY SURVIVED A MOTION TO DISMISS; THE “VOLUNTARY PAYMENT DOCTRINE” DID NOT APPLY (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Ottley, in a matter of first-impression, affirming the denial of the motion to dismiss, determined plaintiff stated a cause of action for a violation of the Arts and Cultural Affairs Law and had standing to bring a class action suit. The essence of the violation was the purported failure to disclose the full price of a ticket for admission to a museum, which included taxes and fees, prior to the ticket purchase. The cause of action is statutory. The “voluntary payment doctrine” was deemed inapplicable:

Arts and Cultural Affairs Law § 25.07(4) provides that the defendant shall disclose the total cost of the ticket, including ancillary fees, prior to the ticket being selected for purchase and that the “service charge, or any other fee or surcharge to the purchaser” be “disclosed in a clear and conspicuous manner” (id.). Arts and Cultural Affairs Law § 25.33 provides that “any person who has been injured by reason of a violation of this article may bring an action in his or her own name to enjoin such unlawful act, an action to recover his or her actual damages or fifty dollars, whichever is greater, or both such actions. The court may award reasonable attorney’s fees to a prevailing plaintiff.” * * *

The voluntary payment doctrine “bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law” … .

… [W]e conclude … the voluntary payment doctrine does not bar the plaintiff’s claims alleging violations of Arts and Cultural Affairs Law § 25.07(4) because such claims are predicated on a lack of full disclosure … . Cammayo v 1AND8, Inc., 2026 NY Slip Op 05762, Second Dept 10-7-26

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IN A FORECLOSURE PROCEEDING, IT IS AN AFFIRMATIVE DEFENSE THAT PLAINTIFF BANK FAILED TO COMPLY WITH 24 CFR 203.604 BY HOLDING A MEETING BEFORE ACCELERATING THE DEBT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the bank’s motion for summary judgment should not have been granted because plaintiff did not demonstrate compliance with 24 CFR 203.604 which requires a meeting before acceleration of the debt:

… [T]he plaintiff moved, among other things, for summary judgment on the complaint insofar as asserted against the defendant, to strike the defendant’s answer, and for an order of reference. In opposition, the defendant argued that the plaintiff was not entitled to accelerate the debt because it failed to comply with, inter alia, 24 CFR 203.604, a HUD regulation requiring a meeting prior to acceleration. * * *

… [T]he affirmative defense alleging a failure to comply with 24 CFR 203.604 was pleaded with the particularity required by CPLR 3015(a). Here, the plaintiff failed to establish that it complied with that regulation or that it was exempt from complying with it … . Accordingly, the court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint … . U.S. Bank N.A. v Ali, 2026 NY Slip Op 05823, Second Dept 10-7-26

Practice Point: Here the bank’s failure to demonstrate it complied with 24 CFR 203.604 by holding a meeting before accelerating the debt precluded summary judgment in this foreclosure action.​​

 

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