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PLAINTIFFS PROPERLY ALLOWED TO AMEND THE COMPLAINT TO ADD THE INSURER (WHICH PAID PLAINTIFFS FOR THEIR LOSSES) AS A PLAINTIFF UNDER THE RELATION-BACK DOCTRINE (AFTER THE STATUTE OF LIMITATIONS HAD RUN FOR AN INDEPENDENT SUBROGATION ACTION) (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Friedman, determined Supreme Court properly allowed plaintiffs to amend the complaint to add the insurer which paid plaintiffs’ losses as a plaintiff. The statute of limitations had passed for a separate subrogation action:

While an application to amend a pleading pursuant to CPLR 3025 lies within the court’s sound discretion, “there is no sound basis in law to grant amendment pursuant to CPLR 3025(c) to add an untimely claim” … . Thus, a pleading cannot be amended to assert a new claim for which the statute of limitations has expired unless the assertion of the new claim is deemed to relate back to an earlier operative pleading that was filed while the new claim still would have been timely (see id.). Whether a new claim relates back to the time of the filing of the earlier pleading is governed by CPLR 203(f), which provides:

“A claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading.”

In determining whether the original pleading provides the requisite notice of the transactions or occurrences underlying the proposed new claim, a court “should not . . . look[] beyond the four corners of the original pleading” … . * * *

… [T]he “transactions, occurrences, or series of transactions or occurrences” referenced in CPLR 203(f), and to be proved in support of the subrogation claim interposed in the proposed [amended complaint] — defendants’ management of the renovation project — are precisely the same “transactions, occurrences, or series of transactions or occurrences” alleged in the earlier complaints. As plaintiffs point out, the only effect of the assertion of the subrogation claim is to shift the claim for a portion of the damages allegedly caused by defendants’ alleged wrongdoing from the … plaintiffs to … their insurer. 217 Trust v VIR Constr., Inc, 2026 NY Slip Op 04824, First Dept 7-30-26

Practice Point: Here plaintiffs’ insurer, which paid plaintiffs for losses which are the subject of the complaint, was properly added to the complaint as a plaintiff, after the statute of limitations for a separate subrogation action had passed, pursuant to the relation-back doctrine.

 

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WHERE THE PROPERTY OWNER DIES INTESTATE, AND THE PLAINTIFF IS NOT SEEKING A DEFICIENCY JUDGMENT, THE FORECLOSURE ACTION MAY BE BROUGHT DIRECTLY AGAINST THE HEIRS OF THE PROPERTY OWNER; THE ESTATE IS NOT A NECESSARY PARTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the foreclosure action against the heir of the decedent property owner should not have been dismissed. Where the property owner dies intestate, and plaintiff is not seeking a deficiency judgment, the foreclosure action can proceed directly against the heirs of the property owner. The estate is not a necessary party:

… [Where] “a property owner dies intestate, title to real property is automatically vested in his or her distributees” … . “Thus, where a mortgagor/property owner dies intestate and the mortgagee does not seek a deficiency judgment, generally a foreclosure action may be commenced directly against the distributees” … . Here, because the decedent died intestate, and because the plaintiff no longer seeks a deficiency judgment, the decedent’s estate was not a necessary party, and the plaintiff could proceed directly against the distributees of the decedent’s estate … . Deutsche Bank Natl. Trust Co. v Unknown Heirs to the Estate of Jacinto Ortiz, 2026 NY Slip Op 04745, Second Dept 7-29-26

Practice Point: Where the property owner dies intestate, and plaintiff is not seeking a deficiency judgment, the foreclosure action may proceed directly against the distributees, the estate is not a necessary party.

 

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THE REFEREE’S REPORT REFERRED TO UNPRODUCED DOCUMENTS RENDERING IT INADMISSBILE HEARSAY (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed. The documents upon which the report was based were not produced, rendering the report inadmissible hearsay:

… [T]he plaintiff’s motion which were to confirm the referee’s report and for a judgment of foreclosure and sale should have been denied. “The report of a referee should be confirmed whenever the findings are substantially supported by the record, and the referee has clearly defined the issues and resolved matters of credibility” … . However, computations based upon a review of unidentified and unproduced business records constitute inadmissible hearsay and lack probative value … .

Here, the referee’s report indicates, among other things, that “[t]he information contained herein was obtained from the books and records of plaintiff pertaining to the defendants’ loan and payment history.” However, the record does not reflect that those books and records were annexed to an affidavit of an another officer of the plaintiff’s former loan servicer. As the defendants contended in opposition to the plaintiff’s motion, inter alia, to confirm the referee’s report and in support of their cross-motion, among other things, pursuant to CPLR 4403 to reject the referee’s report, and as they contend on appeal, the referee’s computations as to the amounts due to the plaintiff for advances of taxes and insurance were based on unidentified and unproduced business records, and therefore, the referee’s assertions in those regards constituted inadmissible hearsay and lacked probative value … . Bank of N.Y. Mellon v Prestia, 2026 NY Slip Op 04735, Second Dept 7-29-26

 

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TO STATE A MERITORIOUS CLAIM AGAINST THE STATE IN THE COURT OF CLAIMS, CLAIMANT NEED NOT MAKE OUT A PRIMA FACIE CASE; IT IS ENOUGH THAT THE CLAIM HAS THE APPEARANCE OF MERIT; HERE CLAIMANT’S APPLICATION FOR PERMISSION TO FILE A LATE CLAIM SHOULD HAVE BEEN GRANTED (FOURTH DEPT). ​

The Fourth Department, reversing the Court of Claims, determined claimant’s application for permission to file a late claim should have been granted. The Court of Claims found that claimant did not demonstrate a meritorious claim. The Fourth Department explained that a claimant need not make out a prima facie case at this stage. If the claim is not patently groundless, frivolous or legally defective it should be deemed meritorious:

… [W]hile being treated in the inpatient psychiatric unit at Upstate, she was restrained by security officers and nurses because she was engaging in self-harm or had refused medication and injection. According to claimant, security officers escorted her to a seclusion room and forcefully pinned her down, with several security officers lying on top of her while her left arm was underneath her body. Claimant’s medical records confirmed that four security officers and two nurses were involved in the restraining incident. Claimant allegedly screamed out in pain, and a nurse told the security officers to get off of her. Consistent with claimant’s allegations, the medical records establish that, as a result of the incident, claimant suffered a dislocated left elbow, which first required a closed reduction under sedation and placement of a cast and later required surgery under general anesthesia to correct the recurrent instability in her elbow and a complete tear of the ligament complex.

… [T]he evidence presented by claimant in support of the application demonstrates that the security officers and nurses may have caused her injuries, as she alleges, by negligently applying excessive force while attempting to restrain her … . Further, contrary to the State’s assertion, to the extent that Upstate’s account of the incident in the medical records suggests that claimant somehow dislocated her own elbow, that notation created at most a factual issue with respect to causation … . Consequently, on this record, it cannot be said that “the claim raised is patently groundless, frivolous or legally defective” … . … [C]aimant’s submissions on the application are sufficient, at this stage in the proceedings, to demonstrate that there appears to be merit to her claim within the meaning of Court of Claims Act § 10 (6) … . Viola v SUNY Upstate Univ. Hosp., 2026 NY Slip Op 04604, Fourth Dept 7-24-26

Practice Point: In seeking permission to make a late claim in the Court of Claims, claimant need not make out a prima facie case. It is enough that the claim has the appearance of merit, i.e., that it is not patently groundless, frivolous or legally defective.

 

DEFENDANT’S COUNTERCLAIMS MADE IN AN ACTION IN WHICH A DEFAULT JUDGMENT WAS GRANTED ARE NOT BARRED BY THE RES JUDICATA DOCTRINE; DEFENDANT, NOW AS A PLAINTIFF, CAN BRING A NEW ACTION BASED ON THE COUNTERCLAIMS; NEW YORK IS A “PERMISSIVE COUNTERCLAIM” JURISDICTION (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, over a dissent, determined the causes of action first brought as counterclaims in a prior action were not barred by the res judicata doctrine after a default judgment in the prior action:

“New York does not have a compulsory counterclaim rule” … . Thus, a defendant who fails to bring a counterclaim in an action that results in an adverse judgment will be barred from bringing that same claim only if ” ‘the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first’ ” … . Stated another way, “the permissive counterclaim rule operates to save from the bar of res judicata those claims for separate or different relief that could have been but were not interposed in the parties’ prior action so long as the second action is not based on a preexisting claim for relief that would impair the rights or interests established in the first action” … .

Inasmuch as the judgment sought by plaintiff in this action would not ” ‘destroy or impair rights or interests established’ ” by defendant’s default judgment in the prior action … , plaintiff’s complaint is not barred by the doctrine of res judicata. The mere fact that a counterclaim may serve as an offset to lessen the net amount owed to a plaintiff is not, in and of itself, sufficient to “impair” the rights established as a result of a default judgment inasmuch as every counterclaim—to the extent established by a defendant—provides an offset to the initial claim … . Vince’s Pizza Plus, Inc. v Dion DeFedericis, 2026 NY Slip Op 04598, Fourth Dept 7-24-26

Practice Point: New York is a “permissive counterclaim” jurisdiction. Therefore counterclaims made by a defendant in a prior action which resulted in a default judgment can be the basis of a new action brought by the defendant, now as a plaintiff, without triggering the res judicata doctrine.

 

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WHERE THE SENTENCING JUDGE ORDERS DOCCS TO ENROLL DEFENDANT IN A SHOCK PROBATION PROGRAM, DOCCS CANNOT CONSIDER THE ORDER TO BE MERELY A RECOMMENDATION WHICH CAN BE IGNORED (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Clark, determined the Department of Corrections and Community Supervision (DOCCS) did not have the discretion to treat Supreme Court’s order to enroll petitioner in the shock probation program as a recommendation which need not be implemented. Although the petitioner had been released from incarceration, the Third Department considered the case as an exception to the mootness doctrine:

… [W]hen applying the literal language of Penal Law § 60.04 (7) (a) and Correction Law § 865 (1), the most rational interpretation of the statutes is that, when the same sentencing judge imposes concurrent sentences on convictions for an eligible drug offense and another non-enumerated offense, the sentencing judge’s directive to enroll an eligible incarcerated individual into the shock incarceration program upon the conviction for the qualifying drug offense is binding on DOCCS, so long as the conviction on the additional non-drug offense is not one of the disqualifying offenses listed in Correction Law § 865 (1). Matter of Adams v Martuscello, 2026 NY Slip Op 04542, Second Dept 7-23-26

Practice Point: Absent a statutory exception, DOCCS must implement a sentencing judge’s order to enroll defendant in the shock probation program.

 

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STATUTORY PENALTIES ARE NOT AVAILABLE IN CLASS ACTIONS UNLESS THE STATUTE SPECIFICALLY AUTHORIZES RECOVERY IN A CLASS ACTION, NOT THE CASE HERE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the class action plaintiffs were not entitled to class certification for the causes of action seeking statutory penalties and attorneys’ fees for failure to provide wage notices and statements in violation of Labor Law section 195 (1) and (3):

CPLR 901(b) provides that, “[u]nless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.” The Labor Law provides for statutory penalties for violations of Labor Law § 195(1) and (3) (see id. §§ 198[1-b], [1-d] …). Inasmuch as Labor Law § 198(1-b) and § 198(1-d) do not specifically authorize recovery as part of a class action, the court should not have granted certification with respect to those issues … Maylou v Mittal, 2026 NY Slip Op 04497, Second Dept 7-22-26

Practice Point: Here the class action plaintiffs sought recovery of statutory penalties. The statutory penalties could not be recovered in a class action because the statute did not explicitly so provide.

 

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FAMILY COURT DID NOT HAVE JURISDICTION TO CONDUCT A “BEST INTERESTS OF THE CHILD” HEARING WHERE THE AUTHORIZED ADOPTION AGENCY WITHDREW ITS CONSENT TO THE ADOPTION; THE SECOND DEPARTMENT ASKED THE LEGISLATURE TO ADDRESS THIS STATUTORY PROBLEM (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Wooten, was constrained to find that the court did not have jurisdiction to conduct a “best interests of the child” hearing where the authorized adoption agency withdrew its consent to the adoption. The Second Department explained that the current statutory scheme places an authorized adoption agency in the role typically performed by Family Court and requested that the Legislature address the problem:

The primary issue presented by this appeal is whether a court reviewing an adoption proceeding has jurisdiction to entertain a hearing to determine the best interests of a child where an authorized agency with custody of the child has withdrawn or withheld its consent to the adoption petition. We are constrained by the statutory scheme for adoptions from an authorized agency to answer that question in the negative. However, the circumstances underlying this proceeding highlight the potential conflict between the governing statutory law and the paramount concerns of the best interests of the child and achieving permanency. We therefore take this occasion to ask the New York State Legislature to consider whether changes are needed to ensure the best interests of children placed in the custody of authorized agencies for the purpose of adoption. * * *

… [B]efore a best interests hearing was conducted, the proposed adoptive father withdrew the adoption petition insofar as asserted by him on the ground that he was no longer seeking to jointly adopt the child with the appellant. The proposed adoptive father’s withdrawal of the joint adoption petition insofar as asserted by him was precipitated by the biological parents’ decision to support adoption of the child by the proposed adoptive father alone.

,,, [T]he agency withdrew its consent to the joint adoption of the child by the proposed adoptive parents on the ground that the proposed adoptive father “is no longer petitioning the Court to adopt jointly with [the appellant].” The agency then moved to dismiss the adoption petition on the ground that the Family Court lacked jurisdiction to entertain the adoption petition due to the agency’s withdrawal of its consent to the joint adoption. In support of the motion, the agency argued that dismissal of the adoption petition was mandated, without a best interests hearing, since the agency had lawful custody of the child and, therefore, its consent to the adoption was required pursuant to Domestic Relations Law § 111. Matter of Aurora A. (Leigh A.–Giuseppe A.), 2026 NY Slip Op 04500, Second Dept 7-22-26

 

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A POLICE REPORT INDICATING DEFENDANT WAS “HIGHLY INTOXICATED” AT THE TIME OF THE SHOOTING WAS NOT ADMISSIBLE AS A BUSINESS RECORD, CRITERIA EXPLAINED IN SOME DEPTH (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Powers, affirmed County Court’s ruling that a police report which indicated defendant was “highly intoxicated” was not admissible as a business record. Defendant sought to use the report as a basis for his expert’s testimony (presumably to the effect that defendant was intoxicated at the time of the shooting):

It is uncontested that the drafter of the report, a lieutenant with the State Police, did not observe the events described therein or, more specifically, defendant’s level of intoxication that night. The inquiry thus distills to whether defendant, as the proponent of the report, sufficiently demonstrated that the source of the statement that he was “highly intoxicated” was an individual with a duty to report such information. We find that defendant failed to meet this burden. The hearing testimony demonstrated that the lieutenant drafted the report based upon information received from numerous sources. However, he was unable to identify who had reported defendant to be highly intoxicated. Defendant’s argument that, because the scene had been secured, the statement must have come from a responding officer’s personal observations is entirely speculative, as nothing in the language of the report itself or the record confirms that an officer was the source of the statement. It is possible that the clause was included based upon defendant’s fiance’s description of defendant as “drunk as a skunk” when making a 911 call that evening. She, as opposed to responding law enforcement, had no business duty to report … . Because defendant did not meet this foundational requirement by demonstrating that “the initial declarant was] acting within the course of regular business conduct,” he failed to demonstrate the admissibility of the report, as well as the specific statement at issue, pursuant to the business records exception … . People v Mawhiney, 2026 NY Slip Op 04460, Third Dept 7-16-26

Practice Point: Here defendant unsuccessfully sought to have a police report which indicated he was highly intoxicated at the time of the shooting admitted as a business record. The criteria for admission as a business record are explained in depth.

 

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A DISCOVERY RULE ENACTED IN 2018 REACHED BACK TEN MONTHS BEFORE THE RULE WAS ENACTED TO RENDER TIMELY THIS MEDICAL MALPRACTICE CAUSE OF ACTION ALLEGING THE NEGLIGENT FAILURE TO DIAGNOSE CANCER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the medical malpractice cause of action alleging the negligent failure to diagnose cancer was rendered timely by a discovery rule which reaches back ten months before the discovery rule was enacted:

The causes of action arising from negligent failure to diagnose cancer accrued on October 23, 2014, when the defendants failed to advise [plaintiff] to submit to additional testing, such as a mammogram. However, the 2018 enactment also includes a provision providing for the revival of certain causes of action, such that an action may be commenced within six months after the effective date, i.e., by July 31, 2018, when it alleges a failure to diagnose cancer or a malignant tumor, and when it became time-barred within 10 months prior to the effective date of the statute—January 31, 2018, that is, on or after March 31, 2017 (see L 2018, ch 1, § 4…). Here, the causes of action qualify for revival pursuant to that provision, as they became time-barred in April 2017, within the 10-month period prior to the act’s effective date, and this action was commenced on June 11, 2018, prior to the July 31, 2018 deadline … . Rhodes v Dilena, 2026 NY Slip Op 04444, Second Dept 7-15-26

Practice Point: Consult this decision for an explanation of the application of the discovery rule enacted in 2018 providing for the revival of a medical malpractice action alleging negligent failure to diagnose cancer after the statute of limitations expired.

 

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