Civil Procedure Archives - New York Appellate Digest

PLAINTIFF BROUGHT A PERSONAL INJURY ACTION AFTER FILING FOR BANKRUPTCY AND BEFORE THE BANKRUPTCY ESTATE WAS FULLY ADMINISTERED BUT DID NOT DISCLOSE THE CAUSE OF ACTION IN THE BANKRUPTCY PROCEEDING; DEFENDANT WAS ENTITLED TO ASSERT THE JUDICIAL ESTOPPEL DEFENSE IN AN AMENDED ANSWER AND TO SUMMARY JUDGMENT DISMISSING THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant in a personal injury action should have been allowed to amend its answer to assert judicial estoppel and should have been granted summary judgment on the ground the plaintiff did not disclose the cause of action in the bankruptcy proceeding:

On July 6, 2012, the plaintiff filed a chapter 13 bankruptcy petition … in the United States Bankruptcy Court for the District of New Jersey … . … On September 3, 2014, the plaintiff allegedly was injured due to the defendant’s negligence. Thereafter, on July 2, 2015, the plaintiff commenced this action to recover damages for his injuries. … On December 4, 2017, a final decree was entered declaring the bankruptcy estate fully administered, and the bankruptcy case was closed. …

… [T]he plaintiff is judicially estopped from pursuing this action because he failed to disclose its existence to the bankruptcy court during the pendency of the chapter 13 bankruptcy proceeding … . The plaintiff had a continuing obligation to update his asset schedules throughout the pendency of the bankruptcy proceeding … . Flanders v E. W. Howell Co., LLC, 2021 NY Slip Op 02276, Second Dept 4-14-21

April 14, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Evidence

THE BEST EVIDENCE RULE AND THE DEAD MAN’S STATUTE PRECLUDED PLAINTIFF FROM PROVING HIS CASE, WHICH WAS BASED UPON A CONTRACT AND DECEDENT’S STATEMENTS ABOUT THE CONTRACT; ALTHOUGH THE DEAD MAN’S STATUTE USUALLY WILL NOT PRECLUDE EVIDENCE AT THE SUMMARY JUDGMENT STAGE, HERE IT IS CLEAR PLAINTIFF WILL NOT BE ABLE TO PROVE HIS CASE AT TRIAL (SECOND DEPT).

The Second Department determined defendants’ motion for summary judgment in this action based upon a contract between plaintiff and decedent was properly granted. The alleged copy of the contract was inadmissible pursuant to the best evidence rule, and any testimony about what the decedent said about the contract was prohibited by the Dead Man’s statute:

… [T]he plaintiff failed to adequately explain the unavailability of the original executed joint development agreement … . Moreover, even if the plaintiff met his threshold burden of explaining the unavailability of the original joint development agreement, he failed to establish that the copy was a reliable and accurate portrayal of the original … . The plaintiff’s proffered testimony that the copy was an exact copy of the original joint development agreement could not be offered at trial, as it was precluded by the application of the Dead Man’s Statute (see CPLR 4519 …). …

“New York’s Dead Man’s Statute by its terms makes testimony by an interested witness ‘concerning a personal transaction or communication between the witness and the deceased’ excludable only ‘[u]pon the trial of an action or the hearing upon the merits of a special proceeding'” … .Generally, “[e]vidence, otherwise relevant and competent upon a trial or hearing, but subject to exclusion on objection under the Dead Man’s Statute, should not predetermine the result on summary judgment in anticipation of the objection”… . Thus, evidence excludable at trial under CPLR 4519 may be considered in opposition to a motion for summary judgment … . However, a trial is unnecessary if it is certain that there would be no waiver of the statute and that all of the proof would be excludable … . Where, as here, the sole evidence proffered by the opposing party is barred by the Dead Man’s Statute, an award of summary judgment is appropriate … . Stathis v Estate of Donald Karas, 2021 NY Slip Op 02330, Second Dept 4-14-21

April 14, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Evidence, Negligence

CONFLICTING EVIDENCE ABOUT WHETHER THERE WAS VIDEO SURVEILLANCE OF THE AREA WERE PLAINTIFF ALLEGEDLY SLIPPED AND FELL PRECLUDED SUMMARY JUDGMENT (FIRST DEPT).

The First Department determined defendants’ motion for summary judgment in this slip and fall case was properly denied. The incident report indicated there was video surveillance of the area where plaintiff allegedly slipped and fell on blueberries on the supermarket (Bogopa’s) floor. An employee of defendant testified he did not know of any surveillance cameras in the supermarket:

The Bogopa defendants moved for summary judgment to dismiss the complaint. In support of their motion, the Bogopa defendants submitted, among other things, a store incident report which checked a “yes” box when asked if the incident was captured on video, which should be preserved. * * *

The record presents contradictory statements from the Bogopa defendants regarding whether surveillance videos recording the time and location of plaintiff’s fall were available and should have been preserved pursuant to an express video-preservation directive in the incident report prepared by the Bogopa defendants following plaintiff’s accident. While the incident report mentions a surveillance recording, the Bogopa defendant’s employee testified that he did not “know of” any surveillance cameras in the supermarket.

The Bogopa defendants argue in their motion for summary judgment that there is no evidence that establishes the existence of surveillance cameras in the supermarket. We disagree. Where, as here, potential video evidence existed of the alleged hazardous location that may have been of assistance to plaintiff in establishing whether defendants created and/or had notice of an alleged slippery, blueberry-strewn floor hazard, the motion by the Bogopa defendants for summary judgment dismissing the complaint against them should be denied. Banks v Bogopa, Inc., 2021 NY Slip Op 02236, Frist Dept 4-13-21

April 13, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Contract Law, Evidence

A THEORY ASSERTED FOR THE FIRST TIME IN OPPOSITION TO DEFENDANT’S SUMMARY JUDGMENT MOTION, AFTER DISCOVERY HAD ENDED, SHOULD NOT HAVE BEEN CONSIDERED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the defendants’ motion for summary judgment in this breach of contract action should have been granted. Plaintiff raised a new theory in opposition to the motion, after discovery had ended:

Plaintiff Frank Darabont, represented by his agent, plaintiff Creative Arts Associates, entered into an agreement to develop and run the television series The Walking Dead in exchange for fixed payments for each episode of the series, as well as backend compensation contingent upon the show’s profitability, as calculated based on “Modified Adjusted Gross Receipts” (MAGR), with defendant AMC Network Entertainment LLC producing the series and exhibiting it on its own cable channel.

Plaintiffs’ claim that AMC breached the implied covenant of good faith and fair dealing by crafting the formula for MAGR arbitrarily, irrationally, or in bad faith was improperly asserted for the first time in opposition to defendants’ motion for summary judgment … . … [T]here are no allegations in the complaint that AMC engaged in misconduct by formulating the MAGR definition in such a manner as to deprive plaintiffs of contractual benefits. … [I]t would be prejudicial to require AMC to defend against a theory of liability asserted only after discovery had concluded. Darabont v AMC Network Entertainment LLC, 2021 NY Slip Op 02240, First Dept 4-13-21

April 13, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Contract Law, Securities

IN THIS RESIDENTIAL-MORTGAGE-BACKED-SECURITIES BREACH OF CONTRACT ACTION, THE LAW OF THE CASE DOCTRINE DID NOT PRECLUDE RAISING THE “BORROWING STATUTE” (STATUTE OF LIMITATIONS) DEFENSE IN AN AMENDED ANSWER SERVED AS OF RIGHT (WITHOUT LEAVE OF COURT); LAW OF THE CASE DOCTRINE EXPLAINED IN SOME DEPTH (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gische, reversing (modifying) Supreme Court, determined that the amended answer with counterclaims, alleging for the first time that the action was untimely under the borrowing statute (CPLR 202), was properly served “as of right” (without leave of court) and the inclusion of the borrowing statute defense was not barred by the law of the case doctrine (LOTC). The opinion includes an in-depth discussion of the LOTC. The opinion rejected the arguments that certain contract provisions were conditions precedent as opposed to independent contractual obligations and certain breach of contract claims were really claims for indemnification. All of the contracts stem from residential-mortgage-backed-securities and obligations to cover losses from the alleged breach of “representations and warranties” concerning the underlying mortgages. With regard to the LOTC, the court wrote:

The doctrine of LOTC is a rule of practice premised upon sound policy that once an issue is judicially determined, further litigation of that issue should be precluded in a particular case … . It ends the matter as far as judges and courts of coordinate jurisdiction are concerned … . While it shares some characteristics of a larger family of kindred concepts, including res judicata and collateral estoppel, it is not identical … . All these concepts contemplate that the party opposing preclusion had a full and fair opportunity to litigate the underlying determination. LOTC, however, differs in that it only addresses the potentially preclusive effect of judicial determinations made during a single litigation and before a final judgment is rendered … . In addition, while res judicata and collateral estoppel are “rigid rules of limitation,” LOTC has been described as “amorphous” and involving “an element of discretion” … . Discretion, however, is circumscribed where the decision providing the basis for LOTC is by an appellate court. Thus, while LOTC cannot bind an appellate court to a trial court ruling … , it does bind a trial court (and subsequent appellate courts of coordinate jurisdiction) to follow the mandate of an appellate court, absent new evidence or a change in the law … . Matter of Part 60 RMBS Put – Back Litig., 2021 NY Slip Op 02252, First Dept 4-13-21

April 13, 2021/0 Comments/by Bruce Freeman

Arbitration, Attorneys, Civil Procedure, Legal Malpractice, Negligence

PLAINTIFF COMMENCED A MALPRACTICE ACTION AGAINST DEFENDANT ATTORNEYS; THE ATTORNEYS COMMENCED AN ARBITRATION PROCEEDING AGAINST PLAINTIFF, BASED ON THE RETAINER AGREEMENT, FOR UNPAID ATTORNEY’S FEES; BOTH THE ARBITRABLE FEE DISPUTE AND THE NONARBITRABLE MALPRACTICE ACTION ARE SUBJECT TO ARBITRATION WHILE THE MALPRACTICE ACTION IS STAYED (FIRST DEPT).

The Frist Department, reversing Supreme Court, determined the retainer agreement which required arbitration of any attorney’s-fee dispute, which was entwined in the plaintiff’s malpractice action against the attorneys, required that both the arbitrable fee dispute and the nonarbitrable malpractice action be addressed in the arbitration:

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503[a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration … . …

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim … . Protostorm, Inc. v Foley & Lardner LLP, 2021 NY Slip Op 02227, First Dept 4-8-21

April 8, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Foreclosure

THE ACCELERATION OF THE MORTGAGE DEBT UPON FILING A PRIOR FORECLOSURE ACTION WAS A NULLITY BECAUSE THE ACTION WAS DISMISSED FOR LACK OF STANDING; THE INSTANT ACTION IS THEREFORE TIMELY BUT ONLY WITH RESPECT TO THE INSTALLMENT PAYMENTS DUE DURING THE SIX YEARS PRIOR TO THE FILING OF THE INSTANT ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the prior foreclosure action which was dismissed for lack of standing did not accelerate the debt. Therefore the instant action is timely but only as to the installment payments due during the six years before the action was brought:

The instant action is the third mortgage foreclosure action commenced with respect to this loan. The first mortgage foreclosure action was commenced in or about July 2010, and was dismissed in December 2012, for lack of standing. A second mortgage foreclosure action was commenced on or about January 23, 2015, and was dismissed due to a mistake in the caption of the action. The instant action was thereafter commenced in October 2016 … . …

A mortgage foreclosure action is governed by a six-year statute of limitations (see CPLR 213[4]). Where a mortgage is payable in installments, separate causes of action accrue for each installment that is not paid, and the statute of limitations begins to run on the date each installment becomes due … . Once a mortgage debt is accelerated, however, the statute of limitations begins to run on the entire debt … .

The first action to foreclose the mortgage, which purportedly accelerated the mortgage debt, was initiated in or about July 2010. However, that action was dismissed for lack of standing, and therefore, the alleged acceleration was a nullity … . Accordingly, the instant action is timely, but only with respect to those installments that accrued within six years of the date of commencement of the instant action … . Therefore, the plaintiff’s recovery may not include any installments that became due more than six years prior to the commencement of the action, and the amount due must be recalculated to reflect that fact. Deutsche Bank Natl. Trust Co. v Limtcher, 2021 NY Slip Op 02134, Second Dept 4-7-21

April 7, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Municipal Law, Negligence

AFTER THE CITY MOVED FOR SUMMARY JUDGMENT IN THIS SLIP AND FALL CASE ON THE GROUND IT DID NOT HAVE WRITTEN NOTICE OF THE ICY CONDITION, THE PLAINTIFFS, YEARS AFTER THE STATUTE OF LIMITATIONS HAD EXPIRED, MOVED FOR LEAVE TO AMEND THE NOTICE OF CLAIM TO ALLEGE THE CITY CREATED THE DANGEROUS CONDITION; THE PLAINTIFFS SHOULD NOT HAVE BEEN ALLOWED TO AMEND THE NOTICE OF CLAIM AND THE CITY SHOULD HAVE BEEN AWARDED SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiffs in this slip and fall case should not have been allowed to amend the notice of claim to add the allegation that the city created the icy condition in the parking garage. The city had moved for summary judgment because it did not have written notice of the condition. The plaintiffs then moved for leave to amend the notice of claim, years after the expiration of the statute of limitations. The city was entitled to summary judgment:

“‘A plaintiff seeking to recover in tort against a municipality must serve a notice of claim to enable authorities to investigate, collect evidence and evaluate the merits of the claim'” … . “‘A notice of claim must set forth, inter alia, the nature of the claim, and the time, place, and manner in which the claim arose'” … . “Under General Municipal Law § 50-e(6), ‘[a] notice of claim may be amended only to correct good faith and nonprejudicial technical mistakes, omissions, or defects, not to substantively change the nature of the claim or the theory of liability'” … . Here, contrary to the court’s determination, the proposed amendment to the notice of claim was not to correct a technical mistake, defect, or omission within the meaning of General Municipal Law § 50-e(6), but rather, improperly sought “to assert a new theory of affirmative negligence several years after the . . . applicable limitations period” … . Congero v City of Glen Cove, 2021 NY Slip Op 02131, Second Dept 4-7-21

April 7, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Insurance Law, Negligence

IN THIS COMPLEX EXCESS INSURANCE CASE, WHICH INCLUDED A REVERSAL BY THE COURT OF APPEALS, THE LAW-OF-THE-CASE AND RES-JUDICATA DOCTRINES DID NOT DICTATE THE OUTCOME AND THE EXCESS INSURANCE CARRIER WAS NOT OBLIGATED TO DEFEND OR INDEMNIFY IN THE UNDERLYING PERSONAL INJURY ACTION (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Renwick, reversing Supreme Court, determined that RLI, an excess insurance carrier, was not obligated to defend or indemnify in the underlying personal injury action. In the underlying action, plaintiff, an employee of Transel Elevator, was working on an elevator at a hotel and was injured descending stairs at the hotel. The complex relationships among the parties and several insurance carriers cannot be fairly summarized here. What follows in the First Department’s summary of the case. In essence the First Department held that prior rulings did not dictate the outcome here under law-of-the-case or res-judicata principles:

Plaintiff Aspen Specialty Insurance Company commenced this action seeking a declaration that the excess insurance policy issued by RLI Insurance Company, Inc. was next in order of coverage for a personal injury action, in which Aspen and RLI’s common insured, Alphonse Hotel Corporation, was a defendant. The issue in this case is whether RLI, an excess insurer with a follow form policy, is bound by a prior judicial determination of this Court that the primary policy issued by Ironshore Indemnity Inc., which underlies RLI’s excess policy, covers the defendant in the personal injury action, Alphone, as an additional insured. In the prior declaratory judgment action between Aspen and Ironshore, this Court declared that the language in the additional insured endorsement extends coverage broadly to any injury causally linked to the named insured, which was satisfied in this case because the loss involved an employee of the named insured who was injured while performing the named insured’s work under the contract with the additional insured. RLI argues that it is not bound by this Court’s prior determination because it was not part of the prior declaratory judgment action. In the present declaratory judgment action, RLI wishes to relitigate the issue of whether Ironshore’s policy covers Alphonse as an additional insured. RLI relies upon the 2017 Court of Appeals decision in Burlington Ins. Co. v NYC Tr. Auth. (29 NY3d 313 [2017]), which interpreted language in an additional insured endorsement similar to the language here as covering the additionally insured party, vicariously, only for negligent acts of the named insured. It is undisputed in the instant case that the named insured was not in control of the instrumentality of the accident that caused the underlying personal injuries. … RLI is not bound by our prior determination and that it is entitled to a declaration that it has no obligation to defend or indemnify in the underlying personal injury action. Aspen Specialty Ins. Co. v RLI Ins. Co., Inc., 2021 NY Slip Op 02092, First Dept 4-6-21

April 6, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Foreclosure

TWO VOLUNTARY DISCONTINUANCES OF TWO SUCCESSIVE FORECLOSURE ACTIONS TWICE REVOKED THE ACCELERATION OF THE DEBT RENDERING THE THIRD FORECLOSURE ACTION TIMELY (FIRST DEPT).

The First Department, reversing Supreme Court based upon the February, 2021 Court of Appeals ruling, determined two voluntary discontinuances of two successive foreclosure actions twice revoked the acceleration of the debt, rending the third foreclosure action timely:

… [O]n February 18, 2021, the Court of Appeals issued its decision in Freedom Mtge. Corp v Engel, — NY3d —, 2021 NY Slip Op 01090 (2021), holding, inter alia, that “where acceleration occurred by virtue of the filing of a complaint in a foreclosure action, the noteholder’s voluntary discontinuance of that action constitutes an affirmative act of revocation of that acceleration as a matter of law, absent an express, contemporaneous statement to the contrary by the noteholder” (Freedom Mtge., at *6). Thus, contrary to defendants’ argument, the September 2013 voluntary discontinuance of the 2009 first foreclosure action did constitute an “affirmative act,” within six years, thereby revoking the prior election to accelerate. A second foreclosure action was commenced in October 2013 and discontinued in September 2017. To the extent there is a question surrounding plaintiff’s reason for discontinuing the second foreclosure action and whether that reason constituted a “contemporaneous statement” that they were not seeking to de-accelerate the debt, it does not change the fact that the third foreclosure action is timely because it was commenced within six years of the date of acceleration, which was October 2013. U.S. Bank Trust, N.A. v Boktor, 2021 NY Slip Op 02124, First Dept 4-6-21

April 6, 2021/0 Comments/by Bruce Freeman

CONFLICTING EVIDENCE ABOUT WHETHER THERE WAS VIDEO SURVEILLANCE OF THE AREA WERE PLAINTIFF ALLEGEDLY SLIPPED AND FELL PRECLUDED SUMMARY JUDGMENT (FIRST DEPT).

A THEORY ASSERTED FOR THE FIRST TIME IN OPPOSITION TO DEFENDANT’S SUMMARY JUDGMENT MOTION, AFTER DISCOVERY HAD ENDED, SHOULD NOT HAVE BEEN CONSIDERED (FIRST DEPT).

IN THIS COMPLEX EXCESS INSURANCE CASE, WHICH INCLUDED A REVERSAL BY THE COURT OF APPEALS, THE LAW-OF-THE-CASE AND RES-JUDICATA DOCTRINES DID NOT DICTATE THE OUTCOME AND THE EXCESS INSURANCE CARRIER WAS NOT OBLIGATED TO DEFEND OR INDEMNIFY IN THE UNDERLYING PERSONAL INJURY ACTION (FIRST DEPT).

TWO VOLUNTARY DISCONTINUANCES OF TWO SUCCESSIVE FORECLOSURE ACTIONS TWICE REVOKED THE ACCELERATION OF THE DEBT RENDERING THE THIRD FORECLOSURE ACTION TIMELY (FIRST DEPT).

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