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THE POINT AT WHICH LEAVE OF COURT AND THE STIPULATION OF ALL PARTIES IS REQUIRED TO DISCONTINUE A FORECLOSURE ACTION IS THE RETURN DATE FOR THE MOTION TO CONFIRM THE REFEREE’S REPORT (SECOND DEPT).

The Second Department, in a matter of first impression, in a full-fledged opinion by Justice Dillon, in the context of a foreclosure action, determined the point at which leave of court and the stipulation of all parties is required to discontinue the action is the return date for the motion to confirm the referee’s report:

CPLR 3217(b) permits the discontinuance of an action by a party with leave of court or by a stipulation of the parties before the cause is submitted to the trier of fact for a determination of the facts; but once the cause has been submitted for a determination of the facts, a discontinuance may only be granted upon both leave of court and a stipulation of all parties appearing in the action. While the mechanics of the statute are clear when an action is tried before a judge or jury, no appellate case has yet addressed the question of when an action is considered “submitted to the court” under CPLR 3217(b) when the matter is referred to a referee to hear and report, and the report is thereafter subject to confirmation, rejection, or modification by the Supreme Court. We hold that the operative date for requiring both leave of court and for the parties to stipulate to the discontinuance is the return date of a motion to confirm, reject, or modify the assigned referee’s report, as that is the moment when the factual issues of a case are submitted to the court for the determinative deliberative process. * * *

We find, as a matter of first impression, that where an action is referred to a court attorney referee to hear and report, the time that is most akin to the submission of the case to the court or the jury for a determination of the facts is the return date of the motion to confirm the referee’s report. Prior to that time, the conclusion of the trial before the referee is not final as the referee, while setting forth his or her findings of fact and conclusions of law, has no authority to determine the matter … . Emigrant Bank v Solimano, 2022 NY Slip Op 05311, Second Dept 9-28-22

Practice Point: In a matter of first impression, the Second Department held that the point at which leave of court and the stipulation of all parties to discontinue a foreclosure action is the return date for the motion to confirm the referee’s report.

 

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THE COMPLAINT STATED CAUSES OF ACTION FOR BREACH OF FIDUCIARY DUTY, FRAUD, CONSTRUCTIVE FRAUD AND MUTUAL MISTAKE; PLAINTIFFS-PHYSICIANS ALLEGED THE FORMS THE EMPLOYER REQUIRED THEM TO SIGN CONSENTING TO THE DISTRIBUTION (TO THE EMPLOYER) OF THE PROCEEDS OF THE DEMUTUALIZATION OF THE MEDICAL MALPRACTICE INSURER WERE INVALID (FIRST DEPT).

The Frist Department, reversing (modifying) Supreme Court, determined the complaint by physicians against their employer/malpractice-insurance-policy-administrator stated causes of action for breach of fiduciary duty, fraud and mutual mistake. The dispute centers on whether the physicians or the employer which paid the malpractice insurance premiums are/is entitled to the proceeds when the insurer (MLMIC) demutualized. The employer had the physicians sign forms consenting to distributing the proceeds to the employer. The physicians allege the consent forms are invalid:

Plaintiffs allege that the forms by which they authorized MLMIC to distribute their demutualization proceeds to defendant are invalid because defendant obtained them in breach of its fiduciary duty, by fraud, or due to mutual mistake. If these forms are invalid, then the demutualization proceeds belong to plaintiffs … .

Transactions between a fiduciary and beneficiary are voidable if the fiduciary acts in its own interest and does not fully disclose all material facts … . Defendant is alleged not only to have withheld the policyholder information statement from plaintiffs, but to have significantly misrepresented their contents for its own gain. These allegations, which are not conclusively refuted by the documentary evidence, are sufficient to survive a motion to dismiss.

Fraud is another basis for rescinding the consent forms … . Plaintiffs also properly allege constructive fraud, because they were owed a fiduciary duty by defendant and so were “warranted to . . . relax the care and vigilance they would ordinarily exercise in the circumstances” … . …

Mutual mistake “may not be invoked by a party to avoid the consequences of its own negligence” … . For the purposes of this motion to dismiss, however, it cannot be said as a matter of law that plaintiffs were negligent … . Cordaro v AdvantageCare Physicians, P.C., 2022 NY Slip Op 05267, First Dept 9-27-22

Practice Point: The complaint adequately alleged the employer, which also served at the medical malpractice insurance policy administrator, breached a fiduciary duty owed to the plaintiffs-physicians by requiring them to consent to the distribution (to the employer) of the proceeds of the demutualization of the medical malpractice insurance carrier. The complaint also sufficiently alleged fraud, constructive fraud and mutual-mistake causes of action.

 

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A CITY CODE ENFORCEMENT OFFICER ORDERED PETITIONER-TENANT TO VACATE HER APARTMENT AFTER FINDING SOME WINDOWS DID NOT OPEN; PENDING THE INSTANT APPEAL, THE CITY AMENDED THE CODE TO ALLOW A HEARING IN THIS CIRCUMSTANCE (RELIEF REQUESTED BY THE PETITIONER); THE CODE ENFORCEMENT OFFICER WAS AN AGENT OF THE STATE AND PETITIONER WAS ENTITLED TO COSTS, DISBURSEMENTS AND COUNSEL FEES AS THE PREVAILING PARTY IN THIS ACTION AGAINST THE STATE (THIRD DEPT). ​

The Third Department, in a full-fledged opinion by Justice Fisher, determined petitioner-tenant was entitled to costs, disbursements and counsel fees in petitioner’s action against the city for ordering petitioner to vacate her apartment without first affording a hearing. The order to vacate was made after the code enforcement officer found windows in the apartment which could not be opened and an electrical problem. Before the appeal was heard, the city amended to code to provide an administrative hearing to those ordered to vacate their apartments. Petitioner was deemed to be a prevailing party and was therefore entitled to costs, disbursements and counsel fees:

Petitioner entered into a lease agreement for a second-floor apartment in the City of Schenectady … . … [P]etitioner contacted respondent City of Schenectady Code Enforcement Office and reported problems with the apartment including, among other things, that only three of the windows in the apartment could be opened. Following this complaint, the owner hired a repairperson to fix the windows … . … [A] code enforcement officer conducted an inspection of said premises. Upon finding that several of the second-floor windows still could not be opened and there was an electrical violation, the code enforcement officer issued an order to “immediately vacate” the second floor of the premises due to “sealed emergency rescue openings” and “unsafe conditions.” The order to vacate listed multiple violations of the Property Maintenance Code of New York State (19 NYCRR part 1226 [hereinafter PMCNYS]) and violations of the Code of the City of Schenectady. * * *

… [R]espondents argue that Supreme Court erred in awarding petitioner counsel fees because this matter is not a civil action against the state within the meaning of CPLR 8601 (a) and, nonetheless, respondents were substantially justified in their acts. We disagree. “CPLR 8601 (a) mandates an award of fees and other expenses to a prevailing party in any civil action brought against the state, unless the position of the state was determined to be substantially justified or that special circumstances render an award unjust” … .

… [G]iven [the] statutory and regulatory framework, we are satisfied that respondents’ code enforcement officer acted as a state agent in issuing the order in the course of his enforcement of the PMCNYS…. .

… [P]etitioners were expressly entitled to a post-deprivation administrative hearing pursuant to Property Maintenance Code of New York State § 103.2.1. That provision contemplates a prompt forum for a dispossessed occupant to address his or her concerns with the involved municipal officials. … [R]espondents’ disregard of petitioner’s repeated requests for such a hearing effectively deprived her of a meaningful opportunity to be heard. Respondents’ failure to follow up on the code violations only compounded the problem. Matter of Brown v City of Schenectady, 2022 NY Slip Op 05245, Third Dept 9-21-22

Practice Point: A tenant ordered to vacate an apartment by a code enforcement officer is entitled to a prompt hearing.

Practice Point: A municipal code enforcement officer is an agent of the state. Therefore, a suit against a municipal code enforcement officer is a suit against the state entitling the prevailing party to costs, disbursements and counsel fees.

 

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IN THIS SLIP AND FALL CASE AGAINST NYC, AT THE SUMMARY JUDGMENT STAGE, ONCE THE CITY DEMONSTRATED IT DID NOT HAVE WRITTEN NOTICE OF THE CONDITION WHICH CAUSED THE FALL, THE PLAINTIFF MUST COME FOWARD WITH EVIDENCE AN EXCEPTION TO THE WRITTEN-NOTICE REQUIREMENT APPLIES, EVEN IF, AS HERE, THE COMPLAINT ALLEGES NO EXCEPTION APPLIES; CASE LAW TO THE CONTRARY SHOULD NO LONGER BE FOLLOWED (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Miller, clarified the burdens of proof at the summary judgment stage where the municipality demonstrates it did not have written notice of the condition which allegedly caused plaintiff’s slip and fall. Once the city demonstrates a lack of written notice, the plaintiff must come forward with proof of an applicable exception to the written-notice requirement, even where, as here, the complaint alleged no exception applies. Precedent to the contrary should no longer be followed:

… [W]here, as here, “the City establishes that it lacked prior written notice under [Administrative Code § 7-201(c)(2)], the burden shifts to the plaintiff to demonstrate the applicability of one of two recognized exceptions to the rule—that the municipality affirmatively created the defect through an act of negligence or that a special use resulted in a special benefit to the locality” …  Furthermore, we clarify that the burden-shifting standard … is applicable even where, as here, the complaint alleged that the defendants created the allegedly dangerous condition … . To the extent that this Court’s case law conflicts with the burden-shifting standard set forth in Groninger or Yarborough [Yarborough v City of New York, 10 NY3d at 728; …Groninger v Village of Mamaroneck, 17 NY3d 125], it should no longer be followed … . * * *

Applying the correct standard here, the City sustained its initial burden on that branch of its motion which was for summary judgment dismissing the first cause of action. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the City affirmatively created the allegedly dangerous condition. The expert affidavit proffered by the plaintiff was not supported by the record and, thus, was speculative and conclusory, and insufficient to raise a triable issue of fact … . Under the circumstances, those branches of the City’s motion which were for summary judgment dismissing the first cause of action and all cross claims insofar as asserted against it should have been granted. Smith v City of New York, 2022 NY Slip Op 05226, Second Dept 9-21-22

Practice Point: The Second Department clarified the burdens of proof at the summary judgment stage where a plaintiff alleges injury by a defective condition on NYC property. If the city demonstrates it did not have written notice of the condition, to survive summary judgment, the plaintiff must come forward with sufficient admissible evidence an exception to the written-notice requirement applies, even where, as in this case, the complaint alleges no exception is applicable. Case law in the Second Department to the contrary should no longer be followed.

 

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DEFENDANT DID NOT ADEQUATELY EXPLAIN HER FAILURE TO RECEIVE THE SUMMONS AND COMPLAINT WHICH WERE MAILED TWICE; THEREFORE DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN GRANTED; STRONG DISSENT (SECOND DEPT).

The Second Department, reversing Supreme Court, over an extensive dissent, determined defendant’s motion to vacate the default judgment should not have been granted. Defendant, Cupid, alleged she was on vacation and did not learn of the action until the motion for a default judgment. The Second Department concluded Cupid may have adequately explained why she did not see the summons and complaint affixed to her door, but  failed to explain why she did not receive the summons and complaint by mail:

Cupid claimed that her denial of receipt was not bare and conclusory, based upon evidence that she was away on vacation when the summons and complaint were left at her door pursuant to CPLR 308(4). However, even assuming that that explanation was sufficient for her alleged failure to receive the summons and complaint left at her door, Cupid did not explain why she did not receive notice by mail—which was effected twice. The bare conclusory denial of receipt was insufficient to establish a reasonable excuse for the default, or lack of notice of the action … . In light of that determination, it is not necessary to determine whether Cupid demonstrated the existence of a potentially meritorious defense for purposes of either CPLR 5015(a)(1) or 317 … . Gray v Goodluck-Hedge, 2022 NY Slip Op 05204, Second Dept 9-21-22

Practice Point: Conclusory allegations the summons and complaint were not received by the defendant will not support the vacation of a default judgment. Here defendant may have explained why she did not see the summons and complaint affixed to her door, but failed to address the fact that the summons and complaint were mailed to her twice.

 

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THE TWO-JUSTICE DISSENT DID NOT PRESENT A QUESTION OF LAW REVIEWABLE BY THE COURT OF APPEALS; THE ORDER DENYING SUMMARY JUDGMENT DID NOT NECESSARILY AFFECT THE FINAL JUDGMENT (CT APP).

The Court of Appeals, dismissing the appeal, in a brief memorandum decision, held that the two-justice dissent (which would normally require review by the Court of Appeals) did not present a reviewable question of law:

… [A]ppeal dismissed, with costs, upon the ground that the two-Justice dissent at the Appellate Division is not on a question of law which would be reviewable by the Court of Appeals (see CPLR 5601 [a]; 5501 [a] [1]). The dissent was predicated on an order denying partial summary judgment that did not necessarily affect the judgment from which the appeal was taken (see Bonczar v American Multi-Cinema, Inc., 38 NY3d 1023 [2022]). Shaw v City of Rochester, 2022 NY Slip Op 05197, Ct App  9-15-22

Below is the summary of Bonczar v American Multi-Cinema, Ins. (cited by the Court of Appeals in Shaw, supra):

The Court of Appeals determined the Appellate Division order denying summary judgment in this Labor Law 240(1) ladder-fall case did not “affect the final judgment” after trial. Therefore the order was not appealable to the Court of Appeals:

The 2018 Appellate Division order may be reviewed on appeal from a final paper only if, pursuant to CPLR 5501 (a), the nonfinal order “necessarily affects” the final judgment. “It is difficult to distill a rule of general applicability regarding the ‘necessarily affects’ requirement” … and “[w]e have never attempted, and we do not now attempt, a generally applicable definition” … . That said, to determine whether a nonfinal order “necessarily affects” the final judgment, in cases where the prior order “str[uck] at the foundation on which the final judgment was predicated” we have inquired whether “reversal would inescapably have led to a vacatur of the judgment” … . This is not such a case. In other cases, we have asked whether the nonfinal order “necessarily removed [a] legal issue from the case” so that “there was no further opportunity during the litigation to raise the question decided by the prior non-final order” … .

In resolving plaintiff’s summary judgment motion, the Appellate Division held that factual questions existed as to whether a statutory violation occurred and as to proximate cause, or more specifically as to whether plaintiff’s own acts or omissions were the sole proximate cause of the accident … . That nonfinal order did not remove any issues from the case. Rather, the question of proximate cause and liability was left undecided. The parties had further opportunity to litigate those issues and in fact did so during the jury trial. Bonczar v American Multi-Cinema, Inc., 2022 NY Slip Op 02835, CtApp 4-28-22

Practice Point: A nonfinal order is not appealable to the Court of Appeals unless it “affects the final judgment.” If questions of fact remain after the nonfinal order is issued, the order does not “affect the final judgment” and is not appealable. Here the nonfinal order was the Appellate Division’s denial of plaintiff’s summary judgment motion. The order left open factual questions resolved at trial. Therefore the order did not “affect the final judgment.”

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THERE WAS VIDEO EVIDENCE OF THE SLIP AND FALL, PHOTOGRAPHIC EVIDENCE OF THE UNLAWFUL DRAIN PIPE WHICH WAS THE SOURCE OF THE ICE ON THE SIDEWALK, AND EXPERT EVIDENCE; DEFENDANTS’ MERE HOPE THAT DISCOVERY WOULD REVEAL EVIDENCE TO DEFEAT PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT DID NOT SUPPORT THE DENIAL OF THE MOTION AS PREMATURE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiffs’ motion for summary judgment in this slip and fall case was not premature and should have been granted. There was video evidence and photographs depicting an unlawfully disconnected drain pipe which was the source of the ice on the sidewalk:

“Although determination of a summary judgment motion may be delayed to allow for further discovery where evidence necessary to oppose the motion is unavailable to the opponent of the motion (see CPLR 3212[f]), ‘[a] determination of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence'” … . …

… [W]here the icy condition on the sidewalk as well as Sloan’s fall are clearly depicted on a surveillance video and the condition of the drain pipe over time is revealed in photographs of the building, the defendants have offered nothing more than hope and speculation that additional discovery might uncover evidence sufficient to raise triable issues of fact regarding the manner in which the accident occurred, the cause of [plaintiff’s] fall, and their notice of the defective condition of the drain pipe … . Sloan v 216 Bedford Kings Corp., 2022 NY Slip Op 05173, Second Dept 9-14-22

Practice Point: Where plaintiff makes out a prima facie case and the defendant doesn’t raise a question of fact, defendant’s mere hope that discovery will provide evidence to defeat plaintiff’s motion for summary judgment is not enough to support denial of the motion aa premature.

 

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THE FORECLOSURE ACTION WAS AUTOMATICALLY STAYED WHEN DEFENDANT’S ATTORNEY WAS SUSPENDED; EVEN THOUGH THE ORDER GRANTING THE ATTORNEY’S MOTION TO WITHDRAW DIRECTED DEFENDANT TO RETAIN AN ATTORNEY OR GO AHEAD PRO SE, DEFENDANT WAS NEVER SERVED WITH A NOTICE TO APPOINT AN ATTORNEY REQUIRED BY CPLR 321; THEREFORE THE STAY WAS NOT LIFTED AND DEFENDANT’S MOTION TO VACATE THE SUMMARY JUDGMENT ORDER SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant (Simonsen) in this foreclosure action was never given notice to appoint new counsel after his attorney (Sirianni) was suspended and withdrew from the case. Even though, in granting the Sirianni’s motion to withdraw, the court directed defendant to retain new counsel or continue pro se, defendant was never provided with the notice required by CPLR 321(c). Therefore defendant’s motion to vacate the summary judgment order should have been granted:

CPLR 321(c) provides, inter alia, that “[i]f an attorney dies, becomes physically or mentally incapacitated, or is removed, suspended or otherwise becomes disabled at any time before judgment, no further proceeding shall be taken in the action against the party for whom he [or she] appeared, without leave of the court, until thirty days after notice to appoint another attorney has been served upon that party.” “[D]uring the stay imposed by CPLR 321(c), no proceedings against the party will have any adverse effect” … , and “[o]rders or judgments that are rendered in violation of the stay provisions of CPLR 321(c) must be vacated” … . “It lies within the power of the other side to bring the stay to an end by serving a notice on the affected party to appoint new counsel within 30 days” … . The protections of CPLR 321(c) can be waived where the party elects to proceed pro se … . …

This action was automatically stayed by operation of CPLR 321(c) on … the effective date of Sirianni’s suspension from the practice of law. At no point was Simonsen provided, pursuant to CPLR 321(c), with the required notice to appoint another attorney, either by the court or opposing counsel. Moreover, the withdrawal order, which granted Sirianni’s motion pursuant to CPLR 321(b)(2) for leave to withdraw as counsel for Simonsen, had no practical effect as to whether the notice provision of CPLR 321(c) applied to this case … . … [T]he withdrawal order failed to direct service of a notice to appoint another attorney upon Simonsen, and there is no evidence in the record that Simonsen was ever served with a copy of the withdrawal order … . The record is also devoid of any evidence that … Simonsen waived the protections of CPLR 321(c) by electing to proceed pro se. Therefore, the automatic stay was not lifted until Simonsen moved, in effect, to vacate the summary judgment order … . JPMorgan Chase Bank, N.A. v Simonsen, 2022 NY Slip Op 05156, Second Dept 9-14-22

Practice Point: As soon as defendant’s attorney was suspended, the foreclosure action was stayed. Even though the court, in its order granting the attorney’s motion to withdraw, directed defendant to retain new counsel or go ahead pro se, defendant was never given notice to appoint another attorney required by CPLR 321. Therefore the stay was not lifted and defendant’s motion to vacate the summary judgment order should have been granted.

 

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DEFENDANT DID NOT DEMONSTRATE DISCOVERY WOULD LEAD TO EVIDENCE ESSENTIAL TO DEFEND AGAINST PLAINTIFF’S SUMMARY JUDGMENT MOTION IN THIS INTERSECTION TRAFFIC ACCIDENT CASE; PLAINTIFF’S MOTION SHOULD NOT HAVE BEEN DENIED AS PREMATURE (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff motorcyclist’s motion for summary judgment in this intersection traffic accident case was not premature, defendant’s violation of the Vehicle and Traffic law was negligence per se, and the comparative-negligence affirmative defense should have been dismissed. Plaintiff demonstrate defendant made an illegal left turn in front of him and he could not avoid the collision:

… [A] violation of the Vehicle and Traffic Law constitutes negligence as a matter of law … . “The operator of an oncoming vehicle with the right-of-way is entitled to assume that the opposing operator will yield in compliance with the Vehicle and Traffic Law” … . “[A] driver with the right-of-way who has only seconds to react to a vehicle which has failed to yield is not comparatively negligent for failing to avoid the collision” … . …

… [T]he plaintiff’s motion was not premature since the defendants failed to demonstrate that discovery might lead to relevant evidence or that facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff (see CPLR 3212[f] … ). Higgins v Stelmach, 2022 NY Slip Op 05155, Second Dept 9-13-22

Practice Point: Plaintiff demonstrated defendant violated the Vehicle and Traffic Law by making a left turn in front of plaintiff’s motorcycle. Defendant did not demonstrate discovery would lead to evidence essential to defending the motion for summary judgment. The motion therefore was not premature. Plaintiff was entitled to summary judgment and dismissal of the comparative negligence affirmative defense.

 

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A LATE MOTION FOR SUMMARY JUDGMENT SHOULD BE ALLOWED WHERE, AS HERE, DISCOVERY WAS NOT COMPLETE AT THE TIME THE MOTION WAS DUE AND THE DISCOVERY IS ESSENTIAL TO THE MOTION (SECOND DEPT).

The Second Department, reversing Supreme Court in this Labor Law 240(1) and 241(6) action, determined Supreme Court properly found plaintiff offered a sufficient reason for making a late motion for summary judgment, i.e., discovery was incomplete at the time the motion was due, but should not have denied the motion on the ground the discovery was not essential to the motion. The discovery dealt with whether plaintiff was engaged in unauthorized work at the time of the accident, which is a defense to Labor Law 240(1) and 241(6) actions:

A party may not move for summary judgment after the deadline to do so has expired, “except with leave of court on good cause shown” (CPLR 3212[a]). As a result, a court may not consider a late motion for summary judgment unless the moving party offers “a satisfactory explanation for the untimeliness—rather than simply permitting meritorious, nonprejudicial filings, however tardy” … . “While significant outstanding discovery may, in certain circumstances, constitute good cause for a delay in making a motion for summary judgment,” the movant must establish that the discovery was “essential to its motion” … . This standard generally requires that the discovery be relevant to resolving disputed issues of fact … . Even if the discovery is essential, good cause for the delay will only exist if the party promptly moves for summary judgment after securing such discovery … . Fuczynski v 144 Div., LLC, 2022 NY Slip Op 05151, Second Dept 9-14-22

Practice Point: Good cause for filing a late motion for summary judgment is demonstrated where, as here, the motion was due before discovery was complete and the discovery is essential to the motion.

 

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