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A DISMISSAL WITHOUT PREJUDICE IS NOT A FINAL DETERMINATION ON THE MERITS AND IS NOT SUBJECT TO THE DOCTRINE OF RES JUDICATA; ATTORNEY’S FEES ARE APPROPRIATE DAMAGES IN AN ACTION FOR BREACH OF A FORUM SELECTION CLAUSE (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s (Wormser’s) action for breach of the forum selection clause seeking attorney’s fees could go ahead. The defendant’s (L’Oreal’s) New Jersey action had been dismissed “without prejudice,” which was not a determination on the merits, and therefore Wormser’s action was not precluded by the res judicata doctrine:

Plaintiff (Wormser) asserts a claim for breach of the forum selection clause contained in the parties’ agreement, which requires disputes to be brought before the courts of New York City, and for attorneys’ fees incurred in the actions that defendant (L’Oréal) brought against it in New Jersey. After the New Jersey court had dismissed its complaint “with prejudice within the jurisdiction of New Jersey,” L’OrÉal commenced an action against Wormser in Supreme Court, New York County. Subsequently, a New Jersey appellate court amended the New Jersey trial court’s orders to make the dismissal “without prejudice” … , and Wormser brought this action.

Wormser’s claim is not barred by the doctrine of res judicata, because the dismissal was without prejudice by the New Jersey appellate court and therefore was not a final determination on the merits ,,, ,

Wormser’s claim for attorneys’ fees may proceed, as “damages may be obtained for breach of a forum selection clause, and an award of such damages does not contravene the American rule that deems attorneys’ fees a mere incident of litigation” … . Wormser Corp. v L’Oréal USA, Inc., 2022 NY Slip Op 03093, First Dept 5-10-22

Practice Point: A dismissal without prejudice is not a final determination on the merits and is not therefore subject to res judicata.

Practice Point: Attorney’s fees are properly demanded as damages in an action for breach of a forum selection clause.

 

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PETITIONERS. RELATIVES OF PERSONS IN THE NYS DNA DATABASE, HAD STANDING TO CHALLENGE THE RESPONDENTS’ REGULATIONS ALLOWING THE RELEASE OF “FAMILIAL DNA MATCH” INFORMATION LINKING DNA FROM A CRIME SCENE TO A FAMILY, NOT AN INDIVIDUAL; THE REGULATIONS WERE BASED ON SOCIAL POLICY AND THEREFORE EXCEEDED THE REGULATORY POWERS OF THE RESPONDENT AGENCIES; TWO-JUSTICE DISSENT ARGUED THE PETITIONERS DID NOT HAVE STANDING TO CHALLENGE THE REGULATIONS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gische, reversing Supreme Court, over a full-fledged two-justice dissenting opinion, determined the respondent agencies exceeded their regulatory powers when they authorized the release of so-called “familial DNA” information to be used as a possible lead for identifying the perpetrator of a crime. In the absence of a DNA “match” or a “partial match” a “familial match” may indicate the perpetrator has a familial relationship with someone in the DNA database. A crucial threshold question was whether the petitioners, relatives of persons whose genetic profiles are in the New York State DNA database, had standing to contest the familial DNA regulations. The dissenters argued the petitioners did not have standing. The majority concluded the basis for the familial DNA regulations was primarily social policy, and therefore the regulations were legislative, rather than administrative, in nature:

Each petitioner’s brother has genetic information stored in the DNA databank. Neither petitioner has been asked or mandated to provide DNA for comparison. Because they are law abiding citizens, neither petitioner knows if they have been targeted for investigation as a result of a familial DNA search, but they harbor great concern and anxiety that they might be investigated for no other reason than that they share family genetics with a convicted criminal … . * * *

We are not required to determine whether respondents made a good or beneficial policy decision. The fact that the decisions respondents made are by their very nature policy driven, greatly favors a conclusion that they were made in excess of respondents’ authority. Matter of Stevens v New York State Div. of Criminal Justice Servs., 2022 NY Slip Op 03062, First Dept 5-5-22

Practice Point: Relatives of persons in the NYS DNA database had standing to challenge the regulations issued by the respondent agencies allowing the release of “familial DNA match” information linking DNA from a crime scene to a family, not an individual.

Practice Point: The “familial DNA match” regulations were deemed to be rooted in social policy, which is the realm of the legislature, and therefore the promulgation of the regulations exceeded the agencies’ powers.

 

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THE BANK’S AFFIDAVIT IN THIS FORECLOSURE ACTION DID NOT LAY A SUFFICIENT FOUNDATION FOR THE ADMISSIBILITY OF BUSINESS RECORDS, INCLUDING PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the bank’s proof of compliance with the notice requirements of RPAPL 1304 was deficient because the foundation for the admission of business records was not laid:

… [T]he plaintiff submitted … an affidavit of an employee of its current mortgage loan servicer, along with copies of the 90-day notice, which was generated by the plaintiff’s prior loan servicer, along with alleged proof of mailing, which was also generated by the prior loan servicer. The affiant averred … that the current mortgage loan servicer is responsible for maintaining the books and records pertaining to the subject mortgage, “including, but not limited to, the account ledgers, and prior servicer’s records.” However, the affiant did not aver to her familiarity with the prior loan servicer’s business practices and procedures, or that the prior loan servicer’s records were incorporated into the current loan servicer’s records. Thus, the plaintiff’s moving affidavit failed to satisfy the admissibility requirements of CPLR 4518(a) … , and the prior loan servicer’s records, including the 90-day notice, were not admissible … . “Accordingly, the plaintiff failed to demonstrate, prima facie, that it complied with the notice provision of RPAPL 1304” … . Bank of N.Y. Mellon v Basta, 2022 NY Slip Op 02971, Second Dept 5-4-22

Practice Point: In a foreclosure action, at the summary judgment stage, even if business records demonstrating the bank’s compliance with the notice requirements of RPAPL 1304 are submitted, they are not admissible unless a proper foundation (CPLR 4518(a)) is laid in the accompanying affidavit.

 

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TO CHALLENGE THE BANK’S STANDING TO FORECLOSE THE DEFENDANT MUST ASSERT THE LACK OF STANDING AS AN AFFIRMATIVE DEFENSE; MERELY DENYING THE RELEVANT ALLEGATIONS IN THE COMPLAINT IS NOT ENOUGH (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the bank in this foreclosure action was not required to affirmatively demonstrate standing, the defendant, to raise the issue, must assert lack of standing as an affirmative defense, and merely denying the relevant allegations in the complaint is not enough:

… [T]he plaintiff was not required to show its standing to maintain the action. “[W]here, as here, standing is not an essential element of the cause of action, under CPLR 3018(b) a defendant must affirmatively plead lack of standing as an affirmative defense in the answer in order to properly raise the issue in its responsive pleading” … . The mere denial of the allegation that the plaintiff was the owner and holder of the note and mortgage in the answer of Republic First Bank, without more, was insufficient to assert that the plaintiff lacks standing … . Aurora Loan Servs., LLC v Jemal, 2022 NY Slip Op 02970, Second Dept 5-4-22

Practice Point: Lack of standing in a foreclosure action must be raised as an affirmative defense. It is not enough to deny the relevant allegations in the foreclosure complaint.

 

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THE RELATION-BACK DOCTRINE DID NOT APPLY TO SAVE THE AMENDED PETITION CHALLENGING A USE VARIANCE; THE INTITIAL PETITION FAILED TO NAME A NECESSARY PARTY WHO WAS KNOWN TO THE PETITIONERS AND WAS DISMISSED ON THAT GROUND; THE AMENDED PEITITION, WHICH NAMED THE NECESSARY PARTY, WAS DISMISSED AS TIME-BARRED; BECAUSE THE PETITIONERS HAD NO DOUBT ABOUT WHO THE NECESSARY PARTY WAS AND HAD NAMED HER IN A PRIOR PETITION, THE RELATION-BACK DOCTRINE COULD NOT BE INVOKED (THIRD DEPT).

The Third Department, over an extensive dissent, determined the relation-back doctrine did not save the petition challenging a use variance. The initial petition was dismissed for failure to name a necessary party, Rosa Kuehn. The subsequent amended petition, which included the necessary party, was dismissed as time-barred:

Supreme Court correctly determined that petitioners are not entitled to the benefit of the relation back doctrine. That doctrine “permits a petitioner to amend a petition to add a respondent even though the statute of limitations has expired at the time of amendment so long as the petitioner can demonstrate three things: (1) that the claims arose out of the same occurrence, (2) that the later-added respondent is united in interest with a previously named respondent, and (3) that the later-added respondent knew or should have known that, but for a mistake by petitioners as to the later-added respondent’s identity, the proceeding would have also been brought against him or her” … .

… [P]etitioners simply cannot meet the third and final condition and therefore cannot avail themselves of the doctrine. Indeed, Rosa Kuehn was appropriately named as a respondent and identified as the landowner of the subject property in petitioners’ successful challenge to the use variance issued in 2013 … ; “thus, this simply is not an instance where the identity of a respondent . . . was in doubt or there was some question regarding that party’s status” … . Matter of Nemeth v K-Tooling, 2022 NY Slip Op 03034, Third Department 5-4-22

Practice Point: Here a necessary party was not named in the petition and the petition was dismissed for that reason. The amended petition, which named the necessary party, was time-barred. The relation-back doctrine could not be invoked to save the amended petition because the identity of the necessary party was known to the petitioners who had named her in a related petition in 2013.

 

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DEFENDANT’S UNTIMELY ANSWER WAS REJECTED BY PLAINTIFF BUT PLAINTIFF DEEMED THE ANSWER TO BE A NOTICE OF APPEARANCE; DEFENDANT DID NOT OBJECT; AN APPEARANCE IS THE EQUIVALENT OF SERVICE OF A SUMMONS; THEREFORE DEFENDANT WAIVED THE LACK-OF-PERSONAL-JURISDICTION DEFENSE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant waived any claim of a lack of personal jurisdiction. The plaintiff, rejecting defendant’s answer as untimely, indicated the answer was deemed to be a notice of appearance, which is the equivalent of personal service of the summons:

An appearance of the defendant is equivalent to personal service of the summons upon him or her, unless an objection to jurisdiction pursuant to CPLR 3211(a)(8) is asserted by motion or in the answer … . Here, the plaintiff submitted evidence that the defendant served an answer upon it on or about January 20, 2015. That answer did not assert the defense of lack of personal jurisdiction. The plaintiff rejected the answer as untimely and advised the defendant that it would deem the untimely answer a notice of appearance by the defendant. The defendant did not object to the plaintiff treating her untimely answer as a notice of appearance . The defendant did not assert lack of personal jurisdiction until moving, inter alia, pursuant to CPLR 3211(a)(8) to dismiss the complaint more than two years later … . Therefore, she waived the defense of lack of personal jurisdiction … . Deutsche Bank Natl. Trust Co. v Muzac, 2022 NY Slip Op 02978, Second Dept 5-4-22

Practice Point: Here defendant’s late answer was rejected but plaintiff informed defendant it considered the answer to be a notice of appearance. Defendant did not object. An appearance is equivalent to service of a summons. Therefore defendant waived the lack-of-personal-jurisdiction defense.

 

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PLAINTIFFS WERE ENTITLED TO AMEND THE BILL OF PARTICULARS TO THE EXTENT THE AMENDMENT AMPLIFIED THE ALLEGATIONS ALREADY MADE WITHOUT OBJECTION IN THE SUPPLEMENTAL BILL OF PARTICULARS (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiffs were entitled to amplify the allegations in the supplemental bill of particulars in second and proposed third supplemental and amended bill of particulars:

The plaintiffs were entitled to amend their bill of particulars once as of right at any time prior to the filing of the note of issue … . Such amendment enables a party to include whatever could have been included in the original bill of particulars … . “‘Whatever the pleading pleads, the bill must particularize since the bill is intended to [afford] the adverse party a more detailed picture of the claim . . . being particularized'” … . B. E. M. v Warwick Val. Cent. Sch. Dist., 2022 NY Slip Op 02990, Second Dept 5-4-22

Practice Point: Here plaintiffs were entitled to amend the supplemental bill of particulars to the extent the amendment amplified allegations already made without objection in the supplemental bill of particulars.

 

PLAINTIFF, A FLORIDA RESIDENT, ALLEGEDLY WAS ABUSED BY A PRIEST IN FLORIDA IN 1983 AND 1984; PLAINTIFF SUED THE DIOCESE OF BROOKLYN BECAUSE THE PRIEST WHO ALLEGEDLY ABUSED HIM WAS TRANSFERRED FROM BROOKLYN TO FLORIDA, ALLEGEDLY BECAUSE OF SEXUAL MISCONDUCT WITH CHILDREN; THE CHILD VICTIMS ACT DOES NOT APPLY TO THE NONRESIDENT PLAINTIFF AND THE BORROWING STATUTE DOES APPLY; THEREFORE FLORIDA’S FOUR-YEAR STATUTE OF LIMITATIONS RENDERED PLAINTIFF’S ACTION TIME-BARRED (SECOND DEPT). ​

The Second Department, in a full-fledged opinion, in a matter of first impression, by Justice Christopher, determined the New York Child Victims Act, CPLR 214-g, is not available to nonresident plaintiffs where the alleged acts of abuse occurred outside New York. CPLR 214-g extends the statute of limitations to allow lawsuits by plaintiffs who were children at the time of the abuse. The Second Department further determined CPLR 214-g does not preclude the application of the borrowing statute, CPLR 202. Here the plaintiff, a Florida resident, alleged the acts of abuse were committed in Florida in 1983 and 1984 by Father William Authenrieth. Plaintiff alleged Father Authenrieth was transferred from the Diocese of Brooklyn to the Florida Diocese of Orlando (Florida) in 1973 because of his sexual misconduct with children. Hence the suit by the Florida plaintiff against the Diocese of Brooklyn. Because CPLR 214-g does not apply and CPLR 202, the borrowing statute, requires the application of Florida’s four-year statute of limitations, plaintiff’s suit is time-barred:

… [U]nder the circumstances of this case, CPLR 214-g does not apply extraterritorially, where the plaintiff is a nonresident, and the alleged acts of sexual abuse were perpetrated by a nonresident outside of New York … . * * *

… [U]nder these circumstances the borrowing statute would apply, and since the plaintiff’s action is time-barred in Florida, it would also be time-barred in New York, unless, as argued by the plaintiff, CPLR 214-g precludes the application of CPLR 202. … We answer that question in the negative. Therefore, even if CPLR 214-g applied extraterritorially, the plaintiff’s action would be dismissed as time-barred pursuant to CPLR 202. S.H. v Diocese of Brooklyn, 2022 NY Slip Op 02982, Second Dept 5-4-22

Practice Point: The Child Victims Act, which extends the statute of limitations for plaintiffs who were abused as children, does not apply to this Florida plaintiff who was allegedly abused in Florida. Plaintiff sued the Diocese of Brooklyn under the theory that the priest who abused him in Florida in 1983 and 1984 was transferred to Florida from Brooklyn, allegedly because of sexual misconduct with children. New York’s borrowing statute applied rendering the action time-barred under Florida’s four-year statute of limitations.

 

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TO FACILITATE APPELLATE REVIEW THE JUDGE WHO AWARDED PLAINTIFFS SUMMARY JUDGMENT, ATTORNEY’S FEES AND COSTS SHOULD HAVE WRITTEN A DECISION EXPLAINING THE BURDENS OF PROOF AND REASONING; ISSUING ORDERS WITHOUT AN EXPLANATORY DECISION IS AN “UNACCEPTABLE PRACTICE;” PLAINTIFFS DID NOT SHOW THEIR INTERPRETATION OF THE CONTRACT WAS THE ONLY REASONABLE ONE; THE FRAUDULENT MISREPRESENTATION CAUSE OF ACTION CANNOT BE BASED UPON AN ALLEGED INTENT TO BREACH THE CONTRACT AND WAS NOT SUFFICIENTLY PLED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined (1) to facilitate appellate review, the court should have written a decision explaining the burdens of proof and its reasoning in granting plaintiffs summary judgment and awarding attorney’s fees and costs; (2)  the plaintiffs did not demonstrate the contract was unambiguous and therefore were not entitled to summary judgment on the breach of contract claims; and (3) summary judgment should not have been awarded on plaintiffs’ fraudulent misrepresentation cause of action. A fraudulent misrepresentation cause of action cannot be based upon an alleged intent to breach a contract:

Although the court granted plaintiffs’ motion insofar as it sought summary judgment, it failed to address the burdens of proof or any specific cause of action. In addition, the court awarded costs and attorneys’ fees without providing the basis therefor. As noted, this case involved a motion for summary judgment and for costs, attorneys’ fees, and sanctions, and the court chose not to write. This is an unacceptable practice … .. To maximize effective appellate review, we must remind our colleagues in the trial courts to provide their reasoning instead of simply issuing orders.  …

… [P]laintiffs did not meet their initial burden on those parts of the motion seeking summary judgment … inasmuch as plaintiffs failed to submit sufficient evidence to establish that their interpretation of the relevant contracts is the only reasonable interpretation thereof. …

… “[F]ar from being collateral to the contract, the purported misrepresentation was directly related to a specific provision of the contract” … .. In addition, CPLR 3016 (b) provides that, “[w]here a cause of action . . . is based upon . . . fraud, the circumstances constituting the wrong shall be stated in detail,” and we conclude that the cause of action here failed to satisfy that requirement … . Wilsey v 7203 Rawson Rd., LLC, 2022 NY Slip Op 02905, Fourth Dept 4-29-22

Practice Point: Here not only was the judge wrong to award plaintiffs summary judgment, attorney’s fees and costs on the breach of contract and fraudulent misrepresentation causes of act, but the judge made appellate review difficult by issuing orders without a decision explaining the burdens of proof and reasoning, characterized as an “unacceptable practice” by the Fourth Department.

 

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PLAINTIFFS HAD STANDING TO CHALLENGE THE TRUST SET UP BY DECEDENT; PLAINITIFFS DID NOT STATE A CAUSE OF ACTION FOR FRAUD BECAUSE IT WAS ALLEGED THE DECEDENT (A THIRD PARTY), NOT THE PLAINTIFFS, RELIED ON THE ALLEGEDLY FALSE STATEMENT; THE COMPLAINT STATED A CAUSE OF ACTION ALLEGING DEFENDANTS EXERCISED UNDUE INFLUENCE OVER THE DECEDENT WHICH AFFECTED THE DECEDENT’S ESTATE-RELATED DECISIONS (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined: (1) the complaint did not state a cause of action for fraud because it was alleged a third-party (the decedent), not plaintiffs, relied upon the alleged false statement; (2) the complaint stated a cause of action for “undue influence” on the decedent by the defendants; and (3), the plaintiffs had standing to challenge the validity of the trust set up by the decedent. It was alleged that the decedent made decisions about the disposition of his assets based upon the false assertion that his daughter-in-law killed his son:

Here, as the grandchildren were given specific bequests in decedent’s … last will and testament, and the instrument creating the trust … reserved to decedent a limited power of appointment to name his grandchildren as possible beneficiaries of trust assets upon his death, the grandchildren are interested persons within the meaning of the SCPA, so plaintiffs have capacity to challenge the validity of the trust … . …

… [P]laintiffs cannot state a cause of action for fraud because the Court of Appeals has expressly declined “to extend the reliance element of fraud to include a claim based on the reliance of a third party” … . … As to plaintiffs’ cause of action asserting undue influence, plaintiffs’ broadly-stated theory is that, upon the death of the deceased son, the previously absent defendants drove a wedge between the daughter-in-law and decedent, took control of decedent’s caretaking as he aged and grew infirm and then moved him into defendants’ home where decedent created the trust and conveyed into it his assets to benefit defendants and the son upon his death. … [A]ffording the plaintiffs the benefit of every favorable inference … , we find that such allegations are enough to assert a cause of action for undue influence … . Constantine v Lutz, 2022 NY Slip Op 02842, Third Dept 4-28-22

Practice Point: To state a cause of action for fraud, it must be alleged the plaintiff(s), not a third party (the decedent in this case), relied on the alleged false statement. Here plaintiffs alleged the decedent made estate-related decisions based upon the false statement that his daughter-in-law killed his son. Because of the absence of the “reliance” element of fraud, that cause of action was properly dismissed.

 

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