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SUPREME COURT PROPERLY CONSIDERED A SUCCESSIVE AND LATE MOTION FOR SUMMARY JUDGMENT, CRITERIA EXPLAINED; DEFENDANT DEMONSTRATED PLAINTIFF WAS NOT A THIRD-PARTY BENEFICIARY OF THE CONTRACT AT ISSUE, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff’s breach of contract cause of action should have been dismissed because plaintiff did not qualify as a third-party beneficiary of the contract entered into by defendant county. The Second Department noted that Supreme Court properly exercised its discretion in allowing the defendant county to make a successive and late motion for summary judgment:

… [A] subsequent summary judgment motion may be properly entertained when it is substantively valid and the granting of the motion will further the ends of justice and eliminate an unnecessary burden on the resources of the courts” … . … [T]he “Supreme Court is afforded wide latitude with respect to determining whether good cause exists for permitting late motions. It may . . . entertain belated but meritorious motions in the interest of judicial economy where the opposing party fails to demonstrate prejudice” … . …

“A party asserting rights as a third-party beneficiary must establish (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [its] benefit and (3) that the benefit to [it] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [it] if the benefit is lost” … . * * *

… [T]he County established … that the plaintiff was not a third-party beneficiary of the … contract, by showing that the plaintiff was not the only entity that could recover under the contract, and that the contract did not contain any language evincing the parties’ intent to authorize the plaintiff to enforce any obligations thereunder … . Old Crompond Rd., LLC v County of Westchester, 2022 NY Slip Op 00310, Second Dept 1-19-22​

 

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THE DEPOSITION OF THE NONPARTY MAJORITY SHAREHOLDER IN THE COOPERATIVE REGARDING LEAKS IN THE UNITS WAS PROPER AND SHOULD NOT HAVE BEEN STOPPED AND SUPPRESSED BY THE JUDGE; SANCTIONS AGAINST PLAINTIFF’S ATTORNEY FOR FRIVOLOUS AND UNPROFESSIONAL CONDUCT WERE WARRANTED (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the deposition of a witness, Ruth Miller, was proper and the judge should not have ordered the deposition to cease and should not have suppressed the portion of the deposition which had already been taken. Miller was a nonparty majority shareholder in the cooperative and the action concerned leaks in the units. The First Department further determined that sanctions against plaintiff’s counsel were warranted:

It was an improvident exercise of discretion for the court to issue a protective order under CPLR 3103(a) barring a continuation of the deposition of nonparty Ruth Miller. Miller is the majority shareholder of the Coop, and therefore is a key figure in the events surrounding plaintiffs’ negligence and breach of contract claims regarding leaks in plaintiffs’ units. Moreover, Miller was a member of the Board during a period of time when decisions were made about building maintenance, which is a relevant issue in plaintiffs’ action. Thus, her testimony is “material and necessary” (CPLR 3101[a] …). …

… [i]t was error for the court to sua sponte issue a suppression order of the testimony previously taken (see CPLR 3103[c]). Defendants made no showing that evidence was improperly or irregularly obtained during the deposition, or that prejudice to a substantial right had accrued through discovery of improperly obtained evidence … . …

… [C]ounsel’s behavior at the deposition was frivolous and unprofessional. Among other things, counsel called the witness “a liar” and told her on the record that she had done “plenty wrong” and had “plenty to worry about in this case,” despite the fact that she is not even a party to the action. Sanctions against counsel are therefore warranted (22 NYCRR 130-1.1 …). Gendell v 42 W. 17th St. Hous. Corp., 2022 NY Slip Op 00272, First Dept 1-18-22

 

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THE LANDLORD’S SUMMARY PROCEEDING WAS PROPERLY BROUGHT IN SUPREME COURT BECAUSE COVID EXECUTIVE ORDERS PROHIBITED BRINGING THE ACTION IN CIVIL COURT; ALTHOUGH SUA SPONTE ORDERS ARE NOT APPEALABLE, THE NOTICE OF APPEAL WAS DEEMED A MOTION FOR LEAVE TO APPEAL (FIRST DEPT).

The First Department, reversing Supreme Court, determined Supreme Court should not have dismissed the landlord’s summary proceeding on the ground that it should have been brought in Civil Court, not Supreme Court. COVID-related Executive Orders prohibited actions for nonpayment of rent in Civil Court. The First Department noted that a sua sponte order is not appealable as of right, but deemed the notice of appeal to be a request for leave to appeal which was granted:

The motion court erred in sua sponte dismissing the complaint on the ground that this action was a landlord-tenant dispute that should have been brought as a summary proceeding in Civil Court. Supreme Court has unlimited general jurisdiction over all real property actions, including those commenced by a landlord against a tenant (NY Const, art VI, § 7[a] …). Supreme Court, however, has the discretion to decline to entertain such an action on the ground that a pending action in Civil Court was the proper forum … .

Here, Supreme Court was the appropriate forum for this action to recover rental arrears because the Executive Orders implemented in response to the pandemic precluded the landlord from commencing a nonpayment proceeding in Civil Court during the relevant period, compelling the landlord to commence this action. A&L 1664 LLC v Jaspar Hospitality LLC, 2022 NY Slip Op 00264, First Dept 1-18-22

 

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PLAINTIFF’S VERDICT IN THIS SUBWAY ACCIDENT CASE SHOULD HAVE BEEN SET ASIDE; PLAINTIFF WAS STRUCK BY A TRAIN AND ALLEGED THE ALLOWED SPEED FOR ENTERING A STATION WAS TOO HIGH; DEFENDANT TRANSIT AUTHORITY SHOULD HAVE BEEN ALLOWED TO PRESENT EVIDENCE THAT SPEED STUDIES HAD BEEN CONDUCTED IN SUPPORT OF THE QUALIFIED IMMUNITY DEFENSE (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Mazzarelli, determined the NYC Transit Authority’s (TA’s) motion to aside the plaintiff’s verdict in this subway accident case should have been granted. Plaintiff was on the tracks when he was struck by a train. Plaintiff argued the speed regulations allowed the train to enter the station at an unsafe speed. The trial judge prohibited the TA from introducing evidence demonstrating it was entitled to qualified immunity because it had conducted studies to determine the appropriate train speed:

The evidence that the TA proffered, and that the trial court precluded, suggested that it may have been entitled to qualified immunity. … Korach’s (the TA’s expert’s] testimony indicated that the TA’s speed policy was consistent with “universally accepted rapid transit system operating practice” … . Accordingly, Korach should have been permitted to testify about the policies that other rapid transit systems have in place with respect to speed restrictions in subway and train stations, including in cases where those stations are situated on curved sections of track. Further, … the testimony that the TA’s own witnesses would have given was designed to demonstrate that the speed policy enabled the “efficient running of a transportation system which serves millions of passengers every year” … . This language suggests that the trial court’s decision to limit evidence of speed policy decisions to their effects on a particular subway line was too restrictive, since the cases applying qualified immunity in subway speed cases take into account the effects that slower speeds would have on the entire subway system. Pedraza v New York City Tr. Auth., 2022 NY Slip Op 00255, First Dept 1-13-22

Similar issues in a case involving a similar accident in which the Pedraza (supra) trial-level evidentiary rulings on qualified immunity were applied under the doctrine of collateral estoppel. Because Pedraza was reversed, this case was reversed as well. Martinez v New York City Tr. Auth., 2022 NY Slip Op 00252, First Dept 1-11-22

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IN THIS FORECLOSURE ACTION, THE ACCRUAL OF INTEREST SHOULD HAVE BEEN TOLLED DURING THE BANK’S UNEXPLAINED DELAYS IN PROCURING AND ENTERING AN ORDER OF REFERENCE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the accrual of interest should have been tolled during the bank’s unexplained delays in procuring and entering an order or reference:

Supreme Court properly found that the nearly 17-month delay in the plaintiff’s service of the notice of entry of the order of reference entered April 30, 2014, was excessive … . However, it improvidently exercised its discretion in tolling the accrual of interest for only one year, as it should have been tolled for the entire period from April 30, 2014, through September 9, 2015. In addition, the court should have also tolled the accrual of interest for the time periods in which the plaintiff made two motions for an order of reference after its initial motion for an order of reference was denied for administrative reasons … . The tolling of the accrual of interest during these time periods is not … penalizing the plaintiff for losing its motions, but is instead a response to the plaintiff’s unexplained delay in prosecuting the action by failing to promptly move for relief after the denial of its first and second motions. … [A]fter the plaintiff’s first motion for an order of reference was denied in August 2011, it failed to move again until February 2013. After the second motion was denied in September 2013, the plaintiff did not make its third motion until February 2014. Deutsche Bank Natl. Trust Co. v Ould-Khattri, 2022 NY Slip Op 00167, Second Dept 1-12-22

 

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IN THIS ARTICLE 78 PROCEEDING, NO APPEAL LIES FROM A JUDGE’S DECLINING TO SIGN AN ORDER TO SHOW CAUSE; THE ONLY REMEDY IS A MOTION TO VACATE THE FINAL JUDGMENT (FIRST DEPT).

The First Department, in this Article 78 proceeding, noted that no appeal lies from a judge’s declining to sign an order to show cause. The only remedy is a motion to vacate the final judgment:

No appeal lies from an order declining to sign an order to show cause, since it is an ex parte order that does not decide a motion made on notice (see CPLR 5701[a][2] … ).

No party requests that we consider relief under CPLR 5704(a). In any event, we note that Supreme Court providently exercised its discretion in declining to sign plaintiffs’ proposed order to show cause … . Plaintiffs sought to bring on a motion to renew an order that denied the petition and dismissed the proceeding, thus terminating the special proceeding. Renewal is not available under such circumstances … . Instead, an application to vacate a final judgment must be brought pursuant to CPLR 5015 … . This principle applies specifically in the context of a challenge to “a judgment dismissing a CPLR article 78 petition” … . Matter of Alliance to End Chickens as Kaporos v New York City Police Dept., 2022 NY Slip Op 00041, First Dept 1-6-22

 

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THE BANK WHICH COMMENCED THE 2006 FORECLOSURE HAD ALREADY ASSIGNED THE NOTE AND MORTGAGE AND DID NOT HAVE STANDING TO FORECLOSE; THEREFORE THE STATUTE OF LIMITATIONS DID NOT START RUNNING IN 2006; THE DISSENT DISAGREED (SECOND DEPT).

The Second Department, over an extensive dissent, determined that the bank (Option One) which commenced foreclosure proceedings in 2006 did not have standing to do so because it had already assigned the note and mortgage (to Residential). Therefore the six-year statute of limitations did not start to run in 2006. The dissent argued Option One, as the original lender, did in fact have standing. Much of the majority’s decision was devoted to demonstrating the dissenting argument was not valid:

We disagree with our dissenting colleague’s assertion that Option One, after its assignment of the note and mortgage to Residential, continued to have standing to commence and prosecute the 2006 action. Our dissenting colleague misreads the holding in Wilmington Sav. Fund Socy., FSB v Matamoro (200 AD3d 79, 90-91), wherein we held that there are three bases to establish standing in residential foreclosure actions. There is no dispute with regard to the second two bases for finding standing; to wit: a plaintiff’s physical possession of the note prior to commencement of the foreclosure action with an allonge or endorsement in blank or to the plaintiff (second basis), or an assignment of the note to the plaintiff prior to the commencement of the foreclosure action (third basis). However, while the Matamoro Court described the first basis for standing as being “where the plaintiff is the original lender in direct privity with the defendant” … , the second part of the description explained that “[t]he direct privity is rarely seen in residential mortgage foreclosure litigations, given the nature of the home lending business where financial instruments are routinely sold, assigned, or ‘bundled’ from one institution to another between the time funds are initially dispersed by a lender and the commencement of a later foreclosure action” … .  The Matamoro Court’s holding and description of the nature of the market falls squarely into the facts of this case. Contrary to our dissenting colleague’s rationale that the original lender retains the right to sue on a note that it has fully assigned, we have held that”‘[a]n absolute assignment of a bond and mortgage transfers to the assignee all rights theretofore conferred upon the assignor-mortgagee to enforce the bond and mortgage'” … . 21st Mtge. Corp. v Rudman, 2022 NY Slip Op 00031, Second Dept 1-5-22

 

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ALTHOUGH THE BANK IN THIS FORECLOSURE ACTION INSPECTED THE VACANT PROPERTY AND MADE PERIODIC REPAIRS, IT WAS NOT A “MORTGAGEE IN POSSESSION” SUCH THAT THE STATUTE OF LIMITATIONS WAS TOLLED; IN ORDER TO BE DEEMED A “MORTGAGEE IN POSSESSION,” THE MORTGAGOR MUST CONSENT TO THE BANK’S POSSESSION OF THE PROPERTY (SECOND DEPT).

The Second Department, reversing Supreme Court, over a dissent, determined the statute of limitations had run on defendant bank’s foreclosure counterclaim. The bank argued that the statute of limitations had been tolled because it was a “mortgagee in possession,” in that it kept tabs on the property and made repairs. The majority held that, in order to be a “mortgagee in possession,” the mortgagor must consent to the possession. Such consent constitutes an acknowledgment of the debt. The mortgagor here did not consent to the mortgagee’s possession of the property:

We disagree with our dissenting colleague that determining whether a mortgagee qualifies as a mortgagee in possession for purposes of tolling the statute of limitations requires “an analysis of the actions taken by the mortgagee to secure the property financially and physically.” Rather, the determination only requires an analysis of whether the mortgagee took full possession of the property pursuant to an agreement with the mortgagor. Mardenborough v U.S. Bank N.A., 2022 NY Slip Op 00034, Second Dept 1-5-22

 

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ALTHOUGH THE MOTION TO DISMISS THE FORECLOSURE ACTION AS ABANDONED PURSUANT TO CPLR 3215 WAS DENIED ON A GROUND NOT RAISED BY THE PARTIES, THE ORDER WAS SELF-PRESERVED AND APPEALABLE; THE PRESENTATION OF AN ORDER OF REFERENCE WITHIN ONE YEAR OF DEFENDANT’S DEFAULT PRECLUDES A FINDING THAT THE ACTION WAS ABANDONED PURSUANT TO CPLR 3215, DESPITE THE MOTION COURT’S REJECTION OF THE ORDER AS INCOMPLETE (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Dillon, over a concurrence and an extensive two-justice dissent, determined; (1) the dismissal of the foreclosure complaint as abandoned pursuant to CPLR 3215 was appealable, even though it was dismissed, sua sponte, on a ground not raised by the parties; and (2) the fact that the plaintiff submitted an order, albeit an order which was rejected for incompleteness, within one year of defendant’s default rendered  the dismissal pursuant to CPLR 3215 unavailable as a remedy:

The [motion] court employed CPLR 3215(c) reasoning, never argued by the parties, to decide a CPLR 3215(c) motion, just as in Rosenblatt [119 AD3d 45],  the court employed reasoning under CPLR 3212, which was never argued by the parties, to decide a CPLR 3212 summary judgment motion. Under the authority of either Rosenblatt or Tirado [175 AD3d 153], the analysis and reasoning of the court, in the order appealed from, although sua sponte, self-preserved the issues for appellate review because it was pursuant to the same CPLR section within which the plaintiff’s motion was based and was dispositive to the action. * * *

… [T]he plaintiff presented a proposed ex parte order of reference within the one-year statutory period. The fact that the Supreme Court rejected the order of reference as defective is beside the point, as the mere presentment of it established the plaintiff’s intent to proceed toward the entry of judgment and not to abandon the action … . Citibank, N.A. v Kerszko, 2022 NY Slip Op 00032, Second Dept 1-5-22

 

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FAMILY COURT DID NOT HAVE THE AUTHORITY TO, SUA SPONTE, ADD A PARTY TO THIS PATERNITY PROCEEDING; APPLICABLE LAW EXPLAINED (THIRD DEPT).

The Third Department, reversing Family Court, determined Family Court did not have the authority to, sua sponte, add a person with whom mother had had a relationship, Rory EE, as a party in the paternity proceeding. All involved agreed Rory EE had no involvement with the child and equitable estoppel was not an issue:

… [A] court cannot, on its own initiative, add or direct the addition of a party … . Rather, the court may only summon a person who should be joined, if the court has jurisdiction over the person; if jurisdiction over the person can be obtained only by his or her consent or appearance, the court must determine whether the proceeding should be permitted to proceed in that person’s absence (see CPLR 1001 [b] …).

Family Court plainly did not have the authority to make Rory EE. a named party to this proceeding. … Family Court has also failed to obtain jurisdiction over Rory EE. No petition or summons, or supplemental summons, was filed against or served upon him … , no party has moved to add him as a necessary party and there has been no stipulation to that end (see CPLR 1003 … ), and he has not appeared before Family Court or otherwise consented to the court’s jurisdiction (see CPLR 320 [b] …). … [W]e reverse and remit for further proceedings, at which time the parties remain free to move for or stipulate to Rory EE. being added as a necessary party, or not, and, absent such a motion or stipulation, and if his joinder is deemed to be necessary, the court is limited to directing that reasonable efforts be made to join him as a party or considering whether this matter should proceed in his absence (see CPLR 1001 …). Matter of Schenectady County Dept. of Social Servs. v Noah DD., 2021 NY Slip Op 07587, Third Dept 12-30-21

 

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