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CUSTODY MATTERS ARE NOT SUBJECT TO ARBITRATION, DESPITE A PROVISION TO THAT EFFECT IN THE STIPULATION OF SETTLEMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined: (1) despite the stipulation calling for arbitration, custody matters are not subject to arbitration; and (2) upon remittal the court must determine whether New York has jurisdiction and, if so, whether New York is an inconvenient forum. Plaintiff is a citizen of the US and defendant is a citizen of Israel. The parties lived together in New York:

The Supreme Court erred in declining to exercise jurisdiction over the parties’ custody/parental access disputes on the basis that their stipulation of settlement, which was incorporated but not merged into their judgment of divorce, contained an arbitration clause … . “Disputes concerning child custody and visitation are not subject to arbitration as ‘the court’s role as parens patriae must not be usurped'” … .

Moreover, since the Supreme Court has made previous custody determinations concerning the parties’ children, the court, prior to determining whether it has subject matter jurisdiction, must first determine whether the defendant and the children have a significant connection with New York and whether there is substantial evidence in New York … . … If, upon remittal, the court determines … that it retains exclusive, continuing jurisdiction over the custody and parental access issues, it may exercise that jurisdiction, or it may decline to do so if it determines … that New York is an inconvenient forum … . Matsui v Matsui, 2021 NY Slip Op 06843, Second Dept 12-8-21

 

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A CROSS-MOTION TO DISMISS THE COMPLAINT PURSUANT TO CPLR 3215 (C) IS NOT AN APPEARANCE AND DOES NOT WAIVE THE LACK-OF-JURISDICTION DEFENSE; INFANT DEFENDANT IN THIS FORECLOSURE ACTION WAS NOT SERVED IN ACCORDANCE WITH CPLR 309; THE COMPLAINT SHOULD HAVE BEEN DISMISSED FOR LACK OF PERSONAL JURISDICTION (SECOND DEPT)

The Second Department, reversing Supreme Court, determined the infant defendant’s (A.M.’s) cross-motion to dismiss the foreclosure complaint for lack of personal jurisdiction should have been granted:

The defendant James McGown purchased the subject property on January 25, 2006. On March 15, 2007, he executed a mortgage encumbering the subject property in favor of Mortgage Electronic Registration Systems, Inc. (… MERS) … . MERS subsequently assigned the mortgage to the plaintiff. McGown failed to make a payment due under the terms of the mortgage … . … McGown executed a deed purportedly conveying the subject property to his daughter, the infant A.M., who at the time was less than one year old. * * *

… A.M. did not waive the defense of personal jurisdiction by cross-moving to dismiss the complaint pursuant to CPLR 3215(c). “‘A defendant may waive the issue of lack of personal jurisdiction by appearing in an action, either formally or informally, without raising the defense of lack of personal jurisdiction in an answer or pre-answer motion to dismiss'” … . However, certain types of limited involvement in an action by a defendant do not waive jurisdictional defenses, including “cross-moving to dismiss the complaint pursuant to CPLR 3215(c), as such a motion by a defendant ‘does not constitute an appearance in the action'” … . …

… [T]he process server attested that he served A.M. pursuant to CPLR 308(2) by delivering a copy of the summons and complaint to the “housekeeper” at A.M.’s dwelling place and then completing the requisite mailing. … [A]lthough McGown was served individually, he was not served … as an individual and representative of A.M. … . Since neither of these methods of service complied with the requirements of CPLR 309, the present action was jurisdictionally defective as asserted against A.M. US Bank N.A. v McGown, 2021 NY Slip Op 06879, Second Dept 12-8-21

 

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SUPREME COURT SHOULD HAVE ACCEPTED PLAINTIFF’S LAW-OFFICE-FAILURE EXCUSE FOR LATE SUBMISSION OF PAPERS OPPOSING DFENDANT’S MOTION FOR SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to vacate a default judgment, based upon law office failure, should have been granted:

… [T]he defendant moved for summary judgment dismissing the complaint. That motion was initially returnable on October 20, 2016, but the return date was adjourned to December 8, 2016, with opposition papers to be served by November 21, 2016. The plaintiff served opposition to the motion on or about November 28, 2016 … . In an order entered February 2, 2017, the Supreme Court granted the defendant’s motion for summary judgment. …

… [G]iven the totality of all relevant factors, including the delay of only approximately seven days from the due date for opposition papers to the time the plaintiff served opposition papers, the lack of any evidence of willfulness by the plaintiff, or prejudice to the defendant from the delay, and the strong public policy in favor of resolving cases on the merits, the Supreme Court improvidently exercised its discretion in not accepting the plaintiff’s excuse of law office failure … . … [T]he plaintiff demonstrated that he had a potentially meritorious opposition to the defendant’s motion for summary judgment. Stango v Byrnes, 2021 NY Slip Op 06877, Second Dept 12-8-21

 

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PURSUANT TO THE DOCTRINE OF TAX ESTOPPEL, TAX FORMS SIGNED BY DECEDENT INDICATING PROPERTY WAS TRANSFERRED WITHOUT CONSIDERATION PRECLUDED THE CONSTRUCTIVE TRUST CAUSE OF ACTION BASED UPON AN ALLEGED PROMISE TO PAY PETITIONERS PROCEEDS FROM THE SALE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the constructive trust cause of action should have been dismissed under the doctrine of tax estoppel. The claim that decedent, Joseph Scott, Jr. promised to pay petitioners the proceeds from the sale of property was belied by the tax forms signed by Scott which indicated the property was transferred without consideration:

The tax forms utterly refute petitioners’ factual allegations that, in consideration for his interest in the Amagansett property, Joseph Scott, Jr. paid respondents more than $410,000 in his lifetime as an advance on the sale of his Woodbine property … . Since petitioners are precluded from arguing that there was an oral agreement that Joseph Scott, Jr. would pay respondents’ decedents consideration for the Amagansett property, they cannot allege that a constructive trust should be imposed on the property … . The application of the tax estoppel doctrine prevents, as a matter of law, petitioners from establishing an essential element of a claim for a constructive trust: a promise by respondents’ decedents to Joseph Scott, Jr. regarding the Amagansett property. Matter of Chimsanthia, 2021 NY Slip Op 06796, First Dept 12-7-21

 

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IF A DEBT IS ACCELERATED, THE SIX-YEAR STATUTE OF LIMITATIONS FOR RECOVERY OF THE DEBT IS TRIGGERED; IF THE DEBT IS NOT ACCELERATED, THE INSTALLMENTS DUE WITHIN THE SIX YEARS PRIOR TO COMMENCING SUIT ARE RECOVERABLE (THIRD DEPT).

The Third Department determined that, because the debt was never accelerated, recovery of the installments due during the six years prior to commencement of the action is not time-barred:

The claim alleges that the [defendants] stopped making monthly payments as required by the 1988 agreement in December 2003, 15 years before the commencement of this action. “Without acceleration of the entire debt by” [plaintiff], however, “a cause of action for portions of the indebtedness” owed would only accrue when each of the individual installments became due … . The … defendants did not demonstrate that [plaintiff] accelerated the debt and, as a result, failed to sustain their burden of showing that the claim was time-barred to the extent that it sought to recover installments that became due after December 2012. DiCenzo v Mone, 2021 NY Slip Op 06734, Third Dept 12-2-21

 

DEFENDANT’S MOTION TO COMPEL PLAINTIFF, WHO SUED UNDER THE NAME MARGARET DOE, TO AMEND THE CAPTION TO INCLUDE HER LEGAL NAME SHOULD NOT HAVE BEEN GRANTED; PLAINTIFF PRESENTED EVIDENCE SUING UNDER HER OWN NAME WOULD HAVE SEVERE MENTAL-HEALTH CONSEQUENCES (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s motion to compel plaintiff to amend the pleadings to include her legal name (the caption reads “Margaret Doe”) should not have been granted:

The presumption in favor of open trials and the potential prejudice to defendant did not outweigh plaintiff’s privacy interest … . In addition to her own affidavit attesting to the psychological harm it would cause to disclose her name publicly, plaintiff submitted affidavits from her treating psychologist and psychiatrist, both of whom opined that forcing plaintiff to proceed with the litigation under her legal name would have severe consequences for her mental health. This particularized medical evidence corroborating plaintiff’s claims of personal harm is compelling … . Doe v Bloomberg L.P., 2021 NY Slip Op 06754, First Dept 12-2-21

 

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THE MOTION TO DISMISS THE ARBITRATION IN THIS ACTION ALLEGING NONPAYMENT FOR CONSTRUCTION WORK SHOULD NOT HAVE BEEN GRANTED; THE ARBITRATOR RULES ON PAYMENT FOR LABOR AND MATERIALS; COURTS RULE ON THE VALIDITY OF MECHANIC’S LIENS (FIRST DEPT).

The First Department noted that an arbitrator’s ruling on the value of labor an materials is conclusive for all parties, but it is not conclusive on the validity of the underlying mechanic’s lien itself. Here the contactor, Flowcon, filed mechanic’s lens alleging defendant, Andiva, failed to pay for construction work on Andiva’s townhouse. The construction contract required arbitration and granted the arbitrator broad powers. Supreme Court granted Andiva’s motion to dismiss the arbitration and the First Department reversed, compelled arbitration and stayed the LIen Law counterclaims:

The AAA’s Construction Industry Arbitration Rules provide that the arbitration tribunal shall rule on its own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement. Thus, the threshold issue of the arbitrability of Flowcon’s claims alleging nonpayment is one for the arbitrator, not the courts, particularly given the parties’ broad arbitration clause … . To the extent Andiva argues that arbitration would usurp the court’s “gatekeeper” role of ruling upon the validity of a lien and undermine the public policy underlying the remedies afforded a lienee under Lien Law §§ 39 and 39-a since its allegation of lien exaggeration would be effectively resolved by an arbitrator rather than a court, the argument is unavailing. This Court has held that an arbitrator’s decision as to the value of labor and materials is conclusive as to all parties to the arbitration but not conclusive as to the validity of the mechanic’s lien itself … . Flowcon, Inc. v Andiva LLC, 2021 NY Slip Op 06756, First Dept 12-2-21

 

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THE INSURED, SPACE NEEDLE, LLC, IS LOCATED IN WASHINGTON STATE; ALTHOUGH THE INSURANCE POLICY NAMED NEW YORK AS THE FORUM AND REQUIRED THE APPLICATION OF NEW YORK LAW FOR ANY LAWSUITS, THE WASHINGTON INSURANCE CODE RENDERED SUCH PROVISIONS VOID; THEREFORE THE INSURER WAS NOT ENTITLED TO AN ANTI-SUIT PRELIMINARY INJUNCTION IN NEW YORK (FIRST DEPT).

he First Department determined plaintiff Elite Insurance Company did not demonstrate a likelihood of success or a balancing of the equities in its favor in its attempt to have a preliminary injunction issued in New York to prevent a suit by the insured, Space Needle of Seattle, Washington, after the COVID-related business-loss claim was denied: Although the insurance contract indicated New York would be the forum and New York law would apply, the Washington Insurance Code rendered such provisions void. The decision includes extensive discussions of the leading cases in these areas:

… [P]laintiff did not demonstrate either a likelihood of success on the merits of its claim for an anti-suit injunction based on the contractual choice-of-law and forum selection clauses of the parties’ insurance contract, or a balancing of the equities in its favor. As an insurance company authorized to sell insurance in Washington, plaintiff was required to comply with the Washington Insurance Code’s prohibition against choice-of-law and forum selection clauses in insurance policies sold in Washington (Wash Rev Code Chapter 48). The Code (RCW) expressly provides that no insurance contract delivered or issued for delivery in this state (Washington) . . . “shall contain any condition, stipulation or agreement (a) requiring it to be construed according to the laws of any other state or country. . .; or (b) depriving the courts of this state of the jurisdiction of action against the insurer . . .” (RCW 48.18.200 [1]). RCW further specifies that any such agreement violating this prohibition “shall be void, but such voiding shall not affect the validity of the other provisions of the contract” (RCW 48.18.200 [2]). Thus, plaintiff has not demonstrated that the equities tip in its favor where it is attempting, as Supreme Court stated, “a blatant end run around” Washington’s prohibition against choice-of-law and forum selection clauses. North Am. Elite Ins. Co. v Space Needle, LLC, 2021 NY Slip Op 06769, First Dept 12-2-21

 

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WHERE A FORECLOSURE ACTION IS TERMINATED BY A STIPULATION OF DISCONTINUANCE WITH PREJUDICE, THE STIPULATION CANNOT BE VACATED BY A MOTION, A PLENARY ACTION MUST BE BROUGHT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank’s motion to vacate the stipulation terminating the foreclosure action should not have been granted:

The Supreme Court improperly granted Deutsche Bank’s motion to vacate the stipulations. The mortgage foreclosure action was terminated by the stipulation of discontinuance with prejudice and Deutsche Bank could only vacate that stipulation by commencing a plenary action … . Deutsche Bank Natl. Trust Co. v Goltz, 2021 NY Slip Op 06671, Second Dept 12-1-21

 

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ALTHOUGH THE COURT HAS THE DISCRETION TO ALLOW AMENDMENT OF A NOTICE OF CLAIM BASED UPON EVIDENCE GIVEN AT THE 50-H HEARING, THE AMENDMENT CANNOT SUBSTANTIALLY CHANGE THE FACTS AND ADD A NEW THEORY OF LIABILITY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the petitioner’s motion to amend the notice of claim in this medical malpractice action against the New York City Health and Hospitals Corporation should not have been granted. Although the court has the power to allow amendment of a notice of claim based upon evidence given at the 50-h hearing, the amendment cannot substantively change the facts and add a new theory of liability:

After a hearing was conducted pursuant to General Municipal Law § 50-h … , the petitioner served an amended notice of claim … expanding the dates of alleged malpractice from January 2, 2014, through September 6, 2018, based on the petitioner’s testimony at the hearing that the decedent had stomach pains since 2016, had been diagnosed with paralytic ileus, and had been treated for that condition by a physician affiliated with Coney Island Hospital since approximately 2016. …

“‘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'” … . “[W]hile a court has the discretion to permit a plaintiff to serve an amended notice of claim, amendment is permitted only where the error in the original notice of claim was made in good faith, the municipality is not prejudiced, and the amendment does not substantively change the nature of the claim” … . “A court may consider evidence adduced at a 50-h hearing to correct a good faith and nonprejudicial technical mistake, omission, irregularity, or defect in the notice of claim. However, the evidence adduced at the 50-h hearing cannot be used to substantively change the nature of the claim or the theory of liability” … . Matter of Lesaine v New York City Health & Hosps. Corp., 2021 NY Slip Op 06617, Second Dept 11-24-21

 

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