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ALTHOUGH PLAINTIFF SOUGHT DISSOLUTION OF THE PARTNERSHIP AND COULD NOT COMPEL PARTITION IF THE PARTNERSHIP EXISTS, PLAINTIFF SHOULD HAVE BEEN ALLOWED TO AMEND THE COMPLAINT TO ADD A CAUSE OF ACTION FOR PARTITION IN THE ALTERNATIVE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determine plaintiff should have been allowed to amend the complaint to allege a cause of action for partition in this partnership dispute. Although plaintiff sought dissolution of the partnership, and could not compel partition if the partnership exists, partition would be available if the existence of the partnership is not proven:

“Absent prejudice or surprise resulting from the delay in making the motion, leave to amend should be granted unless the proposed amendment is patently without merit or palpably improper” … . Here, the plaintiff has alleged the existence of a general partnership and has sought, inter alia, to dissolve it, while the defendant has consistently denied the existence of such partnership. If the plaintiff prevails in establishing the existence of the partnership, then he cannot compel partition of the partnership property … . However, since the existence of the partnership is disputed by the defendant, we see no reason why the plaintiff should not be permitted to plead, in the alternative (see CPLR 3014, 3017[a]), a cause of action to compel partition of the jointly held properties in the event no partnership is found to exist … . Ratto v Oliva, 2021 NY Slip Op 03860, Second Dept 6-16-21

 

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BECAUSE THE STATE, NOT THE TOWN, OWNS THE LAND BENEATH THE LAKE, THE TOWN DID NOT HAVE JURISDICTION TO BRING CRIMINAL CHARGES BASED UPON THE CONSTRUCTION OF DOCKS; THE CRIMINAL MATTER WAS DISMISSED ON THAT GROUND AND PLAINTIFFS BROUGHT A MALICIOUS PROSECUTION ACTION; BECAUSE THE CRIMINAL MATTER WAS TERMINATED IN PLAINTIFFS’ FAVOR THE MALICIOUS PROSECUTION ACTION SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the underlying criminal matter brought against the plaintiffs (the Melchers) by the town had been terminated in favor of the plaintiffs. Therefore the plaintiffs’ malicious prosecution action against the town should not have been dismissed. The town brought criminal charges based upon plaintiffs’ construction of docks in a marina. Pursuant to the Navigation Law, the state owns the land beneath the lake and the town, therefore, did not have jurisdiction to bring the criminal charges. The criminal charges had been dismissed on that ground:

In order to maintain a civil action to recover damages for malicious prosecution, a plaintiff must show “(1) the commencement or continuation of a criminal proceeding by the defendant against the plaintiff, (2) the termination of the proceeding in favor of the accused, (3) the absence of probable cause for the criminal proceeding, and (4) actual malice” … . A criminal proceeding terminates favorably to the accused where the disposition is final, “such that the proceeding cannot be brought again” … , and the disposition is not “inconsistent with a plaintiff’s innocence” … . Whether a disposition was inconsistent with innocence is a case-specific determination that considers the circumstances of the particular case … .

Here, the 2008 criminal proceeding was dismissed for lack of jurisdiction pursuant to CPL 170.30(1)(f) because the Town lacked legal authority to regulate the activity upon which the criminal charges were based. In the dismissal order, the Supreme Court found that “jurisdiction over the [Melchners] ha[d] never been properly obtained and accordingly the [Melchners] [could] not be prosecuted for the offenses alleged.” Under the circumstances, the disposition was not inconsistent with the Melchners’ innocence … . Melchner v Town of Carmel, 2021 NY Slip Op 03830, Second Dept 6-16-21

 

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CONVEYANCES OF REAL PROPERTY SHOULD HAVE BEEN SET ASIDE AS FRAUDULENT PURSUANT TO THE DEBTOR-CREDITOR LAW; RELATED AFFIRMATIVE DEFENSES BASED UPON UNSUPPORTED CONCLUSIONS OF LAW SHOULD HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined conveyances of property should have been set aside as fraudulent and the related affirmative defenses based upon unsupported conclusions of law should have been dismissed:

… [T]he plaintiff submitted … a copy of the deed and transfer documents regarding the properties at issue, which demonstrated that conveyances of the properties were made after the underlying action was commenced and without fair consideration. The plaintiff also submitted evidence that a judgment was docketed against [defendants] and that they failed to satisfy the judgment. With respect to the element of fair consideration, the deed and transfer documents reflect that no money or a nominal fee of ten dollars was paid for the defendants’ properties. Therefore, the plaintiff established her prima facie entitlement to summary judgment on the first cause of action to the extent that it seeks to set aside the conveyances of the properties pursuant to former section 273-a of the Debtor and Creditor Law … . …

The Supreme Court … should have granted that branch of the plaintiff’s motion which was pursuant to CPLR 3211(b) to dismiss the affirmative defenses insofar as the affirmative defenses pertain to Debtor and Creditor Law former § 273-a. CPLR 3211(b) authorizes a plaintiff to move to dismiss a defendant’s affirmative defense on the ground that it is without merit … [T]he affirmative defenses … proffered no supporting facts and merely pleaded conclusions of law. Diaz v 297 Schaefer St. Realty Corp., 2021 NY Slip Op 03825, Second Dept 6-16-21

 

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PLAINTIFF RECEIVED THE FULL BENEFIT OF A LOAN AGREEMENT; THE DOCTRINE OF EQUITABLE ESTOPPEL PRECLUDED PLAINTIFF’S CLAIM THE LOAN AGREEMENT IS UNENFORCEABLE BECAUSE THE UNDERLYING RECORDED MORTGAGE DID NOT BEAR HIS SIGNATURE (SECOND DEPT).

The Second Department determined the defendants” motion to dismiss was properly granted. Plaintiff contended the underlying mortgage which was part of a loan agreement was void because it was not signed, rendering the loan agreement unenforceable. Plaintiff had however accepted the proceeds of the loan and therefore was precluded from contesting the agreement by the doctrine of equitable estoppel:

… [T]he plaintiff does not … deny that he executed a copy of the mortgage in accordance with the loan agreement, he merely contends that the copy that was recorded … , did not bear his signature. The plaintiff contends that this defect rendered the recorded mortgage void ab initio and therefore unenforceable … . * * *

… [T]he defendants’ uncontradicted submissions demonstrated that the plaintiff “had the full benefit” of the loan agreement … . … [T]he plaintiff does not seek to rescind the loan agreement, but he nevertheless seeks to recoup “all closing costs paid to Defendants with any payments to [Citibank] since June 22, 2007,” the date the loan agreement was executed … . Under the circumstances, the doctrine of equitable estoppel precludes the plaintiff from asserting that the recorded mortgage was void … . Bernard v Citibank, N.A., 2021 NY Slip Op 03822, Second Dept 6-16-21

 

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SUPREME COURT HAD JURISDICTION TO ISSUE A DECLARATORY JUDGMENT RE: WHETHER PLAINTIFF PHARMACY COULD SEEK PAYMENT OF PRESCRIPTIONS UNDER THE WORKERS’ COMPENSATION LAW, EVEN THOUGH THE WORKERS’ COMPENSATION BOARD (WCB) HAD JURISDICTION OVER THE ISSUES RAISED IN THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court had jurisdiction over a declaratory judgment action, even though the case involved whether plaintiff pharmacy was entitled to payment for prescriptions under the Workers’ Compensation Law, a matter within the jurisdiction of the Workers’ Compensation Board (WCB):

No party accepted responsibility for the payment of the outstanding prescription bills and the plaintiff commenced this action seeking … a judgment declaring that the Workers’ Compensation Law does not prohibit a pharmacy from seeking payment of a prescription bill from the responsible party in a plenary proceeding in a court of appropriate jurisdiction … . * * *

Pursuant to CPLR 3001, the Supreme Court “may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed. If the court declines to render such a judgment it shall state its grounds.”

The Court of Appeals has ruled that “primary jurisdiction with respect to determinations as to the applicability of the Workers’ Compensation Law has been vested in the Workers’ Compensation Board” [WCB]… . Thus, while the Supreme Court properly determined that the appropriate forum to resolve the issues raised in the complaint is the WCB, the WCB’s jurisdiction is primary and not exclusive. … [S]ince this is a declaratory judgment action, the Supreme Court should have denied the WCB defendants’ motion to dismiss the complaint for lack of subject matter jurisdiction … . 21st Century Pharmacy v American Intl. Group, 2021 NY Slip Op 03820, Second Dept 6-16-21

 

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PLAINTIFF’S COMPLAINT ALLEGING THE LANDLORD ENGAGED IN A FRAUDULENT SCHEME TO DEREGULATE APARMTENTS WAS PROPERLY DISMISSED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Hinds-Radix, determined plaintiff’s complaint alleging the landlord engaged in a fraudulent scheme to deregulate apartments was properly dismissed. The opinion is too complex to fairly summarize here:

… [T]he deregulation of the plaintiff’s apartment was made in good faith … . Further, the late registration of the apartment as rent-stabilized, only after notification by the DHCR [Department of Housing and Community Renewal] of a change in the law several years in the making, does not indicate that [defendant landlord] was engaged in a fraudulent scheme to deregulate the apartment.

“Fraud consists of ‘evidence [of] a representation of material fact, falsity, scienter, reliance and injury'” … . The elements of fraud must be pleaded, and each element must be set forth in detail (see CPLR 3016[b] … ). That requirement was not met in this case.

There are instances in which failure to timely register an apartment as rent stabilized could constitute evidence of fraud. Prior to 2016, and the DHCR’s blanket notification to landlords of the change in the law, there were landlords involved in litigation over failure to register apartments as rent stabilized who nevertheless persisted in that practice … ; attempted to obfuscate the regulatory status of the apartment … ; pressured and misled tenants … ; or even went so far as to engage in misrepresentations as to whether improvements were in fact made … . It is clear that the plaintiff’s apartment was in fact rent stabilized, but that fact was not evidence of fraud, and allegations of fraud based upon speculation are insufficient … . Gridley v Turnbury Vil., LLC, 2021 NY Slip Op 03577, Second Dept 6-9-21

 

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THE FORECLOSURE ACTION WAS PROPERLY DISMSSED AS TIME-BARRED; RPAPL 1304 IS A CONDITION PRECEDENT, NOT A STATUTORY PROHIBITION WHICH WOULD TOLL THE STATUTE OF LIMITATIONS (SECOND DEPT).

The Second Department, over a two-justice partial dissent, determined the defendant’s motion to dismiss the foreclosure action as time-barred, cancel the notice of pendency and cancel and discharge the mortgage (RPAPL article 15) was properly granted. The decision is too complex and factually specific to fairly summarize here (but well worth reading). One of the issues addressed was the difference between a statutory prohibition, which would toll the statute of limitations, and a condition precedent, which would not:

CPLR 204(a) provides that “[w]here the commencement of an action has been stayed by a court or by a statutory prohibition, the duration of the stay is not part of the time within which the action must be commenced” … . RPAPL 1304, which the plaintiff argues is a “statutory prohibition,” requires that “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” RPAPL 1304 describes the required content and manner of service of the notice. “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action” … .

“A statutory prohibition and a condition precedent are separate concepts” … . The salient feature of a “statutory prohibition” is the plaintiff’s lack of control. Since a plaintiff has complete control over the acts necessary to effectuate compliance with a condition precedent, a condition precedent is not a statutory prohibition … . Thus, because the plaintiff had control over when to serve the RPAPL 1304 notice, and could have done so at least 90 days prior to the expiration of the statute of limitations, RPAPL 1304 is not a statutory prohibition within the meaning of CPLR 204(a) … . Everhome Mtge. Co. v Aber, 2021 NY Slip Op 03574, Second Dept 6-9-21

 

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LABOR LAW 240 (1) AND 200 CAUSES OF ACTION MAY BE PLED IN THE ALTERNATIVE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the Labor Law 200 cause of action should not have been dismissed on the ground that it duplicated the Labor Law 240 (1) cause of action. Those causes of action may be pled in the alternative:

… [T]he Supreme Court erred in granting those branches of the School District’s motion which were for summary judgment dismissing the Labor Law § 200 and common-law negligence causes of action asserted against it on the ground that those causes of action were duplicative of the Labor Law § 240(1) cause of action, as the plaintiffs may assert alternative Labor Law causes of action … . Cain v Ameresco, Inc., 2021 NY Slip Op 03572, Second Dept 6-9-21

 

THE CONDITIONAL ORDER OF DISMISSAL DIRECTING THE FILING OF A NOTE OF ISSUE DID NOT MEET THE REQUIREMENTS OF CPLR 3216; THE ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the conditional order of dismissal directing plaintiff to file a note of issue did not meet the statutory requirements of CPLR 3216 and, therefore, the action should not have been dismissed:

The conditional order of dismissal directing plaintiff to file a note of issue by February 28, 2019 or the action would be dismissed failed to adhere to the statutory procedure for dismissing an action for failure to file a note of issue. Specifically, the conditional order of dismissal failed to provide plaintiff with the requisite 90 days to file a note of issue, failed to specify the conduct constituting the neglect demonstrating a general pattern of delay, and did not constitute the requisite written notice because it was not signed by the parties (see CPLR 3216[a], [b][3] … ). Flecha v Neira, 2021 NY Slip Op 03548, First Dept 6-8-21

 

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PLAINTIFF STATED CAUSES OF ACTION FOR VIOLATION OF LABOR LAW 193, IMPROPER DEDUCTIONS FROM WAGES, AND LABOR LAW 215, TERMINATION FOR COMPLAINING OF THE IMPROPER DEDUCTIONS (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff had stated causes of action for violation of Labor Law 193 by making improper deductions from earned wages, and Labor Law 215, by firing plaintiff after she complained of unlawful deductions:

… [P]laintiff alleged that defendants “impermissibly and unlawfully made deductions from [her] wages including the operating costs and expenses of OFRM [her employer] such as, among other things, credit card fees, bank services bills and electric bills.” She also alleged that her draw and net bonus payments constituted “earned wages,” and that defendants had “unlawfully made deductions from [her] [w]ages.” …

Under Labor Law § 193(1)(b), “[n]o employer shall make any deduction from the wages of an employee, except deductions which . . . are expressly authorized in writing by the employee and are for the benefit of the employee.” In order to state a claim for a violation of § 193, “a plaintiff must allege a specific deduction from wages and not merely a failure to pay wages” … . Additionally, a “‘deduction is more targeted and direct than the wholesale withholding’ of wages” … . * * *

Labor Law § 215 provides, in pertinent part, that no employer “shall discharge, threaten, penalize, or in any other manner discriminate against any employee (i) because such employee has made a complaint to his or her employer . . . that the employer has engaged in conduct that the employee, reasonably and in good faith, believes violates any provision of [the Labor Law].” Schmidt-Sarosi v Offices for Fertility & Reproductive Medicine, P.C., 2021 NY Slip Op 03564, First Dept 6-8-21

 

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