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SUBPOENAS RELATING TO CROSS CLAIMS SHOULD NOT HAVE BEEN QUASHED (FIRST DEPT).

The First Department, reversing Supreme Court, determined subpoenas that related to cross claims should not have quashed

[Defendant’s] motion to quash the nonparty subpoenas … to obtain information related to … cross claims … (CPLR 3101[a][4]) should have been denied. Although the subpoenaed information was unrelated to the interpleader action, in New York, cross claims “may be asserted between defendants for any cause of action at all, whether or not related to the plaintiff’s main claim” ( … CPLR 3019[b]). As the requested information is relevant to the pending cross claims, they could be properly subpoenaed. Thus, we remand the matter for discovery to the extent the requested information is “material and necessary” to the cross claims (CPLR 3101[a][4] …). Feiger v Ray Enters., LLC, 2021 NY Slip Op 03525, First Dept 6-3-21

 

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THE EXAMINATION UNDER OATH (EUO) WAS SCHEDULED BEFORE THE INSURER RECEIVED A CLAIM FORM; THEREFORE THE INSURER DID NOT HAVE TO DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF 11 NYCRR 65-3.5 TO BE ENTITLED TO A DEFAULT DECLARATORY JUDGMENT; THE UNDERLYING TRAFFIC ACCIDENT WAS FOUND TO HAVE BEEN STAGED AND CLAIMANT FAILED TO APPEAR AT SCHEDULED EOU’S (FIRST DEPT).

The First Department noted that where an examination under oath (EUO) is scheduled before the insurance company’s of a claim form, the insurer need not submit the proof of mailing in compliance with 11 NYCRR 65-3.5 to obtain a default declaratory judgment. It was determined the underlying traffic accident was staged and claimant did not appear at scheduled EOU’s:

As to claimant Ronald Marcellus, plaintiff additionally provided sufficient proof that he failed to appear for an examination under oath (EUO) despite receiving proper notice, which vitiates the policy … . Generally, an insurer must provide proof that the EUO requests were timely mailed, within 15 business days of receipt of the prescribed verification forms, in compliance with 11 NYCRR 65-3.5 in order to obtain a default declaratory judgment … . However, that requirement does not apply where, as here, the EUOs are scheduled prior to the insurance company’s receipt of a claim form … . Since Marcellus failed to appear on two or more occasions and the EUO requests were sent prior to plaintiff’s receipt of a claim form, plaintiff did not need to demonstrate compliance for the verification requests under 11 NYCRR 65-3.5. State Farm Mut. Auto. Ins. Co. v Surgicore of Jersey City, LLC, 2021 NY Slip Op 03536, First Dept 6-3-21

 

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WHERE THE ORDER DISMISSING A COMPLAINT PURSUANT TO CPLR 3215 AFTER A SEVEN-YEAR DELAY IN SEEKING A DEFAULT JUDGMENT DID NOT SPECIFICALLY SET FORTH CONDUCT DEMONSTRATING A GENERAL PATTERN OF DELAY THE SAVINGS CLAUSE OF CPLR 205 APPLIES AND THE ACTION MAY BE RE-COMMENCED WITHIN SIX MONTHS OF THE DISMISSAL (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the initial foreclosure action was not dismissed for failure to prosecute and, therefore, the savings provision of CPLR 205 applied. The court noted that the seven-year delay in seeking a default judgment which resulted in the dismissal did not constitute “neglect to prosecute:”

For purposes of the savings provision of CPLR 205 (a), “[w]here a dismissal is one for neglect to prosecute the action made pursuant to [CPLR 3216] or otherwise, the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation” … . Here, the first action was dismissed as abandoned pursuant to CPLR 3215 (c). In making this determination, Supreme Court noted that plaintiff waited almost seven years before moving for a default after defendant failed to answer and that plaintiff failed to establish a reasonable excuse for the delay in seeking the default. Therefore … Supreme Court’s order dismissing the first action did not set forth on the record conduct that “demonstrate[d] a general pattern of delay” … . As such, under these circumstances, the second action does not fall outside the savings provision … . * * *

… [T]he Second Department recently ruled that the savings provision was still applicable to a subsequent action when the prior action was dismissed pursuant to CPLR 3215 (c) for failure to move for a judgment against a defendant for “almost seven years” because the trial court did not include findings of specific conduct demonstrating a general pattern of delay in proceeding with litigation … . U.S. Bank N.A. v Jalas, 2021 NY Slip Op 03506, Third Dept 6-3-21

 

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THE RECENT US SUPREME COURT CASE HOLDING THAT A STATE MUST CONSENT TO SUIT AGAINST IT IN A SISTER STATE DID NOT AFFECT THE DOCTRINE OF “WAIVER OF SOVEREIGN IMMUNITY;” HERE NEW JERSEY WAIVED THE DOCTRINE BY PARTICIPATING IN THE FIRST TRIAL OF THIS TRAFFIC ACCIDENT CASE (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Oing, in a comprehensive discussion which cannot be fairly summarized here, determined the defendant, New Jersey Transit, had waived sovereign immunity by participating in the first trial of this traffic accident case. The fact that, since the first trial, the US Supreme Court ( the Hyatt case) held a state may not be sued in a sister state without consent (the “consent to the jurisdiction of a sister state” issue) did not require a different result on the “waiver of sovereign immunity” issue:

There is no dispute that New Jersey Transit did not make a voluntary appearance in this action. It then argues that it made no clear statement by its litigation conduct that it was submitting to the jurisdiction of the courts of this state, pointing out that it has taken a defensive posture from this action’s inception because it had no legitimate legal basis for objecting to New York’s jurisdiction until seven years after the action was commenced, when Hyatt was decided, in 2019. These arguments are an oversimplification of this substantive constitutional issue. The issue is whether New Jersey Transit undertook a litigation strategy that can be deemed a voluntary waiver of its sovereign immunity. * * *

We reject New Jersey Transit’s argument that the sovereign immunity defense was not available at the time it served its answer in this action. The doctrine of sovereign immunity as it applies to states has been available at least since … 1979. The Hyatt Court dramatically altered the sovereign immunity analysis … . Hyatt did not, however, give birth to the doctrine. We cannot help but see the obvious unfair tactical advantage of conceding liability and losing at the first trial on damages and then seeking dismissal of the second trial on damages several years later, based not on the merits of the action but on an alleged “new” defense of sovereign immunity. Belfand v Petosa, 2021 NY Slip Op 03522, First Dept 6-3-21

 

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PLAINTIFF ALLEGED THE INCREASED TRAFFIC RELATED TO AN EVENT AT DEFENDANT COUNTRY CLUB CREATED A DANGEROUS CONDITION CONTRIBUTING TO A COLLISION WITH A VEHICLE ATTEMPTING TO ENTER THE COUNTRY CLUB PREMISES; PLAINITIFFS WERE ENTITLED TO DISCOVERY FROM THE COUNTRY CLUB REGARDING CROWD CONTROL, MARKETING, EVENT PLANNING, SAFETY PLANS, ETC. (THIRD DEPT).

The Third Department determined plaintiffs’ motion to compel discovery from defendant country club was properly granted. Plaintiffs were injured in a collision when defendant driver made a left turn across plaintiffs’ lane of travel to enter the country club premises to attend a special event. Plaintiffs alleged that defendant country club did not take adequate measures to control the increased traffic generated by the event, thereby creating a dangerous condition:

Plaintiffs’ complaint alleges a cause of action for negligence based on, as relevant here, breach of a special duty of care by defendant. The crux of plaintiffs’ theory of liability against defendant is that it organized and hosted an event that it knew or should have known would generate a large amount of traffic to the site, but failed to account for the impact of same, and said failure was a proximate cause of plaintiffs’ injuries. A review of plaintiffs’ demands evinces that they generally sought information regarding crowd control, marketing/advertisement materials, ticket sales, minutes concerning the planning of the event, copies of emergency management plans, safety plans and copies of any and all reports of past medical emergencies at the event. For the most part, the demands were concerned with the event held in 2019, as well as those held in the preceding five years. A review of the record reveals that the discovery sought is aimed at determining whether defendant created a dangerous condition by holding a large event, thus increasing vehicular and pedestrian traffic, with notice of the danger and failing to take appropriate precautions … . Rote v Snyder, 2021 NY Slip Op 03508, Third Dept 6-3-21

 

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PURSUANT TO NEW YORK CITY CIVIL COURT ACT 1808, COLLATERAL ESTOPPEL OR ISSUE PRECLUSION DOES NOT APPLY TO SMALL CLAIMS ACTIONS, BUT RES JUDICATA OR CLAIM PRECLUSION DOES APPLY TO SMALL CLAIMS ACTIONS (CT APP). ​

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive dissent, interpreting New York Civil Court Act section 1808, determined a judgment in a small claims action is subject to the transactional approach to claim preclusion. Plaintiff won a small claims case seeking overtime wages. Then plaintiff brought another action in federal court seeking additional damages for the failure to pay overtime wages under federal and state law. The Second Circuit asked for clarification of the meaning of section 1808, which could be interpreted to prohibit the application of both issue preclusion and claim preclusion to small claims actions. Under the statute, collateral estoppel or issue preclusion does not apply to small claims actions, but res judicata or claim preclusion does:

We now conclude that, under NY City Civ Ct Act § 1808, small claims judgments do not have collateral estoppel or issue preclusive effect (with one exception), but such judgments may have the traditional res judicata or claim preclusive effect in a subsequent action involving a claim between the same adversaries arising out of the same transaction or series of transactions at issue in a prior small claims court action. * * *

… [T]he claim preclusion rule extends beyond attempts to relitigate identical claims. We have consistently applied a “transactional analysis approach” in determining whether an earlier judgment has claim preclusive effect, such that “once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy” … . * * *

Collateral estoppel, or issue preclusion, is related to, but distinct from, the doctrine of res judicata. Collateral estoppel prevents “‘a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party . . . whether or not the . . . causes of action are the same'” … . Simmons v Trans Express Inc., 2021 NY Slip Op 03484, CtApp 6-3-21

 

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COLLATERAL ESTOPPEL PRECLUDED THE GENERAL CONTRACTOR’S INDEMNIFICATION ACTION AGAINST A SUBCONTRACTOR BECAUSE THE SUBCONTRACTOR HAD BEEN GRANTED SUMMARY JUDGMENT IN THE UNDERLYING PERSONAL INJURY ACTION BROUGHT BY THE GENERAL CONTRACTOR’S EMPLOYEES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that Conrad Geoscience Corp was not required to indemnify Kento, the general contractor for the removal of contaminated soil. Kento had hired Conrad to draw up environmental safety plans. The underlying lawsuit was brought by four Kento dump truck drivers who experienced dizziness during work and were treated at a hospital. Conrad won its motion for summary judgment in the underlying action because it did not exercise and supervisory control over the work done by the Kento employees. Collateral estoppel precluded Kento’s indemnification action against Conrad:

Several days prior to the Supreme Court’s denial of Conrad’s motion for summary judgment in this action, the court had granted that branch of Conrad’s motion, made in the underlying action commenced by the Ketco employees, which was for summary judgment dismissing the complaint in that action insofar as asserted against it. That determination was affirmed by this Court in a prior appeal, in which we concluded, “Conrad submitted evidence that, as the entity charged with creating environmental safety plans, it exercised no supervisory authority at the highway construction project work site and owed no duty of care to the plaintiffs. In opposition, the plaintiffs failed to raise a triable issue of fact” … . Based upon Ketco’s concession in its papers submitted in opposition to Conrad’s motion for summary judgment in this action, Conrad contends, in effect, that Ketco is collaterally estopped from seeking contractual indemnification against it. “Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity” … . Privity may be found where a nonparty to a prior litigation has “a relationship with a party to the prior litigation such that his [or her] own rights or obligations in the subsequent proceeding are conditioned in one way or another on, or derivative of, the rights of the party to the prior litigation” … . Here, we agree with Conrad’s contention that, under the circumstances, Ketco, which was clearly in privity with the Ketco employees, is bound by the prior determination of Conrad’s nonliability for the Ketco employees’ alleged injuries. New York State Thruway Auth. v Ketco, Inc., 2021 NY Slip Op 03462, Second Dept 6-2-21

 

PLAINTIFF’S LETTER TO THE COURT REQUESTING SANCTIONS WAS NOT SUFFICIENT TO NOTIFY DEFENDANTS OF THEIR ALLEGED FRIVOLOUS CONDUCT; MONETARY SANCTIONS REVERSED; MATTER REMITTED FOR PLAINTIFF TO MAKE A MOTION TO WHICH DEFENDANTS MAY RESPOND (SECOND DEPT).

The Second Department, reversing Supreme Court, determined sanctions for allegedly frivolous conduct should not have be imposed without a motion on notice and an opportunity to respond:

Pursuant to 22 NYCRR 130-1.1, a court, in its discretion, after a reasonable opportunity to be heard, may impose sanctions against a party or the attorney for a party, or both, for frivolous conduct … . “The form of the hearing shall depend [on] the nature of the conduct and the circumstances of the case” … . Conduct may be deemed frivolous if it is “undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another,” or “asserts material factual statements that are false” … . In determining if sanctions are appropriate, the court looks at the broad pattern of conduct by the offending attorneys or parties … .

Here, the appellants contend, inter alia, that the Supreme Court improvidently exercised its discretion in imposing a sanction upon them without affording them an opportunity to be heard. We agree. Under the particular circumstances of this case, the appellants should have received notice of their alleged offending conduct by way of a motion made on notice containing allegations of fact, and should have been given an opportunity to respond. The letter to the court from the plaintiff … , in which sanctions were requested, was insufficient to provide the defendants with notice of their alleged offending conduct. Muhametaj v Town of Orangetown, 2021 NY Slip Op 03460, Second Dept 6-2-21

 

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THE J.H.O./REFEREE WAS NOT AUTHORIZED BY CPLR 3104 OR ANY ORDER ISSUED BY THE COURT TO CONSIDER AN ALLEGED DEFICIENCY IN THE AMENDED BILL OF PARTICULARS; THE ISSUE PRESENTED A QUESTION OF LAW WHICH COULD NOT HAVE BEEN AVOIDED BELOW, THEREFORE IT MAY BE RAISED FOR THE FIRST TIME ON APPEAL; ORDER STRIKING THE COMPLAINT VACATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the Judicial Hearing Officer (J.H.O)/Referee did not have the authority to grant defendants motion to strike the complaint on the ground the amended bill of particulars did not comply with prior court orders. A bill of particulars is not part of any disclosure procedure which CPLR 3104 authorizes a referee to supervise. Because this is question of law could not have been avoided if brought up below, the issue can be raised for the first time on appeal:

“Since a bill of particulars is not a disclosure device but a means of amplifying a pleading, the present dispute over the contents of the [plaintiffs’ amended] bill[s] of particulars is not part of any disclosure procedure that CPLR 3104 authorizes a referee to supervise” … . Since CPLR 3104 did not authorize the J.H.O./Referee to determine the defendants’ separate motions, among other things, to strike the complaint insofar as asserted against each of them based upon the defendants’ objections to the plaintiffs’ amended bills of particulars, and there exists no order of reference authorizing the J.H.O./Referee to determine the defendants’ motions, the J.H.O./Referee was without authority to determine the defendants’ separate motions, inter alia, to strike the complaint insofar as asserted against each of them … . Kramarenko v New York Community Hosp., 2021 NY Slip Op 03450, Second Dept 6-2-21

 

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THE EXECUTIVE ORDERS SUSPENDING OR MODIFYING THE LAW IN RESPONSE TO COVID-19 TOLLED THE TIME-LIMIT FOR FILING AN APPEAL UNTIL WITHIN 30 DAYS OF NOVEMBER 2, 2020 (SECOND DEPT).

The Second Department determined the Executive Orders suspending or modifying laws to accommodate the disruption caused by COVID-19 tolled the time limitation for the taking of an appeal until within 30 days of November 2, 2020:

The respondents contend that even though Executive Order (A. Cuomo) No. 202.8 … purported to toll the limitations periods, Governor Cuomo did not have the statutory authority to do so, as Executive Law § 29-a, while expressly granting the Governor the authority to suspend statutes, does not expressly grant the Governor the authority to “toll” them. This contention is unpersuasive. … Executive Law § 29-a(2)(d) provides that an order issued pursuant thereto “may provide for the alteration or modification of the requirements of such statute, local law, ordinance, order, rule or regulation suspended, and may include other terms and conditions.” This language in Executive Law § 29-a(2)(d) indicates that the Governor is authorized to do more than just “suspend” statutes during a state disaster emergency; he or she may “alter[ ]” or “modif[y]” the requirements of a statute, and a tolling of time limitations contained in such statute is within that authority … .

Furthermore, although the seven executive orders issued after Executive Order (A. Cuomo) No. 202.8 … did not use the word “toll,” those executive orders all either stated that the Governor “hereby continue[s] the suspensions, and modifications of law, and any directives, not superseded by a subsequent directive,” made in the prior executive orders … or contained nearly identical language to that effect … . Since the tolling of a time limitation contained in a statute constitutes a modification of the requirements of such statute within the meaning of Executive Law § 29-a(2)(d), these subsequent executive orders continued the toll that was put in place by Executive Order (A. Cuomo) No. 202.8 (9 NYCRR 8.202.8). Brash v Richards, 2021 NY Slip Op 03436, Second Dept 6-2-21

 

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