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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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THE FIRST NOTICE OF CLAIM DEMANDED ONLY AN EXTENSION OF THE CONTRACTUAL TIME-LIMIT FOR COMPLETION OF THE PLUMBING CONTRACT; THE PURPORTED AMENDED NOTICE OF CLAIM DEMANDED $2.5 MILLION IN DAMAGES; THE AMENDMENT WAS NOT TECHNICAL IN NATURE AND THEREFORE THE MOTION TO AMEND WAS PROPERLY DENIED (SECOND DEPT).

The Second Department determined plaintiff’s motion for leave to amend its notice of claim was properly denied. The original demanded only an extension of time to complete the plumbing work plaintiff was hired to do by the NYC School Construction Authority. The proposed amended notice of claim included a demand for nearly $2.5 million in damages:

Public Authorities Law § 1744(2) requires the plaintiff to serve a notice of claim upon the defendant within three months after the accrual of such claim … . Under Public Authorities Law § 1744(3), a notice of claim “must set forth in detail . . . (i) the amount of the claim; (ii) a specific and detailed description of the grounds for the claim, relating the dollar amount claimed to the event purportedly giving rise to the claim and indicating how the dollar amount is arrived at; and (iii) the date of the event allegedly underlying the claim.” Here, the original notice of claim filed by the plaintiff failed to comply with Public Authorities Law § 1744(3) … .

The Supreme Court properly denied that branch of the plaintiff’s motion which was for leave to amend the original notice of claim, inter alia, to include damages in the total principal sum of $2,455,740.63. “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” . Here, the proposed amendments to the original notice of claim were not technical in nature, and thus, are not permitted as late-filed amendments to a notice of claim … . In addition, the plaintiff failed to explain the inordinate delay in seeking leave to amend the original notice of claim. BG Natl. Plumbing & Heating, Inc. v New York City Sch. Constr. Auth., 2021 NY Slip Op 03435, Second Dept 6-2-21

 

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THERE WERE PARALLEL DISCIPLINARY PROCEEDINGS STEMMING FROM PETITIONER’S ALLEGED ABUSE OF A PSYCHIATRIC PATIENT; THE ARBITRATOR’S FINDING THAT PETITIONER DID NOT ABUSE THE PATIENT WAS ENTITLED TO PRECLUSIVE EFFECT IN THE PARALLEL PROCEEDING (THIRD DEPT).

The Third Department, reversing the determination of the Administrative Law Judge (ALJ) in this employment disciplinary matter, determined the prior finding by the arbitrator in a parallel proceeding that petitioner did not abuse the psychiatric patient was entitled to preclusive effect:

Petitioner’s sole contention on appeal is that the ALJ erred in not giving preclusive effect to the arbitrator’s determination that petitioner’s conduct did not constitute physical abuse. We agree. “The underlying purpose of the doctrines of res judicata and collateral estoppel is to prevent repetitious litigation of disputes which are essentially the same” … . … [R]espondent contends that the issue decided by the arbitrator was not the identical issue before the ALJ. …

Respondent’s “Report of Investigation Determination” and OMH’s [Office of Mental Health’s] notice of discipline were issued four days apart and both referenced the same case number and charged petitioner with physically abusing the service recipient. Although neither the notice of discipline nor the arbitrator’s decision specifically cite the relevant portion of the Social Services Law associated with physical abuse, the arbitrator specifically took notice of said provision at the disciplinary hearing … . … [T]he arbitrator and the ALJ both reviewed the same videos of the underlying incident and petitioner’s interview. Although the arbitrator and the ALJ both agreed that petitioner pushed the service recipient’s head down into the restraint bed, the arbitrator concluded that petitioner was “cradling the neck of [the service recipient] at that time” such that his conduct did not constitute physical abuse. … [T]his was the same factual issue the ALJ later confronted. Matter of Anonymous v New York State Justice Ctr. for the Protection of People with Special Needs, 2021 NY Slip Op 03510, Third Dept 6-2-21

 

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PLAINTIFF BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE STANDING WITH SUFFICIENT PROOF THAT THE NOTE WAS LOST (PURSUANT TO THE UCC) AND DID NOT PRESENT EVIDENCE SUFFICIENT TO WARRANT CORRECTION OF THE LEGAL DESCRIPTION OF THE PREMISES IN THE MORTGAGE BASED UPON MUTUAL MISTAKE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate the note was lost and did not present sufficient evidence to warrant correction of the legal description of the premises in the mortgage:

“Pursuant to UCC 3-804, which is intended to provide a method of recovery on instruments that are lost, destroyed, or stolen, a plaintiff is required to submit ‘due proof of [the plaintiff’s] ownership, the facts which prevent [its] production of [the note,] and its terms'” … . Here, the copy of the note annexed to the lost note affidavit provided sufficient evidence of the terms of the note … . However, the lost note affidavit failed to sufficiently establish Wells Fargo’s ownership of the note, as it “failed to establish when the note was acquired and failed to provide sufficient facts as to when the search for the note occurred, who conducted the search, or how or when the note was lost” … .Thus, the affidavit failed to sufficiently establish Wells Fargo’s ownership of the note at the time the action was commenced. …

… Supreme Court should have denied that branch of [plaintiff’s] ]motion which was for summary judgment … to reform the mortgage to correct the legal description of the premises. “A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” … . Wells Fargo Bank, N.A. v Zolotnitsky, 2021 NY Slip Op 03482, Second Dept 6-2-21, Second Dept 6-2-21

 

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DEFENDANT NEVER CONSENTED TO THE SUBSTITUTION OF COUNSEL IN THIS FORECLOSURE ACTION; THE MOTION FOR SUMMARY JUDGMENT, SERVED ON THE PURPORTED SUBSTITUTE COUNSEL, WAS NEVER SERVED UPON DEFENDANT AND WAS THEREFORE NULLIFIED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determine the plaintiff’s motion for a default judgment in this foreclosure action was not properly served and therefore must be reversed. The papers were served on an attorney but defendant had not consented to the substitution of thst attorney:

… [T]he record demonstrates that the plaintiff served its motion, inter alia, for an order of reference and its motion for a judgment of foreclosure and sale, on [attorney] Elo, not [defendant] Nakash or CAMBA [legal services]. Nakash retained CAMBA in July 2011 to appear on her behalf at the settlement conferences. Although in April 2013, CAMBA and Elo signed a substitution of counsel, Nakash never acknowledged or signed this substitution, nor was a substitution ordered by the Supreme Court. Moreover, Nakash attested that she did not know Elo, never authorized him to represent her, and never received the plaintiff’s motion papers or any orders from the court. Since the substitution was improper under CPLR 321(b), CAMBA, not Elo, was Nakash’s attorney of record when the plaintiff made its motions, and thus, the plaintiff failed to properly serve Nakash with these motions, depriving the Supreme Court of jurisdiction to entertain these motions and rendering so much of the resulting order dated March 17, 2014, and the order and judgment of foreclosure and sale as are in favor of the plaintiff and against Nakash nullities that must be vacated … . U.S. Bank N.A. v Nakash, 2021 NY Slip Op 03479, Second Dept 6-2-21

 

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WHERE THERE IS A DISPUTE ABOUT THE EXISTENCE OF A CONTRACT A CAUSE OF ACTION FOR UNJUST ENRICHMENT IS NOT DUPLICATIVE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court noted that where there is a dispute about the existence of an enforceable contract, a cause of actiono for unjust enrichment is not duplicative:

With respect to the unjust enrichment … [t]hese claims should not have been dismissed as duplicative because “where there is a bona fide dispute as to the existence of a contract or the application of a contract in the dispute in issue, a plaintiff may proceed upon a theory of quasi contract as well as breach of contract, and will not be required to elect his or her remedies” … . CIP GP 2018, LLC v Koplewicz, 2021 NY Slip Op 03370, First Dept 5-27-21

 

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