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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

 

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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