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THE PETITIONER, A PROBATIONARY POLICE OFFICER CHALLENGING HIS TERMINATION, RAISED QUESTIONS OF FACT IN THIS ARTICLE 78 PROCEEDING; THEREFORE THE SUMMARY DETERMINATION PURSUANT TO CPLR 409 WAS NOT AVAILABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined this Article 78 proceeding reviewing the termination of a probationary police officer (Lake) involved questions of fact rendering a summary determination pursuant to CPLR 409(b) improper:

Since Lake submitted sufficient evidence to raise a triable issue of fact as to whether the reasons put forth by the Town were pretextual, the Town was not entitled to a summary determination on the petition (see CPLR 409[b] …). To the contrary, the record presented triable issues of fact as to whether Lake’s employment was terminated in bad faith for reasons unrelated to his job performance … . Under the these circumstances, the matter should be remitted to the Supreme Court, Suffolk County, for an immediate trial … . Matter of Lake v Town of Southold, 2020 NY Slip Op 08064, Second Dept 12-30-20

 

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THE FORECLOSURE ACTION WAS TIME-BARRED; THE DISCONTINUANCE DID NOT DE-ACCELERATE THE DEBT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion for summary judgment in this foreclosure action should have been granted. The action was time-barred. The debt was accelerated when the foreclosure action was started and the discontinuance did not de-accelerate the debt:

Plaintiff’s … contention—that the stipulation of discontinuance in the 2007 action revoked the acceleration of the debt—is likewise without merit. … Here, the stipulation of discontinuance in the 2007 action is silent on the issue of the revocation of the election to accelerate and does not otherwise indicate that the plaintiff would accept installment payments from the defendant and thus did not constitute an affirmative act revoking acceleration … . Deutsche Bank Natl. Trust Co. v Ebanks, 2020 NY Slip Op 08035, Second Dept 12-30-20

 

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THE ACTION SHOULD NOT HAVE BEEN DISMISSED PURSUANT TO CPLR 3216 FOR FAILURE TO PROSECUTE; ISSUE HAD NOT BEEN JOINED AND OTHER CONDITIONS PRECEDENT TO DISMISSAL WERE NOT MET (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to vacate the conditional order dismissing the action for failure to prosecute pursuant to CPLR 3216 should not have been granted:

The conditional order constituted a defective 90-day notice pursuant to CPLR 3216. The court was without authority to issue a 90-day notice since issue was not joined in the action (see CPLR 3216[b][1] … ). Moreover, the conditional order failed to state that the plaintiff’s failure to comply “will serve as a basis for a motion” by the court to dismiss the action for failure to prosecute … . The purported dismissal was not properly effectuated since the court never directed the parties to show cause why the action should not be dismissed, and failed to issue a formal order of dismissal on notice to the parties as required by CPLR 3216 … . Moreover, the conditional order was erroneous since it directed the plaintiff to move for an order of reference, even though the plaintiff had already moved for an order of reference. Accordingly, we grant the plaintiff’s motion to vacate the conditional order and restore the action to the active calendar. U.S. Bank N.A. v Thompson, 2020 NY Slip Op 08098, Second Dept 12-30-20

 

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ALTHOUGH THE TWO INDICTMENTS ALLEGED THE SAME MODUS OPERANDI FOR MEDICAID FRAUD, THE CHARGES INVOLVED DIFFERENT PARTIES AND TIME PERIODS; THE WRIT OF PROHIBITION SEEKING TO PRECLUDE PROSECUTION ON DOUBLE JEOPARDY GROUNDS DENIED OVER A DISSENT (FIRST DEPT).

The First Department, over a dissent, denied the writ of prohibition seeking to preclude a second prosecution for Medicaid fraud on double jeopardy grounds. Although the alleged scheme to defraud was the same, the two indictments involved different parties and different time periods:

In essence, the wrongdoing charged in each indictment is the filing of fraudulent Medicaid reimbursement claims and related misconduct, such as payment of kickbacks. However, the indictments charge different specific criminal acts, which were perpetrated on different dates and over different time periods. Moreover, the indictments do not allege fraudulent billing of any of the same managed care organizations. While it appears that the different fraudulent acts charged in the two indictments had a similar modus operandi and were part of a common plan, this alone does not suffice to render them part of the same “criminal transaction” under CPL 40.10(2)(b) … . Matter of Dieffenbacher v Jackson, 2020 NY Slip Op 08015, First Dept 12-29-20

 

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THE PROOF WAS NOT SUFFICIENT TO SUPPORT PIERCING THE CORPORATE VEIL AND SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED ON THAT ISSUE (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the proof was not sufficient to support piercing the corporate veil and summary judgment should have been granted on that issue:

“Generally, a plaintiff seeking to pierce the corporate veil must show that (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury” … .

“Since, by definition, a corporation acts through its officers and directors, to hold a shareholder/officer … personally liable, a plaintiff must do more than merely allege that the individual engaged in improper acts or acted in ‘bad faith’ while representing the corporation.” … Instead, “[t]he party seeking to pierce the corporate veil must establish that the owners [of the corporation], through their domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party such that a court in equity will intervene” … .

Here, … the complaint … does not sufficiently allege injury to plaintiff. …

[Plaintiff]  “failed to produce evidence that the individual defendants took steps to render the corporate defendant insolvent in order to avoid plaintiffs’ claim for damages or otherwise defraud plaintiffs” … . Sutton 58 Assocs. LLC v Pilevsky, 2020 NY Slip Op 08020, First Dept 12-29-20

 

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THERE WAS A QUESTION OF FACT WHETHER THE ONE-YEAR STATUTE OF LIMITATIONS IN THE CONTRACT WITH DEFENDANT SUBCONTRACTOR WAS REASONABLE BECAUSE THE RUNNING OF THE STATUTE COULD BE TRIGGERED BY A PARTY OVER WHICH DEFENDANT HAD NO CONTROL (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, reversing Supreme Court, determined the counterclaims by defendant subcontractor, Nastasi, in this breach of a construction contract action, should not have been dismissed. The central issue was whether the one-year contractual statute of limitations was enforceable. Because the statute could be triggered by the failure of the owner to pay the plaintiff general contractor, Turner, a circumstance over which the defendant subcontractor, Nastasi, had no control, there was a question of fact whether the one-year limitations period was reasonable:

The relevant question when deciding whether a limitations period is enforceable is whether and when the damages were objectively ascertainable … . A contractual limitations period is unenforceable without a concrete determination of damages accrual … .

Here, the provisions setting a one-year limitation period for claims arising out of the contracts between Turner and Nastasi are reasonable on their face. However, the contracts also provide that payments by the owner are conditions precedent to any sums owed by Turner to Nastasi. As observed in D&S Restoration, it was neither fair nor reasonable to impose such a condition precedent, which was not within Nastasi’s control, but had the capability of nullifying its claim (D&S Restoration, 160 AD3d at 926).

… [T]he intent of the owner should not govern the interplay of the two provisions. Such a holding will unreasonably permit a party to choose to stay silent on the issue of owner payment unless it suited them, and unilaterally set the accrual date for the claim. Turner Constr. Co. v Nastasi & Assoc., Inc., 2020 NY Slip Op 08024, First Dept 12-29-20

 

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CPLR 204(A) IN CONJUNCTION WITH RPAPL 1301(3) TOLLED THE STATUTE OF LIMITATIONS WHILE THE FIRST FORECLOSURE ACTION WAS PENDING, FROM 2010 TO 2013, RENDERING THE SECOND FORECLOSURE ACTION IN 2017 TIMELY (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Mulvey, reversing Supreme Court, determined the instant foreclosure action was not time barred because CPLR 204(a) in conjunction with Real Property Actions and Proceedings Law (RPAPL) 1301(3) prohibited bringing the instant action while the first action was pending:

In September 2003, defendant, in exchange for a loan to purchase a residence, executed a note secured by a mortgage on that real property. The note and mortgage were later assigned to plaintiff. After defendant failed to make some payments, on May 5, 2010 plaintiff commenced a foreclosure action against defendant, which Supreme Court (Drago, J.) dismissed on October 30, 2013 for failure to prosecute. In April 2015, Supreme Court (Buchannan, J.) denied plaintiff’s motion to vacate the dismissal. In 2017, plaintiff commenced a second foreclosure action. * * *

CPLR 204 (a) provides that, “[w]here the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.” * * *

The statute that plaintiff relies on, in conjunction with CPLR 204 (a), is RPAPL 1301 (3), which provides that, while an action for a mortgage debt “is pending or after final judgment for the plaintiff therein, no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court in which the former action was brought.” The purpose of RPAPL 1301 (3) is “to shield the mortgagor from the expense and annoyance of two independent actions at the same time with reference to the same debt … . … [P]laintiff established that the statute was tolled during the pendency of the first foreclosure action, from May 2010 to October 2013. Citimortgage, Inc. v Ramirez, 2020 NY Slip Op 07970, Third Dept 12-24-20

 

PLAINTIFF’S MOTION TO AMEND THE COMPLAINT TO CORRECTLY NAME THE DEFENDANT PURSUANT TO CPLR 305(C) AFTER THE STATUTE OF LIMITATIONS HAD RUN SHOULD HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined plaintiff’s motion to amend to complaint to reflect the correct name of the defendant should have been granted:

In September 2016, plaintiff allegedly slipped and fell in the bathroom of a McDonald’s restaurant located in the Town of Williamson, Wayne County. In August 2019, plaintiff commenced this action against defendant to recover for the injuries that he sustained. Defendant answered, asserting, among other affirmative defenses, a lack of personal jurisdiction and that she is not a proper party because she does not own, operate, maintain or control the business in which plaintiff was allegedly injured. Defendant subsequently moved to dismiss the complaint on the same grounds, contending that “Nancyone, Inc.,” a New York corporation for which defendant is a corporate officer, owned and operated the subject McDonald’s restaurant and that it had not been properly served with the summons and complaint prior to the expiration of the statute of limitations. …

Plaintiff contends that Supreme Court erred in denying that part of his cross motion that sought leave to amend his complaint pursuant to CPLR 305 (c). We agree. As relevant here, “[i]f a defendant has been misnamed in the caption of the summons and complaint, but has nonetheless been properly served within the limitations period, amendment of the summons and complaint should be allowed in the absence of demonstrated prejudice to a substantial right” … . Kachadourian v Wilkes, 2020 NY Slip Op 07972, Third Dept 12-24-20

 

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THE BANK PRESENTED INADMISSIBLE EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not submit admissible evidence of standing to bring the foreclosure action:

While a witness may always testify as to matters within his or her personal knowledge through personal observation … , here, Klein [plaintiff’s counsel] did not provide any factual details concerning when Cohn & Roth [Klein’s lawfirm] came into physical possession of the consolidated note and allonges … . Modlin’s [an authorized signatory’s] affidavit was similarly deficient inasmuch as she failed to identify the documents reviewed or any basis for the conclusion that the consolidated note and allonges had been in the plaintiff’s possession and were sent to Cohn & Roth prior to the commencement of the action. Under these circumstances, the statements made by Klein and Modlin constituted inadmissible hearsay and lacked probative value … . U.S. Bank Trust N.A. v Auxila, 2020 NY Slip Op 07945, Second Dept 12-23-20

 

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IN THIS ACTION SEEKING TO ENFORCE AFFIDAVITS OF CONFESSION OF JUDGMENT, INFORMATION SUBPOENAS ISSUED BY PLAINTIFFS SHOULD NOT HAVE BEEN QUASHED (SECOND DEPT).

The Second Department, reversing Supreme Court, in an action seeking to enforce affidavits of confession of judgment, determined the motion to quash information subpoenas should not have been granted:

… Supreme Court improvidently exercised its discretion in granting the defendants’ motion to quash the information subpoenas. CPLR 5223 compels disclosure of “all matter relevant to the satisfaction of the judgment.” A judgment creditor is entitled to discovery from either the judgment debtor or a third party in order “to determine whether the judgment debtor[ ] concealed any assets or transferred any assets so as to defraud the judgment creditor or improperly prevented the collection of the underlying judgment” … . …

… [A] party moving to quash a subpoena has the initial burden of establishing either that the requested disclosure “is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious” … . Contrary to the defendants’ contention, the fact that they are seeking to rescind the judgment by confession in a separate action against the plaintiffs, without more, does not preclude enforcement of the judgment in favor of the plaintiffs and against the defendants … . Furthermore, the defendants failed to proffer any evidence that the requested disclosure is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious. Lisogor v Nature’s Delight, Inc., 2020 NY Slip Op 07879, Second Dept 12-23-20

 

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