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THE DECRETAL PARAGRAPH OF THE APPELLATE DECISION REMITTING THE MATTER FOR RETRIAL DID NOT IMPOSE THE CONDITIONS ON RETRIAL WHICH WERE IMPOSED BY SUPREME COURT; NEW TRIAL ORDERED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the decretal paragraph in the appellate decision remitting the matter to Supreme Court did not impose restrictions on the issues to be retried:

“‘A trial court, upon remittitur, lacks the power to deviate from the mandate of the higher court”‘ … . “An order or judgment entered by the lower court on a remittitur ‘must conform strictly to the remittitur'” … . The language in the decretal paragraph controls the extent of the remittitur … .

Here, there is no limiting language in the decretal paragraph of our prior decision and order that would indicate that the new trial would be on issues of apportionment of liability among the defendants. Further, there is no language in that decretal paragraph indicating that the damages awards remain undisturbed. Accordingly, the Supreme Court should not have limited the new trial to issues of apportionment of liability among the defendants. Daniele v Pain Mgt. Ctr. of Long Is., 2020 NY Slip Op 07860, Second Dept  12-23-20

 

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THE JUDGE SHOULD NOT HAVE, SUA SPONTE, IMPOSED AN INJUNCTION AND DETERMINED ISSUES OF FACT; NO MOTION WAS BEFORE THE COURT AND NO HEARING WAS HELD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, imposed an injunction on defendant and determined issues of fact without a motion before the court and without holding a hearing:

The Supreme Court, after a status conference … , issued an order, sua sponte, … which, … directed the defendant … to take all steps necessary to obtain a permit from the Department of Buildings to complete the work on one of the subject properties and expedite repairs to that property, including the submission of new plans by the defendant … .

Since no motion was pending before it, the Supreme Court should not have, sua sponte, and without a hearing, imposed an injunction on the defendant and determined issues of fact … . “A court is generally limited to noticed issues that are the subject of the motion before it” … . … The plaintiffs did not move for an injunction … and the court did not hold a hearing … . City of New York v Quadrozzi, 2020 NY Slip Op 07857, Second Dept 12-23-20

 

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THE DEFENDANTS DEFAULTED IN THIS FORECLOSURE ACTION; THE JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT BASED ON THE BANK’S ALLEGED FAILURE TO COMPLY WITH THE NOTICE REQUIREMENTS OF RPAPL 1304, WHICH IS NOT A JURISDICTIONAL DEFECT AND THEREFORE MUST BE RAISED AS A DEFENSE (SECOND DEPT).

The Second Department determined the judge should not have, sua sponte, dismissed the complaint in this foreclosure action on the ground the bank did not comply with the notice requirements of RPAL 1304. The defendants defaulted and failure to comply with RPAPL 1304 is not a jurisdictional defect. Therefore it must be raised as a defense before a judge can rule on it:

In this action to foreclose a mortgage, in which the defendants failed to appear or answer the complaint, the Supreme Court should have granted the plaintiff’s motion for leave to enter a default judgment and for an order of reference, and should not have, sua sponte, directed dismissal of the complaint based on its determination that the plaintiff failed to establish that it complied with RPAPL 1304 … . Therefore, a plaintiff is not required to disprove the defense unless it is raised by defendants, and in this case the defendants failed to appear in the action or answer the complaint … . Chase Home Fin., LLC v Guido, 2020 NY Slip Op 07854, Second Dept 12-23-20

 

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ALTHOUGH RPAPL 1320-a, ENACTED WHILE THIS APPEAL WAS PENDING, HAS CHANGED THINGS, THE DEFENDANTS’ LACK-OF-STANDING DEFENSE WAS WAIVED BECAUSE IT WAS NOT RAISED IN THEIR ANSWERS OR PRE-ANSWER MOTIONS; THE BANK’S MOTION FOR SUMMARY JUDGMENT WAS PROPERLY GRANTED (CT APP).

The Court of Appeals, in a brief memorandum with an extensive concurring opinion, determined the defendants in the foreclosure action had waived the lack-of-standing defense by not raising it in their answers or pre-answer motions. The court noted that Real Property Actions and Proceedings Law (RPAPL) 1320-a, which was enacted when this appeal was pending, may allow standing to be raised “at this stage of the litigation:”

… Supreme Court did not err in granting plaintiff’s motions for summary judgment and for a judgment of foreclosure and sale. Defendants failed to raise standing in their answers or in pre-answer motions as required by CPLR 3211 (e) and accordingly, under the law in effect at the time of the orders appealed from, the defense was waived … . Defendants’ argument that ownership is an essential element of a foreclosure action, raised for the first time in support of their motion for reargument at the Appellate Division, is unpreserved for our review. We do not reach the issue of whether RPAPL 1302-a, enacted while this appeal was pending, affords defendants an opportunity to raise standing at this stage of the litigation. Defendants are free to apply to the trial court for any relief that may be available to them under that statute. JPMorgan Chase Bank, N.A. v Caliguri, 2020 NY Slip Op 07660, CtApp 12-17-20

 

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THE PROPERTY TRANSFERRED TO THE DEFENDANT BY WILL UPON THE DEATH OF THE PROPERTY OWNER; THEREFORE THE ESTATE WAS NOT A NECESSARY PARTY IN THIS FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the estate was not a necessary party in this foreclosure action because the property transferred upon the property owner’s death by operation of the will:

Pursuant to a deed dated March 27, 1991, Marjorie Colwell became the owner of certain real property located in Brooklyn (hereinafter the subject property). Colwell died on November 8, 2004. Colwell’s will bequeathed the subject property to the defendant Sonia Gaines, and also named Gaines as the executrix of the estate. …

We disagree with the Supreme Court’s determination that the estate was a necessary party to this action, and that the failure to join the estate warranted vacatur of the order of reference and the judgment of foreclosure and sale and dismissal of the complaint insofar as asserted against Gaines … . Pursuant to RPAPL 1311(1), “necessary defendants” in a mortgage foreclosure action include, among others, “[e]very person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the curtesy, or for years, and every person entitled to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof, after the determination of a particular estate therein.” Under the circumstances of this case, the estate was not a necessary party to this mortgage foreclosure action. “Generally, title to real property devised under the will of a decedent vests in the beneficiary at the moment of the testator’s death and not at the time of probate” … . US Bank Trust, N.A. v Gaines,2020 NY Slip Op 07623, Second Dept 12-16-20

 

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SERVICE ON AN UNAUTHORIZED FOREIGN CORPORATION DID NOT COMPLY WITH BUSINESS CORPORATION LAW 307, A JURISDICTIONAL DEFECT (SECOND DEPT). ​

The Second Department determined service on an unauthorized foreign (Paraguayan) corporation (Dahava) did not comply with Business Corporation Law 307 which is a jurisdictional defect:

Business Corporation Law § 307 provides for service of process on unauthorized foreign corporations. Process against a foreign corporation not authorized to do business in New York may be served upon the Secretary of State as its agent (see Business Corporation Law § 307[a]). “Such service shall be sufficient if notice therefor and a copy of the process are” delivered personally to the foreign corporation in the manner by which service of process is authorized by the law of the jurisdiction where the service is made, or “[s]ent by . . . registered mail with return receipt requested, at the post office address specified for the purpose of mailing process, on file in the department of state, or with any official . . . in the jurisdiction of its incorporation, or if no such address is there specified, to its registered or other office there specified, or if no such office is there specified, to the last address . . . known to the plaintiff” … .

Here, the plaintiff failed to establish that he properly served Dahava, a foreign corporation not authorized to do business in New York, pursuant to Business Corporation Law § 307 … . An affidavit of service indicated that Dahava was served on June 5, 2015, by delivery of the summons and complaint on the Secretary of State. A separate affidavit of service stated that on June 11, 2015, a copy of the summons and complaint was sent by registered mail, return receipt requested, to Dahava at the address listed at the top of the [investment] agreement [between the parties]. The plaintiff, however, did not establish that he attempted to ascertain whether an address was on file with the Paraguayan equivalent of the Secretary of State before resorting to mailing the summons and complaint to Dahava’s last known address set forth in the October 2012 agreement … . Friedman v Goldstein, 2020 NY Slip Op 07548, Second Dept 12-16-20

 

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THE BANK FAILED TO DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION WITH ADMISSIBLE EVIDENCE; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate standing to bring the foreclosure action. The bank’s motion for summary judgment should not have been granted:

The plaintiff failed to present admissible evidence establishing that the plaintiff or its counsel was in possession of the note at the time of commencement of the action. In support of its motion, the plaintiff submitted the affidavit of Howard R. Handville, a senior loan analyst at Ocwen Financial Corporation whose indirect subsidiary is Ocwen Loan Servicing, LLC (hereinafter Ocwen), the plaintiff’s loan servicer. Handville attested that he reviewed the servicing records maintained by Ocwen in its ordinary course of business, that prior servicers’ records were integrated into Ocwen’s records and relied upon by Ocwen and that “[b]ased on [his] review of the Servicing Records, the original Note and Mortgage for the Loan were physically delivered to Plaintiff’s custodian on April 25, 2007, prior to the commencement of this foreclosure action.” Handville further averred that “[s]ince that date, the original Note and Mortgage have remained in the physical possession of Plaintiff or its counsel.” Even if Handville’s affidavit was sufficient to lay a proper foundation for the admission of the “Servicing Records,” the affidavit was insufficient to establish standing because the records themselves were not submitted by the plaintiff. “‘[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted’ … , and ‘a witness’s description of a document not admitted into evidence is hearsay’ … . Deutsche Bank Natl. Trust Co. v Schmelzinger, 2020 NY Slip Op 07543, Second Dept 12-16-20

 

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PLAINTIFF WAS INJURED WHEN A WHEEL ON THE CONTAINER HE WAS PUSHING GOT STUCK IN A GAP IN THE FLOOR AFTER THE PLYWOOD COVERING THE GAP BROKE; PLAINTIFF’S MOTION TO AMEND THE COMPLAINT TO ADD THE RELEVANT INDUSTRIAL CODE PROVISION SHOULD HAVE BEEN GRANTED; THE LABOR LAW 241(6), LABOR LAW 200 AND NEGLIGENCE CAUSES OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s Labor Law 241(6), Labor Law 200 and Negligence causes of action should not have been dismissed. Plaintiff was pushing a container of cinderblocks when plywood covering a gap in the floor broke and a wheel got stuck, causing plaintiff to be propelled head over heels and land on his back. The Second Department further held plaintiff should have been allowed to amend the complaint by adding the relevant Industrial Code provision, despite the 3 1/2 delay in bringing the motion to amend. Defendant was not prejudiced by the amendment:

As Industrial Code (12 NYCRR) § 23-1.7(e)(1) is applicable to these facts and defendant failed to show that it would be prejudiced by an amendment of the bill of particulars to assert a violation of this provision as a predicate to the Labor Law § 241(6) claim, plaintiff’s motion to amend should be granted (see CPLR 3025[b] …). In view of the absence of prejudice to defendant, plaintiff was not required to explain his 3½-year delay in bringing this motion … . …

… [A]n inadequately protected gap in the floor of a passageway at a construction site that causes a container, dumpster, or the like to become stuck or otherwise lose its balance and trip, slip, or fall violates Industrial Code (12 NYCRR) § 23-1.7(e)(1) and can serve as a predicate for a Labor Law § 241(6) claim. …

Defendant failed to establish prima facie that it neither created nor had notice of the dangerous condition of the hallway floor … . Trinidad v Turner Constr. Co., 2020 NY Slip Op 07519, First Dept 12-15-20

 

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THE QUI TAM COMPLAINT ALLEGING INSURERS FAILED TO ACCURATELY REPORT UNCLAIMED LIFE INSURANCE PROCEEDS, TO WHICH THE STATE IS ENTITLED, IN VIOLATION OF THE NEW YORK FALSE CLAIMS ACT SHOULD NOT HAVE BEEN DISMISSED AND THE MOTION TO AMEND THE COMPLAINT TO SPECIFY THE FRAUD ALLEGATIONS SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff in this qui tam action should have been allowed to amend the complaint to specify the allegations of fraud against the defendant insurance companies. Unclaimed life insurance proceeds are supposed to escheat to the state. The lawsuit alleged the insurance companies had submitted false statements to the state to conceal the existence of life insurance proceeds to which the state is entitled, a violation of the New York False Claims Act (NYFCA). The First Department, in allowing the complaint to be amended to specify the fraud allegations, held that the 10-year statute of limitations applied to the filing of the alleged false reports:

… [P]laintiff adequately alleged that defendants knowingly filed false reports with the State which failed to identify escheatable life insurance proceeds. The complaint alleges that defendants’ recordkeeping was so haphazard — such as listing incorrect names, dates of birth, and Social Security numbers, or omitting one or more of those pieces of information altogether — that it amounted to reckless disregard for the truth or falsity of the reports that they submitted to the State (see State Finance Law § 188[3][a][iii]). In other circumstances, according to the complaint, defendants had actual knowledge that a policyholder was deceased, as evidenced by returned mail, customer call service logs, or demutualization payments separately escheated to the State, yet defendants nevertheless failed to disclose or escheat the deceased policyholder’s life insurance proceeds to the State (see State Finance Law § 188[3][a][i]). These allegations, if true, demonstrate that defendants “deliberately turn[ed] a blind eye to reporting errors and then attest[ed] that, to [their] knowledge, they d[id] not exist” … . Total Asset Recovery Servs. LLC v Metlife, Inc., 2020 NY Slip Op 07480, First Dept 12-10-20

 

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THE ESTATE WAS A NECESSARY PARTY IN THIS FORECLOSURE ACTION BECAUSE OF THE POTENTIAL FOR A DEFICIENCY JUDGMENT AGAINST THE DECEDENT; DEFENDANT’S CROSS MOTION FOR LEAVE TO SUBSTITUTE HERSELF AS ADMINISTRATOR OF THE ESTATE SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined decedent’s estate was a necessary party in this foreclosure action and defendant’s cross motion pursuant to CPLR 1015 for leave to substitute herself as administrator should have been granted:

In a mortgage foreclosure action, “[t]he rule is that a mortgagor who has made an absolute conveyance of all his [or her] interest in the mortgaged premises, including his equity of redemption, is not a necessary party to foreclosure, unless a deficiency judgment is sought” … . Here, the judgment of foreclosure and sale contains language providing for a potential deficiency judgment against the decedent if the sale of the property does not cover the amount due to the plaintiff. Consequently, the decedent’s estate was a necessary party to the action … . Specialized Loan Servicing, LLC v Kalinin, 2020 NY Slip Op 07417, Second Dept 12-9-20

 

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