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THE RECEIPT OF THE LETTER BY CERTIFIED MAIL, NOT THE PRIOR RECEIPT OF AN EMAIL WITH THE LETTER ATTACHED, TRIGGERED THE FOUR-MONTH STATUTE OF LIMITATIONS FOR BRINGING AN ARTICLE 78 PROCEEDING; THE OMISSION OF THE REQUIREMENT THAT THE RESPONDENTS BE SERVED WITH THE ORDER TO SHOW CAUSE COULD BE REMEDIED BY AN EXTENSION OF THE TIME TO EFFECT SERVICE PURSUANT TO CPLR 306-B (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the receipt of a letter by certified mail on January 22, not the receipt of the email with the letter attached on January 17, started the four-month statute of limitations for the Article 78 action. The letter was the final determination of the respondent Department of Health, denying petitioner’s application to open an assisted living facility.  In addition, the Third Department determined a mistake made in the order to show cause, which did not require service upon the respondents, could be remedied. Therefore petitioners should be granted an extension of time to serve respondents pursuant to CPLR 306-b:

There is no dispute that the January 17 letter constituted a final and binding determination. At issue is whether counsel’s receipt of the January 17 email or counsel’s receipt of the January 17 letter by certified mail on January 22, 2019 provided the notice necessary to trigger the running of the statute of limitations. …

We recognize that there is only one letter, the January 17 letter, a copy of which was attached to the January 17 email and the original was delivered by certified mail on January 22, 2019. That said, even though an email delivery could have sufficed, respondents opted to effect delivery of the January 17 letter through the more formal certified mailing process, by which actual delivery and receipt are confirmed with the recipient’s signature. Given that format, it was not necessarily unreasonable for petitioners to have assumed that receipt of the January 17 letter on January 22, 2017 triggered the limitations period or, at least, an ambiguity was created as to whether to measure the time period from that date. As such, we conclude that Supreme Court erred in granting respondents’ motion to dismiss the petition as untimely … . …

Petitioners submitted, and Supreme Court signed, a proposed order to show cause providing for service upon respondents by service on the Attorney General. Petitioners complied with the terms of that order, but such service was manifestly defective because petitioners were also statutorily required to effect service upon respondents (see CPLR 307, 7804 [c]). In their cross motion, petitioners promptly sought permission to correct this error, and it is evident that respondents were in no way prejudiced. Not to be overlooked is the looming expiration of the statute of limitations. Under such circumstances, rather than dismissing a proceeding, a court is authorized to extend the time for service “upon good cause shown or in the interest of justice” (CPLR 306-b …). Matter of Park Beach Assisted Living, LLC v Zucker, 2020 NY Slip Op 07264, Third Dept 12-3-20

 

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IN THE ABSENCE OF AN ORDER SUBSTITUTING THE BANKRUPTCY TRUSTEE FOR THE PLAINTIFF-DEBTOR, THE DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT SHOULD HAVE BEEN GRANTED; SUPREME COURT SHOULD NOT HAVE DENIED DEFENDANTS’ MOTION AND DIRECTED PLAINTIFF TO SEEK RELIEF FROM THE BANKRUPTCY COURT (SECOND DEPT).

The Second Department, reversing Supreme Court, noted that, as a matter of comity, based upon an order in bankruptcy court, a New York court will substitute the bankruptcy trustee as a party in a suit involving the plaintiff/debtor. Here there was no such order and the defendants’ motion to dismiss the complaint should have been granted:

“‘[T]he integrity of the bankruptcy system depends on full and honest disclosure by debtors of all of their assets'” … . “By failing to list causes of action on bankruptcy schedules of assets, the debtor represents that it has no such claims” … .

“[O]nce a bankruptcy proceeding is commenced, all legal or equitable interests of the debtor become part of the bankruptcy estate, including any causes of action (… see 11 USC § 541[a][1]). Accordingly, where a debtor has sought chapter 7 bankruptcy protection, “the causes of action formerly belonging to the debtor . . . [vest] in the trustee for the benefit of the estate . . . [and] [t]he debtor has no standing to pursue such causes of action” … .

In cases where a plaintiff-debtor has successfully petitioned the bankruptcy court to reopen the bankruptcy to include a pending action, this Court has invoked the doctrine of comity to permit substitution of the bankruptcy trustee as a plaintiff … . Here, however, the Supreme Court went further, directing [plaintiff] to seek such relief from the bankruptcy court and denying the defendants’ motion to dismiss the complaint … . …

Under these circumstances, the court should have granted that branch of the defendants’ motion which was to dismiss the complaint … . Nevertheless, the trustee, if he or she should chose to re-commence the case in his or her own name, will enjoy the protection offered by CPLR 205 … . Turner v Owens Funeral Home, Inc., 2020 NY Slip Op 07238, Second Dept 12-2-20

 

ALTHOUGH DEFENDANT NEVER ANSWERED THE COMPLAINT, HE APPEARED BY MAKING A MOTION TO DISMISS AND PARTICIPATED IN THE LITIGATION, THEREFORE DEFENDANT’S MOTION TO VACATE THE DEFAULT SHOULD HAVE BEEN GRANTED; DISMISSAL OF THE ACTION FOR FAILURE TO INCLUDE A NECESSARY PARTY OR THE FAILURE TO JOIN OR SUBSTITUTE A PARTY WAS NOT WARRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to vacate the default should have been granted. Although defendant did not submit an answer, he did move to dismiss the complaint, which extended his time to answer, and thereafter participated in the litigation. Supreme Court properly denied defendant’s motion to dismiss on the ground a necessary party was not included in the suit, and on the ground a party should have been substituted or joined:

We disagree with the Supreme Court’s determination to deny that branch of the defendant’s motion which was to vacate his default in answering the complaint. “CPLR 320(a) provides that a defendant may appear in an action in one of three ways: (1) by serving an answer, (2) by serving a notice of appearance, or (3) making a motion which has the effect of extending the time to answer” … . Here, the defendant appeared in the action in May 2008, when he, among others, moved pursuant to CPLR 3211(a) to dismiss the complaint, which extended his time to serve an answer (see CPLR 320[a]; 3211[f]). Although the defendant did not serve an answer to the complaint following the denial of his motion, the record demonstrates that the defendant actively participated in the litigation during the ensuing years and that the plaintiffs never moved for leave to enter a default judgment against him. …

“CPLR 1001(a) provides that ‘[p]ersons . . . who might be inequitably affected by a judgment in the action’ are necessary parties whose joinder is required” … . “‘When a person who should be joined under [CPLR 1001(a)] has not been made a party and is subject to the jurisdiction of the court, the court shall order him summoned'”…. . However, “[u]pon any transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred to be substituted or joined in the action” (CPLR 1018). “The determination to substitute or join a party pursuant to CPLR 1018 is within the discretion of the trial court” … . Contrary to the defendant’s contention, the Supreme Court did not improvidently exercise its discretion in permitting the plaintiffs to continue this action against the original defendants, despite any alleged changes to the composition of the purported board of trustees … over the course of this 16-year litigation, in order to avoid any further unnecessary delay … . Kelley v Garuda, 2020 NY Slip Op 07180, Second Dept 12-2-20

 

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PLAINTIFF’S FORECLOSURE ACTION SHOULD NOT HAVE BEEN DISMISSED, SUA SPONTE, AS ABANDONED PURSUANT TO 22 NYCRR 202.48; THE 60-DAY TIME LIMIT ONLY APPLIES TO THE DIRECTION TO SUBMIT A JUDGMENT “ON NOTICE” (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the court should not have dismissed plaintiff’s foreclosure action, sua sponte, as abandoned pursuant to 22 NYCRR 202.48. Supreme Court, after plaintiff’s unopposed motion for a judgment of foreclosure and sale, directed the plaintiff to “submit judgment.” When plaintiff submitted a proposed judgment for signature, Supreme Court dismissed the action because the proposed judgment was not submitted within 60 days. The 60-day time limit only applies when a party is directed to submit the judgment “on notice:”

Pursuant to 22 NYCRR 202.48, an order or judgment which is directed to be settled or submitted on notice must be submitted for signature within 60 days after the signing and filing of the decision directing that the order or judgment be settled or submitted. A party who fails to submit the order or judgment within the 60-day time period will be deemed to have abandoned the action or motion, absent good cause shown … . In this case, when the Supreme Court initially granted the plaintiff’s motion, inter alia, for a judgment of foreclosure and sale, it did not direct that the proposed judgment had to be settled or submitted on notice. 22 NYCRR 202.48 does not apply where, as here, the court merely directs a party to submit an order or judgment without expressly directing that the order or judgment be submitted on notice … . James B. Nutter & Co. v McLaughlin, 2020 NY Slip Op 07178, Second Dept 12-2-20

 

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THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF RPAPL 1304 OR THE MORTGAGE AND DID NOT DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s motion for summary judgment in this foreclosure action should not have been granted. The bank failed to demonstrate compliance with the notice requirements of RPAPL 1304, the notice of default requirements of the mortgage, and standing to bring the action. Evidence submitted in reply papers should not have been considered:

… [T]he plaintiff submitted the affidavit of DiMario Abrams, a vice president for the plaintiff’s loan servicer, as well as copies of the notices and the envelopes in which the notices were allegedly mailed. Abrams did not purport to have personal knowledge of the actual mailing of the notices pursuant to RPAPL 1304, he did not purport to have personal knowledge of the mailing procedures utilized by the plaintiff’s loan servicer, and he did not lay a proper foundation under the business records exception to the hearsay rule with respect to the notices and envelopes attached to his affidavit … . * * *

The plaintiff submitted a lost note affidavit prepared by Dereje D. Badada, a vice president for its loan servicer. According to that affidavit, the note had “been inadvertently lost, misplaced or destroyed,” and the loan servicer had “not pledged, assigned, transferred, hypothecated or otherwise disposed of the note.” There was no allegation in the lost note affidavit that the note had ever been delivered or assigned to the plaintiff, nor were there any details regarding when or how the note was lost, who searched for the note, or when they searched for the note. Therefore, the lost note affidavit did not establish the plaintiff’s ownership of the note or the facts preventing it from producing the note (see UCC 3-804 …). U.S. Bank N.A. v Kohanov, 2020 NY Slip Op 07242, Second Dept 12-2-20

 

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PLAINTIFF IN THIS MEDICAL MALPRACTICE, WRONGFUL DEATH ACTION SHOULD NOT HAVE BEEN ALLOWED TO AMEND THE COMPLAINT BY ADDING A PARTY AFTER THE STATUTE OF LIMITATIONS HAD RUN; TWO OF THE THREE PRONGS OF THE RELATION BACK DOCTRINE WERE NOT DEMONSTRATED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the relation back doctrine did not apply and plaintiff’s motion to amend the complaint to add a party after the statute of limitations had run should not have been granted. Initially plaintiff named two individuals as defendants, Smithem and Dey, in this medical malpractice, wrongful death action. After the statute had run plaintiff’s attorney realized Smithem and Dey were not the right parties and sought to amend the complaint to add Crystal Run Healthcare. Plaintiff acknowledged that Crystal Run employees Smithem and Dey never performed the conduct alleged in the complaint, so Crystal Run was not united in interest with the named defendants. In addition plaintiff failed to demonstrate the correct parties could not have been identified before the statute of limitations ran:

The relation back doctrine allows a plaintiff to amend the complaint to add a party even though the statute of limitations has expired if the plaintiff satisfies three conditions: (1) both claims must arise out of the same occurrence; (2) the proposed defendant must be united in interest with the original defendants; and (3) the proposed defendant must have known or should have known that, but for a mistake by the plaintiff as to the proposed defendant’s identity, the action would have been also brought against it … . …

Supreme Court found that Crystal Run was united in interest with both Smithen and Dey by virtue of an employer-employee relationship and principles of vicarious liability. Although such circumstances can lead to a finding of unity in interest … , plaintiff has candidly admitted that Smithen and Dey are free from any and all liability because they never performed the conduct that is the basis of the complaint. As such, plaintiff has vitiated any claim of vicarious liability. …

Although plaintiff alleged that Smithen and Dey were employed by Catskill Regional Medical Center in the complaint, the answers of both the hospital and Smithem denied said allegation. Additionally, plaintiff served Smithem (and attempted to serve Dey) at Crystal Run. Plaintiff’s failure to act on this knowledge prior to the expiration of the statute of limitations is not the type of mistake contemplated under the relation back doctrine … . Fasce v Smithem, 2020 NY Slip Op 07010, Third Dept 11-25-20

 

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THERE WAS A QUESTION OF FACT WHETHER THE VEHICLE WHICH STRUCK PETITIONER WAS THE VEHICLE INSURED BY GEICO; ARBITRATION OF PETITIONER’S DEMAND FOR UNINSURED MOTORIST BENEFITS FROM ALLSTATE, HER INSURER, SHOULD HAVE BEEN STAYED AND A FRAMED ISSUE HEARING SHOULD HAVE BEEN ORDERED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a stay of arbitration should have been granted and a framed issue hearing granted. Respondent, Michelle Robinson, was struck from behind The driver, Randall, gave Robinson her contact information but left the scene before the police arrived. GEICO, the insurer of the offending vehicle, denied Robinson’s claim stating that Lewis, not Randall, was their insured. Robinson then demanded arbitration for uninsured motorist benefits from Allstate, her insurer. Allstate moved to stay arbitration and requested a framed issue hearing:

“The party seeking a stay of arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay” … . “Thereafter, the burden shifts to the party opposing the stay to rebut the prima facie showing” … . “Where a triable issue of fact is raised, the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing, and the appropriate procedure under such circumstances is to temporarily stay arbitration pending a determination of the issue” … .

Here, the documents submitted by Allstate in support of the petition demonstrated the existence of sufficient evidentiary facts to establish a preliminary issue justifying a temporary stay … . By submitting the MV-104 motor vehicle accident report and the MVR vehicle record report with the results of the license plate search for the plate number provided by Robinson, Allstate made a prima facie showing that the offending vehicle involved in the subject accident had insurance coverage with GEICO at the time of the accident … .

In opposition, Robinson and the GEICO respondents raised questions of fact as to whether the offending vehicle was involved in the subject accident … . Matter of Allstate Ins. Co. v Robinson, 2020 NY Slip Op 07051, Second Dept 11-25-20

 

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THE FAILURE TO RAISE THE LACK OF STANDING DEFENSE IN A FORECLOSURE ACTION CAN BE REMEDIED BY A MOTION TO AMEND THE ANSWER AND BY RAISING THE DEFENSE IN OPPOSITION TO A MOTION FOR SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, in a comprehensive opinion by Justice Miller, explained the relationship between the waiver provisions in  CPLR 3211 (e) and Real Property Actions and Proceedings Law (RPAPL) 1302-a in foreclosure proceedings. The opinion includes a detailed discussion of when defenses are waived by the failure to include them in the answer and when and how such omissions can be remedied by a motion to amend or in a summary judgment motion. The opinion is much too detailed to be summarized here and should be consulted as authoritative on these issues. The narrow issue addressed by the opinion is the effect of failing to raise the defense of a lack of standing in the answer to a foreclosure complaint:

… [W]e now reaffirm that a waiver of the defense of standing pursuant to CPLR 3211(e) should be given the same force and effect as a waiver of the affirmative defenses specifically enumerated in CPLR 3211(a)(3) and (5) … . Accordingly, a waiver of the affirmative defense of standing pursuant to CPLR 3211(e) may be retracted through the amendment of a pleading pursuant to CPLR 3025 … . Case law from this Court should not be read to hold otherwise … . * * *

Where applicable, RPAPL 1302-a places the defense of standing on a footing comparable with the other defenses that are exempt from the waiver provisions of CPLR 3211(e), to wit, those defenses listed in subdivisions CPLR 3211(a)(2), (7), and (10), which may be raised by motion “at any time” … , or by amendment to a pleading, “if one is permitted” (CPLR 3211[e]; see CPL 3025[b]). Even where the defense of standing is omitted from a defendant’s answer in violation of CPLR 3018(b), the defense may be raised for the first time in opposition to a plaintiff’s motion for summary judgment … . GMAC Mtge., LLC v Coombs, 2020 NY Slip Op 07039, Second Dept 11-25-20

 

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NONPARTY BANK SHOULD NOT HAVE BEEN AWARDED POSSESSION OF A CAR SUBJECT TO CIVIL FORFEITURE PROCEEDINGS. (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the nonparty banks should not have been awarded possession of cars subject to civil forfeiture proceedings brought by plaintiff:

The plaintiff commenced this civil forfeiture action pursuant to chapter 420, article II of the Code of Suffolk County, seeking forfeiture of a vehicle owned by the defendant Mary A. Nolie, and operated by an individual who was under the influence of an illegal substance. Thereafter, nonparty Santander Consumer USA, Inc. (hereinafter Santander), which held a lien on the vehicle, moved for summary judgment declaring that it was entitled to take possession of the vehicle, free and clear of any claims, and the plaintiff cross-moved for summary judgment awarding civil forfeiture of the vehicle. … In a judgment … , the court directed that the vehicle be released to Santander, upon demand, free and clear of any claims. …

Contrary to Santander’s contention, it was not named in this action as a noncriminal defendant against whom the County sought to “recover” seized property … . Thus, the plaintiff was not required to establish that Santander “engaged in affirmative acts which aided, abetted or facilitated the conduct of [a] criminal defendant” in order to obtain forfeiture of the subject property … . Further, an innocent lienholder is not entitled to immediate possession of a vehicle which is the subject of a civil forfeiture action, but rather is merely entitled to “satisfy its lien from the proceeds of the property after the forfeiture ha[s] been adjudicated against the guilty party” and to seek any deficiency from the debtor … . Thus, Santander failed to establish its prima facie entitlement to judgment as a matter of law, and the Supreme Court should have denied its motion for summary judgment declaring that it is entitled to take possession of the vehicle, free and clear of any claims. Brown v A 2014 Honda, Vin No. 5J6RM4H74EL039078, 2020 NY Slip Op 07024, Second Dept 11-25-20

Similar issues and result in Brown v A 2007 Chevrolet, Vin No. 1GNET13M372223303, 2020 NY Slip Op 07023, Second Dept 11-25-20

 

ALTHOUGH AN ORDER DISMISSING THE COMPLAINT HAD BEEN ISSUED, NO JUDGMENT DISMISSING THE COMPLAINT WAS ENTERED; THEREFORE THE ACTION WAS STILL VIABLE AND PLAINTIFFS COULD MOVE TO EXTEND THE TIME TO SERVE; THE MOTION SHOULD HAVE BEEN GRANTED IN THE INTEREST OF JUSTICE (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the motion to extend time to serve the defendants in the interest of justice should have been granted. Although defendants’ motion to dismiss the complaint for lack of personal jurisdiction had been granted, no judgment dismissing the complaint had been entered. Therefore the action was still viable when plaintiff moved to extend time:

The defendants … moved, … pursuant to CPLR 5015(a) to vacate the order and judgment entered upon their default, and pursuant to CPLR 3211(a)(8) to dismiss the complaint insofar as asserted against them for lack of personal jurisdiction. After a hearing to determine the validity of service of process, the Supreme Court, by order entered March 5, 2018, granted those branches of the defendants’ motion. However, no judgment dismissing the complaint on the ground of lack of personal jurisdiction was entered. The plaintiff thereafter moved pursuant to CPLR 306-b to extend the time to serve the summons and complaint upon the defendant … . * * *

… [A]n extension of time was warranted in the interest of justice. The plaintiff demonstrated that a potentially meritorious cause of action existed, that while it timely commenced this action, the statute of limitations had expired by the time it moved to extend the time for service, and that there was no demonstrable prejudice to the defendants as a consequence of the delay in service … . Moreover, as the interest of justice standard permits consideration of “any other relevant factor” … , this Court may consider the fact that the process server failed to comply with a subpoena to appear and give testimony at the hearing to determine the validity of service of process, thereby hampering the plaintiff’s ability to meet its burden of proof at that hearing … . Bayview Loan Servicing, LLC v Tanvir H. Chaudhury, 2020 NY Slip Op 07021, Second Dept 11-25-20

 

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