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AN UNPAID PENALTY ASSESSED FOR DEFENDANT’S FAILURE TO MAINTAIN WORKERS’ COMPENSATION COVERAGE WAS ENTERED AS A SUPREME COURT JUDGMENT BY THE COUNTY CLERK IN ACCORDANCE WITH THE WORKERS’ COMPENSATION LAW; BY THE TERMS OF THE STATUTE, SUPREME COURT DID NOT HAVE SUBJECT MATTER JURISDICTION AND DEFENDANT COULD NOT MOVE TO VACATE THE DEFAULT JUDGMENT (THIRD DEPT).

The Third Department determined a judgment entered in Supreme Court by the county clerk pursuant to the Workers’ Compensation Law 26  is not reviewable by Supreme Court. The Workers’ Compensation Board assessed a penalty against defendant for failure to maintain workers’ compensation coverage. When the penalty was not paid the judgment was entered by the county clerk as a ministerial act which cannot be addressed by a motion in Supreme Court to vacate a default judgment:

Defendants … ignore the peculiar statutory scheme by which only this Court may review a final determination by plaintiff with respect to, among other things, assessments ordered pursuant to Workers’ Compensation Law § 52 (5) up until the time that a judgment against an employer is entered. At that point, no appeal is permitted … .

Workers’ Compensation Law § 26 provides that where an employer fails to pay an assessment imposed pursuant to Workers’ Compensation Law § 52 (5) within 20 days after it is due, plaintiff’s chair may file a certified copy of the order imposing such assessment with the county clerk where the employer’s principal place of business is maintained. “[T]hereupon[,] judgment must be entered in the [S]upreme [C]ourt, by the clerk of such county in conformity therewith immediately upon such filing. . . . Such judgment shall be entered in the same manner, have the same effect and be subject to the same proceedings as though rendered in a suit duly heard and determined by the [S]upreme [C]ourt, except that no appeal may be taken therefrom” (Workers’ Compensation Law § 26 …). The entry of such judgment is “merely a ministerial act” made pursuant to Workers’ Compensation Law § 26 … . Indeed, the statute provides that the court shall “vacate or modify” the judgment only “to conform to any later award or decision of [plaintiff]” and “[t]he award may be so compromised [only] by [plaintiff and] in the discretion of [plaintiff]” (Workers’ Compensation Law § 26). Inasmuch as the entry of plaintiff’s order here by the County Clerk was “merely a ministerial act” … , Supreme Court lacked the authority to vacate the judgment because the underlying order was not issued by the court … . …

To allow defendants to petition a different court to vacate its default after judgment has been entered would undermine this statutory scheme by allowing a court other than this one to, in effect, review a final decision of plaintiff. Workers’ Compensation Bd. of the State of N.Y. v Williams Auto Parts Inc., 2020 NY Slip Op 05261, Third Dept 10-1-20

 

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CANCELLATION AND DISCHARGE OF A MORTGAGE PURSUANT TO RPAPL 1501 (4) MUST BE SOUGHT BY AN ACTION OR COUNTERCLAIM, NOT BY A MOTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the motion to cancel and discharge the mortgage pursuant to RPAPL 1501 (4) should not have been granted. That relief must be sought by an action or counterclaim:

Supreme Court should not have granted that branch of the motion which was to cancel and discharge the mortgage pursuant to RPAPL 1501(4), since that relief must be sought in an action or counterclaim and not by motion … . Bank of N.Y. Mellon v 11 Bayberry St., LLC, 2020 NY Slip Op 05175,  Second Dept 9-30-20

A MOTION TO DISMISS AN ACTION FOR A DECLARATORY JUDGMENT FOR FAILURE TO STATE A CAUSE OF ACTION, WHERE THERE ARE NO QUESTIONS OF FACT, SHOULD BE TREATED AS A MOTION FOR A DECLARATION IN DEFENDANT’S FAVOR (SECOND DEPT).

The Second Department noted that where a motion to dismiss an action for declaratory judgment is made, the motion should be deemed a request for a declaration in defendant’s favor:

The courts may consider “the merits of a properly pleaded cause of action for a declaratory judgment upon a motion to dismiss for failure to state a cause of action where ‘no questions of fact are presented [by the controversy]'”  … . “Under such circumstances, the motion to dismiss the cause of action for failure to state a cause of action should be taken as a motion for a declaration in the defendant’s favor and treated accordingly” … . Astoria Landing, Inc. v New York City Council, 2020 NY Slip Op 05174, Second Dept 9-30-20

 

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THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN CONFIRMED; THE REFEREE RELIED ON HEARSAY AND FAILED TO CONDUCT A HEARING ON NOTICE AS REQUIRED BY THE CPLR (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report should not have been confirmed.  The evidence of default presented to the referee was hearsay and the referee did not hold a hearing on notice as required by CPLR 4320:

… [W]ith respect to the amount due to the plaintiff, the referee based his findings on the affidavit of Nicholas J. Raab, an employee of Specialized Loan Servicing, LLC, the plaintiff’s loan servicing agent for the subject loan. While Raab provided a proper foundation for the admission of business records made by a prior servicer … , he failed to attach the business records themselves to his affidavit. Accordingly, Raab’s assertions regarding the date of the defendant’s default in making her mortgage payments, the total sum due to the plaintiff, which included the amount of accrued interest calculated from the date of default, and amounts purportedly paid in an escrow advance and for property preservation, without the business records themselves, constituted inadmissible hearsay … .

… [T]he referee should not have computed the amount due to the plaintiff without holding a hearing on notice to the defendant (see CPLR 4313 …). “While [the] Supreme Court has the authority to engage a Referee to compute and report the amount due under a mortgage (see, RPAPL 1321[1]), and can, in its order of reference, define the scope of the reference and delineate the Referee’s powers and duties thereunder (CPLR 4311), absent any specified restrictions the Referee has those powers and duties delineated in CPLR article 43 and also must comply with the procedures specified therein … . One of the specified procedures is the conducting of a hearing (CPLR 4320[a]), upon notice (CPLR 4313)” … . Wells Fargo Bank, N.A. v Yesmin, 2020 NY Slip Op 05257, Second Dept 9-30-20

 

NASSAU COUNTY SUPREME COURT CANNOT VACATE A DEFAULT ORDER ISSUED BY NEW YORK COUNTY SUPREME COURT, DESPITE THE CHANGE OF VENUE FROM NEW YORK COUNTY TO NASSAU COUNTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the Nassau County Supreme Court could not vacate the default order issued by New York County Supreme Court, even though New York County Supreme Court had granted a change of venue to Nassau County:

The Supreme Court, Nassau County, had no authority to vacate the order of the Supreme Court, New York County … . A motion to vacate an order must be addressed to the court that made the order (see CPLR 5015[a]), and no court other than the one that rendered the order may entertain a motion to vacate it … . In any event, contrary to the defendants’ contention, the Supreme Court, New York County, did not lack subject matter jurisdiction to issue the New York County default order one day after its order granting a change of venue to Nassau County, since the “Supreme Court is a court possessing State-wide jurisdiction and is competent to entertain a motion no matter where the underlying action is pending” … . London v 107 (160) Realty, LLC, 2020 NY Slip Op 05195, Second Dept 9-30-20

 

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LOST NOTE AFFIDAVIT INSUFFICIENT TO ESTABLISH STANDING; PROOF OF COMPLIANCE WITH RPAPL 1304 INSUFFICIENT; OUT OF STATE AFFIDAVIT LACKED A CERTIFICATE OF CONFORMITY; NEITHER PLAINTIFF NOR DEFENDANT ENTITLED TO SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff-bank’s motion for summary judgment in this foreclosure action should not have been granted. The lost note affidavit was insufficient to establish standing the proof of compliance with the notice requirements of RPAPL 1304 was insufficient and the out of state affidavit lacked a certificate of conformity. Defendants’ cross-motion for summary judgment, however, was properly denied:

… [T]he plaintiff failed to proffer evidence establishing that the note was assigned to it, and the affidavit of lost note submitted in support of its motion failed to establish the facts that prevented the plaintiff from producing the original note (see UCC 3-804 …). We also note that the out-of-state affidavit from the vice president of loan documentation for Wells Fargo lacked a certificate of conformity as required by CPLR 2309(c), although such defect by itself would not be fatal to the plaintiff’s motion ,,, ,

… [A]lthough the plaintiff submitted a copy of the 90-day notice purportedly sent to the defendants, it failed to submit an affidavit of service or other proof of mailing establishing that it properly served them by registered or certified mail and first-class mail in accordance with RPAPL 1304 … . …

The defendants’ bare denial of receipt of the RPAPL 1304 notice, without more, was insufficient to establish their prima facie entitlement to judgment as a matter of law … . Trust v Moneta, 2020 NY Slip Op 05181, Second Dept 9-30-20

 

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AFTER CONVERTING THE ARTICLE 78 PETITION TO A COMPLAINT THE JUDGE SHOULD NOT HAVE TREATED THE MOTION TO DISMISS AS A SUMMARY JUDGMENT MOTION WITHOUT NOTIFYING THE PARTIES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge, after converting the article 78 petition to a complaint, should not have, sua sponte, dismissed the complaint without notifying the parties:

… [T]he Supreme Court denied the Comptroller’s motion to dismiss, and, pursuant to CPLR 103(c), converted the article 78 petition into a complaint asserting a declaratory judgment cause of action. Upon reaching the merits of the plaintiff’s complaint, the court sua sponte denied the plaintiff declaratory relief and directed dismissal of the complaint. …

Upon converting the article 78 petition into a complaint, the Supreme Court erred in reaching the merits of the complaint, and directing its dismissal. Having converted the petition to a complaint, the court could only reach the merits by giving the parties adequate notice that it was going to treat the defendant’s pre-answer motion to dismiss as one for summary judgment (see CPLR 3211[c] …). The defendant had not served an answer to either the petition or the complaint, and therefore, any motion for summary judgment would have been premature (see CPLR 3212[a]). Moreover, the record does not establish that the parties deliberately charted a summary judgment course … . Under these circumstances, the court’s determination on the merits of the complaint was premature. Matter of Gorelick v Suffolk County Comptroller’s Off., 2020 NY Slip Op 05048, Second Dept 9-23-20

 

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THE STATE HAS NOT PREEMPTED A MUNICIPALITY’S ABILITY TO REGULATE THE PROCESSING OF WASTE; THEREFORE, EVEN THOUGH THE STATE HAD ISSUED A PERMIT ALLOWING THE PROCESSING OF 500 TONS OF WASTE PER DAY, THE VILLAGE’S ACTION FOR A PERMANENT INJUNCTION REDUCING THE ALLOWED AMOUNT OF WASTE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the village’s request for a preliminary injunction limiting the amount of waste that could be processed by defendant recycling company was properly denied, but the action seeking a permanent injunction should not have been dismissed. The Department of Environmental Conservation (DEC) had issued a temporary emergency permit allowing the defendant to process 1100 tons of waste per day and the defendant applied to make 1100 tons per day permanent. The village sought an injunction imposing the 2008 limit of 370 tons per day. While the preliminary injunction was pending, the DEC issued a permit imposing a daily waste limit of 500 tons per day, which obviated the need for the preliminary injunction. But, because the state has not preempted the ability of a municipality to regulate the amount of waste, the permanent injunction action should not have been dismissed:

… [T]he Supreme Court erred in determining, in effect, that it did not have the authority to issue declaratory or injunctive relief limiting the maximum amount of waste that could be processed at the facility in an amount less than that permitted by the DEC. Indeed, “the State has not preempted local legislation of issues related to municipal solid waste management” … . Thus, the DEC’s issuance of the 2016 renewal permit did not per se preclude the court from considering the merits of the causes of action asserted in the Village’s complaint. * * *

… [A]s a practical matter, the DEC’s issuance of the [500 ton per day] permit largely obviated the need for an order preliminarily enjoining the defendants … . … However, the Supreme Court had an insufficient legal or factual basis, at this preliminary stage, to deny the Village’s request for permanent injunctive relief precluding [defendant] from exceeding the 2008 limits. Indeed, if the Village is ultimately able to establish, at trial, that the defendants breached the terms of a prior agreement entered into between the Village and [defendant], or that the facility’s operation in excess of the 2008 limits constitutes a nuisance, or that the facility is operating in violation of the Village’s zoning code, then the Village may well be entitled to permanent injunctive relief as an appropriate remedy … . Incorporated Vil. of Lindenhurst v One World Recycling, LLC, 2020 NY Slip Op 05037, Second Dept 9-23-20

 

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EVIDENCE SUBMITTED IN PLAINTIFF BANK’S REPLY PAPERS PROPERLY CONSIDERED; THE BANK’S PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF THE MORTGAGE AGREEMENT WAS INSUFFICIENT; THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank’s reply papers were properly considered but plaintiff did not submit sufficient proof that a condition precedent in the mortgage agreement, re: notice of default, was complied with:

… [T]he Supreme Court providently exercised its discretion in considering the affidavit of the plaintiff’s employee Jeremiah Herberg, which was submitted with the plaintiff’s papers in opposition to the defendant’s cross motion and in further support of its motion … . Although “‘[a] party moving for summary judgment generally cannot meet its prima facie burden by submitting evidence for the first time in reply . . . , there are exceptions to the general rule, including . . . when the other party is given an opportunity to respond to the reply papers'” … . Here, the defendant had the opportunity to address the Herberg affidavit in her reply papers in further support of her own cross motion.

However, the plaintiff failed to establish, prima facie, that it complied with the condition precedent contained in section 22 of the mortgage agreement regarding the notice of default. The plaintiff’s submissions did not establish that the notice was sent by first class mail or actually delivered to the notice address, as required by the terms of the mortgage agreement … . Furthermore, Herberg’s affidavit failed to lay a proper foundation for the admission of records concerning the plaintiff’s mailing of the notices of default (see CPLR 4518[a] …). Wells Fargo Bank, N.A. v McKenzie, 2020 NY Slip Op 05086, Second Dept 9-23-20

 

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A CAUSE OF ACTION MAY BE DISMISSED PURSUANT TO CPLR 3211 (a) (4) BECAUSE IT SEEKS THE SAME RELIEF AS A PENDING ACTION INVOLVING THE SAME PARTIES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a cause of action should have been dismissed pursuant CPLR 3211 (a) (4) because it involved the same parties and sought the same relief as a pending action. The actions involved common charges for condominiums:

Pursuant to CPLR 3211(a)(4), a party may move to dismiss a cause of action on the ground that “there is another action pending between the same parties for the same cause of action in a court of any state or the United States.” “‘It is not necessary that the precise legal theories presented in the first action also be presented in the second action as long as the relief . . . is the same or substantially the same'” … . “‘The critical element is that both suits arise out of the same subject matter or series of alleged wrongs'” … .

We disagree with the Supreme Court’s exercise of its discretion in denying that branch of [the] cross motion which was for relief pursuant to CPLR 3211(a)(4). The … [actions] arise out of the same events, and involve overlapping questions of law, namely, the authority of the Board to charge … the increased common charges and assessments. The business judgment rule does not shield a condominium board’s acts of “bad faith and self-dealing” … . … [T]he resolution of [the] causes of action against the Board, which include, among other things, a request for a judgment declaring that the Board’s common charge increases were not valid, may moot the instant action to foreclose upon the common charge liens … . Further, absent relief under CPLR 3211(a)(4), [there would be] duplicative litigation and the prospect of inconsistent results. Board of Mgrs. of the 1835 E. 14th St. Condominium v Singer, 2020 NY Slip Op 05026, Second Dept 9-23-20

 

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