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INSTEAD OF DISMISSING THE PETITION FOR FAILURE TO INCLUDE A NECESSARY PARTY, SUPREME COURT SHOULD HAVE ORDERED THE PARTY SUMMONED PURSUANT TO CPLR 1001 (b) (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the petition seeking review of the village planning board’s decision re: petitioner’s application for approval of a subdivision should not have been dismissed. Because the planning board’s decision affected another landowner (160 South Ocean, LLC) Supreme Court dismissed the petition for failure to include a necessary party. The Second Department held Supreme Court should have ordered the party summoned pursuant to CPLR 1001 (b):

160 South Ocean, LLC, is a necessary party to this proceeding (see CPLR 1001[a]) subject to the jurisdiction of the court, and therefore, the Supreme Court should have “order[ed] [it] summoned,” rather than denying the petition and dismissing the proceeding for failure to join a necessary … party (CPLR 1001[b] …). Accordingly, we reinstate the petition and remit the matter to the Supreme Court, Suffolk County, for further proceedings, including a determination on the merits of the respondents’ motion, inter alia, to dismiss the petition … . Matter of Mulford Bay, LLC v Rocco, 2020 NY Slip Op 05050, Second Dept 9-23-30

 

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THE FAILURE TO COMPLY WITH THE SERVICE OF PROCESS REQUIREMENTS OF BUSINESS CORPORATION LAW 307 IS A JURISDICTIONAL DEFECT AND THE FAILURE TO MAKE DILIGENT EFFORTS TO COMPLY WARRANTED DENIAL OF A MOTION TO EXTEND THE TIME FOR SERVICE PURSUANT TO BUSINESS CORPORATION LAW 306-b (THIRD DEPT).

The Third Department, reversing Supreme Court, determined plaintiffs’ failure to make diligent efforts to serve defendant in accordance with Business Corporation Law 307 required dismissal of the complaint:

… [B]ecause the failure to strictly comply with the procedures of Business Corporation Law § 307 constitutes a jurisdictional defect, rather than a mere irregularity, the 30-day time period in Business Corporation Law § 307 (c) (2) is not subject to extension under CPLR 2004 … . * * *

… [P]laintiffs did not make reasonably diligent efforts to comply with the procedures of Business Corporation Law § 307. Although plaintiffs personally delivered the summons with notice to an authorized agent of the Secretary of State and sent a copy of the summons with notice by registered mail, return receipt requested, to the address that PLS had registered with the Bureau of Corporations and Charitable Organizations within Pennsylvania’s Department of State … , they made absolutely no effort to thereafter file the affidavit of compliance and the requisite accompanying documents … . Moreover, the excuse provided for plaintiffs’ failure to timely serve PLS in accordance with Business Corporation Law § 307 amounts to law office failure, an excuse that has been held to be insufficient to constitute good cause … . Thus, as plaintiffs did not make the requisite showing, they are not entitled to an extension “upon good cause” under CPLR 306-b. Garrow v Pittsburgh Logistics Sys., Inc., 2020 NY Slip Op 05010, Third Dept 9-17-20

 

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LAW OFFICE FAILURE WARRANTED VACATING THE DISMISSAL OF THE FORECLOSURE ACTION STEMMING FROM PLAINTIFF BANK’S FAILURE TO APPEAR AT A SCHEDULED CONFERENCE (THIRD DEPT).

The Third Department determined Supreme Court properly exercised its discretion and vacated the dismissal of this foreclosure action for plaintiff bank’s failure to appear at a scheduled conference (22 NYCRR 202.27):

“22 NYCRR 202.27 gives a court the discretion to dismiss an action where [a] plaintiff fails to appear at any scheduled call of a calendar or at any conference” … . “To vacate a dismissal under 22 NYCRR 202.27, it [is] incumbent upon [a] plaintiff to provide a reasonable excuse for his [or her] failure to appear and to demonstrate a potentially meritorious cause of action” … . “A motion to vacate a prior judgment or order is addressed to the court’s sound discretion, subject to reversal only where there has been a clear abuse of that discretion” … .

Here, plaintiff’s counsel explained that, due to a scheduling error, the assigned attorney actually appeared in court on the conference date but missed the calendar call. Law office failure may constitute a reasonable excuse for an appearance default …  Given the isolated nature of this nonappearance, we find that Supreme Court acted within its discretion in reconsidering and vacating the default dismissal … . Notably, plaintiff supported its vacatur motion with a duly executed affidavit of merit from its representative. We further recognize that plaintiff has a meritorious cause of action, as we affirmed the award of summary judgment in plaintiff’s favor … . Under the circumstances presented, we conclude that the court acted within its discretion in granting the motion to vacate. Onewest Bank, F.S.B. v Mazzone, 2020 NY Slip Op 05011, Third Dept 9-17-20

 

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APPELLANT’S REQUEST FOR AN ADJOURNMENT TO FIND NEW COUNSEL SHOULD HAVE BEEN GRANTED; THE NEARLY $800,000 JUDGMENT AGAINST THE APPELLANT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined appellant’s request for an adjournment to find new counsel should have been granted. The appellant’s attorney had also represented other respondents and had drawn up a settlement agreement. The appellant declined to sign settlement and the court entered a judgment against the appellant for nearly $800,000:

The granting of an adjournment for any purpose rests within the sound discretion of the court … , and its determination will not be disturbed absent an improvident exercise of that discretion … . In deciding whether to grant an adjournment, the court must engage in a balanced consideration of numerous relevant factors, including the merit or lack of merit of the proceeding, prejudice or lack thereof to the petitioner, the number of adjournments granted, the lack of intent to deliberately default or abandon the action, and the length of the pendency of the proceeding … .

Under the circumstances of this case, the Supreme Court improvidently exercised its discretion in denying the appellant’s request for an adjournment to obtain new counsel … . There was no prejudice to the petitioner, no lack of diligence by the appellant, and no substantial delay in the proceeding … . Matter of People of State of N.Y. v Emstar Pizza, Inc., 2020 NY Slip Op 04950, Second Dept 9-16-20

 

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PETITION FOR LEAVE TO FILE A LATE NOTICE OF CLAIM AGAINST THE CITY OF NEW YORK SHOULD NOT HAVE BEEN GRANTED IN THIS LEAD-PAINT EXPOSURE CASE; THE PLAINTIFF WAS EXPOSED TO LEAD IN AN APARTMENT OWNED BY THE NEW YORK CITY HOUSING AUTHORITY (NYCHA), AN ENTITY SEPARATE FROM THE CITY; THEREFORE THE UNDERLYING CLAIM WAS PATENTLY MERITLESS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the motion for leave to file a late notice of claim in this lead-paint exposure case should not have been granted with respect to the defendant City of New York. Plaintiff alleged exposure to lead in an apartment owned by the New York City Housing Authority (NYCHA) which is a entity separate from the city:

” Ordinarily, the courts will not delve into the merits of an action on an application for leave to serve and file a late notice of claim’ … . However, permission to file a late notice of claim is properly denied where the underlying claim is patently meritless’ …”.

Here, the Supreme Court should have denied the petition on the ground that the claim, insofar as asserted against the City, is patently meritless. “Liability for a dangerous condition on real property must be predicated upon ownership, occupancy, control, or special use of the property” … . It is undisputed that the apartment building in which the infant petitioner resided at the time of his injury was owned and operated by NYCHA, an entity which is separate from the City … . Furthermore, there is no basis for finding that the City owed the infant petitioner a duty based upon a special relationship between them … . Matter of K.G. v City of New York, 2020 NY Slip Op 04943, Second Dept 9-16-20

 

A JUDGMENT SUBMITTED AFTER THE 60-DAY DEADLINE IMPOSED BY 22 NYCRR 202.48 (WHERE THE DECISION DIRECTS SUBMISSION OF THE JUDGMENT) CAN BE ACCEPTED BY THE COURT IN THE EXERCISE OF DISCRETION (SECOND DEPT).

The Second Department determined Supreme Court properly accepted a judgment submitted after the 60-day deadline, rather than deeming the judgment abandoned:

22 NYCRR 202.48 requires, inter alia, that a judgment be submitted within 60 days after the filing of the decision directing its submission, and failure to timely submit the judgment shall be deemed an abandonment of the proceeding. However, ” it is within the sound discretion of the court to accept a belated order or judgment for settlement'” … . “Moreover, a court should not deem an action or judgment abandoned where the result would not bring the repose to court proceedings that 22 NYCRR 202.48 was designed to effectuate, and would waste judicial resources'” … . Here, the Supreme Court providently exercised its discretion in accepting the petitioner’s judgment despite its untimely submission, since doing so brought finality to the proceedings and preserved judicial resources … . Matter of Crown Castle NG E., LLC v Town of Hempstead, 2020 NY Slip Op 04940, Second Dept 9-16-20

 

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LAW-OFFICE-FAILURE ALLEGATIONS WERE INSUFFICIENT; PLAINTIFF’S MOTION TO ENTER A DEFAULT JUDGMENT IN THIS PEDESTRIAN ACCIDENT CASE SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to enter a default judgment in this pedestrian accident case should have granted. The law-office-failure allegations were deemed insufficient:

In order to successfully oppose a motion for leave to enter a default judgment, a defendant who has failed to timely appear or answer the complaint must provide a reasonable excuse for the default and demonstrate the existence of a potentially meritorious defense to the action … .

Here, the … defendants’ conclusory explanation that their attorney misplaced the file and that the office was understaffed was insufficient to establish a reasonable excuse for the default … . Since the … defendants failed to demonstrate a reasonable excuse for their default, this Court need not consider whether they proffered a potentially meritorious defense to the action … . Maldonado v Mosquera, 2020 NY Slip Op 04934, Second Dept 9-16-20

 

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ALTHOUGH THE MOTION TO VACATE THE JUDGMENT OF FORECLOSURE FOR LACK OF PERSONAL JURISDICTION WAS PROPERLY GRANTED FOR THE MOVING DEFENDANT, THE JUDGE SHOULD NOT HAVE, SUA SPONTE, GRANTED THE SAME RELIEF TO DEFENDANTS WHO DID NOT SO MOVE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, noted that the judge should not have, sua sponte, vacated the judgment of foreclosure as against those defendants who did not move for that relief:

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … . “[T]he defense of lack of jurisdiction based on improper service is personal in nature and may only be raised by the party improperly served'” … . Here, Hickson was the only defendant who moved to vacate the judgment of foreclosure and sale and to dismiss the complaint for lack of personal jurisdiction. Accordingly, under the circumstances of this case, the Supreme Court had no basis to, sua sponte, vacate so much of the judgment of foreclosure and sale as was against the defendants other than Hickson and to direct the dismissal of the complaint insofar as asserted against those defendants for lack personal jurisdiction. Lehman Bros. Bank v Hickson, 2020 NY Slip Op 04932, Second Dept 9-16-20

 

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CAUSES OF ACTION FOR UNJUST ENRICHMENT, BREACH OF FIDUCIARY DUTY AND AN ACCOUNTING SHOULD NOT HAVE BEEN DISMISSED; FAILURE TO TRANSFER ASSETS ALLEGED A CONTINUING WRONG AND PAYMENTS WHICH ALLEGEDLY SHOULD HAVE BEEN MADE DURING THE STATUTE OF LIMITATIONS PERIOD WERE ACTIONABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff stated causes of action for unjust enrichment, breach of fiduciary duty and an accounting against her sister (Weisel), the sole manager of A & Z, of which plaintiff is also a member. The court noted that the allegation that Weisel did not transfer assets to A & Z alleged a continuing wrong, so payments allegedly owed to A & Z within the statute of limitations period were actionable:

To state a cause of action for unjust enrichment, the plaintiff must allege that (1) the other party was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered … . …

“[A] fiduciary owes a duty of undivided and undiluted loyalty to those whose interests the fiduciary is to protect . . . barring not only blatant self-dealing, but also requiring avoidance of situations in which a fiduciary’s personal interest possibly conflicts with the interest of those owed a fiduciary duty” … . Here, the plaintiff has alleged that Wiesel is the sole manager of A & Z—which, if true, would impose a fiduciary duty on Wiesel arising out of her position as the sole manager of A & Z … . The amended complaint sufficiently alleges that Wiesel is in a fiduciary relationship with the plaintiff, arising out of both her position as sole manager of A & Z and her familial relationship with the plaintiff … .  …

A cause of action for accounting requires “the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest” … . Greenberg v Wiesel, 2020 NY Slip Op 04927, Second Dept 9-16-20

 

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THE STIPULATION OF DISCONTINUANCE DID NOT DEMONSTRATE THE MORTGAGE DEBT WAS DE-ACCELERATED WITHIN THE SIX-YEAR STATUTE OF LIMITATIONS PERIOD IN THIS FORECLOSURE ACTION; THE BANK’S MOTION FOR SUMMARY JUDGMENT WAS PROPERLY DENIED (SECOND DEPT).

The Second Department determined plaintiff bank did not prove the debt had been de-accelerated and therefore did not demonstrate the foreclosure action was not time-barred. It was not demonstrated that the stipulation of discontinuance affirmatively revoked the initial acceleration of the debt:

“A lender may revoke its election to accelerate the mortgage, but it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action” … .

Here, there is no evidence in the record of any affirmative act of revocation occurring during the six-year statute of limitations period following the initiation of the 2008 foreclosure action … . The only evidence submitted by the plaintiff to establish its affirmative act of revocation was a printout of the Queens County Clerk Minutes, showing that a stipulation of discontinuance and a consent to cancel the lis pendens were filed in the 2008 foreclosure action on July 1, 2013. The plaintiff did not submit a copy of the stipulation of discontinuance. A stipulation of discontinuance will not, by itself, constitute an affirmative act of revocation where the stipulation is silent on the issue of the election to accelerate, and does not otherwise indicate that the plaintiff would accept installment payments from the defendant … . Wells Fargo Bank, N.A. v Hussain, 2020 NY Slip Op 04997, Second Dept 9-16-20

 

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