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PETITION TO STAY ARBITRATION IN THIS UNDERINSURED MOTORIST PROCEEDING WAS SERVED AFTER THE 20-DAY STATUTORY PERIOD FOR SERVICE AND WAS NOT SERVED IN THE MANNER REQUIRED BY THE STATUTE (CPLR 7503(c)); THEREFORE THE APPLICATION TO STAY ARBITRATION WAS JURISDICTIONALLY DEFECTIVE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the insurer’s (State Farm’s) notice and petition to stay arbitration was not served within the required 20 days and was not properly served. The petition therefore should have been dismissed:

… [T]he insured, Joyce Reid, sent State Farm Insurance Company (hereinafter State Farm) a demand for supplemental underinsured motorist (hereinafter SUM) arbitration, which was received by State Farm on February 14, 2019. On March 22, 2019, State Farm filed a notice of petition and petition seeking to temporarily stay the arbitration pending the completion of pre-arbitration discovery. That notice and petition were served upon counsel for Reid by first-class mail on March 22, 2019. …

CPLR 7503(c) requires that an application to stay arbitration be made within 20 days after service of a demand to arbitrate. “This limitation is strictly enforced and a court has no jurisdiction to entertain an untimely application” … . CPLR 7503(c) also directs that notice of an application to stay arbitration “shall be served in the same manner as a summons or by registered or certified mail, return receipt requested.”

… State Farm did not file its notice of petition and petition until March 22, 2019, which was beyond the 20-day statute of limitations. Consequently, the proceeding is time-barred … .

Moreover, State Farm’s notice of petition and petition to stay arbitration were served by regular first-class mail, rather than by registered or certified mail, return receipt requested. Since there was a lack of compliance with CPLR 7503(c), the present proceeding was jurisdictionally defective … . Matter of State Farm Ins. Co. v Reid, 2020 NY Slip Op 03517, Second Dept 6-24-20

 

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LABOR LAW 200 CAUSE OF ACTION BASED UPON A DANGEROUS CONDITION PROPERLY SURVIVED SUMMARY JUDGMENT, APPELLANTS DID NOT DEMONSTRATE A LACK OF ACTUAL OR CONSTRUCTIVE NOTICE OF THE CONDITION; JUDGE SHOULD NOT HAVE, SUA SPONTE, DENIED A MOTION ON A GROUND NOT RAISED BY A PARTY (SECOND DEPT).

The Second Department determined the Labor Law 200 and common-law negligence causes of action properly survived summary judgment. The Second Department noted the court should not have, sua sponte, denied appellants’ motion on the ground the deposition transcripts were inadmissible because that issue was not raised. Plaintiff was working in the bottom of a hole which was muddy from heavy rain and littered with boulders and rocks. Plaintiff was injured when he allegedly slipped and fell because of the mud. The Second Department held that the causes of action were based upon a dangerous condition, not the method and manner of work, and the appellants did not demonstrate they lacked actual or constructive notice of the condition:

Labor Law § 200 is a codification of the common-law duty imposed on owners, contractors, and their agents to provide workers with a safe place to work … . There are “two broad categories of actions that implicate the provisions of Labor Law § 200” … . The first category involves worker injuries arising out of alleged dangerous or defective conditions on the premises where the work is performed … . In those circumstances, “[f]or liability to be imposed on the property owner, there must be evidence showing that the property owner either created a dangerous or defective condition, or had actual or constructive notice of it without remedying it within a reasonable time” … . The second category of actions under Labor Law § 200 involves injuries arising from the method and manner of the work … . A property owner will be held liable under this category only if it possessed the authority to supervise or control the means and methods of the work … .

Contrary to the appellants’ contention, the plaintiff’s accident arose from a dangerous premises condition, not from the method and manner of the work. Where a plaintiff alleges that he or she was injured at a work site as a result of a dangerous premises condition, a property owner’s liability under Labor Law § 200 and for common-law negligence rests upon whether the property owner created the condition, or had actual or constructive notice of it and a reasonable amount of time within which to correct the condition … . Modugno v Bovis Lend Lease Interiors, Inc., 2020 NY Slip Op 03508, Second Dept 6-24-20

 

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THE ACTION TO ENFORCE THE POSTNUPTIAL AGREEMENT WAS GOVERNED BY THE THREE-YEAR STATUTE OF LIMITATIONS IN THE DOMESTIC RELATIONS LAW, NOT THE SIX-YEAR CONTRACT STATUTE OF LIMITATIONS IN CPLR 213; THEREFORE THE ACTION WAS TIME-BARRED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the statute of limitations with respect to the enforcement of a postnuptial agreement is that provided for in Domestic Relations Law 250, not the six-year statute of limitations for contract actions generally:

… [T]he six-year statute of limitations that pertains to breach of contract causes of action (see CPLR 213[2]) is not applicable. Rather, the applicable statute of limitations is provided for in Domestic Relations Law § 250. Pursuant to Domestic Relations Law § 250, the statute of limitations for claims arising from prenuptial and postnuptial agreements is three years and that period is tolled, as relevant here, until process has been served in a matrimonial action. The language of the statute makes it broadly applicable to claims arising from prenuptial and postnuptial agreements, such that it applies equally where a party seeks to invalidate the agreement and where a party seeks to enforce it … .

Here, the defendant did not assert his claim to enforce the postnuptial agreement until more than 4½ years after he was served with process in the matrimonial action. Accordingly, the defendant’s claim is untimely, and should have been rejected. Washiradusit v Athonvarangkul, 2020 NY Slip Op 03562, Second Dept 6-24-20

 

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THE COMPLAINT ADEQUATELY ALLEGED THE TOLLING OF THE STATUTE OF LIMITATIONS PURSUANT TO THE CONTINUOUS REPRESENTATION DOCTRINE AND THE EXISTENCE OF THE FUNCTIONAL EQUIVALENT OF PRIVITY BETWEEN PLAINTIFF AND THE DEFENDANT ARCHITECT; SUPREME COURT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the complaint alleging architectural malpractice should not have been dismissed pursuant to CPLR 3211. Plaintiff leased the first floor of a building to operate a pizza restaurant. Plaintiff hired a contractor which in turn hired an architect for the heating, ventilation and air conditioning (HVAC) design. The gas line hookup was completed in 2014. Subsequently, in 2016, National Grid shut off the gas, alleging plaintiff was stealing gas. In 2017 the defendant architect allegedly attempted to remedy the problem with the gas line. The complaint adequately pled the statute of limitations was tolled by the continuous representation doctrine and a privity-like relationship between the plaintiff and the architect:

“The law recognizes that the supposed completion of the contemplated work does not preclude application of the continuous representation toll if inadequacies or other problems with the contemplated work timely manifest themselves after that date and the parties continue the professional relationship to remedy those problems” … . In support of its motion, the architect submitted documentary evidence which included a final invoice issued by it dated August 14, 2014, and a letter of completion issued by the New York City Department of Buildings to the architect stating that its work was completed on December 20, 2014. In opposition, the plaintiffs’ submissions, which included evidence of continuing communications between [plaintiff] and the architect, and evidence of the architect’s efforts to remedy the alleged error uncovered by National Grid regarding the gas line connection for the premises, raised a question of fact as to the application of the continuous representation doctrine and supported the denial of those branches of the architect’s motion which were pursuant to CPLR 3211(a)(1) and (5) to dismiss the amended complaint insofar as asserted against it … . Contrary to the architect’s contention, the fact that two years had elapsed between the completion of its services and its subsequent efforts to remedy the problem does not render the continuous representation doctrine inapplicable as a matter of law … .

We also reject the architect’s contention, as an alternative ground for affirmance, that dismissal of the amended complaint insofar as asserted against it was warranted pursuant to CPLR 3211(a)(1) and (7), on the ground that it was not in privity with the plaintiffs. The evidence submitted by the architect, which included a copy of the contract entered into between it and the contractor, failed to utterly refute the factual allegations supporting the plaintiffs’ contention that a relationship existed between them and the architect that was the “functional equivalent of privity” … . Creative Rest., Inc. v Dyckman Plumbing & Heating, Inc., 2020 NY Slip Op 03499, Second Dept 6-24-20

 

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DEFENDANT’S MOTION TO COMPEL THE PRODUCTION OF TAX RETURNS AFTER THE PARTIES’ FAILURE TO RESPOND TO THE DEMAND FOR PRODUCTION SHOULD HAVE BEEN DENIED; THE FAILURE TO RESPOND TO A PALPABLY IMPROPER DEMAND FOR PRODUCTION, I.E. A DEMAND FOR TAX RETURNS, DOES NOT WAIVE THE ABILITY TO OBJECT TO THE DEMAND ON APPEAL; DEFENDANT MAY RENEW THE MOTION TO COMPEL PRODUCTION OF THE TAX RETURNS IF THE REQUIRED SHOWINGS ARE MADE (FIRST DEPT).

The First Department noted that the failure to respond to defendant-Mazal’s demands for production waived any objections to the demands. Mazal’s motion to compel discovery therefore was properly granted. However objections to demands which are palpably improper are not waived by a failure to respond and Mazal’s demand for tax returns may be in the palpably-improper category. Mazal’s motion to compel the production of tax returns should therefore have been denied. But the First Department denied that portion of the motion to compel without prejudice and granted leave to renew if Mazal can make the required showing of need:

The motion court providently deemed the appealing parties’ objections waived under CPLR 3122 as a result of their failure to respond timely to Mazal’s demands for production … . We modify, however, with respect to Mazal’s demands for the appealing parties’ tax returns, as objections to “palpably improper” demands are not waived … .

A demand for the production of tax returns is disfavored and requires “a strong showing of necessity,” and the inability to obtain the information from other sources … . Here, the failure “to identify the particular information the tax returns . . . will contain and its relevance to the claims made” … should have been sufficient to deny Mazal’s motion to compel. Indeed, the tax returns were not necessary to determine whether plaintiffs acquired an interest in the properties in 1994 or retained it thereafter — the reason the motion court gave for granting the motion. However, Mazal argues that the tax returns could be relevant to its affirmative defenses of laches, estoppel, waiver, ratification, and consent, and the motion court did not pass on this issue. As a result, although Mazal did not sufficiently show the inability to obtain the information sought from other sources or, indeed, what specific information the appealing parties’ tax returns will show, we grant leave to renew upon a proper showing … . Demurjian v Demurjian, 2020 NY Slip Op 03479, First Dept 6-18-20

 

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SELF-EXECUTING CONDITIONAL DISCOVERY ORDER BECAME ABSOLUTE UPON NON-COMPLIANCE; A MOTION TO VACATE, NOT AN APPEAL, IS THE PROPER PROCEDURE TO CONTEST THE ORDER ON THE GROUND OF EXCUSABLE DEFAULT; DEFENDANTS TOOK NO ACTION TO AVOID THE DEFAULT (FIRST DEPT).

The First Department noted that defendants’ failure to comply with a self-executing, conditional order striking the answer became absolute. The proper way to contest such an order is to move to vacate, not appeal:

When defendants failed to comply with the self-executing, conditional order striking their answer if they did not produce a witness for deposition by a date certain, the order became absolute ( … CPLR 3126[3]). Defendants’ proper recourse was to move to vacate the conditional order on the ground of excusable default (… CPLR 5015[a]). They did not seek that relief. In any event, the excuses for failing to comply with the court’s order that defendants asserted in opposition to plaintiff’s motion were not reasonable, and defendants failed to seek an adjournment from the court or take any other action to avoid their knowing default. Humble Monkey, LLC v Rice Sec., LLC, 2020 NY Slip Op 03470, First Dept 6-18-20

 

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THE IMMEDIATE NEIGHBORS HAD STANDING TO CONTEST THE APPROVAL OF THE CONSTRUCTION OF A DOLLAR STORE; THE PLANNING BOARD DID NOT NEED TO SEND THE MATTER TO THE ZONING BOARD OF APPEALS TO INTERPRET A ZONING ORDINANCE WHICH WAS ONLY A GUIDELINE CONCERNING THE ALLOWED LENGTH OF A BUILDING FACADE; THE PLANNING BOARD TOOK THE REQUISITE HARD LOOK PURSUANT TO THE STATE ENVIRONMENTAL QUALITY REVIEW ACT (SEQRA) (THIRD DEPT).

The Third Department, reversing Supreme Court, noting that the abutting neighbors (Cady and Crawley) had standing to contest the town planning board’s approval of the construction of a Dollar Store, determined Supreme Court should not have found that the matter must be sent to the Zoning Board of Appeals (ZBA) for a variance proceeding. Because the zoning ordinance in question, concerning the length of a building facade, was only a guideline, it was not necessary to involve the ZBA to interpret it:

Cady and Cawley’s residence is directly adjacent to the proposed construction site, and the proposed retail store would be directly across the woods from their property. The store’s main parking lot, which is located behind the store, is in the line of sight of Cady and Cawley’s property. As a result, the store is likely to obstruct or interfere with the scenic views within the scenic viewshed overlay district from Cady and Cawley’s property. Cady and Cawley have standing because they have demonstrated that they would suffer an “injury in fact – i.e., actual harm by the action challenged that differs from that suffered by the public at large — and that such injury falls within the zone of interests, or concerns sought to be promoted or protected by the statutory provision under which the agency has acted” … . * * *

… [T]he Town zoning code states that “the length of any faÇade should generally not exceed 50 feet maximum [horizontal dimension]”. Insofar as the subject provision lacks any compulsory language, … this provision is deliberately phrased …  as a guideline, rather than as a prohibition; in other words, there was no requirement for a referral to the ZBA to determine the plain language of the statute. …

… [O]ur review of the record reveals that the Planning Board underwent a nearly four-year process that involved in-depth environmental impact reports, multiple draft EISes [environmental impact statements] and public hearings, which formed the basis of the FEIS [final environments impact statement] and SEQRA [State Environmental Quality Review Act] findings statement. Accordingly, we find that the Planning Board complied with its procedural and substantive requirements under SEQRA … . Matter of Arthur M. v Town of Germantown Planning Bd., 2020 NY Slip Op 03440, Third Dept 6-18-20

 

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ONCE A STIPULATION OF DISCONTINUANCE WAS FILED SUPREME COURT LACKED ANY SUPERVISORY CONTROL OVER THE PROCEEDING AND THE MOTION PRACTICE SEEKING TO SET ASIDE THE SETTLEMENT SHOULD HAVE BEEN DENIED ON THAT GROUND; A PLENARY ACTION WAS REQUIRED (THIRD DEPT). ​

The Third Department, reversing Supreme Court, determined once the stipulation of discontinuance was filed Supreme Court lacked any supervisory control over the proceedings. So the subsequent motions dealing with the allocation of settlement proceeds to the plaintiffs and their attorney should have been denied. After the stipulation of discontinuance a plenary action was required to enforce or set aside the settlement:

As contemplated by the stipulation and order, counsel for the parties executed a stipulation of discontinuance that was filed with the Albany County Clerk (see CPLR 3217 [a] [2]). The filing occurred before any of the motion practice at issue and, as a result, a plenary action was required “to enforce [or set aside] the settlement since the court does not retain the power to exercise supervisory control over previously terminated actions and proceedings” … . Indeed, “[w]hen an action is discontinued, it is as if it had never been,” and Supreme Court lacked authority to grant any of the requested relief … . It follows that both motions should have been denied in their entirety. DeLap v Serseloudi, 2020 NY Slip Op 03443, Third Dept 6-18-20

 

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UNDER THE TERMS OF THE EMPLOYMENT AGREEMENT AND THE APPLICABLE INSURANCE LAW PROVISIONS, AND UNDER THE PRINCIPLES OF UNJUST ENRICHMENT, PLAINTIFF EMPLOYEE, NOT DEFENDANT EMPLOYER, WAS ENTITLED TO THE DEMUTUALIZATION PROCEEDS WHEN THE MEDICAL MALPRACTICE INSURANCE CARRIER CONVERTED FROM A MUTUAL TO A STOCK INSURANCE COMPANY, DESPITE THE FACT THAT THE DEFENDANT EMPLOYER PAID THE POLICY PREMIUMS (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Mulvey, dealt with insurance law, employment law, contract law, unjust enrichment and stare decisis in this dispute between defendant employer and plaintiff employee over the “demutualization” proceeds of an insurance policy. Plaintiff was employed as a certified nurse midwife by defendant. As part of the employment agreement defendant was required to maintain and pay the premiums for a malpractice insurance policy. When the insurance company (MLMIC) converted from a mutual insurance company to a stock insurance company (demutualization) the policyholder was entitled to nearly $75,000. Plaintiff-employee claimed the money was hers and brought an action for a declaratory judgment. Supreme Court agreed with plaintiff but, because there was no on-point appellate decision by the Court of Appeals or the Third Department, Supreme Court was required to follow a First Department decision and, based on that decision, found in favor of defendant-employer. The Third Department noted that it, unlike Supreme Court, was not bound by stare decisis and reversed:

… [P]er the relevant statute [(Insurance Law § 7307 [e] [3])] and the conversion plan’s definitions, plaintiff was entitled to the cash consideration … . * * *

… [T]he parties’ employment agreement provided that plaintiff would perform professional services for defendant. In exchange, defendant would pay her a stated salary and provide specified benefits including, as relevant here, obtaining and paying the premiums for professional liability insurance covering plaintiff. The record indicates that defendant purchased, controlled and maintained such a policy from MLMIC in plaintiff’s favor. Defendant was the policy administrator, selected the coverage and terms, and was responsible for all financial aspects of the policy. Notably, defendant paid annual premiums of approximately $25,710; plaintiff paid nothing toward the premiums and those amounts were not counted as income to plaintiff. Defendant received from MLMIC dividends, premium reductions and the return of premiums when the policy was canceled upon plaintiff leaving defendant’s employ, all without any objection by plaintiff. * * *

The reality is that neither party here bargained for the demutualization proceeds. Moreover, neither party actually paid for them, because membership interests in a mutual insurance company are not paid for by policy premiums; such rights are “acquired . . . at no cost, but rather as an incident of the structure of mutual insurance policies,” through operation of law and the company’s charter and bylaws … . * * *

Neither party changed its position based on demutualization and plaintiff’s conduct was neither tortious nor fraudulent. … [W]e conclude that defendant failed to meet its burden to establish its affirmative defense and counterclaim alleging unjust enrichment. Schoch v Lake Champlain OB-GYN, P.C., 2020 NY Slip Op 03444, Third Dept 6-18-20

 

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ALTHOUGH THE RELEASE EXECUTED BY PLAINTIFF WITH RESPECT TO TWO DEFENDANTS PRECLUDED AN ACTION FOR CONTRIBUTION BY A THIRD DEFENDANT WHICH WAS NOT A PARTY TO THE RELEASE, IT DID NOT PRECLUDE AN ACTION FOR COMMON-LAW INDEMNIFICATION (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined the release executed by plaintiff in this workplace injury case precluded a contribution action by a defendant which was not a party to the release, but did not preclude an action for common-law indemnification:

In 2016, plaintiff was allegedly injured while working at a commercial construction site. Plaintiff accepted $2,000 in settlement of his claims against third-party defendants, Village Air and Electric, Inc. and Jimerico Construction, Inc. — his employer and the contractor that retained it to do work at the construction site, respectively — and executed a release agreeing to hold them harmless. He then commenced this action against defendant, another contractor whose employees had allegedly caused the condition that led to his injuries. Defendant answered and impleaded Village Air and Jimerico, claiming that it was entitled to contribution and/or indemnification.

Jimerico moved … to dismiss the third-party complaint on the ground that the release executed by plaintiff defeated the contribution and indemnification claims (see CPLR 3211 [a] [5]; General Obligations Law § 15-108) … .

… [T]he release executed by plaintiff “relieve[d] [Jimerico] from liability to any other person for contribution” pursuant to CPLR article 14 and, as a result, Supreme Court should have dismissed defendant’s contribution claim against Jimerico (General Obligations Law § 15-108 [b] …). In contrast, Jimerico’s “settlement with . . . plaintiff did not preclude [defendant] from seeking common-law indemnification from” it … . Koretnicki v Northwoods Concrete, Inc., 2020 NY Slip Op 03445, Third Dept 6-18-20

 

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