Civil Procedure – Page 173 – New York Appellate Digest

DEFENDANT’S PARTICIPATION IN A SETTLEMENT CONFERENCE DID NOT WAIVE HIS RIGHT TO SEEK DISMISSAL OF THE FORECLOSURE ACTION AS ABANDONED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the defendant in this foreclosure action did not waive his right to seek dismissal of the complaint by participating in a settlement conference. The plaintiff bank had abandoned the action:

CPLR 3215(c) states that “if [a] plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned…upon its own initiative or on motion.” The language of CPLR 3215(c) is not discretionary, and a claim for which a default judgment is not sought within the requisite one-year period will be deemed abandoned … . Notwithstanding, a claim will not be deemed abandoned if the party seeking a default judgment provides sufficient cause as to why the complaint should not be dismissed (CPLR 3215[c]). Here, plaintiff waited almost three years to seek a default judgment, and it failed to provide sufficient cause as to why the complaint should not be dismissed. As such, plaintiff’s complaint is dismissed as abandoned.

Plaintiff’s argument that defendant waived his right to seek dismissal pursuant to 3215(c) because he participated in the settlement conferences is equally unavailing. Although a party may waive it rights under CPLR 3215(c) “by serving an answer or taking any other steps which may be viewed as a formal or informal appearance”…, defendant’s participation in settlement conferences did not constitute either a formal or an informal appearance “since [he] did not actively litigate the action before the Supreme Court or participate in the action on the merits” … . Wells Fargo Bank, N.A. v Martinez, 2020 NY Slip Op 01693, First Dept 3-12-20

March 12, 2020

Civil Procedure

INSTEAD OF DISMISSING THE COMPLAINT FOR FAILURE TO NAME A NECESSARY PARTY SUPREME COURT SHOULD HAVE ORDERED THE PARTY SUMMONED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the motion to dismiss for failure to name a necessary party should not have been granted. Rather the court should have ordered the party summoned:

… [T]he Supreme Court should have denied that branch of [defendant’s] motion which was pursuant to CPLR 3211(a)(10) to dismiss the complaint insofar as asserted against her for failure to join the estate … as a defendant. “When a [necesssary party] has not been made a party and is subject to the jurisdiction of the court, the court shall order him summoned” (CPLR 1001[b]). Accordingly, we remit the matter … for the joinder of the administrator of the estate … and for further proceedings consistent herewith … . U.S. Bank Trust, N.A. v Gedeon, 2020 NY Slip Op 01660, Second Dept 3-11-20

March 11, 2020

Civil Procedure

VACATING THE NOTE OF ISSUE RETURNS THE CASE TO THE PRE-NOTE OF ISSUE DISCOVERY STAGE, NO NEED TO MAKE A MOTION TO RESTORE THE ACTION TO THE TRIAL CALENDAR; THE MOTION TO EXTEND THE TIME TO FILE A NOTICE OF ISSUE, CITING LAW OFFICE FAILURE, SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, noted that vacating the note of issue automatically removes the case from the trial calendar and restores the action to the pre-note of issue discovery stage. The Second Department also determined the motion to extend the time to file a note of issue, citing law office failure, should have been granted:

The Supreme Court should have denied, as unnecessary, that branch of the plaintiff’s motion which was to restore the action to the active calendar … . Since the note of issue … was vacated, thereafter, the action was restored to the pre-note of issue discovery stage … . Because no note of issue had been filed, the action was not on the trial calendar. Therefore, the court’s action of marking the action “disposed” … , after the plaintiff failed to file and serve a note of issue by the court-ordered deadline, did not dismiss the action … . For the same reason, contrary to the defendant’s contention, CPLR 3404 was inapplicable … . As “this action was never properly dismissed, there was no need for a motion to restore” … .

The Supreme Court improvidently exercised its discretion in denying that branch of the plaintiff’s motion which was to extend his time to file a note of issue. CPLR 2004 allows a court to “extend the time fixed by any statute, rule or order for doing any act, upon such terms as may be just and upon good cause shown.” Here, the plaintiff established good cause for his delay in completing discovery and filing a note of issue based on law office failure, among other things … . Ryskin v Corniel, 2020 NY Slip Op 01658, Second Dept 3-11-20

March 11, 2020

Civil Procedure, Foreclosure

THE BANK’S MOTION TO RESTORE THE 2009 FORECLOSURE ACTION WHICH HAD BEEN ADMINISTRATIVELY, BUT NOT FORMALLY, DISMISSED SHOULD HAVE BEEN GRANTED; THE BANK HAD PREVIOUSLY STATED ITS INTENTION TO DISCONTINUE THE 2009 FORECLOSURE BUT THE MOTION TO RESTORE WAS NOT PRECLUDED BY THE JUDICIAL ESTOPPEL DOCTRINE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank should have been allowed to restore a 2009 foreclosure action which had been administratively, but not formally, dismissed. The court noted that the bank’s prior statement of its intention to discontinue the 2009 action did not trigger the judicial estoppel doctrine:

While, in an effort to successfully prosecute the 2015 foreclosure action, the Bank represented that it would seek to discontinue the 2009 action, it is not judicially estopped from changing its position. ” [A] party who assumes a certain position in a prior legal proceeding and secures a favorable judgment therein is precluded from assuming a contrary position in another action simply because his or her interests have changed'” … . The Bank did not obtain a favorable judgment in the 2015 foreclosure action.

The Supreme Court should have granted that branch of the Bank’s motion which was to restore the 2009 action to the active calendar. The 2009 action was never formally dismissed, as the marking-off procedures of CPLR 3404 do not apply to pre-note of issue actions such as this one … . Since the 2009 action could not properly be marked off pursuant to CPLR 3404, the Bank was not required to move to restore within any specified time frame and was not obligated to demonstrate a reasonable excuse and a potentially meritorious claim … . Further, there was neither a 90-day notice pursuant to CPLR 3216 … , nor an order dismissing the complaint pursuant to 22 NYCRR 202.27 … . Finally, [defendant] does not contend that the 2009 action was dismissed pursuant to CPLR 3215(c). Deutsche Bank Natl. Trust Co. v Gambino, 2020 NY Slip Op 01476, Second Dept 3-4-20

March 4, 2020

Account Stated, Civil Procedure, Contract Law, Debtor-Creditor, Evidence

MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT SHOULD NOT HAVE BEEN GRANTED BECAUSE REFERENCE TO EXTRINSIC EVIDENCE WAS REQUIRED; STATUTE OF FRAUDS DID NOT REQUIRE DISMISSAL BECAUSE IT WAS ALLEGED THERE WAS NEW CONSIDERATION FOR THE PROMISE TO PAY THE DEBT OF ANOTHER (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the invoices submitted by plaintiff do not qualify for CPLR 3213 relief on the account stated cause of action because reference to extrinsic evidence was required, and defendants were not were not entitled to dismissal based upon the statute of frauds because there was an allegation of new consideration flowing from plaintiff to defendants:

Plaintiff’s motion for summary judgment in lieu of complaint should have been denied. The invoices do not qualify for CPLR 3213 relief because it is necessary to consult extrinsic evidence aside from the invoices and proof of nonpayment in order for plaintiff to establish its entitlement to summary judgment on its account stated claim … . Plaintiff has failed to establish, based on the invoices themselves, that defendants, as opposed to nonparty Impact Sports, are liable based on an account stated claim.

Defendants are not entitled to dismissal of the action based on the statute of frauds (GOL § 5-701[a][2]) as plaintiff has sufficiently alleged that there was new consideration flowing from plaintiff to defendants, which is an exception to the requirement that a promise to pay the debt for another be in writing … . Peter R. Ginsberg Law, LLC v J&J Sports Agency, LLC, 2020 NY Slip Op 01468, First Dept 3-3-20

March 3, 2020

Civil Procedure, Negligence

PLAINTIFF ALLEGED THE LANDLORD’S FAILURE TO REPAIR SHOWER-CURTAIN BRACKETS CREATED THE DANGEROUS WATER-ON-THE-FLOOR CONDITION WHICH CAUSED THE SLIP AND FALL; AN OPEN AND OBVIOUS CONDITION CAN STILL BE A DANGEROUS CONDITION; LANDLORD’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant landlord’s motion for summary judgment in this wet-bathroom-floor slip and fall case should not have been granted. Plaintiff alleged the landlord failed to repair brackets for the shower curtain. The fact that the water on the floor was an open and obvious condition relieved landlord of the duty to warn, but not the duty to keep the property safe:

Supreme Court erred in granting summary judgment to defendants on the basis that plaintiff failed to identify the condition of water on the floor before he slipped and fell. Supreme Court incorrectly found that any conclusion that plaintiff slipped and fell because of water accumulation would be based on speculation. Plaintiff argues correctly that, even if in his deposition testimony he did not explicitly state that he noticed water on the floor before he stepped out of the shower, a jury could reasonably infer that he slipped and fell on water on the floor due to the absence of a shower curtain … . Defendants’ proof failed to negate this reasonable inference … .

“[E]ven if a hazard qualifies as open and obvious’ as a matter of law, that characteristic merely eliminates the property owner’s duty to warn of the hazard, but does not eliminate the broader duty to maintain the premises in a reasonably safe condition” … .

… Defendants argue that the broken brackets were not an inherently dangerous condition but rather a benign condition. However, as plaintiff correctly observes, the purpose of the shower brackets was to hold up the shower curtain, and the purpose of a shower curtain is to prevent the accumulation of water when the shower is in use. Matos v Azure Holdings II, L.P., 2020 NY Slip Op 01441, First Dept 3-3-20

March 3, 2020

Civil Conspiracy, Civil Procedure, Fraud

PLAINTIFFS STATED A CAUSE OF ACTION FOR FRAUD AND PROPERLY ALLEGED A CIVIL CONSPIRACY (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiffs had, inter alia, stated a cause of action for fraud and properly alleged a related civil conspiracy. Plaintiffs are owners of commercial buildings and defendants included an employee of one of the plaintiffs and several contractors who did work for the plaintiffs. Plaintiffs alleged invoices for work were inflated and the excess payments were split among defendants. With respect to the fraud and civil conspiracy causes of action, the First Department wrote:

To state a cause of action for fraud, a plaintiff must allege “a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages” … . Such a claim must be pleaded with particularity (CPLR 3016[b] …). “[A]ctual knowledge[, however,] need only be pleaded generally, [given], particularly at the prediscovery stage, that a plaintiff lacks access to the very discovery materials which would illuminate a defendant’s state of mind” … . …

Here, we find that plaintiffs sufficiently pleaded fraud causes of action with the information available to them in a pre-discovery posture … . They alleged the creation and presentation for payment to plaintiffs of false, forged or inflated purchase orders; that defendants “knew that the work described on the bogus purchase orders or invoices and other contract forms was either falsely stated, overcharged or not provided, and knew that Plaintiffs would rely on these falsified or doctored purchase orders to make unwarranted payments”; that plaintiffs “relied on these purchase orders, invoices and other contract forms in making unnecessary payments to . . . defendants” to their detriment; that such reliance was “justifiable” and “reasonable”; and that plaintiffs were damaged as a result of defendants’ fraud. After discovery, plaintiffs can amplify their pleadings and defendants can renew their motions. But at this stage, plaintiffs should be allowed to probe defendants’ knowledge of the alleged fraudulent scheme. …

Although New York does not recognize an independent cause of action for civil conspiracy, allegations of civil conspiracy are permitted “to connect the actions of separate defendants with an otherwise actionable tort” … . To establish a claim of civil conspiracy, the plaintiff must demonstrate the primary tort, plus the following four elements: an agreement between two or more parties; an overt act in furtherance of the agreement; the parties’ intentional participation in the furtherance of a plan or purpose; and resulting damage or injury … . Plaintiffs pleaded the underlying fraud against defendants …, as well as an agreement that “[d]efendants acted in concert and conspired to defraud [p]laintiffs’ business.” As a result, plaintiffs were damaged because they paid monies to the defendants “for non-existent, unnecessary, and/or overpriced construction and maintenance services.” Cohen Bros. Realty Corp. v Mapes, 2020 NY Slip Op 01440, First Dept 3-3-20

March 3, 2020

Civil Procedure, Constitutional Law, Real Property Tax Law

PLAINTIFF DID NOT SUFFICIENTLY ALLEGE THAT NEW YORK’S PROPERTY TAX SYSTEM DISCRIMINATES AGAINST PROPERTY OWNERS IN “MAJORITY-MINORITY” NEIGHBORHOODS; COMPLAINT SHOULD HAVE BEEN DISMISSED IN ITS ENTIRETY (FIRST DEPT).

The First Department, in a comprehensive opinion by Justice Kern, reversing (modifying) Supreme Court, determined the complaint alleging the New York property tax system is unconstitutional should have been dismissed in its entirety for failure to state a cause of action. The opinion is too detailed to fairly summarize here. With respect to the allegations the property tax system discriminates against property owners in “majority-minority” neighborhoods, the court wrote:

… [P]laintiff does not adequately allege a causal connection between the property tax system and any racial disparities in the availability of housing. Plaintiff has failed to allege sufficient concrete facts or produce statistical evidence showing that the application of the property tax system, as opposed to other factors, causes financial barriers that inhibit the ability of minority residents to own homes. Additionally, plaintiff does not allege sufficient concrete facts or produce statistical evidence showing how the current property tax system contributes to higher rates of foreclosure or discourages the production of rental units in majority-minority communities. …

… [P]laintiff has failed to meet its burden “to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection” between the property tax system and the continued segregation of New York City neighborhoods sufficient to “make out a prima facie case of disparate impact” … . …

… [P]laintiff argues that the terms and conditions of all home, condominium and cooperative sales and apartment rentals include the transfer of an illegal tax burden that make purchasing or renting a dwelling more expensive in affected communities. The portion of the FHA [Fair Housing Act] upon which plaintiff relies makes it unlawful to “discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling . . . because of race, color, religion, sex, familial status, or national origin” … . However, in the context of taxation, defendants are not involved in the terms and conditions of the sale or rental of property … . Tax Equity Now NY LLC v City of New York, 2020 NY Slip Op 01401, First Dept 2-27-20

February 27, 2020

Civil Procedure, Foreclosure, Judges

MOTION TO DISCONTINUE STATE FORECLOSURE ACTION WHILE FORECLOSURE WAS PURSUED IN FEDERAL COURT SHOULD HAVE BEEN GRANTED WITHOUT PREJUDICE BECAUSE THERE WAS NO SHOWING OF PREJUDICE ON THE PART OF DEFENDANT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to discontinue the foreclosure action should not have been granted with prejudice because there was no showing of prejudice on the part of the defendant (Jach):

… [T]he plaintiff commenced this action … seeking to foreclose the subject mortgage. After interposing an answer, in which he alleged lack of standing as an affirmative defense, Jach moved for summary judgment dismissing the complaint insofar as asserted against him, and the plaintiff cross-moved, inter alia, for summary judgment on the complaint. The Supreme Court referred the action to a referee to hear and report on the issue of standing. After conducting a hearing, the referee issued a report finding, in effect, that the plaintiff had failed to establish its standing for purposes of its cross motion for summary judgment on the complaint.

… [W]ith this action still pending and the referee’s report not yet confirmed, the plaintiff commenced an action in federal court seeking to foreclose the subject mortgage. Subsequently, … the plaintiff moved before the Supreme Court, among other things, for leave to discontinue the action without prejudice, which Jach opposed.

In the order appealed from, the Supreme Court, inter alia, in effect, upon granting that branch of the plaintiff’s motion which was for leave to discontinue the action, did so with prejudice. The plaintiff appeals.

The Supreme Court, in granting that branch of the plaintiff’s motion which was for leave to discontinue the action, should have done so without prejudice. Pursuant to CPLR 3217(b), “an action shall not be discontinued by a party asserting a claim except upon order of the court and upon terms and conditions, as the court deems proper.” As a general rule, “a plaintiff should be permitted to discontinue an action without prejudice unless the defendant would be prejudiced thereby” … . Here, there was no evidence that Jach would be prejudiced by a discontinuance … . Onewest Bank, FSB v Jach, 2020 NY Slip Op 01357, Second Dept 2-26-20

February 26, 2020

Civil Procedure, Debtor-Creditor, Foreclosure

THE MORTGAGE-PAYMENT MODIFICATION AGREEMENT DID NOT CONSTITUTE AN ACKNOWLEDGMENT OF THE MORTGAGE DEBT WITHIN THE MEANING OF GENERAL OBLIGATIONS LAW 17-101; THEREFORE THE STATUTE OF LIMITATIONS DID NOT START ANEW; THE FORECLOSURE ACTION IS TIME-BARRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s trial payments as a condition for entering a mortgage-payment modification agreement (the Plan) did not amount to an acknowledgment of the debt such that the statute of limitations would start running anew:

” General Obligations Law § 17-101 effectively revives a time-barred claim when the debtor has signed a writing which validly acknowledges the debt'” … . “The writing, in order to constitute an acknowledgment, must recognize an existing debt and must contain nothing inconsistent with an intention on the part of the debtor to pay it” … . “In order to demonstrate that the statute of limitations has been renewed by a partial payment, it must be shown that the payment was accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due, from which a promise may be inferred to pay the remainder'” … . * * *

… [T]he Plan did not constitute an “unconditional and unqualified acknowledgment of [the] debt” sufficient to reset the statute of limitations … . While the writing arguably acknowledged the existence of indebtedness, the defendant merely agreed to make three trial payments so as to receive a permanent modification offer. Any intention to repay the debt was conditioned on the parties reaching a permanent modification agreement, which condition did not occur. Under these circumstances, it cannot be said that the writing contained “nothing inconsistent with an intention on the part of the debtor to pay” the debt … . Indeed, the defendant represented in the Plan that he was unable to afford the mortgage payments. Nationstar Mtge., LLC v Dorsin, 2020 NY Slip Op 01354, Second Dept 2-26-20

February 26, 2020

DEFENDANT’S PARTICIPATION IN A SETTLEMENT CONFERENCE DID NOT WAIVE HIS RIGHT TO SEEK DISMISSAL OF THE FORECLOSURE ACTION AS ABANDONED (FIRST DEPT).

INSTEAD OF DISMISSING THE COMPLAINT FOR FAILURE TO NAME A NECESSARY PARTY SUPREME COURT SHOULD HAVE ORDERED THE PARTY SUMMONED (SECOND DEPT).

VACATING THE NOTE OF ISSUE RETURNS THE CASE TO THE PRE-NOTE OF ISSUE DISCOVERY STAGE, NO NEED TO MAKE A MOTION TO RESTORE THE ACTION TO THE TRIAL CALENDAR; THE MOTION TO EXTEND THE TIME TO FILE A NOTICE OF ISSUE, CITING LAW OFFICE FAILURE, SHOULD HAVE BEEN GRANTED (SECOND DEPT).

MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT SHOULD NOT HAVE BEEN GRANTED BECAUSE REFERENCE TO EXTRINSIC EVIDENCE WAS REQUIRED; STATUTE OF FRAUDS DID NOT REQUIRE DISMISSAL BECAUSE IT WAS ALLEGED THERE WAS NEW CONSIDERATION FOR THE PROMISE TO PAY THE DEBT OF ANOTHER (FIRST DEPT).

PLAINTIFFS STATED A CAUSE OF ACTION FOR FRAUD AND PROPERLY ALLEGED A CIVIL CONSPIRACY (FIRST DEPT).

PLAINTIFF DID NOT SUFFICIENTLY ALLEGE THAT NEW YORK’S PROPERTY TAX SYSTEM DISCRIMINATES AGAINST PROPERTY OWNERS IN “MAJORITY-MINORITY” NEIGHBORHOODS; COMPLAINT SHOULD HAVE BEEN DISMISSED IN ITS ENTIRETY (FIRST DEPT).

MOTION TO DISCONTINUE STATE FORECLOSURE ACTION WHILE FORECLOSURE WAS PURSUED IN FEDERAL COURT SHOULD HAVE BEEN GRANTED WITHOUT PREJUDICE BECAUSE THERE WAS NO SHOWING OF PREJUDICE ON THE PART OF DEFENDANT (SECOND DEPT).

THE MORTGAGE-PAYMENT MODIFICATION AGREEMENT DID NOT CONSTITUTE AN ACKNOWLEDGMENT OF THE MORTGAGE DEBT WITHIN THE MEANING OF GENERAL OBLIGATIONS LAW 17-101; THEREFORE THE STATUTE OF LIMITATIONS DID NOT START ANEW; THE FORECLOSURE ACTION IS TIME-BARRED (SECOND DEPT).

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