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SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT IN THIS FORECLOSURE ACTION, THEREBY DEPRIVING PLAINTIFF OF AN OPPORTUNITY TO BE HEARD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank’s motion to vacate the default in this foreclosure action should have been granted. Supreme Court had, sua sponte, dismissed the complaint without affording plaintiff an opportunity to be heard:

Following the plaintiff’s failure to move for an order of reference … , the Court Attorney Referee found … that the plaintiff failed to show good cause for its failure to move for the order of reference as directed and recommended that the action be dismissed. … Supreme Court directed dismissal of the action.

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … . As no such extraordinary circumstances were present in this case, we disagree with the Supreme Court’s determination to sua sponte direct dismissal of the complaint, without affording the plaintiff notice and opportunity to be heard … , which “amounted to a denial of the plaintiff’s due process rights” … . Accordingly, the Supreme Court should have granted those branches of the plaintiff’s motion which were to vacate the October 4, 2016, order and to restore the action to active status … . Deutsche Bank Natl. Trust Co. v Winslow, 2020 NY Slip Op 01325, Second Dept 2-26-20

 

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PROOF OF POSSESSION OF THE NOTE WHEN THE ACTION WAS COMMENCED WAS HEARSAY; PLAINTIFF BANK DID NOT DEMONSTRATE STANDING TO FORECLOSE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate standing to bring the foreclosure action. The assertions that the note was in plaintiff’s possession when the action was commenced were hearsay and were not supported by business records:

… [T]he plaintiff, to establish its standing to commence this mortgage foreclosure action, submitted an affirmation of Amber A. Jurek, a lawyer with Gross Polowy, LLC (hereinafter Gross Polowy), the plaintiff’s counsel. Jurek stated that she was familiar with Gross Polowy’s records and record-keeping practices. Jurek stated that on January 28, 2015, Gross Polowy received the plaintiff’s file, which included the original endorsed note. Gross Polowy commenced this action on the plaintiff’s behalf on February 26, 2015. According to Jurek, “[o]n that date, Gross Polowy, on behalf of Plaintiff, remained in physical possession of the collateral file, including the original endorsed Note dated March 20, 2012.” The plaintiff also submitted the note, which bore an undated endorsement to the plaintiff. However, Jurek did not set forth any facts based on her personal knowledge to support her statement that the note in the plaintiff’s file was the original endorsed note. Further, the plaintiff failed to attach the business records upon which Jurek relied in her affirmation, and since Jurek did not state that she personally witnessed Gross Polowy receive the plaintiff’s file, her statement is inadmissible hearsay … .

The plaintiff also submitted an affidavit of April H. Hatfield, vice president of loan documentation for the plaintiff. Hatfield stated that she was familiar with the plaintiff’s records and record-keeping practices. Although Hatfield attached the records upon which she relied, she did not state that the plaintiff had possession of the endorsed note at the time the action was commenced. Rather, she relied on Jurek’s affidavit for that fact. Accordingly, Hatfield’s affidavit was also insufficient to establish the plaintiff’s standing.

Finally, the plaintiff did not attach a copy of the note to the complaint when commencing this action. Therefore, the plaintiff failed to establish, prima facie, that it had standing to commence this action … . Wells Fargo Bank, N.A. v Bakth, 2020 NY Slip Op 01382, Second Dept 2-26-20

 

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DEFENDANT LIMITED LIABILITY COMPANY FAILED TO FILE ITS CURRENT ADDRESS WITH THE SECRETARY OF STATE SINCE 2011; DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ALLEGING IT WAS NOT SERVED WITH THE SUMMONS AND COMPLAINT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant limited liability company’s motion to vacate a default judgment pursuant to CPLR 317 should not have been granted. Defendant had not filed its current address with the Secretary of State since 2011:

Pursuant to CPLR 317, a defaulting defendant who was served with a summons other than by personal delivery may be permitted to defend the action upon a finding by the court that the defendant did not personally receive notice of the summons in time to defend and has a potentially meritorious defense … . Here, the defendant was not entitled to vacatur of its default pursuant to CPLR 317. The record reflects that, since September 2011, the defendant had not filed, with the Secretary of State, the required biennial form that would have apprised the Secretary of State of its current address (see Limited Liability Company Law § 301[e]), thus raising an inference that the defendant deliberately attempted to avoid notice of actions commenced against it … .

“In contrast to a motion pursuant to CPLR 317, on a motion pursuant to CPLR 5015(a)(1), the movant is required to establish a reasonable excuse for his or her default” … . Under the circumstances of this case, the defendant’s failure to keep the Secretary of State apprised of its current address over a significant period of time did not constitute a reasonable excuse … . Bookman v 816 Belmont Realty, LLC, 2020 NY Slip Op 01318, Second Dept 2-26-20

 

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QUESTIONS OF FACT WHETHER WALKING ON THE REBAR GRID WAS AN INHERENT RISK OF THE JOB AND WHETHER THE GRID WAS A DANGEROUS CONDITION PRECLUDED A DIRECTED VERDICT IN THIS LABOR LAW 200 ACTION; NEW TRIAL ORDERED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined questions of fact for the jury precluded the directed verdict (CPLR 4401) for the defendants in this Labor Law 200 action. Plaintiff was working as a surveyor at a construction site. He was walking across a rebar grid when one of his legs fell through. There were questions of fact whether walking on the rebar grid was an inherent risk of his job and whether the grid was a dangerous condition. Plaintiff’s motion to set aside the directed verdict (CPLR 4404) should have been granted:

Labor Law § 200 is a codification of the common-law duty imposed upon an owner or general contractor to provide construction site workers with a safe place to work … . The duty, however, is subject to recognized exceptions … . It does not extend to hazards which are part of or inherent in the very work which the contractor is to perform, or where the contractor is engaged for the specific purpose of repairing the defect … .

Here, in directing a verdict in favor of the defendants on the issue of liability, the Supreme Court improperly decided the factual questions of whether traversing an uncovered rebar grid was an inherent risk in the injured plaintiff’s work as a surveyor, and whether the uncovered rebar grid was a dangerous condition under the circumstances presented. The record demonstrates that the plaintiffs’ evidence made out a prima facie case, and that disputed factual issues existed which should have been resolved by the jury. Since the court failed to draw “every favorable inference” in favor of the plaintiffs and because the court resolved disputed issues of fact … , the matter must be remitted to the Supreme Court, Queens County, for a new trial on the issue of liability. Vitale v Astoria Energy II, LLC, 2020 NY Slip Op 01381, Second Dept 2-26-20

 

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PLAINTIFF PROPERLY ALLOWED TO AMEND THE MEDICAL MALPRACTICE COMPLAINT AFTER THE STATUTE OF LIMITATIONS HAD RUN TO ADD A TREATING DOCTOR EMPLOYED BY A NAMED DEFENDANT PURSUANT TO THE RELATION-BACK DOCTRINE (SECOND DEPT).

The Second Department determined the relation-back doctrine allowed the amendment of the complaint (CPLR 1003) in this medical malpractice, wrongful death action to add a doctor, Abergel, who treated plaintiff’s decedent and was employed by the defendant professional corporation (P.C.):

The causes of action arose out of the same conduct, to wit, the alleged negligence by [defendant] Purow and Abergel in the course of treating the decedent for her ulcerative colitis at the P.C.’s office, which they each did within the scope of their employment with the P.C. …

The vicarious liability of the P.C. allows for a finding of unity of interest with Abergel, “regardless of whether the actual wrongdoer or the person or entity sought to be charged vicariously was served first'” … . …

… [T]he plaintiff satisfied the third prong of the test, which focuses, inter alia, on “whether the defendant could have reasonably concluded that the failure to sue within the limitations period meant that there was no intent to sue that person at all and that the matter has been laid to rest as far as he [or she] is concerned'” … . The decedent’s medical records from the P.C. included several notes signed by Abergel, and clearly and repeatedly referenced Abergel as a physician who treated the decedent as part of the care rendered to the decedent by the P.C. * * * In addition, the plaintiff demonstrated that the failure to originally name Abergel as a defendant was the result of a mistake, and there was no need to show that such mistake was excusable … . Petruzzi v Purow, 2020 NY Slip Op 01372, Second Dept 2-26-20

 

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ALTHOUGH MOVING MONEY THROUGH A NEW YORK BANK IS ENOUGH TO CONFER PERSONAL JURISDICTION ON OUT-OF-STATE PARTIES, SUPREME COURT CORRECTLY HELD IT WAS NOT ENOUGH TO MAKE NEW YORK A CONVENIENT FORUM (FIRST DEPT).

The First Department determined that, although using a New York bank for an allegedly fraudulent transaction is sufficient to acquire personal jurisdiction over out-of-state parties, it does not necessarily follow that New York is a convenient forum. Supreme Court properly found New York was not a convenient forum in these actions involving individuals and corporations in Saudi Arabia and the United Arab Emirates, as well as a Swiss bank:

… [T]he court properly considered the following matters, among others: (1) none of the parties to either action is a New York citizen or resident or (if an entity) is formed under New York law or has its principal place of business in New York; … (2) the alleged conduct at issue primarily occurred in the UAE, Saudi Arabia and Switzerland, with the sole New York connection being the fleeting presence of the bribery funds at a nonparty New York correspondent bank while en route from the UAE to Switzerland; (3) the bulk of the relevant documentary evidence is located in the UAE, Saudi Arabia, Switzerland and BVI, and most witnesses are located outside New York and beyond New York’s subpoena power; (4) there is a likelihood that foreign substantive law will govern; (5) there are alternative fora available (Switzerland and the UAE) with greater connection to the subject matter; and (6) in the Pictet [bank] action, Switzerland has an interest in regulating the conduct of a bank operating within its borders … . …

As Supreme Court correctly recognized … “[o]ur state’s interest in the integrity of its banks . . . is not significantly threatened every time one foreign national, effecting what is alleged to be a fraudulent transaction, moves dollars through a bank in New York. . . . New York’s interest in its banking system is not a trump to be played whenever a party to such a transaction seeks to use our courts for a lawsuit with little or no apparent contact with New York” (Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co., 23 NY3d 129, 137 [2014] … ).

In accordance with Mashreqbank, this Court has declined to disturb the motion court’s discretionary determination that New York is not a convenient forum in cases where the sole connection to New York was the passage of wired funds through a correspondent bank in the state … . Al Rushaid Parker Drilling Ltd. v Byrne Modular Bldgs. L.L.C., 2020 NY Slip Op 01277, First Dept 2-25-20

 

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DEFAULT IN THIS NEGLECT/CUSTODY PROCEEDING SHOULD HAVE BEEN ANALYZED UNDER FAMILY COURT ACT 1042, NOT CPLR 5015 AND 5511; BECAUSE RESPONDENT WAS NEVER NOTIFIED THAT A FACT-FINDING HEARING, AS OPPOSED TO A CONFERENCE, WAS GOING TO BE HELD THE DEFAULT ORDER SHOULD HAVE BEEN VACATED (THIRD DEPT).

The Third Department, reversing Family Court, determined: (1) the proper analysis of a default in this neglect/custody proceeding is under Family Court Act 1042, not CPLR 5015 and 5511; (2) respondent was never notified of the fact-finding; and (3) the default order must be vacated:

To begin, although Family Court and the parties assessed whether respondent was entitled to vacatur under “the default mechanism of CPLR 5015 and 5511,” the standard set forth by Family Ct Act § 1042 controls in this Family Ct Act article 10 proceeding … .. If a “person legally responsible for the child’s care” has been notified of a pending fact-finding hearing and fails to attend … . Family Court is free to conduct the hearing so long as the child is represented by counsel … . Respondent is such a person and, upon her timely motion to vacate the fact-finding order, Family Court was obliged to grant vacatur and reopen the hearing if she showed “a meritorious defense to the petition . . . [unless she] willfully refused to appear at the hearing” … . …

It was an impossibility for respondent to default in attending a hearing that she did not know was going to happen and did not, in fact, happen. Respondent was further unable to challenge details of petitioner’s evidence in the absence of a hearing and, the strength of petitioner’s proof remaining a mystery, we deem the denials in respondent’s affidavit sufficient to set forth a meritorious defense. Matter of Lila JJ. (Danelle KK.), 2020 NY Slip Op 01216, Third Dept 2-20-20

 

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NEW YORK SHOULD NOT HAVE BEEN RULED AN INCONVENIENT FORUM FOR THIS VISITATION/CONTACT ENFORCEMENT PROCEEDING, CRITERIA EXPLAINED (THIRD DEPT).

The Third Department, reversing Family Court, determined Family Court should not have ruled that New York was an inconvenient forum for a visitation/contact enforcement petition where mother is in New York and father is in Arizona with the child:

As Family Court acknowledged, it had exclusive continuing jurisdiction over the matter pursuant to the Uniform Child Custody Jurisdiction and Enforcement Act … . However, “[a] court of this state which has jurisdiction under this article . . . may decline to exercise its jurisdiction at any time if it determines that it is an inconvenient forum under the circumstances and that a court of another state is a more appropriate forum” … .

An inconvenient forum determination “depends on the specific issues to be decided in the pending litigation” … . This is an enforcement petition, and the sole issue concerns the conduct of the parents vis-À-vis the current order. The vast amount of testimony as to whether the father violated the order, which is central to the issue in this proceeding, will come from the mother, who is located in New York, and any witnesses that she may call. Any testimony from the father can be presented by telephone, audiovisual means or other electronic means. Moreover, Family Court has presided over numerous proceedings between the parties related to this child … .That court is far more familiar with the case than the Arizona court and is in a better position to interpret the meaning of its own order … .

Additionally, the mother submitted an affidavit evidencing that she will not be able to travel to or retain counsel in Arizona, yet she has legal representation in New York. Family Court acknowledged her indigency and that it was unable to conclude whether Arizona could provide indigent legal representation to her. Matter of Sadie HH. v Darrin II., 2020 NY Slip Op 01219, Third Dept 2-20-20

 

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FATHER’S INCARCERATION CONSTITUTED A CHANGE IN CIRCUMSTANCES RE FATHER’S VISITATION/CONTACT PETITIONS; HEARING REQUIRED TO DETERMINE BEST INTERESTS OF THE CHILD; VISITATION PETITIONS NEED NOT BE VERIFIED (THIRD DEPT).

The Third Department, reversing Family Court, determined: (1) father’s incarceration constituted a change in circumstances; (2) father’s petition for visitation and contact triggered the need for a hearing to determine the best interests of the child; and (3) verification of a visitation petition is not required by CPLR 3020 or Family Ct Act article 6:

… [W]e find that the father demonstrated a change in circumstances arising from his incarceration … .

We note that “[v]isitation with a noncustodial parent, even one who is incarcerated, is presumed to be in the best interests of the child[]” . Further, “as a general matter, custody determinations …  be rendered only after a full and plenary hearing” … . This guideline applies to requests for visitation and contact, as presented here … . Accordingly, in the absence of sufficient information allowing a comprehensive review of the child’s best interests, Family Court erred in dismissing the petitions without a hearing … . Finally, it was not necessary for Family Court to dismiss the petitions because they were unsworn, given that verification of a visitation petition is not required by either CPLR 3020 or Family Ct Act article 6 … . Matter of Shawn MM. v Jasmine LL., 2020 NY Slip Op 01223, Third Dept 2-20-20

 

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ALTHOUGH FATHER MISSED PLEADING AND DISCLOSURE DEADLINES, THERE WAS NO EVIDENCE THE OMISSIONS WERE WILLFUL; THEREFORE PRECLUDING FATHER FROM PRESENTING EVIDENCE IN THE CUSTODY MODIFICATION PROCEEDING WAS TOO SEVERE A SANCTION (THIRD DEPT).

The Third Department, reversing Family Court, determined father should not have been precluded from offering evidence in the modification of custody proceeding. Although father missed several court-imposed deadlines for responding papers and disclosure, the sanction was too severe:

… [A]lthough the father failed to comply with court-ordered deadlines for responsive pleadings and discovery, the record lacks any evidence of willfulness on the part of the father to warrant a drastic sanction of complete preclusion … . The father was represented by assigned counsel at the May 7, 2018 conference during which the initial discovery schedule was established. Shortly thereafter, the mother served a first demand for interrogatories and combined discovery demand. … In the meantime, the father was assigned new counsel who appeared for the July 16, 2018 conference, at which time the deadlines were extended. At the fact-finding hearing, the father’s counsel stated that delay in responding “is predominantly my fault and I will make that very explicitly clear on the record.” In light of the preliminary conference orders, counsel also made the meritless assertion that the mother’s discovery demands were ineffective for lacking court authorization. On the other hand, counsel did serve a response to the interrogatories — although that response was unverified. In light of the foregoing, we cannot conclude that the father’s conduct was willful. Additionally, “modification of custody determinations requires a full and comprehensive hearing with the parties given the opportunity to present in open court evidence as to the best interest[s] of the child” … . Here, the preclusion of all of the father’s testimony renders it difficult to determine the best interests of this child (see id.). Based on the foregoing, we remit the matter for a new hearing. Matter of Tara DD. v Seth CC., 2020 NY Slip Op 01227, Third Dept 2-20-20

 

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