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PLAINTIFF LOAN SERVICING COMPANY WAIVED THE TIME OF THE ESSENCE PROVISION BY ITS RELENTLESS EFFORTS TO PREVENT THE FORECLOSURE SALE TO THE HIGHEST BIDDER (TO EXACT A HIGHER PRICE); THE SANCTIONS IMPOSED ON PLAINTIFF WERE NOT SUPPORTED BY A WRITTEN DECISION AS REQUIRED BY THE CONTROLLING REGULATION; SANCTIONS ASPECT REMITTED (FOURTH DEPT).

The Fourth Department determined plaintiff loan company waived the time of the essence provision in this foreclosure sale to the highest bidder, Fox, by its relentless attempts to prevent the sale from going forward (to exact a higher purchase price). The Fourth Department noted that the sanctions imposed upon plaintiff were not supported by a written decision as required by 22 NYCRR 130-1.1 and remanded for compliance with the regulation:

We reject plaintiff’s contention that the court erred in determining that Fox did not breach the time is of the essence clause. It is well settled that “[a] party may waive timely performance even where the parties have agreed that time is of the essence” … , and that such a waiver may be accomplished by the conduct of a party … . Here, we agree with the court that plaintiff’s relentless attempts to prevent the sale from going forward constituted a waiver of the time is of the essence clause.

We also reject plaintiff’s further contention that the court erred in determining that plaintiff engaged in frivolous conduct and in imposing sanctions for such conduct. We conclude that plaintiff’s conduct was “completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law[, and was] undertaken primarily to delay or prolong the resolution of the litigation” (22 NYCRR 130-1.1 [c] [1], [2] …). Nevertheless, we conclude that the court erred in failing to comply with 22 NYCRR 130-1.2 because “it failed to set forth in a written decision the conduct on which . . . the imposition [of sanctions] is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount . . . imposed to be appropriate’ ” … . We therefore modify the order by vacating the fourth ordering paragraph and we remit the matter to Supreme Court for compliance with 22 NYCRR 130-1.2 … . Bayview Loan Servicing, LLC v Strauss, 2019 NY Slip Op 05866, Fourth Dept 7-31-1

 

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A COURT MAY CONVERT A MOTION TO DISMISS TO A MOTION FOR SUMMARY JUDGMENT WITHOUT NOTICE WHERE A PURE QUESTION OF LAW IS INVOLVED; THE STRICTER STANDARDS FOR NON-COMPETITION AGREEMENTS IN THE EMPLOYMENT CONTEXT DO NOT APPLY IN THE CONTEXT OF THE SALE OF A BUSINESS (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, noted that Supreme Court properly dispensed with notice when it converted a motion to dismiss to a motion for summary judgment on a contractual-interpretation issue, and further noted the difference between non-competition agreements in the employment context and in the sale-of-a-business context. Here defendant sold his business, including goodwill, to plaintiff and then was employed by plaintiff:

… [A]lthough the court is normally required to give notice to the parties before converting a motion to dismiss to one for summary judgment … , the court properly dispensed with the statutory notice here inasmuch as the issue presented “rested entirely upon the construction and interpretation of an unambiguous contractual provision . . . [that] exclusively involve[d] issues of law which were fully appreciated and argued by the parties’ ” … . …

Because plaintiff sold his business to defendant, including the goodwill of that business, the enforceability of the restrictive covenants must be evaluated pursuant to the standard applicable to the sale of a business rather than the “stricter standard of reasonableness” applicable to employment contracts … . It is well settled that a covenant restricting the right of a seller of a business to compete with the buyer is enforceable if its duration and scope are “reasonably necessary to protect the buyer’s legitimate interest in the purchased asset” … . Frank v Metalico Rochester, Inc., 2019 NY Slip Op 05863, Fourth Dept 7-31-19

 

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PLAINTIFF DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE/MAILING REQUIREMENTS AND THEREFORE DID NOT DEMONSTRATE PERSONAL JURISDICTION OVER DEFENDANTS, THE REFEREE’S REPORT SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed because plaintiff did not demonstrate compliance with the notice requirements:

… [T]he Supreme Court should not have confirmed the Referee’s report. The plaintiff failed to submit any evidence at the hearing of compliance with the mailing requirement of CPLR 308(2) and, thus, failed to demonstrate that personal jurisdiction had been obtained over the defendants … . Federal Natl. Mtge. Assn. v Puretz, 2019 NY Slip Op 05958, Second Dept 7-31-19

 

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THE BANK’S MOTION TO VACATE A DEFAULT JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED BECAUSE OF THE BANK’S UNEXCUSED FAILURE TO APPEAR AT A SCHEDULED CONFERENCE IN VIOLATION OF 22 NYCRR 202.27(c) (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank’s unexcused failure to appear at a scheduled conference required denial of the bank’s motion to vacate a default judgment:

Although CPLR 3215(c) was not an appropriate ground upon which to dismiss the complaint because the plaintiff initiated proceedings for the entry of a judgment by moving for an order of reference within one year of the defendant’s default …, dismissal of the complaint was appropriate pursuant to 22 NYCRR 202.27(c) since the plaintiff failed to appear for the scheduled October 2012 conference.

A plaintiff seeking to vacate a default in appearing at a conference is required to demonstrate both a reasonable excuse for its default and a potentially meritorious cause of action (see CPLR 5015[a][1] … ). Although “[t]he determination of whether an excuse is reasonable is committed to the sound discretion of the motion court” … , the defaulting party must submit evidence in admissible form establishing both a reasonable excuse and a potentially meritorious cause of action or defense … .

Here, the plaintiff alleged only that the failure of its two prior attorneys to timely file the attorney affirmation in accordance with the January 2011 order caused the delay in prosecuting this action, and failed to proffer any evidentiary support therefor or any excuse for its failure to appear at the October 2012 conference. Moreover, the record reflects that the plaintiff did not take any action for almost four years to cure its default after the action was marked off the calendar. Since the plaintiff failed to demonstrate a reasonable excuse for its default … , we need not reach the issue of whether it had asserted a potentially meritorious cause of action … . Wells Fargo Bank, N.A. v McClintock, 2019 NY Slip Op 06015, Second Dept 7-31-19

 

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PLAINTIFF CHURCH’S OBJECTION TO THE SYNOD’S TAKING CONTROL OF A SCHOOL OPERATED BY PLAINTIFF CHURCH IS A RELIGIOUS CONTROVERSY WHICH IS NOT JUSTICIABLE IN STATE COURTS (SECOND DEPT).

The Second Department determined three causes of action in a lawsuit brought by a church (Eltingville) against the Synod and its Bishop (stemming from the Synod’s decision to place a school owned and operated by Eltingville under its control) were not justiciable in state courts because of the constitutional separation of church and state:

… [T]he complaint challenged the Synod’s determination to impose synodical administration upon Eltingville. Such a determination could only be made upon finding that “the membership of a congregation has become so scattered or so diminished in numbers as to make it impractical for such a congregation to fulfill the purposes for which it was organized or that it is necessary for this synod to protect the congregation’s property from waste and deterioration” (Synod’s Constitution § 13.24; see Religious Corporations Law § 17-c[2][a][iii]). A Synod’s determination to impose synodical administration on a local church is a nonjusticiable religious determination … . Eltingville Lutheran Church v Rimbo, 2019 NY Slip Op 05957, Second Dept 7-31-19

 

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THE CLAIM WAS NOT JURISDICTIONALLY DEFECTIVE FOR FAILURE TO SPECIFICALLY ALLEGE LOST WAGES AS PART OF THE DAMAGES IN THIS PERSONAL INJURY ACTION, THE DISSENT DISAGREED AND WOULD HAVE VACATED THE AWARD FOR LOST WAGES (FOURTH DEPT).

The Fourth Department affirmed the award of money damages to claimant for personal injury. The claim did not specifically request lost wages as damages. The majority held the claim was not jurisdictionally deficient and the specific items of damage need not have been spelled out. The dissenter disagreed and argued the award for lost wages should be vacated:

Contrary to defendant’s contention, the court did not lack subject matter jurisdiction with respect to damages for past and future lost wages inasmuch as the facts alleged by claimant “were sufficient to apprise [defendant] of the general nature of the claim and to enable it to investigate the matter” … .

The plain language of the statute requires a claimant to specify “the items of damage or injuries claimed to have been sustained” and, “except in[, inter alia,] action[s] to recover damages for personal injury . . . , the total sum claimed” (Court of Claims Act § 11 [b]). Contrary to the view of our dissenting colleague, a natural reading of the statute requires a claimant to specify the items of damage to property or injuries to a person for which the claimant seeks compensation. Here, claimant sufficiently specified the nature of the claim, the time when and the place where the claim arose, and the injuries claimed to have been sustained, i.e., “injuries to his shoulder, bicep, and elbow” … . Inasmuch as this is an action for damages for personal injury, claimant was not required to specify, in total or itemized by category, his claimed items of damage … . Damages sought by claimant for medical expenses or lost wages are matters for the bill of particulars. Donahue v State of New York, 2019 NY Slip Op 05948, Fourth Dept 7-31-19

 

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QUESTION OF FACT WHETHER THE CONTINUOUS REPRESENTATION DOCTRINE TOLLED THE STATUTE OF LIMITATIONS IN THIS LEGAL MALPRACTICE ACTION; THE ATTORNEY HAD ATTEMPTED TO REMEDY THE FAILURE TO FILE OBJECTIONS IN AN ESTATE MATTER AFTER THE STATUTE HAD RUN; ABSENCE OF AN EXPERT’S REPORT FROM THE RECORD ON APPEAL PRECLUDED A RULING ON THE RELATED ISSUE (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined plaintiff had raised a question of fact whether the continuous representation doctrine tolled the statute of limitations in this legal malpractice action. The attorney had attempted to remedy the failure to file objections in an estate matter after the statute had run. The Fourth Department noted that plaintiff’s expert’s report was missing from the record on appeal and therefore plaintiff was unable to argue on appeal that he had raised a related question of fact (concerning damages) before Supreme Court. Defendant had argued the damages were speculative (requiring dismissal) and Supreme Court did not rule on the issue (because the case was dismissed as untimely). The matter was remitted for a ruling on the damages issue:

We are unable to review plaintiff’s contention that he raised a triable issue of fact with respect to … damages by submitting an expert report inasmuch as plaintiff failed to include that document in the record on appeal. Thus plaintiff, as the party raising this issue on his appeal, “submitted this appeal on an incomplete record and must suffer the consequences” … . …

Defendant met his burden … by establishing that the statute of limitations for legal malpractice is three years (see CPLR 214 [6]), that the estate cause of action accrued on November 1, 2010, the last date on which to file objections to the accounting …, and that the estate cause of action was therefore untimely when this malpractice action was commenced on November 15, 2013. “The burden then shifted to plaintiff[] to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine” … .

We agree with plaintiff that the court erred in determining that plaintiff failed to do so. It is well settled that, in order for the continuous representation doctrine to apply, “there must be clear indicia of an ongoing, continuous, developing, and dependant relationship between the client and the attorney which often includes an attempt by the attorney to rectify an alleged act of malpractice” … . Here, plaintiff submitted evidence that defendant made several unsuccessful attempts to file the objections within the weeks after the deadline and that he made preparations to appear at a scheduled conference on the objections on November 23, 2010. Those efforts could be viewed as “attempt[s] by the attorney to rectify an alleged act of malpractice” … , and thus plaintiff raised a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine. Leeder v Antonucci, 2019 NY Slip Op 05898, Fourth Dept 7-31-19

 

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ALTHOUGH THE ARTICLE 78 PETITION WAS VERIFIED BY AN ATTORNEY, THE VERIFICATION WAS VALID BECAUSE THE ATTORNEY HAD FIRST-HAND KNOWLEDGE OF THE FACTS; IN ADDITION, ANY DEFECTS IN THE VERIFICATION WERE WAIVED BY RESPONDENTS; PRIOR ARBITRATION PURSUANT TO THE COLLECTIVE BARGAINING AGREEMENT WAS NOT AN OBSTACLE TO THE PETITION ALLEGING A VIOLATION OF THE EDUCATION LAW CONCERNING THE SUSPENSION OF A SCHOOL PRINCIPAL (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the verification of an Article 78 petition by petitioner’s attorney was valid because the attorney had first hand knowledge of the contents and, even if the verification was invalid, the respondent had waived any objection to it. The matter concerns the suspension of a school principal which had been the subject of arbitration pursuant to the collective bargaining agreement. The arbitration was not an obstacle to these proceedings brought pursuant to the Education Law because the issues are not the same.  The issue involved in the Article 78 petition, an interpretation of Education Law 2566 (6), was not the kind of issue which must first be brought before the Commissioner of Education:

Although the verification requirement of CPLR 7804 (d) must ordinarily be completed by a party, a verification “may be made by [a party’s] attorney [where, as here,] all the material allegations of the pleading are within the personal knowledge of . . . [that] attorney’ ” …  Moreover, a party challenging the sufficiency of a verification is required “to give notice with due diligence to the attorney of the adverse party that he [or she] elect[ed]’ to treat the petition as a nullity” … . Thus, even assuming, arguendo, that the verification by petitioner’s attorney was insufficient, we conclude that respondents waived any challenge to the petition on that ground by failing to make the requisite diligent efforts and instead waiting a month before seeking dismissal of the petition on that basis … . …

… .[A]lthough Education Law § 310 provides … that any party aggrieved by an official act or decision of school authorities “may appeal by petition to the [C]ommissioner of [E]ducation,” the Commissioner exercises primary jurisdiction only where the matter involves an issue requiring his or her specialized knowledge and expertise … . Petitioner’s contention regarding section 2566, however, requires no more than the interpretation and application of the plain language of that statute for which no deference to the Department of Education is required … . Matter of Buffalo Council of Supervisors & Adm’rs, Local #10 v Cash, 2019 NY Slip Op 05895, Fourth Dept 7-31-19

 

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PLAINTIFF BANK WAS ENTITLED TO AN ORDER REQUIRING THE COUNTY CLERK TO RECORD A MORTGAGE, THE ORIGINAL OF WHICH HAD ALLEGEDLY BEEN LOST; AN ATTORNEY AFFIDAVIT IS AN APPROPRIATE VEHICLE FOR THE SUBMISSION OF DOCUMENTS IN ADMISSIBLE FORM (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank was entitled to an order requiring the county clerk to accept a copy of a mortgage for recording (the original allegedly had been lost and was never recorded). The Second Department further determined that an attorney affidavit was an appropriate vehicle for the submission of the documents to be recorded, which were in admissible form:

The plaintiff established its prima facie entitlement to judgment as a matter of law on the first cause of action, which sought an order directing the Suffolk County Clerk to accept a copy of the mortgage for recording. The County Clerk has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law §§ 290[3]; 291; County Law § 525[1]). “Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly-drawn prerequisites set forth in the recording statute” … . Here, the copy of the mortgage submitted on the motion, which is notarized, was subject to recording … . Contrary to the Supreme Court’s determination, the complaint adequately stated a cause of action for this relief … , and the plaintiff’s failure to submit an affidavit of someone with personal knowledge of the facts was not fatal to the motion. The affidavit or affirmation of an attorney, even if he or she has no personal knowledge of the facts, may serve as the vehicle for the submission of acceptable attachments which provide evidentiary proof in admissible form, e.g., documents and transcripts … . JPMorgan Chase Bank, N.A. v Wright, 2019 NY Slip Op 05966, Second Dept 7-31-19

 

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FAILURE TO DISCLOSE THE SLIP AND FALL ACTION AS AN ASSET IN A BANKRUPTCY PROCEEDING DEPRIVED PLAINTIFF OF THE LEGAL CAPACITY TO SUE (SECOND DEPT).

The Second Department determined plaintiff did not have the legal capacity to sue in this slip and fall case because the action was not listed as an asset in a prior bankruptcy proceeding:

“The failure of a party to disclose a cause of action as an asset in a prior bankruptcy proceeding, which the party knew or should have known existed at the time of that proceeding, deprives him or her of the legal capacity to sue subsequently on that cause of action'” … .

Here, it is undisputed that the plaintiff did not disclose, in the bankruptcy petition that she filed in October 2015, the existence of the cause of action to recover damages for personal injuries that she had previously asserted against the defendant. The defendant established, prima facie, that when the petition was filed, the plaintiff knew or should have known of the existence of her cause of action, and the plaintiff failed to raise a triable issue of fact in opposition to that prima facie showing … . Jean-Paul v 67-30 Dartmouth St. Owners Corp., 2019 NY Slip Op 05965, Second Dept 7-31-19

 

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