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DEBTOR’S LAWSUIT WAS DISMISSED BECAUSE IT WAS NOT LISTED AS AN ASSET IN THE BANKRUPTCY FILINGS, BANKRUPTCY TRUSTEE WAS ENTITLED TO RECOMMENCE THE SUIT PURSUANT TO CPLR 205 (a) WITHIN SIX MONTHS OF THE DISMISSAL (SECOND DEPT).

The Second Department determined the bankruptcy trustee could take advantage of CPLR 205 (a) to recommence a lawsuit within six months of the dismissal. The timely filed action was dismissed because the debtor did not list the suit as an asset in the bankruptcy filings:

… [D]ismissal of the 2013 action was not based upon a voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute the action, or a final judgment on the merits (see CPLR 205[a]). … CPLR 205(a) is applicable even though the 2013 action was dismissed based on the debtor’s incapacity to sue. The extension provisions of CPLR 205(a) are available to a plaintiff who seeks to recommence an action, notwithstanding that the prior action upon which the plaintiff relies was “invalid” in the sense that it contained a fatal defect … .

Although, as a general matter, only the plaintiff in the original action is entitled to the benefits of CPLR 205(a), the Court of Appeals has nevertheless recognized an exception to this general rule under certain circumstances where the plaintiff in the new action is seeking to enforce “the rights of the plaintiff in the original action” … . The Court of Appeals also has stated that the statute’s ” broad and liberal purpose is not to be frittered away by any narrow construction'” … . In this case, the plaintiff, the debtor’s bankruptcy trustee, seeks to recommence a personal injury action as the debtor’s successor-in-interest. As the debtor’s successor-in-interest, the plaintiff has the capacity to commence this action to recover damages for the debtor’s alleged personal injuries … . Consequently, the plaintiff is not seeking to enforce any rights separate and independent from those asserted by the debtor in the prior action … . Goodman v Skanska USA Civ., Inc., 2019 NY Slip Op 01394, Second Dept 2-27-19

 

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PLAINTIFF IN THIS SLIP AND FALL CASE ENTITLED TO SEVERANCE OF THE ACTION AGAINST THE PROPERTY OWNER, WHICH FILED FOR BANKRUPTCY, AND THE SNOW REMOVAL CONTRACTOR (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff in this slip and fall case was entitled to severance of the action against the property owner, Pathmark (supermarket), which filed for bankruptcy, from the action against the snow removal contractor, Peterman:

The supermarket defendants filed for chapter 11 bankruptcy relief, resulting in an automatic stay pursuant to 11 USC § 362(a). However, the automatic stay provisions of 11 USC § 362(a) did not extend to the nonbankrupt Peterman … . “Generally, the balance of the equities lies with plaintiff[ ] when severance is sought because the case against one defendant is stayed pursuant to 11 USC § 362(a), and that is particularly so in this personal injury action where a delay would be prejudicial to the plaintiff[ ]” … .

The supermarket defendants are subject to a $750,000 self-insured retention, which would make a lifting of the bankruptcy stay less likely. As the prejudice to the plaintiff in being required to await the conclusion of the bankruptcy proceeding before obtaining any remedy outweighs any potential inconvenience to Peterman, the Supreme Court improvidently exercised its discretion in denying the plaintiff’s motion pursuant to CPLR 603 to sever the action insofar as asserted against the supermarket defendants from the action insofar as asserted against Peterman … . Vogric v Pathmark Stores, Inc., 2019 NY Slip Op 01447, Second Dept 2-27-19

 

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MOTION TO DISMISS THE NEGLIGENCE ACTION AGAINST DEFENDANT SECURITY COMPANY IN THIS THIRD PARTY ASSAULT CASE SHOULD NOT HAVE BEEN GRANTED, THE EVIDENCE SUBMITTED BY THE DEFENDANT DID NOT RULE OUT LIABILITY BASED UPON THE RELATIONSHIP BETWEEN THE DEFENDANT SECURITY COMPANY AND THE COMPANY PROVIDING SECURITY AT THE TIME OF THE ASSAULT (SECOND DEPT).

The Second Department determined defendant security company’s motion to dismiss the complaint should not have been granted in this third party assault case. The complaint alleged the security company’s negligence resulted in the murder of plaintiff’s decedent at an assisted living facility. The defendant alleged it did not provide security there at the time of the murder. However, the documentary evidence submitted by defendant did not rule out the possibility the defendant company could be liable based upon its relationship with the company which was providing security at the time of the murder:

Generally, “a corporation which acquires the assets of another is not liable for the torts of its predecessor”… . However, such liability may arise if the successor corporation expressly or impliedly assumed the predecessor’s tort liability, there was a consolidation or merger of seller and purchaser, the purchaser corporation was a mere continuation of the seller corporation, or the transaction was entered into fraudulently to escape such obligations… .

Moreover, “[w]here, as here, evidentiary material is submitted and considered on a motion pursuant to CPLR 3211(a)(7) . . . the motion should not be granted unless the movant can show that a material fact as claimed by the plaintiff is not a fact at all and unless it can be said that no significant dispute exists regarding it”… . ” Accordingly, consideration of such evidentiary materials will almost never warrant dismissal under CPLR 3211(a)(7) unless the materials establish conclusively that [the plaintiff] has no [claim or] cause of action'”… .

Contrary to the Supreme Court’s determination, the documentary and affidavit evidence submitted by USSA in support of its motion failed to conclusively establish that the plaintiff had no cause of action against it. More particularly, that evidence failed to demonstrate that the exceptions to the general rule of a successor corporation’s nonliability where there was a de facto merger between the purchaser and the seller, or where the purchaser is a mere continuation of the seller, do not apply to this case … . Shea v Salvation Army, 2019 NY Slip Op 01441, Second Dept 2-27-19

 

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ALTHOUGH THE MOTION TO SET ASIDE THE DEFAULT JUDGMENT IN THIS DOG BITE CASE SHOULD NOT HAVE BEEN GRANTED, A FULL EVIDENTIARY HEARING WAS REQUIRED TO DETERMINE THE APPROPRIATE DAMAGES AMOUNT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the motion to vacate the default in this dog-bite case should not have been granted because it was untimely and unsubstantiated, but a full evidentiary hearing was required to determine the appropriate amount of damages:

… [A] court has the “inherent power to set aside excessive awards made upon default,” despite the fact that there is no reasonable excuse for the default … . “An unwarranted and excessive award after inquest will not be sustained, as to do otherwise would be tantamount to granting the plaintiffs an “open season” at the expense of a defaulting defendant'”… . In light of the evidence in the record, including the plaintiff’s testimony at the inquest, which was not supported by any expert testimony, and a police report of the incident which stated that the plaintiff suffered “minor injuries from an animal bite,” there are significant questions as to whether the award of the principal sum of $500,000, consisting of $200,000 for past pain and suffering and $300,000 for future pain and suffering, was excessive. Thus, we agree with the Supreme Court’s determination to stay enforcement of the default judgment and the settlement agreements based upon that judgment, and to direct further discovery. However, the court also should have stated in its order dated September 21, 2016, that the issues to be determined on the motion to stay enforcement of the default judgment are limited to the issue of damages. Loeffler v Glasgow, 2019 NY Slip Op 01401, Second Dept 2-27-19

 

MOTION TO DISMISS SUIT SEEKING RETURN OF A PAINTING ALLEGEDLY LOOTED BY THE NAZI-OCCUPIED FRENCH GOVERNMENT DURING WORLD WAR II PROPERLY DENIED (FIRST DEPT).

The First Department determined defendants’ motion to dismiss on forum non conveniens grounds was properly denied. The suit seeks the return of a painting allegedly looted by the Nazi-occupied French government:

In weighing the relevant factors, the court correctly observed that plaintiff and several defendants maintained residences in New York … . Although defendants suggest that France is the more appropriate forum, they also argued below, and submitted expert affidavits in support of the position, that this action would be time-barred in that jurisdiction, an important factor to consider … . This Court observes that retaining this action would not be particularly burdensome; New York has previously entertained actions concerning Nazi looting of art during World War II … . That the originals of some documents are located abroad does not require dismissal, and it is noted that the key documents have already been translated for the court… . In light of the foregoing, defendants failed to meet their heavy burden of establishing that the action should be dismissed on forum non conveniens grounds … . Gowen v Helly Nahmad Gallery, Inc., 2019 NY Slip Op 01350, First Dept 2-26-19

 

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PLAINTIFF’S DEPLORABLE MISCONDUCT, INCLUDING ACCESSING DEFENDANT’S ATTORNEY-CLIENT COMMUNICATIONS, DELETING RELEVANT DOCUMENTS AND LYING UNDER OATH, IN DELAWARE COURT PROCEEDINGS REQUIRED DISMISSAL OF PLAINTIFF’S PERSONAL INJURY ACTION AGAINST THE SAME DEFENDANT IN NEW YORK (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the plaintiff’s personal injury action should have been dismissed because of plaintiff’s misconduct in a Delaware court proceeding. The New York personal injury action alleged plaintiff was injured in an physical fight with the defendant which stemmed from the Delaware litigation. The Delaware court found that plaintiff had engaged in deplorable misconduct by accessing defendant’s privileged attorney-client communications, deleting relevant documents and lying under oath:

Plaintiff’s improper and willful access of defendant’s privileged communications and spoliation of evidence supports dismissal of his claims in this action (CPLR 3103[c]; CPLR 3126[3]; Lipin v Bender , 84 NY2d 562 [1994] [dismissing the plaintiff’s complaint because her improper taking of the defendant’s attorney/client documents and work product caused prejudice to the defendant and irreparably tainted the litigation process]). Among the materials improperly accessed here was a privileged memorandum from defendant’s counsel about his strategy concerning the incident underlying this action. Further, plaintiff’s counsel referred to the contents of some of the privileged communications during motion practice in this litigation. Since “[p]laintiff’s knowledge . . . can never be purged,” and he would “carry [that knowledge] into any new attorney-client relationship,” we find that dismissal of the complaint is “the only practicable remedy here” … . Shawe v Elting, 2019 NY Slip Op 01374, First Dept 2-26-19

 

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IN COURT STIPULATION OF SETTLEMENT WAS BINDING DESPITE AGREEMENT TO FINALIZE IT IN WRITING (THIRD DEPT

The Third Department, reversing Supreme Court, determined that the in-court stipulation was binding, notwithstanding the agreement to memorialize it in writing:

The threshold question presented is whether the parties reached a binding settlement. A stipulation of settlement placed on the record by counsel in open court is binding, all the more so when, as here, the parties contemporaneously confirm their acceptance on the record (see CPLR 2104 … ). “To be enforceable, an open court stipulation must contain all of the material terms and evince a clear mutual accord between the parties” … . As a matter of policy, stipulations of settlement are encouraged to promote judicial economy and to “provide litigants with predictability and assurance that courts will honor their prior agreements” … . The nuance here concerns the additional component of a more specific writing to follow the open court settlement, as interjected by the court without objection by counsel. Following the October 19, 2017 appearance, plaintiffs forwarded a draft written settlement to defendant … . While acknowledging that it was prepared to finalize the settlement agreement, defendant raised concerns about the scope of the indemnification language and a provision requiring defendant “to make tax-related representations.” The agreement was not signed and the subject motion ensued.

The parties acknowledge that they agreed to memorialize the record stipulation in a written agreement and, at the same time, agree that the record stipulation is binding. Although defendant has professed an intent to finalize the settlement once certain language issues as to the release and indemnification are resolved, it is significant that defendant does not contend that there are any necessary material terms not included in the oral stipulation… . As recounted above, it bears emphasis that the scope of both the required release and indemnification are in fact outlined in the oral stipulation. In our view, defendant’s language concerns present an implementation issue that the parties expressly accounted for in the record stipulation by having Supreme Court retain jurisdiction. Given the above, we conclude that the record stipulation constitutes a binding settlement, notwithstanding the parties’ dispute over finalizing the written agreement. It follows that the court erred in declining to “so order” the transcript, and, given defendant’s default in payment, by denying plaintiffs’ motion for judgment. Birches At Schoharie, L.P. v Schoharie Senior Gen. Partner LLC, 2019 NY Slip Op 01277, Third Dept 2-21-19

 

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COURT OF CLAIMS DID NOT HAVE SUBJECT MATTER JURISDICTION OVER A WORKERS’ COMPENSATION ISSUE, REVIEW OF AN AGENCY DETERMINATION MUST BE BROUGHT AS AN ARTICLE 78 PROCEEDING (THIRD DEPT).

The Third Department determined the Court of Claims did not have subject matter jurisdiction over review of an agency determination, which must be brought as an Article 78 action:

At issue is whether the Court of Claims has subject matter jurisdiction over the action. While claimant seeks significant financial relief, the core of its claim challenges defendant’s determination to classify the therapists as employees for purposes of calculating the premium due under the workers’ compensation policy. This is a threshold agency determination that the Court of Claims lacks subject matter jurisdiction to address … . … Such agency determinations are subject to review in the context of a CPLR article 78 proceeding commenced in Supreme Court, where a successful petitioner would be entitled to recover an overpayment as incidental relief (see CPLR 7806 … ). As such, claimant’s application should have been denied. Family & Educ. Consultants, LLC v New York State Ins. Fund, 2019 NY Slip Op 01273, Third Dept 2-21-19

 

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JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE FORECLOSURE ACTION WHEN PLAINTIFF BANK ATTEMPT TO TO BRING PREVIOUSLY FILED PAPERS INTO COMPLIANCE WITH SUBSEQUENT ADMINISTRATIVE ORDERS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, dismissed the foreclosure action when plaintiff bank attempted to bring previously filed documents into compliance with subsequent administrative orders:

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal”… . Here, the plaintiff’s counsel attempted to comply, in good faith, with Administrative Orders 548/10 and 431/11 of the Chief Administrative Judge, which did not exist at the time of the commencement of the action, or at the time of the plaintiff’s prior motion for an order of reference. Under such circumstances, dismissal was not warranted. Nothing in the Administrative Orders requires the dismissal of an action merely because the plaintiff’s counsel discovers that there was some irregularity or defect in a prior submission, nor is the plaintiff effectively required to commence an entirely new action … . JP Morgan Chase Bank, N.A. v Laszlo, 2019 NY Slip Op 01205, Second Dept 2-20-19

 

THE MOTION TO AMEND THE COMPLAINT WAS MADE BEFORE THE STATUTE OF LIMITATIONS RAN, BUT THE SUPPLEMENTAL SUMMONS WAS NOT ATTACHED TO THE MOTION PAPERS, THEREFORE THE STATUTE OF LIMITATIONS WAS NOT TOLLED BY THE MOTION (FIRST DEPT).

The First Department determined the statute of limitations was not tolled by the motion to amend the complaint, which was made before the statute ran, because the supplemental summons was not attached to the motion papers:

Although plaintiffs sought leave to amend the complaint before the applicable statute of limitations had expired, their motion did not toll the statute, because they failed to annex the supplemental summons to their papers (see Karagiannis v North Shore Long Is. Jewish Health Sys., Inc., 80 AD3d 569, 569 [2d Dept 2011]). Bossung v Rebaco Realty Holding Co., N.V., 2019 NY Slip Op 01188 [169 AD3d 538], First Dept 2-19-19

 

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