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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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THE SOLE REMEDY PROVISION OF THE CONTRACT IN THIS RESIDENTIAL MORTGAGE BACKED SECURITIES CASE, WHICH REQUIRED THAT THE DEFENDANT BE NOTIFIED AND GIVEN THE OPPORTUNITY TO REPURCHASE DEFECTIVE MORTGAGES, WAS NOT COMPLIED WITH PRIOR TO THE RUNNING OF THE STATUTE OF LIMITATIONS, PLAINTIFF’S TIMELY COMPLAINT WAS PROPERLY DISMISSED WITHOUT PREJUDICE, DESPITE THE FAILURE TO COMPLY WITH THE SOLE REMEDY PROVISION, ALLOWING PLAINTIFF TO REFILE THE COMPLAINT WITHIN SIX MONTHS PURSUANT TO CPLR 205 (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined that the trustee’s breach of contract action in the residential-mortgage-backed-securities (RMBS) case was properly dismissed without prejudice, allowing plaintiff to refile pursuant to CPLR 205 (which allows a suit to be refiled within six months of a dismissal that is not on the merits). The contractual sole remedy provision, which requires that the defendant (DLJ) be notified and given the opportunity to repurchase any mortgages deemed defective, was not be complied with and the timely complaint was dismissed for that reason:

As a general rule, under CPLR 205 (a) a subsequent action may be filed within six months of a non-merits dismissal of the initial timely-filed matter. Here, we conclude that CPLR 205 (a) applies to an RMBS trustee’s second action when its timely first action is dismissed for failure to comply with a contractual condition precedent. * * *

The difference between a procedural and substantive condition precedent is well-established. A condition precedent is substantive when it “describe[s] acts or events which must occur before a party is obliged to perform a promise made pursuant to an existing contract”… . In other words, the condition is “part of the cause of action and necessary to be alleged and proven, and without this no cause of action exist[s]” … , RMBS notice and sole remedy provisions are not substantive elements of the cause of action, but instead limitations on the remedy for a breach of the mortgage loan representations and warranties … . They serve as a precondition, “a procedural prerequisite to suit,” not a separate undertaking by the trustee … . Since notice and sole remedy provisions “do[] not create a substantive condition precedent” … , they do not affect when the statute of limitations commences because the limitations clock begins to run when the contract is executed.

Nevertheless, DLJ argues that the Trustee had to fulfill the procedural condition precedent before the limitations period expired, and its failure to do so rendered the original action untimely, such that a new action cannot be commenced pursuant to CPLR 205 (a). DLJ’s argument cannot be reconciled with our case law that a suit may be refiled pursuant to CPLR 205 (a) despite a plaintiff’s failure to comply with a condition precedent prior to the expiration of the statute of limitations. U.S. Bank Natl. Assn. v DLJ Mtge. Capital, Inc., 2019 NY Slip Op 01169, CtApp 2-19-19

 

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TRUSTEE’S BREACH OF CONTRACT ACTION IN THIS RESIDENTIAL MORTGAGE BACKED SECURITIES CASE WAS TIME-BARRED, THE ACTION COULD NOT RELATE BACK PURSUANT TO CPLR 203 BECAUSE THE TIMELY ACTION BY ANOTHER PARTY WAS PRECLUDED BY THE CONTRACT, THE COURT OF APPEALS COULD NOT CONSIDER WHETHER THE ACTION WAS TIMELY PURSUANT TO CPLR 205, EVEN THOUGH THE ISSUE WAS ADDRESSED BY THE APPELLATE DIVISION, BECAUSE THE ISSUE WAS NOT FULLY ADDRESSED IN SUPREME COURT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined that the trustee’s breach of contract action in this residential-mortgage-backed-securities securities case was time-barred. A certificate holder had filed a timely action, but the relevant contract precluded the action by the certificate holder. Therefore the trustee’s action could not be deemed to relate-back to it (CPLR 203). The Court of Appeals could not consider whether the trustee’s action was timely under CPLR 205, despite the fact that the Appellate Division addressed the issue, because the issue was not fully addressed by the parties in Supreme Court and the Court of Appeals does not have interest of justice jurisdiction:

CPLR 203 (f) has no application here because the certificate holder’s pre-existing action was not valid. The lower courts concluded that under the no action clause, the certificate holder could not bring the action on behalf of itself, any other certificate holder, or the Trustee. Those conclusions are not at issue in this Court. Thus, the certificate holder’s action was subject to dismissal, and there is no valid pre-existing action to which a claim in a subsequent amended pleading may relate back. The Trustee’s contention that it may use the relation-back doctrine of CPLR 203 (f) to cure the certificate holder’s lack of a right to sue, and that it may therefore avoid any problem with the identity of the plaintiff upon re-filing pursuant to CPLR 205 (a), is without merit. U.S. Bank Natl. Assn. v DLJ Mtge. Capital, Inc., 2019 NY Slip Op 01168, CtApp 2-19-19

 

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MENTAL HEALTH LEGAL SERVICES DOES NOT HAVE STANDING TO SEEK A WRIT OF MANDAMUS TO COMPEL A HOSPITAL TO COMPLY WITH THE MENTAL HYGIENE LAW PROCEDURE WHEN A PATIENT REQUESTS AN ADMISSION OR RETENTION HEARING (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge DiFiore, over a three-judge dissenting opinion, reversing the Appellate Division, determined Mental Hygiene Legal Services did not have standing to seek a writ of mandamus to compel a hospital to comply with Mental Hygiene Law 9.31 (b) “which sets forth the procedure that must be followed after a patient requests an admission or retention hearing:

MHLS alleges that, in early 2016, it “began to notice problems with the medical charts offered into evidence by BPC [Bronx Psychiatric Center]” because “documents contained in the chart had been added or removed just prior to the hearing.” MHLS filed this CPLR article 78 petition in the nature of mandamus, in its own name — and separate from any specific client or proceeding — seeking an order compelling BPC to provide copies of a patient’s entire clinical chart when it provides notice of a request for an admission or retention hearing, arguing the clinical chart is part of the “record of the patient” under Mental Hygiene Law § 9.31. Matter of Mental Hygiene Legal Serv. v Daniels, 2019 NY Slip Op 01123, CtApp 2-14-19

 

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