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PLAINTIFF ENTITLED TO PREJUDGMENT INTEREST AT THE STATUTORY RATE IN THIS CONVERSION ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff was entitled to interest at the statutory rate based on the value of the property at the time and place of conversion:

On a prior appeal in this action, this Court awarded summary judgment to the plaintiff, inter alia, on the cause of action to recover damages for conversion in the sum of $69,500, representing the amount of estate funds that were wrongfully converted by the defendant Rick Barrett. The Supreme Court subsequently entered an amended judgment that awarded the plaintiff the sum of $69,500 but failed to award prejudgment interest at the statutory rate of 9% per annum on that sum. The plaintiff appeals from so much of the amended judgment as failed to award prejudgment interest at the statutory rate on the $69,500 damages award.

“The usual measure of damages for conversion is the value of the property at the time and place of conversion, plus interest” … . Indeed, CPLR 5001(a) provides for the award of prejudgment interest upon sums awarded for the deprivation of or interference with another’s property, and relevant case law clearly establishes that such interest is properly awarded as part of the recovery on a cause of action sounding in conversion … . Moreover, interest is to be awarded at the statutory rate of 9% per annum … . Scotti v Barrett, 2018 NY Slip Op 07477, Second Dept 11-7-18

CONVERSION (PLAINTIFF ENTITLED TO PREJUDGMENT INTEREST AT THE STATUTORY RATE IN THIS CONVERSION ACTION (SECOND DEPT))/INTEREST (CONVERSION, PLAINTIFF ENTITLED TO PREJUDGMENT INTEREST AT THE STATUTORY RATE IN THIS CONVERSION ACTION (SECOND DEPT))/CPLR 5001 (PLAINTIFF ENTITLED TO PREJUDGMENT INTEREST AT THE STATUTORY RATE IN THIS CONVERSION ACTION (SECOND DEPT))

SUPREME COURT SHOULD NOT HAVE GRANTED PLAINTIFF PERMISSION TO SERVE AN AMENDED COMPLAINT AND SIMULTANEOUSLY AWARDED PLAINTIFF SUMMARY JUDGMENT ON SEVERAL CAUSES OF ACTION, THE AMENDED COMPLAINT SUPERSEDES THE ORIGINAL AND MUST BE ANSWERED BEFORE FURTHER PROCEEDINGS (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined Supreme Court should not have simultaneously granted plaintiff permission to amend the complaint and granted summary judgment on several causes of action. An amended complaint supersedes the original complaint and should be answered before any further proceedings:

… Supreme Court should not have awarded the plaintiff summary judgment on the issue of liability on the first, third, and fourth causes of action in the amended complaint, while simultaneously allowing the plaintiff to serve the amended complaint … . “When an amended complaint has been served, it supersedes the original complaint and becomes the only complaint in the case” … . “Since an amended complaint supplants the original complaint, it would unduly prejudice a defendant if it were bound by an original answer when the original complaint has no legal effect” … . As a result, “an amended complaint should ordinarily be followed by an answer” … . Here, the court should not have awarded the plaintiff summary judgment on the issue of liability on the causes of action in the amended complaint before the defendant had answered the amended complaint … . R&G Brenner Income Tax Consultants v Gilmartin, 2018 NY Slip Op 07470, Second Dept 11-7-18

CIVIL PROCEDURE (SUPREME COURT SHOULD NOT HAVE GRANTED PLAINTIFF PERMISSION TO SERVE AN AMENDED COMPLAINT AND SIMULTANEOUSLY AWARDED PLAINTIFF SUMMARY JUDGMENT ON SEVERAL CAUSES OF ACTION, THE AMENDED COMPLAINT SUPERSEDES THE ORIGINAL AND MUST BE ANSWERED BEFORE FURTHER PROCEEDINGS (SECOND DEPT))/AMENDED COMPLAINT (SUPREME COURT SHOULD NOT HAVE GRANTED PLAINTIFF PERMISSION TO SERVE AN AMENDED COMPLAINT AND SIMULTANEOUSLY AWARDED PLAINTIFF SUMMARY JUDGMENT ON SEVERAL CAUSES OF ACTION, THE AMENDED COMPLAINT SUPERSEDES THE ORIGINAL AND MUST BE ANSWERED BEFORE FURTHER PROCEEDINGS (SECOND DEPT))

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MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ motion pursuant to CPLR 306-b to dismiss the complaint in this foreclosure action (with regard to defendant Joseph) because it was not served within 120 days of filing should have been granted. The court explained the criteria for allowing extra time to serve:

As relevant here, CPLR 306-b provides that “[s]ervice of the summons and complaint . . . shall be made within one hundred twenty days after the commencement of the action.” Further, “[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service.” ” Good cause’ and interest of justice’ are two separate and independent statutory standards” … . “To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service” … . “If good cause for an extension is not established, courts must consider the interest of justice’ standard of CPLR 306-b” … , which “requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties” … . “Unlike an extension request premised on good cause, a plaintiff [seeking an extension in the interest of justice] need not establish reasonably diligent efforts at service as a threshold matter” … . “However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the statute of limitations, the potentially meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff’s request for the extension of time, and prejudice to defendant” … . “No one factor is determinative—the calculus of the court’s decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served” … .

The plaintiff failed to establish that it exercised reasonably diligent efforts in attempting to effect proper service of process upon Joseph and, thus, failed to show good cause … . Further, the plaintiff failed to establish that an extension of time was warranted in the interest of justice … . Where the plaintiff’s delay in serving a defendant is protracted, and the defendant has no notice of the action for a protracted period of time, an inference of substantial prejudice arises …  The plaintiff failed to rebut the inference of substantial prejudice that arose due to its protracted delay in serving Joseph, as it failed to come forward with any proof that Joseph had notice of this action prior to being served more than 5½ years after the action was commenced … . Moreover, the plaintiff failed to explain its more than six-month delay in moving for relief pursuant to CPLR 306-b after it effectuated service upon Joseph … . Under theses circumstances, the plaintiff failed to establish its entitlement to an extension of time to serve Joseph under the interest of justice standard … , and its motion should have been denied. Wells Fargo Bank, NA v Barrella, 2018 NY Slip Op 07486, Second Dept 11-7-18

FORECLOSURE (MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))/CIVIL PROCEDURE (MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))/CPLR 306-b MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))

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THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion for a default judgment and an order of reference should have been granted. By not raising lack of standing as a defense in the answer, the defense was waived. Supreme Court did not have the authority to, sua sponte, deny plaintiff’s motion on that ground:

… [U]nder this Court’s well-established precedent, as articulated in Wells Fargo Bank Minn., N.A. v Mastropaolo (42 AD3d 239), the defense of lack of standing is waived if not raised by the defendant in an answer or pre-answer motion to dismiss. Accordingly, by failing to answer the complaint or to make a pre-answer motion to dismiss the complaint, the defendants waived the defense of lack of standing … . Under the circumstances of this case, we remit the matter to the Supreme Court, Kings County, for further proceedings before a different Justice. Wells Fargo Bank, N.A. v Halberstam, 2018 NY Slip Op 07485, Second Dept 11-7-18

FORECLOSURE (THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/STANDING (FORECLOSURE, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/CIVIL PROCEDURE (FORECLOSURE, STANDING, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/JUDGES (SUA SPONTE DISMISSAL, FORECLOSURE, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/SUA SPONTE (THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))

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LABOR LAW 200 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE DEFENDANT GENERAL CONTRACTOR DID NOT EXERCISE SUPERVISORY CONTROL OVER THE MANNER OF PLAINTIFF’S WORK, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED CROSS CLAIMS BECAUSE THAT RELIEF WAS NOT REQUESTED, PLAINTIFF’S EMPLOYER WAS NOT ENTITLED TO PROTECTION FROM SUIT UNDER THE WORKERS’ COMPENSATION LAW BECAUSE IT DID NOT MAINTAIN A WORKERS’ COMPENSATION POLICY (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, in a comprehensive decision, over a comprehensive dissent, determined that the general contractor, Ultimate, was not liable under Labor Law 200 for plaintiff’s fall through an opening in planks and plywood covering a stairwell opening because the accident was attributable to the manner of the work and Ultimate did not exercise any supervisory control over the installation of drywall by the plaintiff. The dissent argued that there was a question of fact whether the opening in the stairwell covering was a dangerous condition of which Ultimate had notice, which is also a ground for liability under Labor Law 200. The Second Department noted that the court should not have sua sponte dismissed Ultimate’s cross claims against the drywall company (Fortin) because such relief was not requested. The Second Department further noted that Fortin was not entitled to protection from plaintiff’s suit under the Workers’ Compensation Law on the ground that plaintiff was Fortin’s employee because Fortin did not maintain a Workers’ Compensation policy:

“Labor Law § 200(1) is a codification of the common-law duty of an owner or general contractor to provide workers with a safe place to work”… . “Cases involving Labor Law § 200 fall into two broad categories: namely, those where workers are injured as a result of dangerous or defective premises conditions at a work site, and those involving the manner in which the work is performed” … . Where “a claim arises out of alleged defects or dangers arising from a subcontractor’s methods or materials, recovery against the owner or general contractor cannot be had unless it is shown that the party to be charged exercised some supervisory control over the operation” … . “A defendant has the authority to supervise or control the work for purposes of Labor Law § 200 when that defendant bears the responsibility for the manner in which the work is performed” … . “[M]ere general supervisory authority at a work site for the purpose of overseeing the progress of the work and inspecting the work product is insufficient to impose liability under Labor Law § 200” … . …

… Ultimate established, … that the accident arose from the method and manner in which the plaintiff and Jean-Guy Fortin covered the stairwell opening … . …

The Supreme Court should not have, in effect, sua sponte, directed dismissal of Ultimate’s cross claims against Fortin for common-law indemnification and contribution, which relief Fortin did not request in its motion papers… . Moreover, the Supreme Court should have granted that branch of Ultimate’s motion which was for summary judgment on its cross claim against Fortin for common-law indemnification. Contrary to Fortin’s contention, Ultimate’s cross claims are not barred by Workers’ Compensation Law § 11. … Ultimate established that Fortin did not procure workers’ compensation on behalf of the plaintiff … . Therefore, Fortin is not entitled to the benefit of the workers’ compensation bar. Poulin v Ultimate Homes, Inc., 2018 NY Slip Op 07468, Second Dept 11-7-18

LABOR LAW-CONSTRUCTION LAW (LABOR LAW 200 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE DEFENDANT GENERAL CONTRACTOR DID NOT EXERCISE SUPERVISORY CONTROL OVER THE MANNER OF PLAINTIFF’S WORK, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED CROSS CLAIMS BECAUSE THAT RELIEF WAS NOT REQUESTED, PLAINTIFF’S EMPLOYER WAS NOT ENTITLED TO PROTECTION FROM SUIT UNDER THE WORKERS’ COMPENSATION LAW BECAUSE IT DID NOT MAINTAIN A WORKERS’ COMPENSATION POLICY (SECOND DEPT))/CIVIL PROCEDURE (SUA SPONTE, LABOR LAW 200 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE DEFENDANT GENERAL CONTRACTOR DID NOT EXERCISE SUPERVISORY CONTROL OVER THE MANNER OF PLAINTIFF’S WORK, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED CROSS CLAIMS BECAUSE THAT RELIEF WAS NOT REQUESTED, PLAINTIFF’S EMPLOYER WAS NOT ENTITLED TO PROTECTION FROM SUIT UNDER THE WORKERS’ COMPENSATION LAW BECAUSE IT DID NOT MAINTAIN A WORKERS’ COMPENSATION POLICY (SECOND DEPT))/JUDGES (SUA SPONTE, LABOR LAW 200 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE DEFENDANT GENERAL CONTRACTOR DID NOT EXERCISE SUPERVISORY CONTROL OVER THE MANNER OF PLAINTIFF’S WORK, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED CROSS CLAIMS BECAUSE THAT RELIEF WAS NOT REQUESTED, PLAINTIFF’S EMPLOYER WAS NOT ENTITLED TO PROTECTION FROM SUIT UNDER THE WORKERS’ COMPENSATION LAW BECAUSE IT DID NOT MAINTAIN A WORKERS’ COMPENSATION POLICY (SECOND DEPT))/WORKERS’ COMPENSATION (LABOR LAW-CONSTRUCTION LAW, LABOR LAW 200 CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE DEFENDANT GENERAL CONTRACTOR DID NOT EXERCISE SUPERVISORY CONTROL OVER THE MANNER OF PLAINTIFF’S WORK, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DISMISSED CROSS CLAIMS BECAUSE THAT RELIEF WAS NOT REQUESTED, PLAINTIFF’S EMPLOYER WAS NOT ENTITLED TO PROTECTION FROM SUIT UNDER THE WORKERS’ COMPENSATION LAW BECAUSE IT DID NOT MAINTAIN A WORKERS’ COMPENSATION POLICY (SECOND DEPT)

THE PHRASE ‘WITHIN FIVE DAYS’ IN CPLR 511, A CHANGE OF VENUE STATUTE, DOES NOT IMPOSE A WAITING PERIOD FOR A MOTION TO CHANGE VENUE, THE MOTION MAY BE MADE WITHIN THE FIVE DAYS (THIRD DEPT), ​

The Third Department, over a partial dissent, determined that the phrase “within five days” in a change of venue statute (CPLR 511) did not impose a five day waiting period:

Asserting that Ulster County was an improper venue for the proceeding, the Steeles served a timely written demand that the proceeding be tried in Oswego County (see CPLR 511 [b]). Four days later, the Steeles moved, in Ulster County, to change venue of the proceeding to Oswego County. The Aarons argue that the Steeles, by failing to wait five days after their demand to allow the Aarons an opportunity to provide a written consent to change venue, failed to comply with the statutory procedure and thereby were not entitled to a change of venue as of right. This argument is based on an interpretation that the language “unless within five days” places a hold on the defendant’s obligation to make a motion, during which time the defendant must simply wait for the plaintiff to respond to the demand (CPLR 511 [b]). We disagree with that interpretation of the statute.

The Aarons’ argument appears to focus exclusively on the phrase “unless within five days.” However, a plaintiff can choose not to respond to the demand, so the defendant may be sitting and waiting for nothing. In our view, the five-day window is a time limit on the plaintiff only, and the defendant is not required to refrain from doing anything during that period. Instead, the limits placed on a defendant under CPLR 511 (b) — other than the 15-day limit to move for change of venue — are contingent on whatever response the plaintiff may provide, rather than a five-day time period. While the five days are a limit on the plaintiff’s ability to respond to the demand, the defendant retains the ability to make the venue motion “unless . . . [the] plaintiff serves a written consent” agreeing to the venue selected by the defendant (CPLR 511 [b]). In other words, the important occurrence for the defendant is the plaintiff granting consent, not the passage of days. If the plaintiff consents to the demanded change in venue, the defendant may not move for such relief. In a situation where the defendant made a motion before the end of the plaintiff’s five-day response window and the plaintiff thereafter consented, the defendant would have to withdraw the motion (which would be unnecessary at that point anyway). Matter of Aaron v Steele, 2018 NY Slip Op 07393, Third Dept 11-1-18

CIVIL PROCEDURE (VENUE, THE PHRASE ‘WITHIN FIVE DAYS’ IN CPLR 511, A CHANGE OF VENUE STATUTE, DOES NOT IMPOSE A WAITING PERIOD FOR A MOTION TO CHANGE VENUE, THE MOTION MAY BE MADE WITHIN THE FIVE DAYS (THIRD DEPT))/CPLR 511 (VENUE, THE PHRASE ‘WITHIN FIVE DAYS’ IN CPLR 511, A CHANGE OF VENUE STATUTE, DOES NOT IMPOSE A WAITING PERIOD FOR A MOTION TO CHANGE VENUE, THE MOTION MAY BE MADE WITHIN THE FIVE DAYS (THIRD DEPT))/VENUE (THE PHRASE ‘WITHIN FIVE DAYS’ IN CPLR 511, A CHANGE OF VENUE STATUTE, DOES NOT IMPOSE A WAITING PERIOD FOR A MOTION TO CHANGE VENUE, THE MOTION MAY BE MADE WITHIN THE FIVE DAYS (THIRD DEPT))

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PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the defendant general contractor’s motion to dismiss the complaint brought by plaintiff subcontractor, based upon the subcontractor’s failure to allege it was licensed to do home improvement work, should have been granted:

“Pursuant to CPLR 3015(e), a complaint that seeks to recover damages for breach of a home improvement contract or to recover in quantum meruit for home improvement services is subject to dismissal under CPLR 3211(a)(7) if it does not allege compliance with the licensing requirement” … . Moreover, a home improvement contractor who fails to possess and plead possession of a valid license as required by relevant laws may not commence an action to foreclose a mechanic’s lien … .

Here, the complaint did not allege that the plaintiff was duly licensed in the Town of East Hampton at the time the services were rendered … . Moreover, in opposition to the defendants’ motion, the plaintiff did not dispute that it did not possess the necessary license. The plaintiff’s contention that the work it performed was not for home improvement but, rather, was for the construction of a new home for which a home improvement contracting license was not necessary, is without merit. The Town Code defines “home improvement” as including, inter alia, “[n]ew home construction” … . Moreover, contrary to the plaintiff’s contention, the defendants are entitled to the protection of CPLR 3015(e) and the applicable licensing requirements … . Kristeel, Inc. v Seaview Dev. Corp., 2018 NY Slip Op 07296, Second Dept 10-31-18

CIVIL PROCEDURE (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/CPLR 3015 (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/HOME IMPROVEMENT CONTRACTS (PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/CONTRACT LAW (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/LIEN LAW (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/MECHANIC’S LIENS (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/MUNICIPAL LAW (LICENSES, HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))/LICENSES  (HOME IMPROVEMENT CONTRACTS, PLAINTIFF CONTRACTOR DID NOT ALLEGE IT WAS LICENSED TO DO HOME IMPROVEMENT WORK IN ITS COMPLAINT ALLEGING BREACH OF CONTRACT AND SEEKING TO FORECLOSE ON A MECHANIC’S LIEN, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT))

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STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT).

he Second Department determined a stipulation of settlement entered by plaintiff’s attorney was a binding contract. The fact that plaintiff changed her mind before the stipulation was filed was of no consequence. Plaintiff made no effort to demonstrate the contract was invalid due to duress, fraud, mistake or overreaching:

We agree with the Supreme Court’s determination to deny the plaintiff’s motion, inter alia, to vacate the stipulation of discontinuance. CPLR 2104 provides that, “[a]n agreement between parties or their attorneys relating to any matter in an action, other than one between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered.” Here, there is no dispute that on October 30, 2015, the plaintiff’s former counsel had actual authority from his client to enter into the stipulation discontinuing the action on her behalf … . Contrary to the plaintiff’s contention, the stipulation of discontinuance clearly evidenced the plaintiff’s intent to discontinue the action as of October 30, 2015, notwithstanding that she changed her mind prior to the filing of the stipulation on November 2, 2015 … , even though it did not effect a discontinuance until it was filed with the clerk of the court on November 2, 2015 (CPLR 3217[a][2]). In seeking to vacate the stipulation, the plaintiff failed to meet her burden to establish good cause sufficient to invalidate a contract, such as that the stipulation was the result of duress, fraud, mistake, or overreaching, or that the terms of the stipulation were unconscionable … . Demetriou v Wolfer, 2018 NY Slip Op 07288, Second Dept 10-31-18

CIVIL PROCEDURE (STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT))/DISCONTINUANCE (STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT))/STIPULATIONS (STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT))/CONTRACT LAW (STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT))/CPLR 2103, CPLR 3217 (STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT))/ATTORNEYS STIPULATION OF DISCONTINUANCE ENTERED INTO BY PLAINTIFF’S ATTORNEY COULD NOT BE INVALIDATED, EVEN THOUGH PLAINTIFF CHANGED HER MIND BEFORE THE STIPULATION WAS FILED, NO EVIDENCE OF DURESS, FRAUD, MISTAKE, OVERREACHING (SECOND DEPT)

MOTION PAPERS WERE MAILED TO DEFENDANT 20, NOT 21, DAYS BEFORE THE RETURN DATE, THEREFORE THE CROSS MOTION, SERVED SIX DAYS BEFORE THE RETURN DATE, WAS TIMELY (SECOND DEPT). ​

The Second Department, reversing Supreme Court, noted that the denial of a cross motion as untimely was improper because plaintiff did not mail the motion papers 21 days before the return date:

The plaintiff served its motion by regular mail on March 17, 2016, with a return date of April 6, 2016. In order to make effective its demand for seven days’ notice of answering papers or a cross motion (see CPLR 2214[b]; CPLR 2215), the plaintiff was required to have mailed its motion papers at least 21 days prior to the return date (seeCPLR 2103[b][2]; CPLR 2214[b]… ). The plaintiff mailed its motion papers only 20 days before the return date. Thus, the cross motion, which was served six days before the return date, was timely (see CPLR 2215). Zisholtz & Zisholtz, LLP v Mandel, 2018 NY Slip Op 07349, Second Dept 10-31-18

CIVIL PROCEDURE (MOTION PAPERS WERE MAILED TO DEFENDANT 20, NOT 21, DAYS BEFORE THE RETURN DATE, THEREFORE THE CROSS MOTION, SERVED SIX DAYS BEFORE THE RETURN DATE, WAS TIMELY (SECOND DEPT))/CROSS MOTIONS (MOTION PAPERS WERE MAILED TO DEFENDANT 20, NOT 21, DAYS BEFORE THE RETURN DATE, THEREFORE THE CROSS MOTION, SERVED SIX DAYS BEFORE THE RETURN DATE, WAS TIMELY (SECOND DEPT))/CPLR 2013, 2014, 2015 (MOTION PAPERS WERE MAILED TO DEFENDANT 20, NOT 21, DAYS BEFORE THE RETURN DATE, THEREFORE THE CROSS MOTION, SERVED SIX DAYS BEFORE THE RETURN DATE, WAS TIMELY (SECOND DEPT))

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THE ARBITRATOR-PANEL DID NOT HAVE THE AUTHORITY TO RECONSIDER A PARTIAL FINAL AWARD IN THIS DISPUTE BETWEEN AN INSURER AND THE INSURED, THE PANEL INITIALLY FOUND THAT A $10 MILLION SETTLEMENT PAID BY THE INSURED WAS NOT A COVERED LOSS, BUT SUBSEQUENTLY REVERSED ITSELF (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kern, over a dissenting opinion, determined that the arbitrator-panel (JAMS) did not have the power to reconsider its initial finding (called a partial final award or PFA) that the $10 million settlement paid by Allied was not a “loss” within the meaning of the insurance policy issued to Allied by AISLIC. The parties had agreed to first decide whether the settlement constituted a “loss” and then determine the applicable costs stemming from the insured’s defense of the claim against it.  The First Department held that the arbitrator-panel did not have the authority to reconsider the initial PFA and reverse itself (finding that the settlement did actually constitute a “loss”) in the course of considering the defense and indemnification issues:

Here, when the panel reconsidered the PFA, it exceeded its authority based on the common law doctrine of functus officio. The doctrine of functus officio provides that absent an agreement to the contrary, after an arbitrator renders a final award, the arbitrator may not entertain an application to change the award, “except … to correct a deficiency of form or a miscalculation of figures or to eliminate matter not submitted”(…CPLR 7509; CPLR 7511[c]). “In order to be final,’ an arbitration award must be intended by the arbitrators to be their complete determination of all claims submitted to them” … . “Generally, in order for a claim to be completely determined, the arbitrators must have decided not only the issue of liability of a party on the claim, but also the issue of damages” … .

However, “the submission by the parties determines the scope of the arbitrators’ authority” … . Thus, “if the parties agree that the [arbitration] panel is to make a final decision as to part of the dispute, the arbitrators have the authority and responsibility to do so . . . [and] once [the] arbitrators have finally decided the submitted issues, they are, in common-law parlance, functus officio,’ meaning that their authority over those questions is ended” … . American Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 2018 NY Slip Op 07194, First Dept 10-25-18

ARBITRATION (THE ARBITRATOR-PANEL DID NOT HAVE THE AUTHORITY TO RECONSIDER A PARTIAL FINAL AWARD IN THIS DISPUTE BETWEEN AN INSURER AND THE INSURED, THE PANEL INITIALLY FOUND THAT A $10 MILLION SETTLEMENT PAID BY THE INSURED WAS NOT A COVERED LOSS, BUT SUBSEQUENTLY REVERSED ITSELF (FIRST DEPT))/INSURANCE LAW (ARBITRATION, THE ARBITRATOR-PANEL DID NOT HAVE THE AUTHORITY TO RECONSIDER A PARTIAL FINAL AWARD IN THIS DISPUTE BETWEEN AN INSURER AND THE INSURED, THE PANEL INITIALLY FOUND THAT A $10 MILLION SETTLEMENT PAID BY THE INSURED WAS NOT A COVERED LOSS, BUT SUBSEQUENTLY REVERSED ITSELF (FIRST DEPT))/CIVIL PROCEDURE (ARBITRATION, THE ARBITRATOR-PANEL DID NOT HAVE THE AUTHORITY TO RECONSIDER A PARTIAL FINAL AWARD IN THIS DISPUTE BETWEEN AN INSURER AND THE INSURED, THE PANEL INITIALLY FOUND THAT A $10 MILLION SETTLEMENT PAID BY THE INSURED WAS NOT A COVERED LOSS, BUT SUBSEQUENTLY REVERSED ITSELF (FIRST DEPT))/FUNCTUS OFFICIO (ARBITRATION, THE ARBITRATOR-PANEL DID NOT HAVE THE AUTHORITY TO RECONSIDER A PARTIAL FINAL AWARD IN THIS DISPUTE BETWEEN AN INSURER AND THE INSURED, THE PANEL INITIALLY FOUND THAT A $10 MILLION SETTLEMENT PAID BY THE INSURED WAS NOT A COVERED LOSS, BUT SUBSEQUENTLY REVERSED ITSELF (FIRST DEPT))

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