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THE PETITIONER WAS ENTITLED TO A HEARING ON WHETHER HIS ACKNOWLEDGMENT OF PATERNITY WAS BASED ON A MISREPRESENTATION BY MOTHER AND WHETHER PETITIONER IS ESTOPPED FROM DENYING PATERNITY BASED ON THE BEST INTERESTS OF THE CHILD (SECOND DEPT).

The Second Department, reversing Family Court, determined the petitioner was entitled to a hearing on the issues of whether petitioner’s (appellant’s) acknowledgment of paternity was procured by a misrepresentation by mother and, if so, whether the petitioner should be estopped from challenging the acknowledgment based on the best interests of the child. As is often the case in Family Court reversals, the failure to hold a hearing is the problem:

“Where . . . a party seeks to challenge an acknowledgment of paternity more than 60 days after its execution, Family Court Act § 516-a(b) requires the court to conduct a hearing to determine the issues of fraud, duress, or a material mistake of fact [in the execution of the acknowledgment of paternity] before ordering a [genetic marker test]” … . “In the event the court determines that a valid ground for vacatur of the acknowledgment exists, the issue of whether the petitioner should be estopped, in accordance with the child’s best interest, from vacating the acknowledgment of paternity, must [then also] be evaluated at a hearing” … . * * *

Here, the issue of the appellant’s paternity was not actually litigated in connection with the prior proceedings … . The Family Court’s findings … that the appellant, … would have been equitably estopped from seeking vacatur of the acknowledgment of paternity, were made without a hearing, during an appearance on the appellant’s petitions to modify custody and visitation, when, in response to the appellant raising the issue of his attempts to vacate the acknowledgment of paternity, the attorney for the child indicated that the child viewed the appellant as her father. Thus, contrary to the court’s determination, the doctrine of collateral estoppel is inapplicable … . Matter of Stephen B.J.B. v Marcia N.S.C., 2025 NY Slip Op 01921, Second Dept 4-2-25

Practice Point: The most frequent basis for Family Court reversals is the judge’s failure to hold a hearing before making a ruling.

 

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FAMILY COURT LOST SUBJECT MATTER JURISDICTION AFTER THE NEGLECT PETITION WAS DISMISSED; THEREFORE THE COURT SHOULD NOT HAVE CONTINUED THE CHILD’S PLACEMENT IN FOSTER CARE (FIRST DEPT).

The First Department, reversing Family Court, in a full-fledged opinion by Justice Gesmer, determined Family Court lost subject matter jurisdiction after the neglect petition against mother was dismissed. Therefore the child’s placement in foster should not have been continued by the court. The First Department also noted that mother’s mental-health records from the period after the filing and after the dismissal of the neglect petition were improperly admitted:

We … find that Family Court lacked subject matter jurisdiction to continue R.C.’s foster care placement for the reasons articulated in Matter of Jamie J. (Michelle E.C.) (30 NY3d 275 [2017]), in which the Court of Appeals held that “Family Court’s jurisdiction terminates upon dismissal of the original neglect or abuse petition” … .

The “court’s lack of subject matter jurisdiction is not waivable, but may be raised at any stage of the action, and the court may . . . on its own motion . . . at any time, when its attention is called to the facts, refuse to proceed further and dismiss the action” … .

Here, once the neglect petition against the mother was dismissed, Family Court lacked subject matter jurisdiction to continue the child’s temporary removal from the mother’s care and placement in foster care … . Accordingly, it should have immediately returned the child to the mother’s care and terminated the child’s foster care placement. It erred when it determined that it could hold permanency hearings based on the pending neglect petition against the putative father, since the child was not removed from his care, but from the mother’s. … Indeed, there is no evidence in the record that the child ever resided with the putative father and no indication that he ever sought custody of the child.

Furthermore, we find that the failure of Family Court to immediately return the child to the care of the mother after the dismissal of the neglect petition against her—as well as the subsequent protracted proceedings, including the dispositional hearing, which lasted nearly a year and a half—violated her due process rights … . Matter of R.C. (D.C.–R.R.), 2025 NY Slip Op 01859, First Dept 3-27-25

Practice Point: Here Family Court lost subject matter jurisdiction after the neglect petition against mother was dismissed and did not have the authority to continue the child’s placement in foster care.

Practice Point: The protracted proceedings after the dismissal of the neglect petition, during which the child remained in foster care, violated mother’s right to due process.

 

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THE COMPLAINT SUFFICIENTLY ALLEGED FACTS THAT WOULD SUPPORT PIERCING THE CORPORATE VEIL (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the cause of action alleging that the corporate veil should be pierced should not have been dismissed. The complaint alleged failure to adhere to LLC formalities, inadequate capitalization, commingling of assets, and the personal use of LLC funds:

“To survive a motion to dismiss the complaint, a party seeking to pierce the corporate veil must allege facts that, if proved, establish that the party against whom the doctrine is asserted (1) exercised complete domination over the corporation with respect to the transaction at issue, and (2) through such domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the plaintiff such that a court in equity will intervene” … . “Factors to be considered in determining whether an individual has abused the privilege of doing business in the corporate or LLC form include the failure to adhere to LLC formalities, inadequate capitalization, commingling of assets, and the personal use of LLC funds” … . “Additionally, the corporate veil will be pierced to achieve equity, even absent fraud, when a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator’s business instead of its own and can be called the other’s alter ego” … . “[A] fact-laden claim to pierce the corporate veil is unsuited for resolution on a pre-answer, pre-discovery motion to dismiss” … . Goldberg v KOSL Bldg. Group, LLC, 2025 NY Slip Op 01790, Second Dept 3-26-25

Practice Point: Here the allegations in the complaint that defendant failed to adhere to LLC formalities, inadequately capitalized the corporate entities, commingled assets, and personally used LLC funds sufficiently supported plaintiff’s seeking to pierce the corporate veil.

 

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PLAINTIFF ALLEGED DEFENDANT HOSPITAL WAS NEGLIGENT IN PLACING HIM IN A ROOM WITH A PERSON WITH COVID; PLAINTIFF WAS ENTITLED TO DISCOVERY OF THAT PERSON’S MEDICAL RECORDS TO DETERMINE WHEN THE HOSPITAL BECAME AWARE OF THE COVID DIAGNOSIS (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff was entitled to discovery of another’s medical records. Plaintiff alleged the hospital was negligent in placing plaintiff in a room with a person with COVID. The sought medical records may reveal when the hospital became aware of the COVID diagnosis:

Although “discovery determinations rest within the sound discretion of the trial court, the Appellate Division is vested with a corresponding power to substitute its own discretion for that of the trial court, even in the absence of abuse” … . CPLR 3101 (a) provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” “What is material and necessary is left to the sound discretion of the lower courts and includes any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason” … .

Pursuant to CPLR 4504 (a), “a person authorized to practice medicine . . . shall not be allowed to disclose any information which [they] acquired in attending a patient in a professional capacity, and which was necessary to enable [them] to act in that capacity.” The physician-patient privilege may be overcome, however, where the plaintiff establishes that the information in the medical records is material and necessary to their claim … . Here, plaintiffs established that the nonparty patient’s hospital records would show when defendant, its agents, servants and employees became aware that the patient had tested positive for COVID-19 and that such information is material and necessary to establish whether defendant had notice that it was placing plaintiff in the same room as a person who had COVID-19 … . Martin v Kaleida Health, 2025 NY Slip Op 01756, Fourth Dept 3-21-25

Practice Point: Here plaintiff was entitled to limited discovery of another’s medical records because the records were “material and necessary to the prosecution of the action.”

 

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IN ORDER TO SEEK COURT REVIEW OF AN ALLEGED VIOLATION OF A COLLECTIVE BARGAINING AGREEMENT BY AN EMPLOYER AND/OR A UNION, AN EMPLOYEE MUST BRING A PLENARY ACTION, NOT AN ARTICLE 78 PROCEEDING (CT APP). ​

The Court of Appeals, in a full-fledged opinion by Judge Wilson, affirming the dismissal of appellant-employee’s Article 78 petition, determined an employee who has exhausted the contractual grievance process and alleges the employer breached a collective bargaining agreement must bring a plenary action, not an Article 78 proceeding, for any further review:

… [W]hen a claim arises under a collective bargaining agreement that creates a mandatory grievance process, the employee “may not sue the employer directly for breach of that agreement but must proceed, through the union, in accordance with the contract. Unless the contract provides otherwise, only when the union fails in its duty of fair representation can the employee go beyond the agreed procedure and litigate a contract issue directly against the employer” … . Allegations that an employer has breached the collective bargaining agreement are contract claims that may not be resolved in an article 78 proceeding … . Thus, when an employee alleges that an employer has breached a term in a collective bargaining agreement, the proper mechanism is a plenary action alleging both breach of contract by the employer and breach of the duty of fair representation by the union … . * * *

The procedure applicable to an employee’s claim depends on the source of the right or benefit the employee asserts. Statutory or constitutional claims are appropriately brought in an article 78 proceeding … . Claims arising exclusively from an alleged breach of a term in a collective bargaining agreement must be brought through a civil action for breach of contract … and must meet the requirements set out in Ambach (70 NY2d at 508). Matter of Dourdounas v City of New York, 2025 NY Slip Op 01671, CtApp 3-20-25

Practice Point: An employee who, after exhausting the grievance mechanism in a collective bargaining agreement, seeks court review of whether the employer and/or the union breached the collective bargaining agreement must bring a plenary action, not an Article 78 proceeding.

 

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TO SUFFICIENTLY ALLEGE THE APPLICABILITY OF THE FRAUD EXCEPTION TO THE FOUR-YEAR LOOKBACK FOR A “FRAUDULENT SCHEME TO INFLATE RENTS” ACTION, THE PLAINTIFF NEED NOT ALLEGE RELIANCE ON A FRAUDULENT REPRESENTATION; IT IS ENOUGH TO ALLEGE SUFFICIENT INDICIA OF FRAUD OR A COLORABLE CLAIM OF FRAUD (CT APP). ​

The Court of Appeals, reversing (modifying) the Appellate Division, in a full-fledged opinion by Judge Garcia, determined that to sufficiently allege the applicability of the fraud exception to the four-year statute of limitations (“lookback” period) in a “fraudulent scheme to inflate rents” action, a plaintiff need not allege satisfaction of each element of common-law fraud (including reliance), rather the plaintiff need only allege “sufficient indicia” of fraud:

… [T]he fraud exception serves a far different purpose than an allegation of common law fraud. The fraud exception, applicable only to an overcharge claim, simply allows for review of the rental history outside the four-year lookback period and then … “solely to ascertain whether fraud occurred—not to furnish evidence for calculation of the base date rent or permit recovery for years of overcharges barred by the statute of limitations” … . The exception operates to protect not only current tenants, who may or may not have relied on a fraudulent representation, but future tenants and the overall rent regulatory system. Requiring that a tenant show reliance on a landlord’s fraudulent representation would exempt an “unscrupulous landlord in collusion with a tenant” from the consequences of engaging in a scheme to evade the law’s protection … . Given the narrow purpose and scope of the fraud exception, there is no basis for imposing the pleading requirements of a common law fraud claim. Instead, we require plaintiffs to put forth “sufficient indicia of fraud” or a “colorable claim” of a fraudulent scheme but do not impose a burden to establish each element of a common law fraud claim.

… [T]o invoke the fraud exception, a plaintiff must allege sufficient indicia of fraud, or a colorable claim of a fraudulent scheme to evade the protections of the rent stabilization laws, to withstand a motion to dismiss on statute of limitations grounds. Such allegations must include more than an assertion that a tenant was overcharged—a mere allegation of a high rent increase is insufficient for the fraud exception to apply … We address only the reliance issue here. On remittal the Appellate Division should apply our established standard—assessing whether plaintiffs’ complaint alleges sufficient indicia of fraud or a colorable claim of a fraudulent scheme “to remove tenants’ apartment from the protections of rent stabilization” … . Burrows v 75-25 153rd St., LLC, 2025 NY Slip Op 01669, CtApp 3-20-25

Practice Point: Consult this opinion for insight into what the complaint must allege to invoke the fraud exception to the four-year lookback period for a “fraudulent scheme to inflate rents” action.

 

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WHERE IT HAS BEEN MORE THAN A YEAR SINCE DEFENDANT FAILED TO ANSWER THE COMPLAINT, THE DEFENDANT IS ENTITLED TO NOTICE BEFORE ENTRY OF A DEFAULT JUDGMENT; HERE THE FAILURE TO GIVE DEFENDANT NOTICE RENDERED THE DEFAULT JUDGMENT A NULLITY (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined it had been more than a year since defendant Callahan had failed to answer the complaint and, therefore, Callahan was entitled to notice before a default judgment could be entered. No notice was given:

“Pursuant to CPLR 3215(g)(1), ‘whenever application [for judgment by default] is made to the court or to the clerk, any defendant who has appeared is entitled to at least five days’ notice of the time and place of the application, and if more than one year has elapsed since the default any defendant who has not appeared is entitled to the same notice unless the court orders otherwise'” … . “[T]he failure to provide a defendant who has appeared in an action with the notice required by CPLR 3215(g)(1), like the failure to provide proper notice of other kinds of motions, is a jurisdictional defect that deprives the court of the authority to entertain a motion for leave to enter a default judgment” … . As such, “‘the failure to provide a defendant with proper notice of a motion renders the resulting order and judgment entered upon that order nullities'” … . Flagstar Bank, FSB v Powers, 2025 NY Slip Op 01610, Second Dept 3-19-25

Practice Point: Where it has been more than a year since defendant failed to answer a complaint, the defendant is entitled to notice before entry of a default judgment. Failure to provide notice renders the judgment a nullity.

 

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THE SIX-MONTH STATUTE OF LIMITATIONS IN THE EMPLOYMENT CONTRACT WITH PLAINTIFF WAS REASONABLE AND ENFORCEABLE; THEREFORE PLAINTIFF’S EMPLOYMENT DISCRIMINATION ACTION, WHICH WAS COMMENCED SIX MONTHS AND ONE DAY AFTER PLAINTIFF’S EMPLOYMENT WAS TERMINATED, WAS TIME-BARRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the six-month statute of limitations in the employment contract with plaintiff was reasonable and enforceable. Therefore plaintiff’s action, which was commenced one day after the six-month limitation period had expired, was time-barred:

“Parties to a contract may agree to limit the period of time within which an action must be commenced to a period shorter than that provided by the applicable statute of limitations” … . “‘[A]n agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to [*2]commence an action is enforceable provided it is in writing'” … . CPLR 201 provides that an action “must be commenced within the time specified in this article unless a different time is prescribed by law or a shorter time is prescribed by written agreement.”

Pursuant to CPLR 3211(a)(5), “‘a moving defendant must establish, prima facie, that the time within which to commence the action has expired'” … . Once this threshold showing is met, the burden then shifts to the plaintiff to “‘raise a question of fact as to whether the statute of limitations was tolled or was otherwise inapplicable, or whether the action was actually commenced within the applicable limitations period'” … .

Here, the defendants produced the employment application, which contained the provision regarding the six-month limitations period and which was signed by the plaintiff. The plaintiff does not dispute that her employment was terminated on November 23, 2021. The defendants therefore established … that the limitations period expired on May 23, 2022. The plaintiff commenced this action on May 24, 2022, one day after the expiration of the limitations period. Salati v Northwell Health, 2025 NY Slip Op 01660, Second Dept 3-19-25

Practice Point: Here the six-month statute of limitations in plaintiff’s employment contract was deemed reasonable and enforceable. Therefore plaintiff’s employment discrimination action, commenced six months and one day after her employment was terminated, was time-barred.

 

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WHEN DEFENDANT’S ATTORNEY WAS SUSPENDED ANY FURTHER PROCEEDINGS IN THIS FORECLOSURE ACTION WERE STAYED; NEITHER PROCEDURE FOR LIFTING THE STAY WAS INVOKED; DEFENDANT’S MOTION TO VACATE SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a stay of the foreclosure action was in effect because of the suspension of defendant McGrath’s attorney. Because plaintiff never served McGrath with the required notice to lift the stay, the summary judgment order should have been vacated:

When an attorney is suspended from the practice of law, “as with an attorney’s death, incapacitation, removal from an action, or other disability, CPLR 321(c) protects the client by automatically staying the action from the date of the disabling event” … . “The express language of CPLR 321(c) sets no particular time limit to the stay of proceedings that is automatically triggered by a qualifying event” … .

“[D]uring the stay imposed by CPLR 321(c), no proceedings against the party will have any adverse effect” … , and “[o]rders or judgments that are rendered in violation of the stay provisions of CPLR 321(c) must be vacated” … .

“[T]here are actually two ways in which a CPLR 321(c) stay may be lifted. One way is if the party that lost its counsel retains new counsel at its own initiative, or otherwise communicates an intention to proceed pro se” … . “The second way is by means of [a] notice procedure pursuant to CPLR 321(c)” … .

Here, the plaintiff did not serve McGrath with the notice to appoint “either personally or in such manner as the court direct[ed]” (CPLR 321[c]). It is undisputed that no attempt was made to personally serve the required notice, nor is it alleged that the Supreme Court directed that service of the notice be made in some other manner … . Moreover, it is undisputed that McGrath did not communicate an intention to proceed pro se … . Therefore, the automatic stay was not lifted until McGrath opposed the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale and cross-moved to vacate the summary judgment order … . HSBC Bank USA, N.A. v McGrath, 2025 NY Slip Op 01614, Second Dept 3-19-25

Practice Point: When a party’s attorney is suspended, the proceedings are automatically stayed. There are two statutory procedures for lifting the stay, neither of which was invoked here.

 

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THE MOTIONS TO AMEND THE COMPLAINT AND JOIN AN ACTION SHOULD HAVE BEEN GRANTED; CRITERIA EXPLAINED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff’s motions to amend the complaint and to join another action should have been granted. The proposed amendment was not time-barred because the original complaint gave notice of the transactions and occurrences upon which the amendment is based. The motion to join another action should have been granted because there were common questions of law or fact and defendants would not be prejudiced:

While a proposed amendment generally is considered patently devoid of merit if it is time-barred under the applicable statute of limitations” … , here, the proposed amendment relates back to the original complaint and is deemed to have been timely interposed because the original complaint gave “notice of the transactions, occurrences, or series of transactions or occurrences” on which the claims in the proposed amended complaint were based (CPLR 203[f] …). [Defendants] failed to establish that they were prejudiced or surprised by the plaintiff’s delay in seeking leave to amend the complaint, as discovery was still ongoing at the time the plaintiff’s motion was made … , the proposed amended complaint was “premised upon the same facts, transactions, or occurrences” alleged in the original complaint … , and the proposed amendment merely elaborated on the same theory of liability alleged in the original complaint … . …

The Supreme Court also improvidently exercised its discretion in denying that branch of the plaintiff’s motion which was pursuant to CPLR 602(a) to join Action No. 2 with Action No. 1 for purposes of trial. “Where common questions of law or fact exist, a motion to consolidate or for a joint trial pursuant to CPLR 602(a) should be granted absent a showing of prejudice to a substantial right by the party opposing the motion” … . Here, Action No. 1 and Action No. 2 both arise from the project, concern the same parties, and involve common questions of law and fact … , and a failure to try the two actions jointly would result in a “duplication of trials, unnecessary costs and expense, and a danger of an injustice resulting from divergent decisions” … . Contrary to the contentions of KGD and OLA, the possibility of prejudice resulting from a joint trial can be mitigated by appropriate jury instructions … , and any potential prejudice is outweighed by the possibility of inconsistent verdicts if separate trials ensue … .  Great Neck Lib. v Kaeyer, Garment & Davidson Architects, P.C., 2025 NY Slip Op 01613, Second Dept 3-19-24

Practice Point: Consult this decision for the criteria for amending a complaint, including a determination whether the amendment is time-barred (it is not if the original complaint gave notice of the transactions or occurrences referenced in the amendment).

Practice Point: Consult this decision for the criteria for consolidating two actions which involve common questions of law or fact.

 

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