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DICTA IN A COURT ORDER WAS NOT A FINDING ON THE MERITS AND THEREFORE COULD NOT BE THE BASIS FOR A DISMISSAL FOUNDED UPON DOCUMENTARY EVIDENCE.

The Second Department, reversing Supreme Court, determined that a court order precluding evidence because of a failure to comply with discovery demands was not documentary evidence which utterly refuted the allegations of legal malpractice in the complaint. Therefore, defendants’ motion to dismiss should not have been granted. Although the order opined that the evidence, had it been produced would not have demonstrated legal malpractice, that portion of the order was dicta:

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… [T]he complaint alleges that the defendants, Anthony P. Gallo, P.C., and Anthony P. Gallo (hereinafter together Gallo), who represented the plaintiff in a prior legal malpractice action against the plaintiff’s former attorneys, Demartin & Rizzo, P.C., and Joseph N. Rizzo, Jr. (hereinafter together Rizzo), negligently failed to respond to certain discovery demands by Rizzo, which resulted in the Supreme Court … precluding the introduction of evidence in the plaintiff’s legal malpractice action against Rizzo (… hereinafter the Rizzo order). The complaint further alleges that, as a result of this evidence being precluded, the court which issued the Rizzo order found that the plaintiff had failed to meet its burden of proof as to the element of damages sustained as a result of Rizzo’s malpractice. * * *

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… [T]he Rizzo order does not utterly refute the allegations in the complaint, nor does it establish a defense as a matter of law. The order concludes, in part, that there was no proof of actual damages presented by the plaintiff, due to the plaintiff’s failure to respond to at least two of Rizzo’s discovery demands, which resulted in the preclusion of the damages evidence. The Rizzo order then states, referring to the precluded evidence, “[m]oreover, even if, arguendo the [c]ourt were to overlook that deficiency, its probative value is highly suspect” … . Contrary to the Supreme Court’s conclusion, this alternate holding, which constitutes dicta, was not a finding on the merits and did not utterly refute the allegations in the complaint against Gallo … . 4777 Food Servs. Corp. v Anthony P. Gallo, P.C., 2017 NY Slip Op 04086, 2nd Dept 5-24-17

 

CIVIL PROCEDURE (DICTA IN A COURT ORDER WAS NOT A FINDING ON THE MERITS AND THEREFORE COULD NOT BE THE BASIS FOR A DISMISSAL FOUNDED UPON DOCUMENTARY EVIDENCE)/EVIDENCE (CIVIL PROCEDURE, DICTA IN A COURT ORDER WAS NOT A FINDING ON THE MERITS AND THEREFORE COULD NOT BE THE BASIS FOR A DISMISSAL FOUNDED UPON DOCUMENTARY EVIDENCE)/DISMISS, MOTION TO (CIVIL PROCEDURE, (DICTA IN A COURT ORDER WAS NOT A FINDING ON THE MERITS AND THEREFORE COULD NOT BE THE BASIS FOR A DISMISSAL FOUNDED UPON DOCUMENTARY EVIDENCE)/DOCUMENTARY EVIDENCE (CIVIL PROCEDURE, MOTION TO DISMISS, DICTA IN A COURT ORDER WAS NOT A FINDING ON THE MERITS AND THEREFORE COULD NOT BE THE BASIS FOR A DISMISSAL FOUNDED UPON DOCUMENTARY EVIDENCE)

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IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE.

The First Department determined Supreme Court should not have limited discovery in this lead-paint exposure case to documents relating solely to the apartments where infant plaintiff resided or spent time. The condition of other portions of the buildings may be relevant to defendants’ notice of the condition of the paint:

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The motion court should not have limited defendants’ production of records pertaining to lead-based paint exposure to the date of exposure and three years prior only in the subject apartments, namely, the apartment in which the infant plaintiff resided and the apartment, in a different building, where she attended day care. “While 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” … .

Plaintiffs allege in their complaint that defendants “knew, should have known, and/or had reason to know that there was deteriorated, defective, flaking, chipping and peeling paint in the Subject Premises [apartments] and the Subject Building,” which “could be harmful to children” … . Yet, despite this knowledge, the complaint alleges that defendants were negligent in performing repairs within the plaintiffs’ residence and the apartment where the infant plaintiff attended day care, and permitted the continued “emission, discharge[], spread and dissemination of lead based paint . . . thus causing the exposure of the infant plaintiff” to the hazardous conditions which were a contributing cause of her lead poisoning. Additionally, since plaintiffs had evidence from the New York City Department of Housing Preservation and Development (HPD), which showed numerous lead paint violations in the subject buildings, and since evidence of lead paint hazards in one part of a building may be relevant to the issues of defendants’ notice of the condition, duties and obligations to the plaintiffs … , plaintiffs’ demand for production of records for lead-based paint violations in the other apartments in the buildings was appropriate … . “Knowledge of a dangerous condition in one portion of the structure may have imposed upon the owners an obligation to examine’ other portions of the structure for defects arising from the same cause, and to ascertain what was ascertainable with the exercise of reasonable care” … . The fact that plaintiffs may have been able to access some evidence of lead paint violations in the building from HPD does not preclude plaintiffs from seeking these records directly from defendants in discovery … .  Z.D. v MP Mgt., LLC, 2017 NY Slip Op 04059, 1st Dept 5-23-17

 

NEGLIGENCE (IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE)/TOXIC TORTS  (IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE)/CIVIL PROCEDURE (DISCOVERY, IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE)/DISCOVERY  (IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE)/LEAD PAINT  (IN THIS LEAD-PAINT EXPOSURE CASE, DISCOVERY SHOULD NOT HAVE BEEN LIMITED TO DOCUMENTS CONCERNING ONLY THE APARTMENTS INFANT PLAINTIFF SPENT TIME IN, THE CONDITION OF OTHER PORTIONS OF THE BUILDING MAY BE RELEVANT TO DEFENDANTS’ NOTICE)

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NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK.

The First Department determined New York law applies to discovery from PriceWaterhouseCoopers in New York’s suit against Exxon alleging fraud in connection with the company’s knowledge of the causes and effects of global warming. PriceWaterhouseCoopers argued Texas law applied. Texas has an accountant privilege, New York does not:

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In this proceeding arising from an underlying investigation by the NYAG [attorney general]into alleged fraud by respondent Exxon concerning its published climate change information, the motion court properly found that the New York law on privilege, rather than Texas law, applies, and that New York does not recognize an accountant-client privilege.

We reject Exxon’s argument that an interest-balancing analysis is required to decide which state’s choice of law should govern the evidentiary privilege. Our current case law requires that when we are deciding privilege issues, we apply the law of the place where the evidence will be introduced at trial, or the place where the discovery proceeding is located … . In light of our conclusion that New York law applies, we need not decide how this issue would be decided under Texas law. Matter of People of the State of New York v PriceWaterhouseCoopers, LLP, 2017 NY Slip Op 04071, 1st Dept 5-23-17

 

CIVIL PROCEDURE (NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/PRIVILEGE (ACCOUNTANT PRIVILEGE, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/DISCOVERY (CIVIL PROCEDURE, CHOICE OF LAW, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/PRIVILEGE (ACCOUNTANT PRIVILEGE, CHOICE OF LAW, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/ACCOUNTANT PRIVILEGE (NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/CHOICE OF LAW (ACCOUNTANT PRIVILEGE, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/ENVIRONMENTAL LAW  (EXXON, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/GLOBAL WARMING (EXXON, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)/EXXON (GLOBAL WARMING, NEW YORK LAW APPLIES TO DISCOVERY IN THIS SUIT BY THE ATTORNEY GENERAL AGAINST EXXON ALLEGING FRAUD IN CONNECTION WITH EXXON’S KNOWLEDGE OF THE CAUSES AND EFFECTS OF GLOBAL WARMING, NO ACCOUNTANT PRIVILEGE IN NEW YORK)

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PLAINTIFF DID NOT HAVE STANDING TO CONTEST PROPERTY TRANSFER TO HER BROTHER BY HER MOTHER BASED UPON AN ALLEGATION MOTHER LACKED MENTAL CAPACITY AT THE TIME OF THE TRANSFER, PLAINTIFF HAD ONLY A POTENTIAL, SPECULATIVE INTEREST IN HER MOTHER’S PROPERTY.

The Second Department, reversing Supreme Court, determined plaintiff did not have standing to bring an action against her brother based upon allegations her brother, who had a power of attorney for their mother, had been unjustly enriched by the transfer of mother’s property to him:

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The plaintiff, claiming that the mother lacked mental capacity at the time of the transfer, commenced this action against the defendant asserting causes of action to impose a constructive trust, to recover damages for unjust enrichment, for an accounting, and for “appointment of [a] guardian ad litem” for the mother. The defendant moved, inter alia, for summary judgment dismissing the complaint, asserting, among other things, that the plaintiff lacked standing. The Supreme Court denied the motion.

“[S]tanding requires an inquiry into whether the litigant has an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request'” … . Thus, to demonstrate standing, a plaintiff must “establish that he or she will actually be harmed by the challenged action, and that the injury is more than conjectural” … . “The rules governing standing help courts separate the tangible from the abstract or speculative injury” … .

Here, the defendant demonstrated his prima facie entitlement to judgment as a matter of law on the basis that the plaintiff lacked standing to commence this action. “While [the] mother was alive, she had the absolute right to change her intentions regarding the distribution of her assets” … . Accordingly, the plaintiff’s interest in the subject real property and the mother’s other assets was merely a “potential, speculative interest,” insufficient to give rise to standing … . Jacob v Conway, 2017 NY Slip Op 03936, 2nd Dept 5-17-17

 

TRUSTS AND ESTATES (PLAINTIFF DID NOT HAVE STANDING TO CONTEST PROPERTY TRANSFER TO HER BROTHER BY HER MOTHER BASED UPON AN ALLEGATION MOTHER LACKED MENTAL CAPACITY AT THE TIME OF THE TRANSFER, PLAINTIFF HAD ONLY A POTENTIAL, SPECULATIVE INTEREST IN HER MOTHER’S PROPERTY)/CIVIL PROCEDURE (STANDING, PLAINTIFF DID NOT HAVE STANDING TO CONTEST PROPERTY TRANSFER TO HER BROTHER BY HER MOTHER BASED UPON AN ALLEGATION MOTHER LACKED MENTAL CAPACITY AT THE TIME OF THE TRANSFER, PLAINTIFF HAD ONLY A POTENTIAL, SPECULATIVE INTEREST IN HER MOTHER’S PROPERTY)/STANDING (TRUSTS AND ESTATES,  PLAINTIFF DID NOT HAVE STANDING TO CONTEST PROPERTY TRANSFER TO HER BROTHER BY HER MOTHER BASED UPON AN ALLEGATION MOTHER LACKED MENTAL CAPACITY AT THE TIME OF THE TRANSFER, PLAINTIFF HAD ONLY A POTENTIAL, SPECULATIVE INTEREST IN HER MOTHER’S PROPERTY)

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MOTION TO RENEW PROPERLY USED TO CORRECT DEFECT IN INITIAL PAPERS (DEPOSITION TRANSCRIPTS UNSIGNED), PLAINTIFF RAISED A QUESTION OF FACT WHETHER DEFENDANT BAR SERVED DRIVER WHEN HE WAS VISIBLY INTOXICATED (DRAM SHOP ACT).

The Second Department, reversing Supreme Court, determined a question of fact had been raised whether defendant bar (Danu) served the driver of the car in which plaintiff was injured when the driver was visibly intoxicated (Dram Shop Act). The court noted that defendant’s motion to renew its motion for summary judgment to correct a defect in the initial motion papers (the deposition transcripts were unsigned) was proper:

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“CPLR 2221(e) has not been construed so narrowly as to disqualify, as new facts not offered on the prior motion, facts contained in a document originally rejected for consideration because the document was not in admissible form” … . Here, Danu’s failure to provide signed copies of the deposition transcripts with the original summary judgment motion was tantamount to law office failure, which constituted a reasonable justification… . Thus, the Supreme Court properly granted that branch of Danu’s motion which was for leave to renew. * * *

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… [T]he plaintiff raised a triable issue of fact as to whether Danu’s bartenders, who were not presented for deposition, served alcohol to the driver while he was visibly intoxicated. Proof of a high blood alcohol content does not, in and of itself, “provide a sound basis for drawing inferences about a person’s appearance or demeanor” … . Nonetheless, “[p]roof of visible intoxication can be established by circumstantial evidence, including expert and eyewitness testimony”… .

The plaintiff submitted a transcript of the driver’s plea of guilty to aggravated driving while intoxicated and related crimes, which established that the driver recalled drinking “a few” mixed drinks prior to the accident and that his blood alcohol content was over .18%. The plaintiff also relies on a police report indicating that, after the accident, the driver was “observed to be intoxicated and placed under arrest.” Although Danu now argues that the police report is inadmissible, it submitted the report with its reply papers on the original motion. Thus, Danu waived any objection to its admissibility, and on appeal the plaintiff may rely upon the report in opposition to Danu’s summary judgment motion … . Trigoso v Correa, 2017 NY Slip Op 03983, 2nd Dept 5-17-17

 

NEGLIGENCE (PLAINTIFF RAISED A QUESTION OF FACT WHETHER DEFENDANT BAR SERVED DRIVER WHEN HE WAS VISIBLY INTOXICATED (DRAM SHOP ACT))/CIVIL PROCEDURE (MOTION TO RENEW PROPERLY USED TO CORRECT DEFECT IN INITIAL PAPERS (DEPOSITION TRANSCRIPTS UNSIGNED))/DRAM SHOP ACT (PLAINTIFF RAISED A QUESTION OF FACT WHETHER DEFENDANT BAR SERVED DRIVER WHEN HE WAS VISIBLY INTOXICATED (DRAM SHOP ACT))/EVIDENCE (PLAINTIFF RAISED A QUESTION OF FACT WHETHER DEFENDANT BAR SERVED DRIVER WHEN HE WAS VISIBLY INTOXICATED (DRAM SHOP ACT))/RENEW, MOTION TO (MOTION TO RENEW PROPERLY USED TO CORRECT DEFECT IN INITIAL PAPERS (DEPOSITION TRANSCRIPTS UNSIGNED))

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PLAINTIFF’S MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED.

The Second Department, reversing (modifying) Supreme Court, determined plaintiff’s motion to set aside the verdict as against the weight of the evidence should have been granted in this car-bus collision case. Plaintiff testified he had a green light. The bus driver (Puntarich) testified he had a green turn arrow. The jury found the bus driver negligent but his negligence was not the proximate cause of the accident. The Second Department noted that, because of the conflicting factual allegations, a motion to set aside the verdict as a matter of law could not be granted:

“A jury finding that a party was negligent but that the negligence was not a proximate cause of the accident is inconsistent and against the weight of the evidence only when the issues are so inextricably interwoven as to make it logically impossible to find negligence without also finding proximate cause'” … . Under the circumstances of this case, the Supreme Court should have granted that branch of the plaintiff’s motion which was to set aside the verdict as contrary to the weight of the evidence, as the finding that Puntarich’s negligence was not a proximate cause of the accident did not rest upon a fair interpretation of the credible evidence … . However, that branch of the plaintiff’s motion which was to set aside the verdict and for judgment as a matter of law was properly denied, as issues of fact exist as to whether the plaintiff also was at fault in causing the accident … .  Mancini v Metropolitan Suburban Bus Auth., 2017 NY Slip Op 03939, 2nd Dept 5-17-17

NEGLIGENCE (PLAINTIFF’S MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED)/CIVIL PROCEDURE (MOTION TO SET ASIDE THE VERDICT, NEGLIGENCE, PLAINTIFF’S MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED)/VERDICT, MOTION TO SET ASIDE (NEGLIGENCE, PLAINTIFF’S MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED)/EVIDENCE (MOTION TO SET ASIDE THE VERDICT, NEGLIGENCE, PLAINTIFF’S MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED)

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REQUIREMENTS OF BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE NOT MET, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SEEKING PAYMENT OF A NOTE SHOULD NOT HAVE BEEN GRANTED.

The Second Department, reversing Supreme Court, determined plaintiff, seeking payment of a note, did not submit proof of the payment history of the note in admissible form (requirements of the business records exception to the hearsay rule not met). Therefore plaintiff’s motion for summary judgment should not have been granted:

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… [T]he plaintiff failed to demonstrate the admissibility of the records relied upon by its account officer under the business records exception to the hearsay rule (see CPLR 4518[a]), and thus, failed to establish a default in payment under the note. “A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures” … . Here, the plaintiff’s account officer did not allege that she was personally familiar with HSBC’s record keeping practices and procedures, and thus failed to lay a proper foundation for the admission of records concerning the payment history under the note … . Inasmuch as the plaintiff’s motion was based on evidence that was not in admissible form, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law … . Cadlerock Joint Venture, L.P. v Trombley, 2017 NY Slip Op 03927, 2nd Dept 5-17-17

CIVIL PROCEDURE (BUSINESS RECORDS EXCEPTION TO HEARSAY RULE, REQUIREMENTS OF BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE NOT MET, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SEEKING PAYMENT OF A NOTE SHOULD NOT HAVE BEEN GRANTED)/EVIDENCE (BUSINESS RECORDS EXCEPTION TO HEARSAY RULE, REQUIREMENTS OF BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE NOT MET, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SEEKING PAYMENT OF A NOTE SHOULD NOT HAVE BEEN GRANTED)/DEBTOR-CREDITOR (BUSINESS RECORDS EXCEPTION TO HEARSAY RULE, REQUIREMENTS OF BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE NOT MET, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SEEKING PAYMENT OF A NOTE SHOULD NOT HAVE BEEN GRANTED)

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CAUSE OF ACTION BASED UPON A LOAN PAYABLE UPON DEMAND ACCRUES WHEN THE LOAN IS MADE.

The Second Department determined plaintiff’s causes of action based upon loans repayable on demand accrued when the loan was made, rendering them time-barred, despite the provision that payment became due three months after a demand for payment:

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Here, the parties’ agreement … provided that the sums loaned to the defendants were repayable on demand. Accordingly, the plaintiff possessed a legal right to demand payment at the time that each loan was advanced to the defendants, and the statute of limitations began to run at each of those respective times … . Contrary to the plaintiff’s contention, the three-month period for repayment following a demand did not constitute a condition that had to be fulfilled before the right to final payment arose… . Accordingly, the Supreme Court properly granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss as time-barred so much of the first cause of action as was predicated upon loans that allegedly were made more than six years prior to the commencement of the action. Elia v Perla, 2017 NY Slip Op 03930, 2nd Dept 5-17-17

CIVIL PROCEDURE (STATUTE OF LIMITATIONS, CAUSE OF ACTION BASED UPON A LOAN PAYABLE UPON DEMAND ACCRUES WHEN THE LOAN IS MADE)/DEBTOR-CREDITOR (LOAN PAYABLE UPON DEMAND, CAUSE OF ACTION BASED UPON A LOAN PAYABLE UPON DEMAND ACCRUES WHEN THE LOAN IS MADE)

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CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD.

The First Department, in an issue-rich decision which is sparse on facts, determined several jurisdiction and choice of law issues in a complex lawsuit involving a great many inter-related international corporations and allegations of fraud. One of the many jurisdiction issues discussed is so-called “conspiracy jurisdiction;” a sample of that discussion follows:

The remaining possibility for obtaining jurisdiction over defendants-appellants is conspiracy jurisdiction … . Defendants contend that the complaint does not allege an agreement by the Citco defendants to participate in a conspiracy to defraud Massachusetts Bay Transportation Authority Retirement Fund (MBTARF) and that MBTARF failed to identify an overt act. However, we find that the complaint contains factual allegations from which such an agreement can be inferred … . It also alleges an overt act, namely, that alleged co-conspirators Mr. Fletcher and FAM took $7.1 million of MBTARF’s investment in nonparty Fletcher Fixed Income Alpha Fund, Ltd. (Alpha) and used it in violation of Alpha’s offering memorandum as partial repayment of Leveraged’s loan to Citco Bank and SFT … .

Turning to the additional requirements for conspiracy jurisdiction … , we must examine Leveraged’s and Fletcher Income Arbitrage Fund Ltd. (Arbitrage)’s conspiracy claims with respect to personal jurisdiction. Leveraged and Arbitrage’s conspiracy claims allege that Mr. Fletcher and FAM fraudulently transferred cash from plaintiff Fletcher International, Ltd. to Unternaehrer in the FIP Transaction. The transfer was made by instructing SFT to transfer money from FIP’s account to Citco Bank’s account at HSBC New York, for further credit to SFT, for further credit to Unternaehrer. Using a New York bank account for a fraudulent scheme constitutes a tort within New York … .

MBTARF’s conspiracy claim alleges that Mr. Fletcher and FAM made misrepresentations to it about how its investment would be used. It also alleges that they diverted its money. Drawing inferences in favor of plaintiffs … , we find that the misrepresentation and diversion occurred in New York because FAM and Mr. Fletcher were located there.

We find that the additional Lawati factors (102 AD3d at 428) are satisfied as to Citco Group but not Citco Global. Since Citco Group is the parent, it is logical to infer that Citco Cayman (a New York co-conspirator because it has not contested jurisdiction) acted under its control. However, since Citco Global is only a sibling of Citco Cayman, it is not as logical to infer that Citco Cayman acted under Citco Global’s control. FIA Leveraged Fund Ltd. v Grant Thornton LLP, 2017 NY Slip Op 03887, 1st Dept 5-16-17

 

CIVIL PROCEDURE (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/JURISDICTION  (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CONSPIRACY JURISDICTION (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CORPORATION LAW (JURISDICTION, CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/FRAUD (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)

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ALTHOUGH MOST OF THE CAUSES OF ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES WERE TIME-BARRED, A LIMITED BACKSTOP GUARANTY CAUSE OF ACTION AND A FAILURE TO NOTIFY CAUSE OF ACTION WERE REINSTATED.

The First Department, in a full-fledged opinion by Justice Moskowitz, reinstated a couple of causes of action in a lawsuit stemming from the purchase of residential mortgage-backed securities, the bulk of which was deemed time-barred. A limited backstop guaranty cause of action and a cause of action stemming from the failure to notify of a material breach were reinstated. The intertwined contracts and guarantees and the legal reasoning stemming from recent similar cases are too detailed to fairly summarize here. Bank of N.Y. Mellon v WMC Mtge., LLC, 2017 NY Slip Op 03881, 1st Dept 5-11-17

 

SECURITIES (RESIDENTIAL MORTGAGE-BACKED SECURITIES, ALTHOUGH MOST OF THE CAUSES OF ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES WERE TIME-BARRED, A LIMITED BACKSTOP GUARANTY CAUSE OF ACTION AND A FAILURE TO NOTIFY CAUSE OF ACTION WERE REINSTATED)/CONTRACT LAW (RESIDENTIAL MORTGAGE-BACKED SECURITIES, ALTHOUGH MOST OF THE CAUSES OF ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES WERE TIME-BARRED, A LIMITED BACKSTOP GUARANTY CAUSE OF ACTION AND A FAILURE TO NOTIFY CAUSE OF ACTION WERE REINSTATED)/RESIDENTIAL MORTGAGE-BACKED SECURITIES (RESIDENTIAL MORTGAGE-BACKED SECURITIES, ALTHOUGH MOST OF THE CAUSES OF ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES WERE TIME-BARRED, A LIMITED BACKSTOP GUARANTY CAUSE OF ACTION AND A FAILURE TO NOTIFY CAUSE OF ACTION WERE REINSTATED)/CIVIL PROCEDURE (RESIDENTIAL MORTGAGE-BACKED SECURITIES, ALTHOUGH MOST OF THE CAUSES OF ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES WERE TIME-BARRED, A LIMITED BACKSTOP GUARANTY CAUSE OF ACTION AND A FAILURE TO NOTIFY CAUSE OF ACTION WERE REINSTATED)

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