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PROPER VENUE FOR CONSOLIDATED ACTIONS STARTED IN DIFFERENT COUNTIES IS THE COUNTY WHERE THE FIRST ACTION WAS STARTED.

The Second Department determined the proper venue for consolidated actions which had been started in different counties was the county in which the first action was started:

… [I]n the absence of special circumstances, where the actions have been commenced in different counties, venue should be placed in the county having jurisdiction over the action commenced first … . Since venue properly lies in Richmond County with respect to this action, the first of the three subject actions to be commenced, venue of the action commenced in the Supreme Court, Kings County, and venue of the action commenced in the Civil Court, Queens County, should have been transferred to Richmond County. Oboku v New York City Tr. Auth., 2016 NY Slip Op 05635, 2nd Dept 7-27-16

CIVIL PROCEDURE (PROPER VENUE FOR CONSOLIDATED ACTIONS STARTED IN DIFFERENT COUNTIES IS THE COUNTY WHERE THE FIRST ACTION WAS STARTED)/VENUE (PROPER VENUE FOR CONSOLIDATED ACTIONS STARTED IN DIFFERENT COUNTIES IS THE COUNTY WHERE THE FIRST ACTION WAS STARTED)

ISSUE WHICH WAS NOT RAISED IN THE PRIOR FEDERAL ACTION BUT WHICH CONSTITUTED A COMPLUSORY COUNTERCLAIM UNDER FEDERAL LAW BARRED IN SUBSEQUENT STATE ACTION UNDER DOCTRINE OF RES JUDICATA.

The First Department determined the doctrine of res judicata prohibited litigation in state court of an issue which was not raised but which constituted a compulsory counterclaim in the prior federal action:

 

… [T]he Court of Appeals has provided clear guidance on this issue in Gargiulo v Oppenheim (63 NY2d 843, 845 [1984]), stating in dicta, “For purposes of the disposition of this appeal we assume, without deciding, that under the procedural compulsory counterclaim rule in the Federal Courts (FRCP rule 13[a] [in 28 USC, Appendix]) claim and issue preclusion would extend to bar the later assertion in the present State court action of a contention which could have been raised by way of a counterclaim … . … [W]e conclude that the later assertion in a state court action of a contention that constituted a compulsory counterclaim (FRCP rule 13[a]) in a prior federal action between the same parties is barred under the doctrine of res judicata … . Paramount Pictures Corp. v Allianz Risk Transfer AG, 2016 NY Slip Op 05618, 1st Dept 7-21-16

CIVIL PROCEDURE (ISSUE WHICH WAS NOT RAISED IN THE PRIOR FEDERAL ACTION BUT WHICH CONSTITUTED A COMPLUSORY COUNTERCLAIM UNDER FEDERAL LAW BARRED IN SUBSEQUENT STATE ACTION UNDER DOCTRINE OF RES JUDICATA)/RES JUDICATA (ISSUE WHICH WAS NOT RAISED IN THE PRIOR FEDERAL ACTION BUT WHICH CONSTITUTED A COMPLUSORY COUNTERCLAIM UNDER FEDERAL LAW BARRED IN SUBSEQUENT STATE ACTION UNDER DOCTRINE OF RES JUDICATA)/COUNTERCLAIMS (RES JUDICATA, ISSUE WHICH WAS NOT RAISED IN THE PRIOR FEDERAL ACTION BUT WHICH CONSTITUTED A COMPLUSORY COUNTERCLAIM UNDER FEDERAL LAW BARRED IN SUBSEQUENT STATE ACTION UNDER DOCTRINE OF RES JUDICATA)

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MEMBERSHIP IN LIMITED LIABILITY COMPANY CAN BE REACHED BY A JUDGMENT CREDITOR; CHARGING ORDER, RATHER THAN ASSIGNMENT OF THE MEMBERSHIP INTEREST TO THE CREDITOR, IS AN APPROPRIATE REMEDY.

The Second Department determined a debtor’s membership in a limited liability company can be reached by a judgment creditor. The court further determined that a remedy other than the assignment of the membership interest to the creditor was properly fashioned by Supreme Court:

In considering the remedies available to a judgment creditor such as the petitioner under CPLR article 52, the Supreme Court was not limited to considering the petitioner’s request for an order assigning to him [the debtor’s membership interest in the LLC. CPLR 5240, which was relied upon by the Supreme Court, provides, in pertinent part, that a court “may at any time, on its own initiative or the motion of any interested person, and upon such notice as it may require, make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure” … . This section grants the Supreme Court broad discretionary power to alter the use of procedures set forth in CPLR article 52 … . Limited Liability Company Law § 607 expressly provides that, on an application by a judgment creditor of a member of an LLC, “the court may charge” the debtor’s membership interest “with payment of the unsatisfied amount of the judgment with interest,” and “[t]o the extent so charged, the judgment creditor has only the rights of an assignee of the membership interest.” Thus, CPLR 5240 and Limited Liability Company Law § 607 give the court discretion, in an appropriate case, to issue a charging order instead of, inter alia, an order assigning or turning over the judgment debtor’s membership interest in an LLC to the judgment creditor … . Matter of Sirotkin v Jordan, LLC, 2016 NY Slip Op 05576, 2nd Dept 7-20-16

DEBTOR-CREDITOR (MEMBERSHIP IN LIMITED LIABILITY COMPANY CAN BE REACHED BY A JUDGMENT CREDITOR; CHARGING ORDER, RATHER THAN ASSIGNMENT OF THE MEMBERSHIP INTEREST TO THE CREDITOR, IS AN APPROPRIATE REMEDY)/CIVIL PROCEDURE (DEBTOR-CREDITOR, MEMBERSHIP IN LIMITED LIABILITY COMPANY CAN BE REACHED BY A JUDGMENT CREDITOR; CHARGING ORDER, RATHER THAN ASSIGNMENT OF THE MEMBERSHIP INTEREST TO THE CREDITOR, IS AN APPROPRIATE REMEDY)/LIMITED LIABILITY COMPANY (DEBTOR-CREDITOR, MEMBERSHIP IN LIMITED LIABILITY COMPANY CAN BE REACHED BY A JUDGMENT CREDITOR; CHARGING ORDER, RATHER THAN ASSIGNMENT OF THE MEMBERSHIP INTEREST TO THE CREDITOR, IS AN APPROPRIATE REMEDY)

UNTIMELY MOTION TO INTERVENE SHOULD NOT HAVE BEEN GRANTED.

The Second Department, reversing Supreme Court, determined a motion to intervene in a foreclosure action was untimely and should have been dismissed. The potential intervenor (Shelepers) knew of the foreclosure action at the time the property was transferred to it but waited four months to bring the motion:

Intervention under CPLR 1012 and 1013 requires a timely motion … . Here, Shelepers purchased the subject property with the knowledge that this foreclosure action was pending, and yet it waited over four months before seeking leave to intervene. Under the circumstances of this case, Shelepers’ motion for leave to intervene in the action was untimely … . Castle Peak 2012-1 Loan Trust v Sattar, 2016 NY Slip Op 05111, 2nd Dept 6-29-16

CIVIL PROCEDURE (UNTIMELY MOTION TO INTERVENE SHOULD NOT HAVE BEEN GRANTED)/INTERVENE, MOTION TO (UNTIMELY MOTION TO INTERVENE SHOULD NOT HAVE BEEN GRANTED)

PLAINTIFF NEED NOT SHOW BOTH A JUSTIFIABLE EXCUSE AND A MERITORIOUS CAUSE OF ACTION TO AVOID DISMISSAL FOR NEGLECT TO PROCEED.

The Second Department, reversing Supreme Court, determined the action should not have been dismissed pursuant to CPLR 3216 for neglect to proceed. The court noted that plaintiff need not show both and justifiable excuse and meritorious cause of action to avoid dismissal:

CPLR 3216 is “extremely forgiving” … in that it “never requires, but merely authorizes, the Supreme Court to dismiss a plaintiff's action based on the plaintiff's unreasonable neglect to proceed” … . While the Supreme Court is prohibited from dismissing an action based on neglect to proceed whenever the plaintiff has shown a justifiable excuse for the delay in the prosecution of the action and a potentially meritorious cause of action … , a dual showing of justifiable excuse and meritorious cause of action is not strictly necessary for a plaintiff to avoid dismissal of the action … . Bell v United Parcel Serv., Inc., 2016 NY Slip Op 05110, 2nd Dept 6-29-16

CIVIL PROCEDUR (NEGLECT TO PROCEED, PLAINTIFF NEED NOT SHOW BOTH A JUSTIFIABLE EXCUSE AND A MERITORIOUS CAUSE OF ACTION TO AVOID DISMISSAL FOR NEGLECT TO PROCEED)/NEGLECT TO PROCEED (PLAINTIFF NEED NOT SHOW BOTH A JUSTIFIABLE EXCUSE AND A MERITORIOUS CAUSE OF ACTION TO AVOID DISMISSAL FOR NEGLECT TO PROCEED)/CPLR 3216 (NEGLECT TO PROCEED, PLAINTIFF NEED NOT SHOW BOTH A JUSTIFIABLE EXCUSE AND A MERITORIOUS CAUSE OF ACTION TO AVOID DISMISSAL FOR NEGLECT TO PROCEED)

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DISMISSAL OF COMPLAINT TOO SEVERE A SANCTION FOR SPOLIATION OF EVIDENCE, RELEVANT LAW CLEARLY EXPLAINED.

The First Department determined the trial court correctly found sanctions should be imposed on plaintiff (Arbor) for spoliation of evidence, but the dismissal of the complaint was too severe. The court offered a clear explanation of the relevant law:

“Failures which support a finding of gross negligence, when the duty to preserve electronic data has been triggered, include: (1) the failure to issue a written litigation hold []; (2) the failure to identify all of the key players and to ensure that their electronic and other records are preserved; and (3) the failure to cease the deletion of e-mail” … . Here, the motion court correctly determined that Arbor’s destruction of evidence was, at a minimum, gross negligence, since Arbor failed to institute a formal litigation hold until approximately two years after even Arbor admits it had an obligation to do so. The minutes further reveal the extent to which Arbor failed to identify all of the key players in the loan transaction, and failed to preserve their electronic records. Where, as here, the spoliation is the result of the plaintiff’s intentional destruction or gross negligence, the relevance of the evidence lost or destroyed is presumed … . Plaintiff failed to rebut this presumption. Accordingly, the motion court properly determined an appropriate sanction should be imposed on plaintiff. However, the sanction must reflect “an appropriate balancing under the circumstances,” … . Generally, dismissal of the complaint is warranted only where the spoliated evidence constitutes “the sole means” by which the defendant can establish its defense … , or where the defense was otherwise “fatally compromised” … or defendant is rendered “prejudicially bereft” of its ability to defend as a result of the spoliation … . The record upon renewal does not support such a finding, given the massive document production and the key witnesses that are available to testify … . Accordingly, an adverse inference charge is an appropriate sanction under the circumstances … . Arbor Realty Funding, LLC v Herrick, Feinstein LLP, 2016 NY Slip Op 05065, 1st Dept 6-28-16

CIVIL PROCEDURE (DISMISSAL OF COMPLAINT TOO SEVERE A SANCTION FOR SPOLIATION OF EVIDENCE, RELEVANT LAW CLEARLY EXPLAINED)/EVIDENCE (CIVIL, DISMISSAL OF COMPLAINT TOO SEVERE A SANCTION FOR SPOLIATION OF EVIDENCE, RELEVANT LAW CLEARLY EXPLAINED)/SPOLIATION (DISMISSAL OF COMPLAINT TOO SEVERE A SANCTION FOR SPOLIATION OF EVIDENCE, RELEVANT LAW CLEARLY EXPLAINED)

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STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES IN THIS SLIP AND FALL CASE.

The Fourth Department, over an extensive dissent, determined striking defendant's answer in this slip and fall case was too severe a sanction for failing to preserve evidence, i.e., surveillance tapes:

… [W]e agree with plaintiff that a sanction was warranted inasmuch as defendant “wilfully fail[ed] to disclose information” that the court had ordered to be preserved (CPLR 3126). Nevertheless, we conclude that the court abused its discretion in striking defendant's answer and affirmative defenses. It is well established that “a less drastic sanction than dismissal of the responsible party's pleading may be imposed where[, as here,] the loss does not deprive the nonresponsible party of the means of establishing his or her claim or defense” … . Indeed, we note that the record does not demonstrate that the plaintiff has been ” prejudicially bereft' ” of the means of prosecuting his action … . Thus, we conclude that an appropriate sanction is that an adverse inference charge be given at trial with respect to the unavailable surveillance footage … . Sarach v M&T Bank Corp., 2016 NY Slip Op 04820, 4th Dept 6-17-16

NEGLIGENCE (STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES IN THIS SLIP AND FALL CASE)/CIVIL PROCEDURE (STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES IN THIS SLIP AND FALL CASE)/EVIDENCE (STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES IN THIS SLIP AND FALL CASE)/SLIP AND FALL  (STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES IN THIS SLIP AND FALL CASE)/SURVEILLANCE TAPES (SLIP AND FALL, STRIKING ANSWER TOO SEVERE A SANCTION FOR FAILING TO PRESERVE SURVEILLANCE TAPES)

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PLAINTIFF SUBMITTED POLICE REPORT IN SUPPORT OF SUMMARY JUDGMENT MOTION, REPORT CREATED A QUESTION OF FACT, PLAINTIFF WAIVED ANY OBJECTION TO ITS ADMISSIBILITY BY SUBMITTING IT.

The Second Department determined plaintiff created an issue of fact in this rear-end collision case by submitting a police report indicating defendant driver slid on snow and ice. The court noted plaintiff waived any objection to the admissibility of the report by submitting it in support of plaintiff's motion for summary judgment:

In support of the motion, the plaintiff submitted, inter alia, a copy of the police accident report. The police accident report indicated that the defendant driver stated that snow and ice on the road caused him to hit the plaintiff's vehicle, which demonstrated the existence of a triable issue of fact as to whether the defendant driver had a nonnegligent explanation for his actions … . Since the plaintiff submitted the police report in support of his motion, he waived any objection to its admissibility … . Orcel v Haber, 2016 NY Slip Op 04700, 2nd Dept 6-15-16

NEGLIGENCE (PLAINTIFF SUBMITTED POLICE REPORT IN SUPPORT OF SUMMARY JUDGMENT MOTION, REPORT CREATED A QUESTION OF FACT, PLAINTIFF WAIVED ANY OBJECTION TO ITS ADMISSIBILITY BY SUBMITTING IT)/EVIDENCE (POLICE REPORT, SUMMARY JUDGMENT MOTION, PLAINTIFF SUBMITTED POLICE REPORT IN SUPPORT OF SUMMARY JUDGMENT MOTION, REPORT CREATED A QUESTION OF FACT, PLAINTIFF WAIVED ANY OBJECTION TO ITS ADMISSIBILITY BY SUBMITTING IT)/SUMMARY JUDGMENT (PLAINTIFF SUBMITTED POLICE REPORT IN SUPPORT OF SUMMARY JUDGMENT MOTION, REPORT CREATED A QUESTION OF FACT, PLAINTIFF WAIVED ANY OBJECTION TO ITS ADMISSIBILITY BY SUBMITTING IT)/CIVIL PROCEDURE (SUMMARY JUDGMENT MOTION, PLAINTIFF SUBMITTED POLICE REPORT IN SUPPORT OF SUMMARY JUDGMENT MOTION, REPORT CREATED A QUESTION OF FACT, PLAINTIFF WAIVED ANY OBJECTION TO ITS ADMISSIBILITY BY SUBMITTING IT)

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QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW.

The Second Department determined plaintiff special guardian had raised a question of fact about whether the fiduciary tolling rule applied to this breach of fiduciary duty action brought on behalf of her mentally ill brother, thereby rendering the action timely. The court explained the rule and why the issue can be raised for the first time on appeal:

… [T]he plaintiff raised a question of fact as to whether the statute of limitations was tolled pursuant to the fiduciary tolling rule or the “repudiation rule,” under which the “applicable statutory period . . . does not begin to run until the fiduciary has openly repudiated his or her obligation or the relationship has been otherwise terminated” … . Although the plaintiff raises the issue for the first time on appeal, the issue of whether the fiduciary tolling rules applies to the facts as alleged may be reached, since it involves a question of law which appears on the face of the record and which could not have been avoided if raised at the proper juncture … . Franklin v Hafftka, 2016 NY Slip Op 04692, 2nd Dept 6-15-16

CIVIL PROCEDURE (STATUTE OF LIMITATIONS, QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW)/STATUTE OF LIMITATIONS (QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW)/FIDUCIARY TOLLING RULE (STATUTE OF LIMITATIONS, QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW)FIDUCIARY DUTY, BREACH OF (STATUTE OF LIMITATIONS, QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW)/APPEALS (STATUTE OF LIMITATIONS, QUESTION OF FACT WHETHER FIDUCIARY TOLLING RULE EXTENDED STATUTE OF LIMITATIONS; ISSUE CAN BE ADDRESSED ON APPEAL EVEN THOUGH NOT RAISED BELOW)

POLICY MEMORANDUM FROM NEW YORK STATE HEALTH INSURANCE PROGRAM AMOUNTED TO A RULE OR REGULATION WHICH MUST BE FILED WITH THE DEPARTMENT OF STATE; BECAUSE IT WAS NEVER FILED THE FOUR-MONTH STATUTE OF LIMITATIONS TO CONTEST THE POLICY NEVER STARTED TO RUN.

The Third Department determined the four month statute of limitations for challenging a policy announced by the New York State Health Insurance Plan (NYSHIP) never started to run because the policy memorandum amount to a rule or regulation which was never filed with the Department of State:

Here, the policy memorandum broadly and invariably affects “that segment of the ‘general public’ over which” the State respondents have authority, inasmuch as it applies to all individuals eligible for NYSHIP coverage who seek to participate in the health insurance buyout program … . Furthermore, the pronouncement that all those who decline their own NYSHIP coverage are now ineligible for the buyout program if their alternative coverage — e.g., through a spouse — is also a NYSHIP plan, clearly reflects “a firm, rigid, unqualified standard or policy” that effectively “carves out a course of conduct for the future” … . Consequently, we find that the policy memorandum constitutes a “rule or regulation” within the meaning of NY Constitution, article IV, § 8 and Executive Law § 102 (1) (a). As such, it is invalid and without effect until it is filed with the Department of State … . Matter of Plainview-Old Bethpage Congress of Teachers v New York State Health Ins. Plan, 2016 NY Slip Op 04473, 3rd Dept 6-9-16

 

CIVIL PROCEDURE (POLICY MEMORANDUM FROM NEW YORK STATE HEALTH INSURANCE PROGRAM AMOUNTED TO A RULE OR REGULATION WHICH MUST BE FILED WITH THE DEPARTMENT OF STATE, BECAUSE IT WAS NEVER THE FILED FOUR-MONTH STATUTE OF LIMITATIONS TO CONTEST THE POLICY NEVER STARTED TO RUN)/EMPLOYMENT LAW (POLICY MEMORANDUM FROM NEW YORK STATE HEALTH INSURANCE PROGRAM AMOUNTED TO A RULE OR REGULATION WHICH MUST BE FILED WITH THE DEPARTMENT OF STATE, BECAUSE IT WAS NEVER THE FILED FOUR-MONTH STATUTE OF LIMITATIONS TO CONTEST THE POLICY NEVER STARTED TO RUN)

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