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CLASS ACTION SUIT AGAINST EMPLOYER ALLEGING EMPLOYEES WERE ROUTINELY UNDERPAID ALLOWED TO GO FORWARD.

The First Department determined plaintiffs, former and current non-managerial employees of defendant Jenny Craig (weight-loss centers), established commonality (CPLR 901(a)(2)) such that their class action suit could proceed. 751 class members alleged they were regularly underpaid because 30 minutes of pay was routinely deducted for breaks which the employees did not take:

Where, as here, “the same types of subterfuge [were] allegedly employed to pay lower wages,” commonality of the claims will be found to predominate, even though the putative class members have “different levels of damages” … . Class action is an appropriate method of adjudicating wage claims arising from an employer's alleged practice of underpaying employees, given that “the damages allegedly suffered by an individual class member are likely to be insignificant, and the costs of prosecuting individual actions would result in the class members having no realistic day in court … . Weinstein v Jenny Craig Operations, Inc., 2016 NY Slip Op 02932, 1st Dept 4-19-16


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MOTION TO AMEND PLEADINGS BASED ON TRIAL EVIDENCE OF MUTUAL MISTAKE PROPERLY GRANTED, CRITERIA EXPLAINED.

The Third Department determined Supreme Court properly allowed the pleadings to be amended to conform to the evidence at trial. The trial evidence indicated the contract at issue was based upon mutual mistake rather than deliberate misrepresentation. The motion to amend the pleadings to allege mutual mistake was properly granted and the contract was properly rescinded on that ground:

 

The burden was upon defendant, as the party opposing plaintiff's motion, to establish that it was “hindered in the preparation of [its] case or . . . prevented from taking some measure in support of [its] position” … . That burden cannot be met when the difference between the original pleading and the evidence results from “proof admitted at the instance or with the acquiescence of [the opposing] party” .. . Here, the proof upon which plaintiff's motion was based was the testimony of defendant's president that she acted mistakenly in providing the wrong sales figures … . Given this testimony, defendant cannot have been surprised or unduly prejudiced by plaintiff's assertion of the theory of mutual mistake; thus, leave to conform the pleadings to the proof was properly granted … . Lakshmi Grocery & Gas, Inc. v GRJH, Inc., 2016 NY Slip Op 02891, 3rd Dept 4-14-16


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TRIAL COURT SHOULD NOT HAVE SET ASIDE VERDICT IN MALICIOUS PROSECUTION ACTION.

The First Department, in a full-fledged opinion by Justice Kapnick, reversing Supreme Court, reinstated plaintiff's malicious prosecution, 42 USC 1983, punitive damages and attorneys' fees claims. The claims had been dismissed pursuant to defendants' motion to set aside the $4 million jury verdict. Plaintiff had been injured during an arrest which took place just outside plaintiff's residence after he was approached by two police officers, ostensibly for his holding an open can of beer. Plaintiff was ultimately charged only with disorderly conduct which was dismissed at trial at the close of the People's case. The opinion includes an in-depth discussion of the elements of malicious prosecution, including the distinct “lack of probable cause to arrest” and “malice” elements. The court noted that the trial court improperly substituted its own factual judgments for the jury's. The court explained:

The actual malice element “does not require a plaintiff to prove that the defendant was motivated by spite or hatred, although it will of course be satisfied by such proof” … . Since “[a]ctual malice is seldom established by direct evidence of an ulterior motive” … , it “may be proven by circumstantial evidence” … , and depends “upon inferences to be reasonably drawn from the surrounding facts and circumstances” … . Actual malice may also be inferred from a total lack of probable cause … or from defendant's intentionally providing false information to law enforcement authorities … . It is important to note that the lack of probable cause and actual malice elements are independent, and “a jury may, but is not required to, infer the existence of actual malice from the fact that there was no probable cause to initiate the proceeding” … . As a result, it is advisable to separate the questions of probable cause and malice on a verdict sheet … . Here, however, while there was only one question, the trial court did charge the jury on both the elements of probable cause and malice, and instructed the jury that only if they found that “plaintiff [] prove[d] both that the defendants did not have probable cause and that they acted maliciously” (emphasis added) should they move on to consider damages, which they did.

Based on the foregoing, and contrary to the trial court's finding, the jury's verdict on malicious prosecution was improperly set aside as insufficient as a matter of law. It cannot be said that there was no valid line of reasoning that could possibly have led rational people to the conclusion reached by the jury on the basis of the evidence at trial. Moreover, the court impermissibly usurped the jury's role and made factual determinations. The court's statement that the plaintiff “refus[ed] to submit to the authority of the police” is a clear example of the court substituting its judgment for that of the jury. When the facts give rise to conflicting inferences, as they do here, it is for the jury, not the court, to resolve those conflicts. Cardoza v City of New York, 2016 NY Slip Op 02766, 1st Dept 4-12-16


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DESTRUCTION (SPOLIATION) OF EVIDENCE WARRANTED STRIKING THE PLEADINGS.

The First Department determined defendant's pleadings were properly struck because defendant destroyed emails relevant to plaintiff's defamation action:

Defendant undertook an affirmative course of action resulting in destruction of relevant emails, though she represented otherwise during sworn testimony. As the documents received from third-party recipients confirm, the files defendant destroyed are highly relevant and tend to substantiate plaintiffs' claims. Evidence of defendant's willful and prejudicial destruction of evidence warrants the sanction of striking her pleadings … . Where a party disposes of evidence without moving for a protective order, a negative inference may be drawn that the destruction was willful … . Willfulness may also be inferred from a party's repeated failure to comply with discovery directives … . It should also be noted that this Court has upheld the striking of pleadings where the destruction of critical evidence occurs through ordinary negligence … . Chan v Cheung, 2016 NY Slip Op 02731, 1st Dept 4-12-16


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MOVING PARTY CANNOT RELY ON GAPS IN OPPOSING PARTY’S PROOF IN MOTIONS AND CROSS-MOTIONS FOR SUMMARY JUDGMENT; WITNESS-CREDIBILITY SHOULD NOT BE TAKEN INTO ACCOUNT AT THE SUMMARY JUDGMENT STAGE.

The First Department, over a partial dissent, reversing (modifying) Supreme Court, determined neither plaintiff nor defendant was entitled to summary judgment in this contract dispute. Defendant, KLT, represented a concert artist, Akon, who cancelled a performance, allegedly due to illness. The question was whether, under the terms of the contract, plaintiff was entitled to its money back. KLT moved for summary judgment, arguing that the “force majeure” clause applied and plaintiff was not entitled to relief. Plaintiff cross-moved for summary judgment alleging breach of contract. The court found that KLT's proof of Akon's illness was insufficient and summary judgment was properly denied for that reason. The court went on to find Supreme Court should not have granted plaintiff's cross-motion because plaintiff did not demonstrate illness was not the reason for the cancellation of the concert. The decision presents another example of how appellate courts analyze summary judgment motions. Plaintiff could not rely on the gaps in KLT's proof of illness. Rather plaintiff was required to affirmatively prove illness was not the reason for the cancellation. The court further noted that witness-credibility cannot be taken into account at the summary judgment stage (the dissent argued Akon's testimony about illness was not to be believed):

… [P]laintiff, in its cross motion for summary judgment, was required to establish that Akon was able to perform at the concert and was not unable to do so due to sickness. Instead, plaintiff merely pointed to gaps in KLT's evidence — the missing medical records that would have proven Akon was ill, and thus its cross motion was improperly granted … .

The dissent merely points to additional gaps in KLT's evidence, such as proof of travel arrangements to demonstrate Akon intended to travel to Brussels [to perform the concert], and notes the limited value of the affidavit of Akon's surgeon. However, these gaps do not equate to plaintiff meeting its burden to establish an absence of a genuine issue of fact as to whether Akon was ill. Plaintiff acknowledges that it lacks any documentary evidence refuting that Akon was unable to perform, and has no evidence that he was physically capable of performing. The dissent, like the Supreme Court, appears to completely dismiss the value of Akon's deposition testimony, yet it is “not the court's function on a motion for summary judgment to assess credibility” … . Belgium v Mateo Prods., Inc., 2016 NY Slip Op 02730, 1st Dept, 4-12-16


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THE FLAWS IN PLAINTIFF’S PROOF OF STANDING TO BRING THE FORECLOSURE ACTION DID NOT ENTITLE DEFENDANT TO SUMMARY JUDGMENT ON THE CROSS MOTION; SUMMARY JUDGMENT CANNOT BE GRANTED TO A MOVING PARTY BASED UPON FLAWS IN THE OPPOSING PAPERS.

The Second Department, modifying Supreme Court’s order, determined defendant was not entitled to summary judgment in a foreclosure proceeding. Defendant alleged plaintiff, Aurora Loan Services, did not have standing to bring the action (i.e., did not have possession of the note at the time the action was commenced). Aurora Loan Services was unable to demonstrate standing because the evidence submitted did not meet the requirements of the business records exception to the hearsay rule. Aurora’s summary judgment motion was therefore properly denied. However, the flaws in Aurora’s proof of standing did not entitle defendant to summary judgment on defendant’s cross motion. In the summary judgment context, the court first looks only at the moving party’s papers to determine whether the moving party has made a prima facie showing justifying summary judgment. Here the defendant’s papers did not demonstrate Aurora lacked standing. Therefore the cross motion should have been denied, notwithstanding the flaws in the plaintiff’s opposing papers.

… Supreme Court erred in granting the defendant’s cross motion for summary judgment dismissing the complaint insofar as asserted against him for lack of standing and to cancel the notice of pendency filed against the subject property. “[T]he burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied. To defeat a defendant’s motion, the plaintiff has no burden of establishing its standing as a matter of law” … . Here, the defendant, as the moving party, failed to make a prima facie showing that the plaintiff lacked standing … . Aurora Loan Servs., LLC v Mercius, 2016 NY Slip Op 02599, 2nd Dept 4-6-16

FORECLOSURE FLAWS IN PLAINTIFF’S PROOF OF STANDING TO BRING THE FORECLOSURE ACTION DID NOT ENTITLE DEFENDANT TO SUMMARY JUDGMENT ON THE CROSS MOTION; SUMMARY JUDGMENT CANNOT BE GRANTED TO THE MOVING PARTY BASED UPON FLAWS IN THE OPPOSING PAPERS)/EVIDENCE (SUMMARY JUDGMENT MOTIONS, FORECLOSURE, FLAWS IN PLAINTIFF’S PROOF OF STANDING TO BRING THE FORECLOSURE ACTION DID NOT ENTITLE DEFENDANT TO SUMMARY JUDGMENT ON THE CROSS MOTION; SUMMARY JUDGMENT CANNOT BE GRANTED TO THE MOVING PARTY BASED UPON FLAWS IN THE OPPOSING PAPERS)/SUMMARY JUDGMENT MOTIONS (SUMMARY JUDGMENT CANNOT BE GRANTED TO THE MOVING PARTY BASED UPON FLAWS IN THE OPPOSING PAPERS)/CIVIL PROCEDURE (SUMMARY JUDGMENT MOTIONS, FORECLOSURE, FLAWS IN PLAINTIFF’S PROOF OF STANDING TO BRING THE FORECLOSURE ACTION DID NOT ENTITLE DEFENDANT TO SUMMARY JUDGMENT ON THE CROSS MOTION; SUMMARY JUDGMENT CANNOT BE GRANTED TO THE MOVING PARTY BASED UPON FLAWS IN THE OPPOSING PAPERS)

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ACKNOWLEDGING DEBT IN BANKRUPTCY PLAN RENEWED THE STATUTE OF LIMITATIONS WHICH STARTED TO RUN UPON GRANT OF DISCHARGE IN BANKRUPTCY.

The Second Department determined the statute of limitations re: a default on a note secured by a mortgage was renewed when defendant (Raudkivi) acknowledged the debt in his bankruptcy plan. The statute therefore began to run when defendant was granted a discharge in bankruptcy, which occurred less than six years before suit was brought:

Raudkivi’s Chapter 13 bankruptcy plan, in which he acknowledged the mortgage debt and promised to repay it, renewed the limitations period (see General Obligations Law § 17-105[1]…). The automatic bankruptcy stay, which was in effect when Raudkivi executed his Chapter 13 bankruptcy plan, tolled the renewed limitations period (see CPLR 204[a]…), so the renewed limitations period did not begin to run until Raudkivi was granted his discharge in bankruptcy in October of 2006 (see 11 USC § 362[c][2][C]). Since this action was commenced less than six years later, in July of 2012, this action is not time-barred. PSP-NC, LLC v Raudkivi, 2016 NY Slip Op 02632, 2nd Dept 4-6-16

DEBTOR-CREDITOR (ACKNOWLEDGING DEBT IN BANKRUPTCY PLAN RENEWED THE STATUTE OF LIMITATIONS WHICH STARTED TO RUN UPON GRANT OF DISCHARGE IN BANKRUPTCY)/BANKRUPTCY (ACKNOWLEDGING DEBT IN BANKRUPTCY PLAN RENEWED THE STATUTE OF LIMITATIONS WHICH STARTED TO RUN UPON GRANT OF DISCHARGE IN BANKRUPTCY)/CIVIL PROCEDURE (ACKNOWLEDGING DEBT IN BANKRUPTCY PLAN RENEWED THE STATUTE OF LIMITATIONS WHICH STARTED TO RUN UPON GRANT OF DISCHARGE IN BANKRUPTCY)

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CORPORATE VEIL PIERCED TO ENFORCE JUDGMENTS.

The Second Department determined petitioners were properly granted summary judgment piercing the corporate (Diontech) veil to enforce judgments:

Equity will intervene to pierce the corporate veil and permit the imposition of individual liability on owners for the obligations of their corporations in order to avoid fraud or injustice … . A party seeking to pierce the corporate veil must establish that (1) the owners exercised complete domination of the corporation with respect to the transaction at issue, and (2) such domination was used to commit a fraud or wrong against the party seeking to pierce the corporate veil which resulted in the injury to that party … . The decision whether to pierce the corporate veil in a given instance will depend on the circumstances of the case … .

Here, the petitioners demonstrated their prima facie entitlement to judgment as a matter of law on so much of the petition as sought to pierce Diontech’s corporate veil by submitting evidence showing, inter alia, that the appellants dominated Diontech, that Diontech did not adhere to any corporate formalities such as holding regular meetings and maintaining corporate records and minutes, that the appellants used corporate funds for personal purposes, and that the appellants stripped Diontech of assets as they wound down the business, leaving it without sufficient funds to pay its creditors, including the petitioners… . Matter of Agai v Diontech Consulting, Inc., 2016 NY Slip Op 02646, 2nd Dept 4-6-16

CORPORATION LAW (CORPORATE VEIL PIERCED TO ENFORCE JUDGMENTS AGAINST PRINCIPALS)/CIVIL PROCEDURE (CORPORATE VEIL PIERCED TO ENFORCE JUDGMENTS AGAINST PRINCIPALS)/DEBTOR-CREDITOR (CORPORATE VEIL PIERCED TO ENFORCE JUDGMENTS AGAINST PRINCIPALS)/PIERCING CORPORATE VEIL (CORPORATE VEIL PIERCED TO ENFORCE JUDGMENTS AGAINST PRINCIPALS)

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PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY; CRITERIA FOR AMENDMENT OF A COMPLAINT TO CONFORM TO TRIAL PROOF DESCRIBED.

In an action to foreclose a mechanic’s lien, the Second Department determined Supreme Court properly allowed amendment of the pleadings to conform with the proof, which was consistent with an action for quantum meruit. Plaintiff contractor was unable to show the value of the work performed, so plaintiff’s Lien Law and quantum meruit actions failed. Similarly, the defendants failed to prove they ended up paying more than the original agreed price for the work. So defendants’ counterclaims for breach of contract and damages failed. With respect to the amendment of the complaint to conform to the proof, and the flaws in plaintiff’s proof of the value of plaintiff’s work, the court wrote:

Pursuant to Lien Law § 3, a contractor who performs labor or furnishes materials for the improvement of real property with the consent, or at the request of, the owner “shall have a lien for the principal and interest, of the value, or the agreed price, of such labor . . . or materials upon the real property improved or to be improved and upon such improvement.” “A lienor may seek amounts due from both written contracts and from change orders for extras, depending on whether the owner gave his consent for the extra work” … . The lienor’s right to recover is limited by the contract price or the reasonable value of the labor and materials provided … . The lienor has the burden of establishing the amount of the outstanding debt by proffering proof either of the price of the contract or the value of labor and materials supplied … .

… [P]laintiff failed to offer bills, invoices, receipts, time sheets, checks, or any other evidence which would establish the cost of materials, work done by subcontractors, or the number of hours he worked on the job and proffered no explanation for his failure to present this evidence. He likewise failed to provide any detailed description of the work performed, the cost of any portion of the work, or the hourly rate at which he valued his labor. Indeed, at trial, the plaintiff admitted that the sum asserted in his lien was only an estimate. … .

Pursuant to CPLR 3025(c), a trial court may permit the amendment of pleadings before or after judgment to conform them to the evidence “upon such terms as may be just” … .Here, although the complaint sought recovery in the form of foreclosure on his mechanic’s lien, at trial, the plaintiff sought to conform the pleadings to the proof and assert a cause of action for recovery in quantum meruit. The Supreme Court granted that motion, and therefore, contrary to the defendants’ contention, that theory of recovery was properly before the court. * * *

Here, although the plaintiff presented evidence satisfying … three elements [of quntum meruit], this cause of action must fail for the same reason that the cause of action to foreclose his mechanic’s lien must fail; namely, his failure to present any evidence of the value of the materials supplied or services rendered. DiSario v Rynston, 2016 NY Slip Op 02611, 2nd Dept 4-6-16

CONTRACT LAW (PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY)/QUANTUM MERUIT (PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY)/MECHANIC’S LIEN (PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY)/LIEN LAW (PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY)/EVIDENCE (PLAINTIFF-CONTRACTOR’S FAILURE TO PROVE THE VALUE OF THE WORK PRECLUDED RECOVERY UNDER THE LIEN LAW AND UNDER A QUANTUM MERUIT THEORY)/CIVIL PROCEDURE (CRITERIA FOR AMENDMENT OF A COMPLAINT TO CONFORM TO TRIAL PROOF DESCRIBED)/COMPLAINT, AMENDMENT OF (CRITERIA FOR AMENDMENT OF A COMPLAINT TO CONFORM TO TRIAL PROOF DESCRIBED)

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UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT.

The Second Department affirmed the dismissal of plaintiff contractor’s complaint seeking quantum meruit and recovery under the lien law because the contractor did not allege it was duly licensed in Nassau County when the home improvement services were rendered:

” An unlicensed contractor may neither enforce a home improvement contract against an owner nor seek recovery in quantum meruit'” … . “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” … .

Here, the complaint did not allege that the plaintiff was duly licensed in Nassau County at the time of the services rendered (see Nassau County Administrative Code § 21-11.2). Moreover … the plaintiff conceded that it did not possess the necessary license. Therefore, the plaintiff was not entitled to enforce its contract against the defendant or to recover in quantum meruit … . Holistic Homes, LLC v Greenfield, 2016 NY Slip Op 02619, 2nd Dept 4-6-16

CIVIL PROCEDURE (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/CONTRACT LAW  (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/LIEN LAW (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/CONTRACT LAW (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/MECHANIC’S LIEN (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/QUANTUM MERUIT (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)

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