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SHAREHOLDERS’ DERIVATIVE ACTION IS EQUITABLE IN NATURE, MOTION TO STRIKE DEMAND FOR A JURY TRIAL SHOULD HAVE BEEN GRANTED.

The First Department, reversing Supreme Court, determined defendant's motion to strike plaintiff's demand for a jury trial in this shareholders' derivative action should have been granted. The court noted that a motion to strike a demand for a jury trial can be made anytime up to the opening of trial:

Supreme Court erred in finding that plaintiff in this shareholders' derivative action was entitled to a jury trial, since the claims brought in his capacity as a shareholder were “derivative and therefore equitable in nature” … . Contrary to plaintiff's contention, the motion was not untimely, since a motion to strike a demand for a jury trial may be made at anytime up to the opening of trial … , and we find no prejudice in defendants' delay of a few months, following the restoration of the case to the calendar, in making their motion. Moyal v Sleppin, 2016 NY Slip Op 04107, 1st Dept 5-26-16

CORPORATION LAW (SHAREHOLDERS' DERIVATIVE ACTION IS EQUITABLE IN NATURE, MOTION TO STRIKE DEMAND FOR A JURY TRIAL SHOULD HAVE BEEN GRANTED)/CIVIL PROCEDURE (SHAREHOLDERS' DERIVATIVE ACTION IS EQUITABLE IN NATURE, MOTION TO STRIKE DEMAND FOR A JURY TRIAL SHOULD HAVE BEEN GRANTED)/SHAREHOLDERS' DERIVATIVE ACTION (SHAREHOLDERS' DERIVATIVE ACTION IS EQUITABLE IN NATURE, MOTION TO STRIKE DEMAND FOR A JURY TRIAL SHOULD HAVE BEEN GRANTED)/JURY TRIAL, MOTION TO STRIKE DEMAND FOR (SHAREHOLDERS' DERIVATIVE ACTION IS EQUITABLE IN NATURE, MOTION TO STRIKE DEMAND FOR A JURY TRIAL SHOULD HAVE BEEN GRANTED)

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EXECUTOR-STATUS (PRIOR TO DEATH) AND FAMILIAL RELATIONSHIP DO NOT CREATE A FIDUCIARY RELATIONSHIP, EQUITABLE ESTOPPEL SHOULD NOT HAVE BEEN INVOKED TO SAVE A TIME-BARRED CLAIM.

The Third Department, over a two-justice dissent, determined the doctrine of equitable estoppel should not have been invoked to save a time-barred claim to real property. The real property was the subject of a 1977 will which placed the property in trust for decedent's children and named defendant executor. In 1988 the property was conveyed to the defendant, but the will was never amended. Supreme Court denied defendant's motion to dismiss, finding that defendant's executor-status and familial ties created a fiduciary relationship, requiring defendant to notify plaintiffs of the 1988 transfer. The Third Department held the appointment as executor did not create a fiduciary relationship (prior to death), and the familial relationship, as well, did not create a fiduciary relationship. Therefore, the Third Department ruled, the defendant was not barred, by equitable estoppel, from asserting the statute of limitations defense:

Supreme Court recognized that “concealment without actual misrepresentation may form the basis for invocation of the doctrine [of equitable estoppel] if 'there was a fiduciary relationship which gave [the] defendant an obligation to inform [the] plaintiff of facts underlying the claim'” … . Here, the court found that plaintiffs had sufficiently alleged that defendant owed them a fiduciary duty to disclose the conveyance when it occurred in 1988 because of her nomination as executor-trustee in the 1977 will, as well as their familial relationship.

We note, however, that the existence of a familial relationship does not equate to a fiduciary relationship for equitable estoppel purposes … . Nor does the mere fact that a will has nominated an executor, in and of itself, create a fiduciary relationship between the nominee and the will's beneficiaries. Indeed, because of the ambulatory nature of a will, a nominated executor is prohibited from acting in a fiduciary capacity until the testator dies … . Similarly, “a testamentary trust cannot become effective prior to the testator's death” … . Picard v Fish, 2016 NY Slip Op 04086, 3rd Dept 5-26-16

CIVIL PROCEDURE (EXECUTOR-STATUS (PRIOR TO DEATH) AND FAMILIAL RELATIONSHIP DO NOT CREATE A FIDUCIARY RELATIONSHIP, EQUITABLE ESTOPPEL SHOULD NOT HAVE BEEN INVOKED TO BAR A TIME-BARRED CLAIM)/EQUITABLE ESTOPPEL (EXECUTOR-STATUS (PRIOR TO DEATH) AND FAMILIAL RELATIONSHIP DO NOT CREATE A FIDUCIARY RELATIONSHIP, EQUITABLE ESTOPPEL SHOULD NOT HAVE BEEN INVOKED TO BAR A TIME-BARRED CLAIM)/TRUSTS AND ESTATES (EXECUTOR-STATUS (PRIOR TO DEATH) AND FAMILIAL RELATIONSHIP DO NOT CREATE A FIDUCIARY RELATIONSHIP, EQUITABLE ESTOPPEL SHOULD NOT HAVE BEEN INVOKED TO BAR A TIME-BARRED CLAIM)

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INFANCY DOES NOT TOLL 90-DAY PERIOD FOR FILING A NOTICE OF CLAIM, MOTION FOR LEAVE FILE A LATE NOTICE SHOULD NOT HAVE BEEN GRANTED.

The Second Department, reversing Supreme Court, determined plaintiffs' motion for leave to file a late notice of claim against defendant school district should have been denied. Although infancy tolls the one-year-ninety-days statute of limitations, it does not toll the 90-day period for filing a notice of claim. The motion for leave to file a late notice was not made until more than four years after the expiration of the 90-day filing period:

Here, the plaintiffs failed to establish that the defendant had “acquired actual knowledge of the essential facts constituting the claim” within 90 days of the accident or a reasonable time thereafter (General Municipal Law § 50-e[5]). The school's principal prepared an accident claim form on the day of the accident, and the infant plaintiff's parents completed the medical claim portion of that form a couple of weeks after the accident. Contrary to the plaintiffs' contention, this form, which merely indicated that the infant plaintiff lost his left front tooth and part of his right front tooth when he hit his mouth on the gymnasium floor in an attempt to “duck from a ball” during physical education class, did not establish that the defendant had timely, actual knowledge of the essential facts underlying the claims that it was negligent in supervising the students, in failing to provide a safe play area, and in allowing the infant plaintiff to engage in an inappropriate activity … . Accordingly, the defendant had no reason to conduct a prompt investigation into the purported negligent supervision and alleged unsafe condition of the gymnasium floor … . Horn v Bellmore Union Free Sch. Dist., 2016 NY Slip Op 04021, 2nd Dept 5-25-16

NEGLIGENCE (INFANCY DOES NOT TOLL 90-DAY PERIOD FOR FILING A NOTICE OF CLAIM, MOTION FOR LEAVE FILE A LATE NOTICE SHOULD NOT HAVE BEEN GRANTED)/CIVIL PROCEDURE (INFANCY DOES NOT TOLL 90-DAY PERIOD FOR FILING A NOTICE OF CLAIM, MOTION FOR LEAVE FILE A LATE NOTICE SHOULD NOT HAVE BEEN GRANTED)/EDUCATION-SCHOOL LAW (INFANCY DOES NOT TOLL 90-DAY PERIOD FOR FILING A NOTICE OF CLAIM, MOTION FOR LEAVE FILE A LATE NOTICE SHOULD NOT HAVE BEEN GRANTED)/MUNICIPAL LAW (INFANCY DOES NOT TOLL 90-DAY PERIOD FOR FILING A NOTICE OF CLAIM, MOTION FOR LEAVE FILE A LATE NOTICE SHOULD NOT HAVE BEEN GRANTED)

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TAKING TIMELY STEPS TO PROCEED TO JUDGMENT AFTER DEFAULT IN FORECLOSURE ACTION SUFFICIENT TO AVOID DISMISSAL OF COMPLAINT AS ABANDONED.

The Second Department, reversing Supreme Court, determined plaintiff-bank's taking timely steps to proceed to judgment after a default in this foreclosure action were sufficient to avoid dismissal of the complaint as abandoned:

CPLR 3215(c) provides that “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after [a] default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed.” However, “[i]t is not necessary for a plaintiff to actually obtain a default judgment within one year of the default in order to avoid dismissal pursuant to CPLR 3215(c)” … . Rather, it is enough that the plaintiff timely takes “the preliminary step toward obtaining a default judgment of foreclosure and sale by moving for an order of reference” to establish that it “initiated proceedings for entry of a judgment within one year of the default” for the purposes of satisfying CPLR 3215(c) … . “[A]s long as proceedings are being taken, and these proceedings manifest an intent not to abandon the case but to seek a judgment, the case should not be subject to dismissal” … . This is so even where, as here, the timely motion for an order of reference was subsequently withdrawn … . HSBC Bank USA, N.A. v Traore, 2016 NY Slip Op 04022, 2nd Dept 5-25-16

CIVIL PROCEDURE (TAKING TIMELY STEPS TO PROCEED TO JUDGMENT AFTER DEFAULT IN FORECLOSURE ACTION SUFFICIENT TO AVOID DISMISSAL OF COMPLAINT AS ABANDONED)/FORECLOSURE (TAKING TIMELY STEPS TO PROCEED TO JUDGMENT AFTER DEFAULT IN FORECLOSURE ACTION SUFFICIENT TO AVOID DISMISSAL OF COMPLAINT AS ABANDONED)/ABANDONMENT OF ACTION (TAKING TIMELY STEPS TO PROCEED TO JUDGMENT AFTER DEFAULT IN FORECLOSURE ACTION SUFFICIENT TO AVOID DISMISSAL OF COMPLAINT AS ABANDONED)

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PLAINTIFF’S SISTER WRONGLY IMPEACHED BY QUESTIONS ABOUT HER CRIMINAL HISTORY AND BAD ACTS, TRIAL JUDGE SHOULD HAVE SET ASIDE THE VERDICT.

The Second Department determined the verdict in this personal injury case should have been set aside because of an evidentiary error. The injured plaintiff’s sister, who was also her guardian, was wrongly questioned about her criminal history and bad acts:

Pursuant to CPLR 4404(a), a court “may set aside a verdict or any judgment entered thereon and direct that judgment be entered in favor of a party entitled to judgment as a matter of law or it may order a new trial of a cause of action or separable issue where the verdict is contrary to the weight of the evidence [or] in the interest of justice” (CPLR 4404[a]…). “A motion pursuant to CPLR 4404(a) to set aside a verdict and for a new trial in the interest of justice encompasses errors in the trial court’s rulings on the admissibility of evidence, mistakes in the charge, misconduct, newly discovered evidence, and surprise” … . In considering such a motion, “[t]he Trial Judge must decide whether substantial justice has been done, whether it is likely that the verdict has been affected . . . and must look to his [or her] own common sense, experience and sense of fairness rather than to precedents in arriving at a decision'” … .

Here, the Supreme Court erred in permitting the defendants to impeach the credibility of the injured plaintiff’s sister on direct examination by questioning her with respect to her criminal history and prior bad acts … . “Indeed, it is well established that an adverse party or a hostile witness may not be impeached on direct examination by evidence of his or her criminal conviction[s]” … . Morency v Horizon Transp. Servs., Inc., 2016 NY Slip Op 04029, 2nd Dept 5-25-16

 

CIVIL PROCEDURE (SET ASIDE VERDICT, PLAINTIFF’S SISTER WRONGLY IMPEACHED BY QUESTIONS ABOUT HER CRIMINAL HISTORY AND BAD ACTS, TRIAL JUDGE SHOULD HAVE SET ASIDE THE VERDICT)/EVIDENCE (PLAINTIFF’S SISTER WRONGLY IMPEACHED BY QUESTIONS ABOUT HER CRIMINAL HISTORY AND BAD ACTS, TRIAL JUDGE SHOULD HAVE SET ASIDE THE VERDICT)/VERDICT, MOTION TO SET ASIDE (PLAINTIFF’S SISTER WRONGLY IMPEACHED BY QUESTIONS ABOUT HER CRIMINAL HISTORY AND BAD ACTS, TRIAL JUDGE SHOULD HAVE SET ASIDE THE VERDICT)

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BURDENS OF PROOF FOR MOTION TO CHANGE VENUE EXPLAINED; CRITERIA FOR RAISING AN ISSUE FOR THE FIRST TIME ON APPEAL EXPLAINED.

The Second Department determined defendant did not meet its burden on its motion to change venue. The court noted that, although one of the arguments in opposition was not raised below, the argument met the criteria for an issue which may be raised for the first time on appeal. The court further noted that reply papers could not be used to meet the defendant's burden. The relevant law was explained as follows:

” [T]o prevail on a motion pursuant to CPLR 510(1) to change venue, a defendant must show that the plaintiff's choice of venue is improper, and also that the defendant's choice of venue is proper'” … . “Only if a defendant meets this burden is the plaintiff required to establish, in opposition, that the venue selected was proper” … . * * *

Although the plaintiff did not point out [the] deficiency in proof in opposing the motion to transfer venue, ” questions of law which appear on the face of the record and which could not have been avoided if raised at the proper juncture may be raised for the first time on appeal'” … . Pinos v Clinton Cafe & Deli, Inc., 2016 NY Slip Op 04035, 2nd Dept 5-25-16

CIVIL PROCEDURE (BURDENS OF PROOF FOR MOTION TO CHANGE VENUE EXPLAINED; CRITERIA FOR RAISING AN ISSUE FOR THE FIRST TIME ON APPEAL EXPLAINED)/APPEALS (CIVIL, CRITERIA FOR RAISING AN ISSUE FOR THE FIRST TIME ON APPEAL EXPLAINED)/VENUE (BURDENS OF PROOF FOR MOTION TO CHANGE VENUE EXPLAINED)

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CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT.

The Second Department determined a letter from counsel, together with other correspondence, established an enforceable settlement agreement of a real property dispute:

CPLR 2104 governs the enforceability of settlement agreements … . Pursuant to CPLR 2104, a settlement agreement is binding upon a party if it is in a writing subscribed either by the party or by his or her attorney. To be enforceable, a settlement agreement must set forth all material terms, and there must be clear mutual accord between the parties … .

Here, the material terms of the settlement agreement were set forth in a letter by the plaintiff's then attorney, who had apparent authority to settle the case on her behalf based on the plaintiff's actions … . The exchange of correspondence between the attorneys for the parties, in conjunction with the defendants' completion of the tasks demanded in the settlement without any objection by the plaintiff, was sufficient to constitute an enforceable settlement agreement between the parties … . Martin v Harrington, 2016 NY Slip Op 04027, 2nd Dept 5-25-16

CIVIL PROCEDURE (CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT)/CONTRACT LAW (CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT)

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ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH.

The First Department determined the down payment bearing interest at the rate agreed to in the (real estate) contract was the exclusive remedy. The court should not have awarded interest at the statutory rate:

The contract's terms, requiring that the down payment be placed in an interest-bearing account, so that the party entitled to the down payment would receive compensation for the deprivation of its use of the money in the form of accrued interest, were sufficiently clear to establish that interest paid at the statutory rate was not contemplated by the parties at the time the contract was formed and that the amount escrowed, including interest earned, should be the exclusive remedy to the wronged party … . Ithilien Realty Corp. v 176 Ludlow, LLC, 2016 NY Slip Op 04002, 1st Dept 5-24-16

CIVIL PROCEDURE (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)/CONTRACT LAW (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)/REAL ESTATE (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)

COURT OF CLAIMS LACKS JURISDICTION WHERE MONEY DAMAGES ARE MERELY INCIDENTAL TO THE CLAIM.

The Third Department determined a prisoner's lawsuit alleging false imprisonment based upon mistakes in sentencing was properly dismissed because the Court of Claims lacked jurisdiction:

“While jurisdiction reposes in the Court of Claims where the essential nature of the claim against defendant is to recover money, it does not lie where monetary relief is incidental to the primary claim” … . Here, we agree with the Court of Claims that it lacks subject matter jurisdiction on claimant's false imprisonment claim, inasmuch as his primary argument is that he is currently being confined unlawfully due to errors in resentencing and that any claim for related damages is incidental to this primary argument. Therefore, the claim for false imprisonment was properly dismissed for lack of jurisdiction. Jackson v State of New York, 2016 NY Slip Op 03938, 3rd Dept 5-19-16

CIVIL PROCEDURE (COURT OF CLAIMS LACKS JURISDICTION WHERE MONEY DAMAGES ARE MERELY INCIDENTAL TO THE CLAIM)/COURT OF CLAIMS (COURT OF CLAIMS LACKS JURISDICTION WHERE MONEY DAMAGES ARE MERELY INCIDENTAL TO THE CLAIM)

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EVIDENCE SUBMITTED IN SUPPORT OF MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WITHIN THE MEANING OF CPLR 3211(a)(1).

The Second Department determined the evidence submitted by defendant law firm in support of a motion to dismiss the malpractice complaint based on documentary evidence was properly denied. The letters and affirmation did not constitute “documentary evidence” and did not utterly refute plaintiff's allegations:

“The evidence submitted in support of a [CPLR 3211(a)(1)] motion must be documentary' or the motion must be denied” … . To qualify as documentary evidence, the evidence “must be unambiguous and of undisputed authenticity” … . “[J]udicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable,' would qualify as documentary evidence' in the proper case” … . Affidavits and letters “were not the types of documents contemplated by the Legislature when it enacted this provision”… .

Here, the letters … did not constitute documentary evidence for the purpose of a motion pursuant to CPLR 3211(a)(1)… ,  Similarly, the affirmation of one of [the law firm's] members was not documentary evidence for the purpose of this motion … . Anderson v Armentano, 2016 NY Slip Op 03690, 2nd Dept 5-11-16

CIVIL PROCEDURE (EVIDENCE SUBMITTED IN SUPPORT OF MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WITHIN THE MEANING OF CPLR 3211(a)(1))/EVIDENCE (CIVIL MOTION TO DISMISS, EVIDENCE SUBMITTED IN SUPPORT OF MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WITHIN THE MEANING OF CPLR 3211(a)(1))/DOCUMENTARY EVIDENCE (CIVIL MOTION TO DISMISS, EVIDENCE SUBMITTED IN SUPPORT OF MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WITHIN THE MEANING OF CPLR 3211(a)(1))/DISMISS, MOTION TO (CIVIL MOTION TO DISMISS, EVIDENCE SUBMITTED IN SUPPORT OF MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WITHIN THE MEANING OF CPLR 3211(a)(1)

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