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Business Connections to New York Insufficient to Confer Jurisdiction Under CPLR 301 or 302, Criteria Explained

The Second Department determined the defendants-respondents were properly granted summary judgment dismissing the complaint based upon the court’s lack of jurisdiction over a foreign corporation and individual non-domiciliary (insufficient business connection with New York). The court explained the business-related jurisdiction requirements under CPLR 301 and 302:

“Jurisdiction under CPLR 301 may be acquired over a foreign corporation only if that corporation does business here not occasionally or casually, but with a fair measure of permanence and continuity’ so as to warrant a finding of its presence’ in this jurisdiction” … . Furthermore, “[a]n individual cannot be subject to jurisdiction under CPLR 301 unless he [or she] is doing business in New York as an individual rather than on behalf of a corporation” … . Here, the respondents were not doing business in this State … .

Pursuant to CPLR 302(a)(1), “a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state or contracts anywhere to supply goods or services in the state” (CPLR 302[a][1]). “Whether a defendant has transacted business within New York is determined under the totality of the circumstances, and rests on whether the defendant, by some act or acts, has purposefully avail[ed] itself of the privilege of conducting activities within [New York]”‘ … . “Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws'” … . “CPLR 302(a)(1) jurisdiction is proper even though the defendant never enters New York, so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted'” … .

Here, the respondents established, prima facie, that they did not conduct any purposeful activities in New York which bore a substantial relationship to the subject matter of this action, so as to avail themselves of the benefits and protections of this State’s laws. Okeke v Momah, 2015 NY Slip Op 07252, 2nd Dept 10-7-15

 

In Opposing a Motion to Dismiss for Failure to Timely File a Note of Issue, No Need to Show Potentially Meritorious Cause of Action Where Defendant Contributed to the Delay

The Second Department determined that defendants’ motion to dismiss for failure to prosecute should not have been granted. The court noted that one of the defendants contributed to the delay in filing the note of issue by not showing up for a deposition. Because of the defendant’s contribution to the delay, the plaintiff did not have to demonstrate a potentially meritorious cause of action:

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” … . When served with a 90-day demand pursuant to CPLR 3216, it is incumbent upon a plaintiff to comply with the demand by filing a note of issue or by moving, before the default date, either to vacate the demand or extend the 90-day period … . In general, if a plaintiff fails to comply with the demand, to avoid the sanction of dismissal, the plaintiff is required to demonstrate a justifiable excuse for the delay and the existence of a potentially meritorious cause of action (see CPLR 3216[e]…).

Here, although the plaintiff did not file a note of issue within the 90-day demand period, her conduct negated any inference that she intended to abandon the action … . In opposition to the defendants’ separate motions, the plaintiff promptly cross-moved to strike the answer of … defendant …Sarab for his willful failure to appear for a court-ordered deposition. The plaintiff established that, due to an unresolved discovery dispute, she was unable to timely file a note of issue … . Furthermore, since Sarab contributed to the plaintiff’s inability to file a timely note of issue in the proper form, the plaintiff was not required to demonstrate a potentially meritorious cause of action … . Lee v Rad, 2015 NY Slip Op 07248, 2nd Dept 10-7-15

 

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Forum Selection Clause in Nursing Home Admission Agreement Enforceable

The Second Department determined defendant nursing home’s motion to change venue based upon a forum selection clause in the admission agreement should have been granted. After her mother (a resident of defendant nursing home) died, plaintiff brought this action for medical malpractice in a county other than that designated in the admission agreement:

” A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court'” … . Here, the plaintiff failed to show that enforcement of the forum selection clause would be unreasonable, unjust, or in contravention of public policy, or that the inclusion of the forum selection clause in the agreement was the result of fraud or overreaching … . Moreover, the plaintiff failed to demonstrate that a trial in Suffolk County would be so gravely difficult that, for all practical purposes, she would be deprived of her day in court … . Puleo v Shore View Ctr. for Rehabilitation & Health Care, 2015 NY Slip Op 07255, 2nd Dept 10-7-15

 

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Conclusory Allegations Will Not Survive a Motion to Dismiss for Failure to State a Cause of Action—Punitive Damages Must Be Connected to a Substantive Cause of Action—Late Disclaimer in Property Damage Action Is Valid Absent Prejudice

The Fourth Department determined plaintiff’s cause of action alleging bad faith on the part of the insurer should have been dismissed for failure to state a cause of action. The court explained that conclusory, as opposed to fact-based, allegations will not survive a motion to dismiss. The court noted that a claim for punitive damages must be tied to a specific cause of action and cannot be based upon conclusory allegations.  The court further held that even an unreasonable delay in disclaiming a property damage claim is valid absent prejudice:

Our role is thus to “determine only whether the facts as alleged fit within any cognizable legal theory . . . and the criterion is whether the proponent of the pleading has a cause of action, not whether he [or she] has stated one’ ” … . Nevertheless, ” [w]hile it is axiomatic that a court must assume the truth of the complaint’s allegations, such an assumption must fail where there are conclusory allegations lacking factual support’ ” … . Indeed, ” a cause of action cannot be predicated solely on mere conclusory statements . . . unsupported by factual allegations’ ” … . …

… [W]e note that, “in order to establish a prima facie case of bad faith, the plaintiff must establish that the insurer’s conduct constituted a gross disregard’ of the insured’s interests” … . We conclude … the fourth and sixth causes of action “should have been dismissed because they do not allege [any] conduct by [Allstate] constituting the requisite gross disregard of the insured’s interests’ necessary to support such causes of action” … . Moreover, the “[a]llegations that [Allstate] had no good faith basis for denying coverage are redundant to [plaintiffs’] cause[s] of action for breach of contract based on the denial of coverage, and do not give rise to an independent tort cause of action, regardless of the insertion of tort language into the pleading” … .

… “A demand or request for punitive damages is parasitic and possesses no viability absent its attachment to a substantive cause of action” … . Here, the complaint fails to set forth “the pleading elements required to state a claim for punitive damages” … ; plaintiffs’ “conclusory allegation[s] as to [Allstate’s] motive for [its] refusal [to pay the claim are] an insufficient premise for a demand for punitive damages” … . …

Where, as here, the underlying claim does not arise out of an accident involving bodily injury or death, the notice of disclaimer provisions set forth in Insurance Law § 3420 (d) are inapplicable and, [u]nder the common-law rule, delay in giving notice of disclaimer of coverage, even if unreasonable, will not estop the insurer to disclaim unless the insured has suffered prejudice from the delay’ ” … . Contrary to plaintiffs’ contention, their conclusory allegation that they were “damaged and prejudiced” by the untimely disclaimer is insufficient to withstand this CPLR 3211 (a) (7) motion to dismiss … . Miller v Allstate Indem. Co., 2015 NY Slip Op 07134, 4th Dept 10-2-15

 

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Pleading Requirements for “Goods Sold and Delivered” Cause of Action Succinctly Explained

In affirming Supreme Court’s grant of summary judgment to plaintiff on its “goods sold and delivered” cause of action, the Fourth Department explained the pleading requirements:

… [P]laintiff’s complaint, with its attached invoices, satisfied the pleading requirements of CPLR 3016 (f) … . The invoices provided the requisite degree of specificity inasmuch as they permitted defendant ” to respond in a meaningful way on an item-by-item basis’ ” … . Each invoice set forth the date of the order, the specific items ordered and delivered, the quantity ordered and delivered, as well as the price per unit and the total price for the quantity ordered … . Defendant was thus required to indicate specifically in its verified answer “those items [it] dispute[d] and whether in respect of delivery or performance, reasonable value or agreed price” (CPLR 3016 [f]). Defendant failed to do so and, therefore, Supreme Court properly granted that part of plaintiff’s motion on the cause of action for goods sold and delivered … . Erie Materials, Inc. v Central City Roofing Co., Inc., 2015 NY Slip Op 07137, 4th Dept 10-2-15

 

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State Claims Re: Alleged Release of Toxins During Love Canal Clean-Up Not Precluded (Preempted) by Federal CERCLA Remedy

The Fourth Department determined state claims for negligence, abnormally dangerous activity, private nuisance and trespass were not precluded by a federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) remedy re: the Love Canal toxic contamination:

As the federal District Court explained, “it is uniformly recognized that, in enacting CERCLA, Congress expressly disclaimed an intent to preempt state tort liability for damages caused by the release of hazardous substances” … . District Court therefore granted plaintiffs’ motion seeking to remand the matter to Supreme Court, determining that “plaintiffs seek relief only under common law theories of negligence, . . . private nuisance, and trespass” … , “[and t]he claims . . . do not expressly challenge the effectiveness of the [CERCLA] remedy . . . Rather, plaintiffs seek only to be made whole for any harm proximately caused by defendants’ conduct, whether in performance of operation, maintenance, and monitoring obligations with respect to the remedy, or during the [sewer project]” … .

* * * The doctrine of judicial estoppel prohibits a party who has assumed a position in one legal proceeding, and prevailed on that position, from assuming a contrary position in another proceeding because the party’s interests have changed … . Here, however, we conclude that plaintiffs’ position was consistent in both the federal and state court matters inasmuch as they maintained that they did not challenge the CERCLA remedy, as the moving defendants alleged, but instead challenged defendants’ performance of their respective obligations in executing the CERCLA remedY. Abbo-Bradley v City of Niagara Falls, 2015 NY Slip Op 07145, 4th Dept 10-2-15

 

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Appropriate Statutes of Limitations and Accrual Dates Explained for “Breach of Fiduciary Duty,” Civil RICO,” and “Declaratory Judgment” Causes of Action

The Second Department described the analytical criteria for determining the statutes of limitations and accrual dates for (1) breach of fiduciary duty claims where allegations of fraud are essential; (2) civil RICO claims; (3) and declaratory judgment actions seeking a constructive trust:

“New York law does not provide a single statute of limitations for breach of fiduciary duty claims. Rather, the choice of the applicable limitations period depends on the substantive remedy that the plaintiff seeks. Where the remedy sought is purely monetary in nature, courts construe the suit as alleging injury to property’ within the meaning of CPLR 214(4), which has a three-year limitations period. Where, however, the relief sought is equitable in nature, the six-year limitations period of CPLR 213(1) applies” … .

“[W]here an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213(8)” … . “An exception to this rule . . . is that courts will not apply the fraud Statute of Limitations if the fraud allegation is only incidental to the claim asserted; otherwise, fraud would be used as a means to litigate stale claims'” … . “Thus, where an allegation of fraud is not essential to the cause of action pleaded except as an answer to an anticipated defense of Statute of Limitations, courts look for the reality, and the essence of the action and not its mere name” … . …

CPLR 213(8) provides, in part, “the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.” “The discovery accrual rule also applies to fraud-based breach of fiduciary duty claims. An inquiry as to the time that a plaintiff could, with reasonable diligence, have discovered the fraud turns upon whether a person of ordinary intelligence possessed knowledge of facts from which the fraud could be reasonably inferred” … . …

“The statute of limitations for civil RICO claims is four years” … . “A RICO claim is deemed to have accrued when the plaintiff knew or should have known of his or her injury, regardless of when he or she discovered the underlying fraud'” … . …

“Actions for declaratory judgments are not ascribed a certain limitations period. The nature of the relief sought in a declaratory judgment action dictates the applicable limitations period. Thus, if the action for a declaratory judgment could have been brought in a different form asserting a particular cause of action, the limitations period applicable to the particular cause of action will apply” … .

The … action for a declaratory judgment could have been brought … as a cause of action to impose a constructive trust … . A constructive trust is equitable in nature and governed by a six-year statute of limitations … . DiRaimondo v Calhoun, 2015 NY Slip Op 07002, 2nd Dept 9-30-15

 

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Pleading Requirements for “Fraud” and “Aiding and Abetting Fraud” Causes of Action Succinctly Described

The Second Department, in affirming the denial of a motion to dismiss “fraud” and “aiding and abetting fraud” causes of action, explained the elements which must be alleged in the complaint:

To state a cause of action sounding in fraud, a plaintiff must allege that “(1) the defendant made a representation or a material omission of fact which was false and the defendant knew to be false, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) there was justifiable reliance on the misrepresentation or material omission, and (4) injury” … . To plead a cause of action to recover damages for aiding and abetting fraud, the complaint “must allege the existence of [the] underlying fraud, knowledge of the fraud by the aider and abettor, and substantial assistance by the aider and abettor in the achievement of the fraud”. Moreover, pursuant to CPLR 3016(b), where a cause of action is based upon fraud or aiding and abetting fraud, the “circumstances constituting the wrong” must be “stated in detail.” Caravello v One Mgt. Group, LLC, 2015 NY Slip Op 07000, 2nd Dept 9-30-15

 

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Question Whether Loan At Issue Was a “Home Loan” Requiring a Settlement Conference, Hearing Ordered

The Second Department found that a hearing was required to determine whether the loan at issue was a “home loan” such that a settlement conference pursuant to CPLR 3408 was required. The court explained the analytical factors:

“CPLR 3408 does not apply to every residential foreclosure action” … . CPLR 3408 only mandates a settlement conference in a residential foreclosure action involving a “home loan” as that term is defined by RPAPL 1304, and when the “defendant is a resident of the property subject to foreclosure” (see CPLR 3408…).

RPAPL 1304(5)(a)(i)-(iv) defines a qualifying home loan as one in which, inter alia, the borrower is a natural person; the borrower incurs the debt primarily for personal, family, or household purposes; and the loan is secured by a mortgage on real property in this state “used or occupied, or intended to be used or occupied wholly or partly, as the home or [the] residence of one or more persons and which is or will be occupied by the borrower as the borrower’s principal dwelling” … .

Here, the conflicting affidavits submitted by the parties reveal a sharp factual dispute, inter alia, as to whether the subject loan was made for the defendant’s personal, family, or household use, and whether the mortgaged premises was to be occupied as the defendant’s principal dwelling. Richlew Real Estate Venture v Grant, 2015 NY Slip Op 07018, 2nd Dept 9-30-15

 

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Forum Selection Clause in a “Release of Liability” Form Is Enforceable

The Second Department determined the forum selection clause in an “Equipment Rental Form and Release of Liability” signed by plaintiff prior to taking snowboarding lessons at defendant ski resort was enforceable. Plaintiff alleged injury caused by improper instruction and argued the form was an invalid contract of adhesion:

Contrary to the plaintiff’s contentions, the “Equipment Rental Form and Release of Liability” was not an unenforceable contract of adhesion, and enforcement of the forum selection clause contained therein does not contravene public policy … . Karlsberg v Hunter Mtn. Ski Bowl, Inc., 2015 NY Slip Op 06890, 2nd Dept 9-23-15

 

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