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In the Absence of Prejudice to Defendants, It Was Not Error to Allow Evidence of a Theory of Liability Not Explicitly Referenced in the Complaint and Bill of Particulars

The Third Department determined evidence of a theory of liability that was not explicitly included in the pleadings and bill of particulars was not error. The theory was implicit in the pleadings and the defendants could not have been surprised by the related evidence. The court noted it would have been better had the plaintiffs moved to conform the pleadings to the evidence:

Generally, a party is limited to presenting evidence at trial that supports a cause of action or theory of recovery that was either pleaded in the complaint or asserted in the bill of particulars … . However, evidence concerning a specific theory or injury not mentioned in the bill of particulars may nonetheless avoid exclusion where such proof necessarily flows from the information conveyed in the pleadings and where the defendants should have been aware of the basis thereof… .

The contested theory of liability in this case is based on the allegedly erroneous interpretation of plaintiff’s February CT scan by Beatty (hereinafter referred to as the Beatty theory). It is worth noting that, because the complaint and bills of particulars do not contain an express articulation of the Beatty theory, the better practice certainly would have been for plaintiff to seek leave to amend his pleadings in advance of trial or at least have moved to conform the pleadings to the proof after the trial was underway. However, we nonetheless find that Supreme Court’s determinations allowing plaintiff to advance the Beatty theory at trial, including permitting plaintiff’s expert to offer testimony on the theory, do not constitute reversible error. In our view, the complaint— * * * which reference[s] the February CT scan as a basis for a departure from accepted medical practice — [was] sufficient to notify defendants of the Beatty theory and, as such, permit that theory of liability to be advanced at trial without prejudice. Simply put, we are unpersuaded by defendants’ position that they were not aware of the Beatty theory as a basis for a potential finding of medical malpractice. Boyer v Kamthan, 2015 NY Slip Op 05983, 3rd Dept 7-9-15

 

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Estate of Mortgage-Holder Is a Necessary Party In a Foreclosure Proceeding

The Third Department determined that the estate of one of the mortgage-holders was a necessary party in a foreclosure proceeding. The court explained the relevant law:

“In an action to foreclose a mortgage, all parties having an interest, including persons holding title to the subject premises, must be made a ‘party . . . to the action'” … . Although defendant did not specifically raise the argument that decedent’s estate was a necessary party to the instant action, “the absence of a necessary party may be raised at any stage of the proceedings, by any party or by the court on its own motion” … . …. [W]here two individuals are the co-holders of a mortgage and one dies, the plaintiffs in a related foreclosure action would be the living mortgagee — or, in this case, his assignee … — and the personal representative of the deceased mortgagee … .

Here, given the lack of evidence that the corpus and distribution of decedent’s estate have previously been determined, such determination for the first time could inequitably affect decedent’s estate … . We find that decedent’s estate is therefore a necessary party to this action, as “[t]he rights, interests and equities of all of the parties claiming an interest in the mortgaged premises . . . should be settled and determined before any judgment of foreclosure and sale is entered” … . Bayview Loan Servicing, LLC v Sulyman, 2015 NY Slip Op 05989, 3rd Dept 7-9-15

 

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Declaratory Judgment, Not Mandamus, Was Proper Vehicle for Determining Whether a Town Was Obligated to Repair a Bridge

The Second Department determined Supreme Court properly converted a mandamus proceeding to a declaratory judgment proceeding and properly found that the town was obligated, under the Highway Law, to repair an unsafe bridge. However, Supreme Court did not have the power to direct the town to make the repairs “as expeditiously as possible.”  The Second Department explained the relevant law:

“The extraordinary remedy of mandamus is available in limited circumstances only to compel the performance of a purely ministerial act which does not involve the exercise of official discretion or judgment, and only when a clear legal right to the relief has been demonstrated” …, whereas declaratory relief “is not an extraordinary remedy,” as it “only provides a declaration of rights between parties” and “cannot be executed upon so as to compel a party to perform an act” … . Here, the appellants correctly concede that the Town is obligated to repair and maintain the Dock Street Bridge, since it is part of a highway by use within the meaning of Highway Law § 189 by virtue of the Town’s maintenance of Dock Street for the requisite statutory time period … . However, as the Supreme Court correctly observed, “[t]he many factors involved in a determination as to when and how bridges should be constructed, reconstructed and repaired militate that such judgments must be left to the [Town], with due regard to fiscal appropriations, and should not be the subject of judicial fiat” … . Thus, the Supreme Court properly converted the proceeding to a declaratory judgment action pursuant to CPLR 103(c) and, thereupon, declared that the Town “is responsible for the maintenance, repair, and/or replacement of the Dock Street Bridge”… .

However, the Supreme Court erred by declaring that the Town “shall take all measures necessary to fulfill its legal obligation to repair or replace the Dock Street Bridge, as expeditiously as possible in consideration of . . . fiscal and other concerns.” It is beyond cavil that ” questions of judgment, discretion, allocation of resources and priorities [are] inappropriate for resolution in the judicial arena'” … . As the Supreme Court recognized, it is within the discretion of the Town to “investigat[e] . . . the most appropriate method of repairing or replacing the bridge, and the potential availability of grants and funding sources other than the [T]own’s tax base” to address its “present financial inability to replace the Dock Street Bridge,” and courts cannot interfere with this function … . Consequently, the Supreme Court’s declaration that the Town must “take all measures necessary to . . . repair or replace the Dock Street Bridge[ ] as expeditiously as possible” was purely advisory and does not create any binding obligation on the Town. Thus, this declaration was improper … . Matter of Hyde Park Landing, Ltd. v Town of Hyde Park, 2015 NY Slip Op 05945, 2nd Dept 7-8-15

 

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Sua Sponte Dismissal for Lack of Standing Reversed—Defendants Did Not Raise the Defense and Therefore Waived It—Lack of Standing is Not a Jurisdictional Defect

The Second Department determined Supreme Court should not have, sua sponte, dismissed the foreclosure action for an alleged lack of standing. The defendants did not raise the standing defense and, therefore, waived it. Standing is not a jurisdictional defense warranting sua sponte action by the court:

The Supreme Court improperly, sua sponte, directed the dismissal of the complaint on the ground that the plaintiff lacked standing. “A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … . Here, the Supreme Court was not presented with extraordinary circumstances warranting the sua sponte dismissal of the complaint … . Since the defendants … did not raise the defense of lack of standing in their answers and did not make pre-answer motions to dismiss the complaint on that ground, they waived the issue … . Moreover, a party’s lack of standing does not constitute a jurisdictional defect and does not warrant a sua sponte dismissal of the complaint by the court … . Onewest Bank, FSB v Prince, 2015 NY Slip Op 05922, 2nd Dept 7-8-15

 

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Motion to Intervene by Members of a De-Certified Class Should Have Been Granted—Class Members Allowed to Sue In Their Individual Capacities

The Second Department determined the motion to intervene by plaintiffs and 167 residents in a de-certified class action alleging environmental damage resulting from emissions from defendant’s (BNL’s) lab should have been granted. The action began as a class action suit which was dismissed without prejudice. Then, in accordance with CPLR 1013, the individuals in the class brought a motion to intervene accompanied by a complaint which was denied by Supreme Court.  The Second Department held the motion to intervene should have been granted and further held that the statute of limitations had been tolled from the time the class action proceedings were commenced:

… [T]he plaintiffs, along with 167 members of the proposed classes, moved together for leave to allow those 167 proposed class members to intervene in the action as plaintiffs pursuant to CPLR 1013, on the ground that “when a class action is de-certified, putative members of the de-certified class are given the opportunity to intervene into the case because of their allegations of common questions of law and fact.” The plaintiffs and the proposed intervenors (hereinafter collectively the appellants) alleged that the proposed intervenors owned property in the vicinity of BNL in 1996 and after, and presented common questions of law and fact with respect to loss of property values, and the cost of using municipal water instead of well water. They submitted a third amended complaint in support of their motion. * * *

… [T]he causes of action of the proposed intervenors are all based upon common theories of liability and, thus, satisfy the requirement of CPLR 1013 that their causes of action involve common questions of law or fact. Contrary to the Supreme Court’s conclusion, BNL would not be faced with a “plethora of new claims.” Moreover, BNL did not demonstrate that intervention would substantially prejudice any party, or cause undue delay … .

To the extent BNL argues, as an alternate ground for affirmance , that the claims of the proposed intervenors are time-barred, this contention is without merit. The statute of limitations applicable to this toxic tort action is the three-year statute of limitations pursuant to CPLR 214-c, which runs from the date of discovery or the date when the injury should have been discovered through the exercise of due diligence … . In American Pipe & Constr. Co. v Utah (414 US 538, 553), the United States Supreme Court held that, under the federal class action rule, commencement of a class action suit tolls the running of the statute of limitations for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status. New York courts have adopted this rule … . Osarczuk v Associated Univs., Inc., 2015 NY Slip Op 05653, 2nd Dept 7-1-15

 

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Declaratory Judgment Actions Seeking a Determination of the Validity of Certain Tax Assessment/Liens Were Governed by the Six-Year Statute of Limitations

Reversing Supreme Court, the Second Department determined the declaratory judgment actions seeking a ruling on the validity of certain tax assessments/liens were not time-barred and further found that, even where tax assessments are challenged as “void ab initio,” the statute of limitations (six years here) applies:

… [E]ven where a tax assessment is challenged as “void ab initio,” the action is subject to the governing statute of limitations … .

An action for a declaratory judgment is generally governed by a six-year limitations period (see CPLR 213[1]). Where a declaratory judgment action involves claims that are ” open to resolution through a form of proceeding for which a specific limitation period is statutorily provided, then that period limits the time for commencement of the declaratory judgment action'” … . The instant action could not have been brought pursuant to CPLR article 78 (see CPLR 7803), or as any other form of proceeding for which a specific limitations period is provided. Therefore, the six-year limitations period is applicable … . Town of Hempstead v AJM Capital II, LLC, 2015 NY Slip Op 05663, 2nd Dept 7-1-15

 

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Absent a Private Right of Action Expressly Granted by Statute, An Association Created by Statute Does Not Have the Capacity to Sue

The Second Department determined a nonprofit association created by statute (Insurance Law 2130), the Excess Line Association of New York (ELANY), did not have the capacity to sue based upon the defendants’ alleged failure to comply with the Insurance Law. Only the Superintendent of Insurance can enforce the Insurance Law.  Because the legislature did not provide ELANY with a statutory private right of action, the association did not have the capacity to bring the suit:

… ELANY both lacked capacity to commence this action and failed to state a cause of action. Capacity to sue “concerns a litigant’s power to appear and bring its grievance before the court” … . Entities created by statute “have neither an inherent nor a common-law right to sue. Rather, their right to sue, if it exists at all, must be derived from the relevant enabling legislation or some other concrete statutory predicate” … Such an entity ” has no power other than that given it by the Legislature, either explicitly or by necessary implication'” … .

ELANY was created by Insurance Law § 2130. The statute gives ELANY certain duties, mostly relating to receipt of records and preparation of reports, and provides that the services ELANY performs are to be funded by a stamping fee assessed for premium bearing documents submitted to it in accordance with Insurance Law § 2118 (see Insurance Law § 2130[a], [f]). Brokers’ records are to be open to examination by ELANY and the Superintendent of Insurance (now the Deputy for Insurance; hereinafter the Superintendent) (see Insurance Law § 2118[c]; Financial Services Law § 203). ELANY must perform its functions under the plan of operation established and approved by the Superintendent and “shall be supervised by the superintendent” (Insurance Law § 2130[a]; see Insurance Law § 2130[c]). The Superintendent may impose fines and may suspend or revoke an excess line broker’s license for noncompliance with the Insurance Law (see Insurance Law §§ 109, 2105[a]). Contrary to ELANY’s contention, none of the provisions of the statute confers upon it by necessary implication the capacity to sue to enforce the provisions of the Insurance Law. Rather, the broad enforcement powers of the Superintendent, the lack of enforcement powers granted to ELANY, and the requirement that ELANY function under the supervision of the Superintendent “negate[ ] any inference of a legislative intent to confer that power” … . Excess Line Assn. of N.Y. (ELANY) v Waldorf & Assoc., 2015 NY Slip Op 05637, 2nd Dept 7-1-15

 

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Pleading Requirements for Unjust Enrichment and Fraud Not Met

The Second Department determined the complaint against defendant bank alleging unjust enrichment and fraud was properly dismissed for failure to state a cause of action. The action stemmed from a foreclosure sale.  After the property had been sold, the judgment of foreclosure and sale was vacated because the bank did not properly serve process on one of the parties. The full amount paid for the property was refunded to the plaintiff.  The plaintiff then sued for unjust enrichment claiming the bank collected banK fees and interest.  Re: unjust enrichment: the complaint failed to allege the bank had been enriched at plaintiff’s expense. And the plaintiff sued for fraud alleging the bank knew it had failed to properly serve one of the parties at the time it prosecuted the foreclosure action.  Re: fraud: the complaint included only conclusory allegations of fraud without out the requisite supporting factual allegations. The Second Department explained:

The elements of a cause of action to recover for unjust enrichment are “(1) the defendant was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” … . “The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” … .

Here, the plaintiff merely alleged in the amended complaint that U.S. Bank was “unjustly enriched in that it collected bank fees and interest.” Even accepting these allegations in the amended complaint as true, the amended complaint failed, as a matter of law, to sufficiently allege that U.S. Bank was enriched at the plaintiff’s expense … . * * *

“The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages” … . All of the elements of a fraud claim “must be supported by factual allegations containing the details constituting the wrong” in order to satisfy the pleading requirements of CPLR 3016(b)… .

Here, the amended complaint consisted of conclusory allegations regarding U.S. Bank’s knowledge that it had commenced and prosecuted the underlying foreclosure action without properly effecting service on all of the necessary parties. Furthermore, the facts alleged in the amended complaint do not give rise to a reasonable inference that U.S. Bank had knowledge of, or participated in, the alleged fraud … . GFRE, Inc. v U.S. Bank, N.A., 2015 NY Slip Op 05640, 2nd Dept 7-1-15

 

Criteria for Intervention Described

In finding the motion for leave to intervene was properly denied, the Second Department explained the criteria:

Upon a timely motion, a person is permitted to intervene in an action as of right when, among other things, “the representation of the person’s interest by the parties is or may be inadequate and the person is or may be bound by the judgment” (CPLR 1012[a][2]…). In addition, the court, in its discretion, may permit a person to intervene, inter alia, “when the person’s claim or defense and the main action have a common question of law or fact” (CPLR 1013…). ” However, it has been held under liberal rules of construction that whether intervention is sought as a matter of right under CPLR 1012(a), or as a matter of discretion under CPLR 1013 is of little practical significance [and that] intervention should be permitted where the intervenor has a real and substantial interest in the outcome of the proceedings'” … . Trent v Jackson, 2015 NY Slip Op 05467, 2nd Dept 6-24-15

 

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Unsigned Deposition Transcripts and Party Admission in Police Report Admissible as Evidence in Support of Summary Judgment Motion

In reversing the grant of summary judgment to the defendant in a vehicle accident case, the Second Department noted the unsigned deposition transcripts of both plaintiff and defendant were admissible for purposes of the motion.  The court also noted that a party admission included in a police report was admissible, while the hearsay report itself was not:

“[T]he failure to submit an affidavit by a person with knowledge of the facts is not necessarily fatal to a motion where . . . the moving party submits other proof, such as deposition testimony … . Here, the defendant’s certified deposition transcript, although unsigned, was admissible since it was his own testimony that he was proffering in support of his motion and, in effect, he adopted it as accurate … . In addition, the transcript of the plaintiff’s deposition testimony, which was unsigned, was also admissible for the purpose of the defendant’s motion, since the transcript was certified by the reporter and the plaintiff did not challenge its accuracy … .

With respect to the police accident report submitted by the defendant in support of his motion, it was not certified as a business record and thus constituted inadmissible hearsay (see CPLR 4518[a]…), except for that portion of the report which contained a party admission by the plaintiff that she did not have a recollection of the accident … . Gezelter v Pecora, 2015 NY Slip Op 05440, 2nd Dept 6-24-15

 

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