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Service by “Nailing” On the Day Before the Last Possible Day and “Mailing” on the Last Possible Day Was Timely

The Court of Appeals, affirming the 4th Department, determined that service by “nailing and mailing” the petition to invalidate a designating petition was timely. The petition was “nailed” on the day before the last possible day for service and was “mailed” on the last possible day for service:

We agree with the courts below that this proceeding was properly commenced in a timely manner. Here, there is no dispute that petitioner complied with the terms of the order to show cause by nailing the papers to the door of [respondent’s] residence on July 22, 2015 and mailing the papers to that residence by express mail on July 23. [Respondent] maintains that mailing on the last day of the statutory period was jurisdictionally defective since delivery inevitably would occur outside of the statutory period. However, where the instrument of notice has been delivered by another prescribed method within the statutory period, we have rejected such contentions concerning mailing … . Matter of Angletti v Morreale, 2015 NY Slip Op 06647, CtApp 8-26-15

 

Doctrine of Comity Precluded New York Action Attacking Bermuda Judgment

The Second Department determined Supreme Court, under the doctrine of comity, properly dismissed the complaint attacking a foreign country judgment. Plaintiff had appeared in the Bermuda case and made no showing of fraud or a public policy violation:

Generally, the courts of this State will “accord recognition to the judgments rendered in a foreign country under the doctrine of comity,” which is “the equivalent of full faith and credit given by courts to judgments of our sister States” … . Absent some showing of fraud in the procurement of the foreign country judgment or that recognition of the judgment would do violence to a strong public policy of New York State, a party who properly appeared in the action is precluded from attacking the validity of the foreign country judgment in a collateral proceeding commenced in a New York court … .

Contrary to the plaintiff’s contention, the Supreme Court properly determined that the adjudication of his claims for compensation under employment and consulting agreements with his former employer in a winding-up proceeding that was litigated in the British Overseas Territory of Bermuda precluded the instant action against the employer, among others, to recover damages for breach of contract and fraud. The plaintiff appeared in the Bermuda proceeding by submitting his claims to the Bermuda court, and made no showing of fraud or that a public policy of this State would be violated by recognizing the Bermuda court’s rejection of his claims. Accordingly, the Supreme Court properly granted that branch of the defendants’ motion which was to dismiss the complaint based on principles of comity. Basile v CAI Master Allocation Fund, Ltd., 2015 NY Slip Op 06650, 2nd Dept 8-26-15

 

Although the President of a Corporation Was Also a Member of Defendant Limited Liability Company, the Corporation and Limited Liability Were Not Shown to Be “United in Interest” Such that the “Relation-Back” Doctrine Would Apply to Allow Adding the Corporation as a Defendant After the Statute of Limitations Had Run

The Second Department determined plaintiffs were not entitled to amend the complaint to add a party after the statute of limitations had passed pursuant to the “relation-back” doctrine. Although the president of the party to be added, Madjek, Inc., was a member of Madjek, LLC, (a named defendant), that relationship alone was not enough to demonstrate Madjek, LLC, and Madjek, Inc. were “united in interest” such that one would be vicariously liable for the acts of the other. The court explained the “relation-back” and “united in interest” criteria:

To establish the applicability of the relation-back doctrine, a plaintiff is required to prove that: (1) both claims arose out of the same conduct, transaction, or occurrence; (2) the new defendant is united in interest with the original defendant, and by reason of that relationship can be charged with notice of the commencement of the action such that it will not be prejudiced in maintaining its defense on the merits; and (3) the new defendant knew or should have known that, but for a mistake by the plaintiffs as to the identity of the proper parties, the action would have been brought against it as well (see CPLR 203[b] …). Once a defendant has demonstrated that the statute of limitations has expired, the burden is on the plaintiff to establish the applicability of the relation-back doctrine … .

While it is undisputed that the first prong of the test has been satisfied here, the plaintiffs failed to establish that the Madjek defendants are united in interest. Defendants are united in interest only when their interest “in the subject-matter [of the action] is such that [the defendants] stand or fall together and that judgment against one will similarly affect the other” … . Defendants are not united in interest if there is a possibility that the new party could have a different defense than the original party … . Here, the only fact that the plaintiffs established in support of their contention that the Madjek defendants were united in interest was that the president of Madjek, Inc., was a member of Madjek, LLC. This fact, standing alone, is insufficient to establish that the Madjek defendants are vicariously liable for the acts of each other and, thus, is insufficient to establish that the Madjek defendants are united in interest … . Montalvo v Madjek, Inc., 2015 NY Slip Op 06661, 2nd Dept 8-26-15

 

Case Should Not Have Been Dismissed on Forum Non Conveniens Grounds—Analytical Criteria Explained

The First Department determined Supreme Court should not have dismissed plaintiff’s action on “forum non conveniens” grounds. The action concerned a lease and guaranty for property located in Georgia, but the property itself was not part of the dispute. Both parties were authorized to do business in New York, plaintiff’s principal place of business was in New York, the lease was executed in New York and the guaranty was executed in New Jersey. The fact that Georgia law was to be applied (by the terms of the contract) did not control. The court explained the analytical criteria:

Generally, “unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed” … .

“The burden rests upon the defendant challenging the forum to demonstrate relevant . . . factors which militate against accepting the litigation and the court, after considering and balancing the various competing factors, must determine in the exercise of its sound discretion whether to retain jurisdiction or not” … . “Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum” … .

The court may also consider the residency of the parties and where the transaction out of which the case arose occurred … . “No one factor is controlling . . . [t]he great advantage of the rule of forum non conveniens is its flexibility based upon the facts and circumstances of each case” … . Here, there is a substantial nexus to New York.

“Although the residence of a plaintiff is not the sole determining factor on a motion for dismissal on grounds of forum non conveniens, it has been held to generally be the most significant factor in the equation” … . As the motion court acknowledged, in this case both parties are authorized to do business in New York and the plaintiff’s principal place of business is in New York. While the real property that is the subject of the lease and guaranty is located in Georgia, the actual property is not at issue in this case. In any event, the lease was actually executed in New York and some of the correspondence was sent to the nonparty tenant at a New York address. Moreover, the guaranty which is the subject of this litigation was executed in New Jersey and the defendant guarantor, a New Jersey corporation with its principal executive office in New Jersey, does not conduct any business in Georgia. While counsel for the nonparty tenant submitted an affidavit listing several potential witnesses who are located in either Georgia or Tennessee, there is no indication as to what knowledge these proposed witnesses have relating to the issues in this case, or whether they would even testify. Thor Gallery at S. DeKalb, LLC v Reliance Mediaworks (USA) Inc., 2015 NY Slip Op 06644, 1st Dept 8-25-15

 

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Defendants Demonstrated They Were Entitled to Depose Nonparty Physician Whose Notations Expressed Skepticism About the Cause of Plaintiff’s Injuries

The Second Department determined defendants were entitled to depose a nonparty doctor whose notations in medical records expressed skepticism about the plaintiff’s claims re: the cause of her injuries. The court explained the applicable law:

Pursuant to CPLR 3101(a)(4), a party may obtain discovery from a nonparty in possession of material and necessary evidence, so long as the nonparty is apprised of the circumstances or reasons requiring disclosure. The notice requirement of CPLR 3101(a)(4) “obligates the subpoenaing party to state, either on the face of the subpoena or in a notice accompanying it, the circumstances or reasons such disclosure is sought or required'” … . After the subpoenaing party has established compliance with the CPLR 3101(a)(4) notice requirement, disclosure from a nonparty requires no more than a showing that the requested information is relevant to the prosecution or defense of the action … . However, the party or nonparty moving to vacate the subpoena has the initial burden of establishing either that the requested deposition testimony “is utterly irrelevant'” to the action or that ” the futility of the process to uncover anything legitimate is inevitable or obvious'” … .

Here, contrary to the plaintiff’s contention, the … defendants satisfied the notice requirement. In a copy of the document entitled “Authorization to Permit the Interview of Treating Physician by Defense Counsel,” which was attached to the nonparty witness subpoena, “the circumstances or reasons” requiring the deposition of the nonparty were properly provided (CPLR 3101[a][4]). Since the … defendants met this minimal obligation, the burden shifted to the plaintiff to establish that the deposition testimony sought was irrelevant to this action, which she failed to do. Further, the … defendants demonstrated that it was relevant to the defense of the action … . Bianchi v Galster Mgt. Corp., 2015 NY Slip Op 06568, 2nd Dept 8-19-15

 

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“Nailing” of Petition on Next to Last Day for Service, and Mailing on the Last Day, Was Sufficient—Respondent, Who Initially Declined Designation as a Candidate, Could Not Subsequently Accept Designation as a Substitute Candidate

The Fourth Department, over a two-justice dissent, determined that the petition seeking invalidation of respondent’s designating petition was timely served by “nail and mail” because the nailing occurred on the day before the last possible date for service and the mailing occurred on the last possible day for service. The fact the petition could not have been “received” by mail by that date was not determinative. On the merits, the court determined respondent could not be the substitute candidate for a vacancy he himself had created by initially declining the designation. With respect to the service issue, the court wrote:

… [T]he petitioner must effectuate ” actual delivery of the instrument of notice not later than the last day on which the proceeding may be commenced’ ” … . In other words, the respondents must “receive delivery” of the order to show cause and the verified petition “within the [statute of limitations] period” … . That requirement operates irrespective of the court’s specific service directions under section 16-116 … .

Contrary to the view of our dissenting colleagues, we conclude that petitioner effectuated “actual delivery” of the commencement papers when they were affixed to respondent’s front door. It is well established that because “the [commencement] papers were timely affixed to the front door, the fact that the papers mailed were not received on [or before the statute of limitations date] was not a jurisdictional defect” … . Matter of Angletti v Morreale, 2015 NY Slip Op 06616, 4th Dept 8-19-15

 

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Where the State Is a Potential Joint Tortfeasor Which Cannot Be Joined In the Supreme Court Action with the Other Defendant (Because the State Must Be Sued in the Court of Claims), the Jury in the Supreme Court Trial Should Be Allowed, If Appropriate, to Apportion Damages Between the Defendant and the State

Plaintiff was injured when a tree limb fell and struck her car while she was driving on a state highway. Plaintiff sued both the defendant (the property owner) and the state. However, the state could be sued only in the Court of Claims, so two separate actions were brought against the two potential tortfeasors. The Third Department, in a case of first impression, in a full-fledged opinion by Justice McCarthy, over a partial dissent, determined that evidence of both the defendant’s and the state’s liability could be presented in the Supreme Court trial and the jury should, if appropriate, be allowed to apportion damages between the defendant and the state:

“Under CPLR article 16, a joint tortfeasor whose culpability is 50% or less is not jointly liable for all of [a] plaintiff’s noneconomic damages, but severally liable for its proportionate share” … . The provision was promulgated as a modification of the common-law theory of joint and several liability, the purpose of which was to “remedy the inequities created by joint and several liability on low-fault, ‘deep pocket’ defendants” … . However, where potential tortfeasors are not joined in an action, the culpability of a nonparty tortfeasor may be imposed upon the named defendant if the plaintiff can show that he or she is unable to obtain jurisdiction over the nonparty tortfeasor (see CPLR 1601 [1]). Here, plaintiffs do not face a jurisdictional limitation in impleading the State as a codefendant, but instead cannot do so due to the doctrine of sovereign immunity … . Plaintiffs’ only recourse against the State is to pursue an action in the Court of Claims (see Court of Claims Act §§ 8, 9). Likewise, if defendant is found liable in Supreme Court, it could seek indemnification from the State relative to its share of actual culpability as an additional claimant in the subsequent Court of Claims action … .

CPLR 1601 (1) is silent in regard to whether the State’s proportionate share of liability should be considered in calculating a defendant’s culpability in an action like the one at bar, and we have never decided the issue. * * *

Although we recognize the possibility of inconsistent verdicts as to the apportionment of fault in Supreme Court and in the Court of Claims, we note that this risk arises regardless of whether or not the jury is entitled to apportion liability between defendant and the State … . Given the statutory purpose of CPLR 1601 (1) to “limit[] a joint tortfeasor’s liability for noneconomic losses to its proportionate share, provided that it is 50% or less at fault” …, we find that juries in this scenario should be given the option to, if appropriate, apportion fault between defendant and the State. Artibee v Home Place Corp., 2015 NY Slip Op 06556, 3rd Dept 8-13-15

 

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County Clerk Not Authorized to Enter Judgment Where the Underlying Stipulation Required Notice Prior to Entry and Extrinsic Evidence Was Required to Calculate the Amount

The Second Department vacated a clerk’s judgment which had been entered based upon defendant’s alleged violation of a stipulation requiring monthly installments to pay off a judgment. The stipulation allowed the entry of judgment only “upon ten (10) days notice” and extrinsic evidence was necessary to calculate the amount of the judgment:

… [T]he … County Clerk did not have authority to enter a clerk’s judgment against Wielgus pursuant to CPLR 3215(i)(1). This statute states, in relevant part, that “[w]here . . . a stipulation of settlement is made, providing, in the event of failure to comply with the stipulation, for entry without further notice of a judgment in a specified amount, . . . the clerk shall enter judgment on the stipulation and an affidavit as to the failure to comply with the terms thereof, together with a complaint or a concise statement of the facts on which the claim was based” (CPLR 3215[i][1] [emphasis added]). Although the stipulation provided that [plaintiff bank] could enter a money judgment against [defendant] in the event of a default, it permitted entry of such a judgment only “upon ten (10) days notice” to [defendant]. Thus, the stipulation was not one which provided for entry of a judgment upon default “without further notice.” Moreover, the stipulation did not provide for entry of a judgment “in a specified amount.” Rather, it provided that the judgment to be entered upon [defendant’s] default would be calculated so as to “credit [defendant] for all payments made on account.” The stipulation thus did not specify the exact principal sum of the judgment that [plaintiff bank] would have the right to enter based on a default … under the stipulation; rather, it provided for a formula that required reference to extrinsic proof … .

Furthermore, as a general rule, a clerk’s judgment should not be entered where, as here, the amount of the judgment can be determined only by reference to extrinsic proof … . Generally, a judgment should be entered on application to the clerk only where “there can be no dispute as to the amount due”… . Under these circumstances, HSBC was required to apply to the court, rather than to the clerk, for an order enforcing the stipulation and granting leave to enter an appropriate judgment … . HSBC Bank USA, N.A. v Wielgus, 2015 NY Slip Op 06494, 2nd Dept 8-12-15

 

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International Bank With a Branch in New York Was Required to Comply with an Information Subpoena—“Separate Entity Rule” Which Prevents New York Courts from Enforcing Restraining Notices and Turnover Orders Directed to Branches of Foreign Banks Located Outside New York, Does Not Prevent New York Courts from Directing the New York Branch of a Foreign Bank to Comply with an Information Subpoena, Even though the Information Sought Relates to Foreign Branches–The Information Sought Is Available Through Electronic Searches Made by the New York Branch of the Bank

The First Department, in a full-fledged opinion by Justice Acosta, determined that defendant international bank, Mega (based in Taiwan with branches in 14 countries), was required to comply with an information subpoena issued to its New York branch. The essence of the action is the collection of a $39 million judgment. It was alleged that Mega was aiding the judgment debtor in preventing collection. Because the information requested was available to Mega through electronic searches conducted from the New York branch, and because Mega had consented to the necessary regulatory oversight in return for permission to operate in New York, Mega was directed to comply with the information subpoena:

The issue is whether the separate entity rule bars New York courts from compelling Mega’s New York branch to produce information pertaining to Mega’s foreign branches.

The separate entity rule is that “each branch of a bank is a separate entity, in no way concerned with accounts maintained by depositors in other branches or at the home office” … . The continuing validity of this arcane rule was recently upheld by the Court of Appeals … , solely with respect to restraining notices and turnover orders affecting assets located in foreign branch accounts  * * *. … [T]he rule does not bar the court’s exercise of jurisdiction over Mega to compel a full response to the information subpoena.

Moreover, public policy interests and innovations in technology support such an exercise of jurisdiction. … “[B]road post-judgment discovery in aid of execution is the norm in federal and New York state courts” … , and “New York law entitles judgment creditors to discover all matters relevant to the satisfaction of a judgment” … . * * *

“The information requested by the Information Subpoena can be found via electronic searches performed in [the bank’s] New York office, and [is] within this jurisdiction” … . Matter of B&M Kingstone, LLC v Mega Intl. Commercial Bank Co., Ltd., 2015 NY Slip Op 06482, 1st Dept 8-11-15

 

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agreement to maintain a driveway on a right-of-way ran with the land.

The Third Department held small claims court had properly determined an agreement to maintain a driveway on a right-of-way passing through the grantor’s front parcel to the grantee’s rear parcel ran with the land. The Third Department noted its review of small claims court rulings is confined to whether “substantial justice” was done according to the rules and principals of substantive law. Small claims court correctly held that the original parties to the property transfer intended the maintenance agreement to run with the land and that the agreement “touches and concerns” the land.  Therefore the defendant, the subsequent purchaser of the rear parcel, was bound by the maintenance agreement:

“Appellate review of small claims is limited to determining whether ‘substantial justice has not been done between the parties according to the rules and principles of substantive law'” … . Accordingly, this Court will overturn such a decision only if it is clearly erroneous … . As relevant here, to establish that the 1982 agreement ran with the land and was binding on defendants, plaintiff was required to establish that “(1) the grantor and grantee intended the [agreement] to run with the land, (2) there is privity of estate between the parties to the current dispute, and (3) the [agreement] touches and concerns the land” … . * * *

…[A]n agreement touches and concerns the land “if it affects the legal relations — the advantages and the burdens — of the parties to the [agreement], as owners of particular parcels of land and not merely as members of the community in general”… . Pugliatti v Riccio, 2015 NY Slip Op 06398, 3rd Dept 7-30-15

 

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