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Abuse of Discretion to Grant Motion for Leave to Amend Answer On the Eve of Trial

The Second Department determined Supreme Court should not have granted defendant’s motion for leave to amend his answer, which was made long after the action had been certified for trial:

While leave to amend a pleading shall be freely granted (see CPLR 3025[b]), a motion for leave to amend is committed to the broad discretion of the court … . “In exercising its discretion, the court should consider how long the party seeking the amendment was aware of the facts upon which the motion was predicated [and] whether a reasonable excuse for the delay was offered” … . Generally, in the absence of prejudice or surprise to the opposing party, leave to amend pleadings should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit … .

“However, where the application for leave to amend is made long after the action has been certified for trial, judicial discretion in allowing such amendments should be discrete, circumspect, prudent, and cautious'” … . “Moreover, when . . . leave is sought on the eve of trial, judicial discretion should be exercised sparingly” … . Yong Soon Oh v Hua Jin, 2015 NY Slip Op 00362, 2nd Dept 1-14-15

 

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Constructive Trust Causes of Action Should Not Have Been Dismissed on the Merits, Criteria Explained (Some Constructive Trust Causes of Action Were Properly Dismissed as Time-Barred, However)/Procedure Re: Motion to Dismiss for Failure to State a Cause of Action Described/Application of Statute of Limitations to Constructive Trusts Explained/”Dead Man’s” Statute Not Applicable to Certain Evidence, at Least at this Stage of the Proceedings

The Fourth Department determined causes of action alleging the existence of constructive trusts on behalf of petitioners re: real property and stock owned by decedent should not have been dismissed on the merits.  (However, in a second related appeal addressed in the same decision, the Fourth Department determined the real-property constructive trust actions were time-barred). Re: the company stock, respondent, the executor, alleged he was the sole owner but could not support the allegation with documentary evidence. Petitioners alleged the stock should be distributed as one of the assets of decedent’s estate.  The Fourth Department held that the petitioners had stated a valid constructive-trust cause of action. The court discussed in some depth the consideration of evidence submitted re: a motion to dismiss pursuant to CPLR 3211(a)(7), the nature of a constructive trust, the inapplicability of the “dead-man’s” statute (CPLR 4519) to certain evidence, and the application of the six-year statute of limitations to constructive trusts.  With respect to the nature of constructive trusts, the court wrote:

We agree with petitioners that the petition sufficiently states a cause of action for a constructive trust with respect to the NGR property, the Manitou Road property and NYSFC stock. “On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction . . . We accept the facts as alleged in the [petition] as true, accord [the petitioners] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory . . . In assessing a motion under CPLR 3211 (a) (7), . . . a court may freely consider affidavits submitted by the [petitioner] to remedy any defects in the [petition] . . . and the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one’ ” … .

“[I]t is well settled that [a] constructive trust may be imposed when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest . . . In order to invoke the court’s equity powers, [a petitioner] must show a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, a breach of the promise, and [the respondent’s] unjust enrichment . . . Inasmuch as a constructive trust is an equitable remedy, however, courts do not rigidly apply the elements but use them as flexible guidelines . . . In this flexible spirit, the promise need not be express, but may be implied based on the circumstances of the relationship and the nature of the transaction” … .

The facts as alleged in the petition and set forth in the corresponding affidavits establish the existence of a confidential and fiduciary relationship between respondent and decedents. The facts with respect to the NGR and Manitou Road properties establish that respondent promised to pay decedents for the NGR property and to reconvey the Manitou Road property to decedents after it was subdivided by respondent. The petition further alleges that the properties were transferred to respondent as a result of those promises, and that respondent breached those promises and was thereby unjustly enriched.

With respect to the NYSFC stock, the petition and corresponding affidavits allege that Anthony believed, until the day that he died, that he still owned the company and that respondent had made promises to “allow all of [decedents’] children to share in NYSFC.” While the allegations of an express promise are lacking, “[e]ven without an express promise, . . . courts of equity have imposed a constructive trust upon property transferred in reliance upon a confidential relationship. In such a situation, a promise may be implied or inferred from the very transaction itself. As Judge Cardozo so eloquently observed: Though a promise in words was lacking, the whole transaction, it might be found, was “instinct with an obligation” imperfectly expressed’ ” (Sharp, 40 NY2d at 122). Based on the circumstances of the relationship between respondent and decedents and the nature of their multiple transactions, we conclude that there are sufficient facts from which we can conclude that there was an implied promise made by respondent to decedents; that the transfer of stock, if indeed there was a transfer, was made in reliance upon that promise; and that the promise was thereafter broken, resulting in an unjust enrichment to respondent. Matter of Thomas, 2015 NY Slip Op 00017, 4th Dept 1-2-15

 

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Seizure of Claimant’s Computers Pursuant to a Warrant Did Not Give Rise to Conversion, Negligent Misrepresentation and Constitutional Tort Causes of Action—Elements of Those Causes of Action Explained

The Fourth Department reversed the Court of Claims and dismissed causes of action for conversion and negligent misrepresentation stemming from the seizure of claimant’s computers pursuant to a judicial warrant.  The court noted that the seizure pursuant to the authority of the warrant precluded the conversion cause of action and the absence of privity between the claimant and the investigators who said the computers would be promptly returned precluded the negligent representation cause of action. Alternate ways to seek return of the computers (an application to County Court and an Article 78 proceeding if the application were denied) precluded the constitutional tort cause of action:

An actionable “conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession” … . Here, a search warrant specifically authorized law enforcement to “search for and seize” six categories of items, including “[a]ll computers and computer storage media and related peripherals, electronic or computer data.” Claimants have never challenged the validity of the search warrant. Moreover, the unchallenged warrant placed no time limit on the retention of the items seized, and the authorization to “seize” the computers was not terminated until County Court ordered the property returned following Boerman’s guilty plea. We therefore conclude that defendant’s exercise of control over the computers did not constitute conversion inasmuch as it had the proper authority to exercise such control … .

The tort of “negligent misrepresentation requires [a claimant] to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information’ ” … . We agree with defendant that, as a matter of law, there can be no “privity-like relationship” between an investigator and the target of his or her investigation … . Indeed, the relationship between investigator and target is the opposite of a “special position of confidence and trust” in which one party might justifiably rely upon the ” unique or specialized expertise’ ” of the other party … . Thus, as defendant correctly contends, the negligent misrepresentation claim fails as a matter of law … .

Even assuming, arguendo, that the initial seizure or continued detention of claimants’ computers violated the Search and Seizure Clause of the State Constitution (art I, § 12), we conclude that “no . . . claim [for constitutional tort] will lie where the claimant has an adequate remedy in an alternate forum” … . Here, claimants could have raised their constitutional arguments in an application to County Court seeking the return of their computers … or, if such motion were denied, in a CPLR article 78 proceeding seeking relief in the nature of mandamus or prohibition … . LM Bis Assoc Inc v State of New York, 2015 NY Slip Op 00007, 4th Dept 1-2-15

 

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Jury Verdict Finding Defendant’s Negligence Was Not the Proximate Cause of the Accident Should Not Have Been Set Aside—Criteria for Setting Aside a Verdict As Against the Weight of the Evidence Explained

The Fourth Department determined the trial court should not have set aside a verdict on the ground that it was against the weight of the evidence.  Plaintiff, a pedestrian, had been struck by a car driven by defendant.  The jury concluded the driver was negligent but the driver’s negligence was not the proximate cause of the accident:

“A verdict rendered in favor of a defendant may be successfully challenged as against the weight of the evidence only when the evidence so preponderated in favor of the plaintiff that it could not have been reached on any fair interpretation of the evidence” … . “A jury finding that a party was negligent but that such negligence was not a proximate cause of the accident is inconsistent and against the weight of the evidence only when the issues are so inextricably interwoven as to make it logically impossible to find negligence without also finding proximate cause’ ” … . Where, however, “a verdict can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view” … .

Here, the jury could have reasonably found from the evidence that plaintiff was not crossing the street in the crosswalk; that it was a dark, rainy evening; and that plaintiff emerged in defendant’s lane of travel from between stopped vehicles. The jury could also reasonably have found that, although defendant was negligent in, for example, the manner in which she approached the intersection before turning left, such negligence was not a proximate cause of the collision with plaintiff after she made the turn. Thus, “the finding of proximate cause did not inevitably flow from the finding of culpable conduct,” and the verdict therefore is not against the weight of the evidence … . Amorosi v Hubbard, 2015 NY Slip Op 00110, 4th Dept 1-2-15

 

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Defendant’s Motion to Vacate a Default Judgment of Divorce Should Have Been Granted Even Though Defendant First Appeared and Then Withdrew

The Fourth Department defendant’s motion to vacate a default judgment of divorce should have been granted, even though the defendant had appeared in the action and then withdrew.  The court noted that a default judgment cannot be appealed and the only remedy is therefore a motion to vacate:

We reject plaintiff’s contention that defendant could not move to vacate the judgment based on excusable default pursuant to CPLR 5015 (a) (1) because he appeared and then withdrew his appearance on the record. Regardless of the fact that defendant appeared initially, the judgment was entered upon defendant’s default. Defendant therefore could not appeal from the judgment of divorce (see CPLR 5511) and, indeed, his only remedy was to move to vacate the judgment of divorce pursuant to CPLR 5015 (a) (1) … .

We conclude that defendant demonstrated both a reasonable excuse for the default and a meritorious defense …, and that he is entitled to vacatur of those parts of the judgment of divorce distributing the parties’ assets …, the only parts of the judgment challenged by defendant on appeal … . Defendant averred that he informed his attorney that he disagreed with the proposed resolution of the parties’ retirement accounts and did not want to finalize the judgment on those terms, but that he was subsequently unable to contact his attorney, and a default judgment of divorce was entered without his knowledge. Furthermore, the judgment of divorce failed to resolve the outstanding issues regarding distribution of the retirement accounts, the home equity loan, and defendant’s enhanced earning capacity, which issues the parties expressly acknowledged remained to be resolved and were dependent upon, at least in part, the forthcoming report. Marshall v Marshall, 2015 NY Slip Op 00059, 4th Dept 1-2-15

 

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Supreme Court Properly Considered Documentary Evidence Re: a Motion to Dismiss for Failure to State a Cause of Action Pursuant to CPLR 3211(a)(7)—Limited Role of Such Evidence in this Context Clarified/Criteria for Specific Performance of a Real Estate Contract Explained

The Fourth Department, in a full-fledged opinion by Justice Whalen, clarified how a motion to dismiss for failure to state a cause of action (CPLR 3211(a)(7)) should be handled when documentary evidence is submitted by the defendant.  The case involved a real estate transaction which initially fell through when plaintiff was unable to finance it.  Years later, when plaintiff finally was able to obtain financing, it sought specific performance of the original contract. Documents tracing the history of the communications between plaintiff and defendant were submitted with the motion to dismiss.  Supreme Court considered the documents and dismissed the complaint.  The Fourth Department affirmed. In addition to an extensive discussion of the use of documentary evidence submitted in support of (and in opposition to) a motion to dismiss pursuant to CPLR 3211(a)(7), the Fourth Department explained the criteria for specific performance of a real estate contract and the role of a “time is of the essence” demand (which was not made here):

CPLR 3211 (a) (7) authorizes the summary dismissal of a complaint for failure to “state” a cause of action. Historically, “[a] motion to dismiss for failure to state a cause of action . . . was[] limited to the face of the complaint” (Rovello, 40 NY2d at 638 [Wachtler, J., dissenting]), but the Legislature enlarged the scope of facial sufficiency motions by enacting subdivision (c) of CPLR 3211, which permits “trial court[s to] use affidavits in its consideration of a pleading motion to dismiss” (id. at 635 …). The Court in Rovello held that the plain text of CPLR 3211 (c) “leaves this question,” i.e., the admissibility of affidavits on a motion pursuant to CPLR 3211 (a) (7), “free from doubt” (id. at 635). The 1st Department recently explained that Rovello’s reference to “affidavits” is merely shorthand for “evidentiary submissions” … .

As noted in Rovello, however, CPLR 3211 does not specify “what effect shall be given the contents of affidavits submitted on a motion to dismiss when the motion has not been converted to a motion for summary judgment” (id.). The Court noted that “[m]odern pleading rules are designed to focus attention on whether the pleader has a cause of action rather than on whether he has properly stated one’ ” and held that evidentiary submissions may only be considered for a “limited purpose” in assessing the facial sufficiency of a civil complaint (id. at 636). This “limited purpose,” Rovello explained, is two-fold. On the one hand, “affidavits submitted by the defendant [as movant] will seldom if ever warrant the relief” sought under CPLR 3211 (a) (7) “unless too the affidavits establish conclusively that plaintiff has no cause of action” (id. [emphasis added]). On the other hand, the nonmoving party may “freely” submit evidentiary materials “to preserve inartfully pleaded, but potentially meritorious, claims” (id. at 635).

The “limited purpose” to be accorded evidentiary submissions on a motion to dismiss has been consistently reiterated by the Court of Appeals since Rovello … . Indeed, in Guggenheimer v Ginzburg (43 NY2d 268, 275), the Ct. of Appeals noted that “dismissal should . . . eventuate” only when the defendant’s evidentiary affidavits “show[] that a material fact as claimed by the pleader to be one is not a fact at all and . . . that no significant dispute exists regarding it” … . * * *

We therefore conclude that the court properly considered defendant’s evidentiary submissions in evaluating the motion to dismiss at bar. Liberty Affordable Hous Inc v Maple Ct Apts, 2015 NY Slip Op 0003, 4th Dept 1-2-15

 

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Complaint by Members of a Congregation against the Congregation’s Board of Trustees Stemming from the Termination of a Rabbi Reinstated—Criteria for Motions to Dismiss, Statutory Interpretation Principles, Criteria for Stating a Defamation Cause of Action, and the Qualified Immunity Afforded Board Members by the Not-for-Profit Corporation Law Discussed in Some Depth

The Second Department, in a full-fledged opinion by Justice Dickerson, reversed Supreme Court's dismissal of a complaint against the congregation's board of trustees by members of the congregation alleging causes of action stemming from the board's termination of a Rabbi. The Second Department held Supreme Court had not properly interpreted the Religious Corporations Law and the congregation's by-laws (Supreme Court had erroneously concluded the board had the power to act as it did under the statute and by-laws). The court further held the complaint sufficiently alleged malice in support of the defamation cause of action and sufficiently alleged the qualified immunity afforded board members by the Not-for-Profit Corporation Law may not apply.  The court discussed the criteria for a motion to dismiss pursuant to CPLR 3211, statutory interpretation principles, the elements of defamation, and the qualified immunity afforded board members by the Not-for-Profit-Corporation Law in some depth. Only a portion of the statutory-interpretation discussion is quoted here.  Supreme Court had interpreted the statutory phrase “The trustees … shall have no power to settle or remove or fix the salary of the minister…” to refer only to the trustees' actions concerning “the salary of the minister.”  The Second Department interpreted the phrase to mean the trustees have no power to “settle,” “remove,” or “fix the salary of” the minister:

We conclude that a more natural reading of the provision “[t]he trustees . . . shall have no power to settle or remove or fix the salary of the minister” (Religious Corporations Law § 200) establishes that “settle or remove” do not modify “the salary of the minister.” Rather, a more natural reading of this passage would be that the terms “settle,” “remove,” and “fix the salary of” all modify “the minister.” Under this reading, the trustees have no power to settle, or hire, the minister; they have no power to remove, or terminate the engagement of, the minister; and, finally, they have no power to fix the salary of the minister.

Under the Supreme Court's interpretation of the relevant language, the words “settle” and “fix” would have the same meaning, thus rendering one of these terms superfluous. ” Words are not to be rejected as superfluous where it is practicable to give each a distinct and separate meaning'” (…see McKinney's Cons Laws of NY, Book 1, Statutes § 231). Moreover, the Supreme Court's interpretation would lead to the somewhat unnatural provision for the “removal” of a clergyperson's salary. Furthermore, the use of the word “or” to separate each of the three terms suggests an intent to distinguish three distinct concepts.

Additionally, our interpretation of the statute, prohibiting the trustees from settling or removing the minister, or fixing his or her salary, is supported by the consistent, and quite similar, language set forth in Religious Corporations Law § 5. We note in this regard that ” [a] statute or legislative act is to be construed as a whole, and all parts of an act are to be read and construed together to determine the legislative intent'” … . Kamchi v Weissman, 2014 NY Slip Op 09109, 2nd Dept 12-31-14


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Prior Ties to New York Sufficient to Justify Jurisdiction of New York Courts over Custody Proceedings Brought by the Child’s Grandmother Two Months After the Child and Mother Moved to Florida

The Second Department determined New York did not have jurisdiction over the custody matter by virtue of Domestic Relations Law 76 (1)(a) but did have jurisdiction pursuant to Domestic Relations Law 76 (1)(b) ( Unified Child Custody Jurisdiction and Enforcement Act [UCCJEA]).  Respondent mother had moved from New York to Florida with the child two months before the custody proceedings were commenced by petitioner, the child's grandmother (who lives in New York).  The mother argued the New York courts did not have jurisdiction:

UCCJEA provides the jurisdictional grounds for a court of this state to hear an initial custody dispute, including when “this state is the home state of the child on the date of the commencement of the proceeding, or was the home state of the child within six months before the commencement of the proceeding and the child is absent from this state but a parent or person acting as a parent continues to live in this state” (Domestic Relations Law § 76 [1] [a]…).

It is not disputed that New York was the home state of the child within six months prior to the time that petitioner commenced this proceeding. Because the child moved to Florida approximately two months prior to the commencement of the proceeding, the question presented is whether Family Court properly concluded that petitioner was a “person acting as a parent” for the purposes of the UCCJEA. A “person acting as a parent” is one who “(a) has physical custody of the child or has had physical custody for a period of six consecutive months . . . within one year immediately before the commencement of a child custody proceeding; and (b) has been awarded legal custody by a court or claims a right to legal custody under the law of this state” (Domestic Relations Law § 75-a [13]). …[B]ecause petitioner neither claims a right to legal custody nor has been awarded legal custody of the child, Family Court erred when it determined that petitioner was a “person acting as a parent” pursuant to Domestic Relations Law § 76 (1) (a).

…Having found that petitioner was not a “person acting as a parent,” it follows that, at the time this proceeding was commenced, the child, who had been living in Florida for fewer than six months, did not have a home state for purposes of the UCCJEA … . In such a case, a New York court may exercise jurisdiction if “(i) the child [and the parent] . . . have a significant connection with this state other than mere physical presence; and (ii) substantial evidence is available in this state concerning the child's care, protection, training, and personal relationships” (Domestic Relations Law § 76 [1] [b]).

* * * … [W]e find that the record supports a finding that, at the time that the petition was filed, the child and respondent had a significant connection with New York and that “substantial evidence regarding her present and future welfare” existed in New York … . Accordingly, we find that Family Court had subject matter jurisdiction to entertain the petition. Matter of Breselor v Arciniega, 2014 NY Slip Op 09084, 3rd Dept 12-31-14


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Neither CPLR 5015 Nor Family Court Act 451 Was a Bar to Mother’s Petition to Modify a Child-Support Money Judgment by Temporarily Suspending Interest

In reversing Family Court's denial of mother's petition to modify a child-support money judgment (temporary suspension of interest), the Second Department explained that neither CPLR 5015, nor Family Court Act 451 was a bar to the petition:

The mother's failure to allege any of the grounds listed in CPLR 5015 did not preclude her from seeking modification of the money judgment since the grounds set forth in the statute are not exhaustive … . Additionally, Family Court Act § 451 provides the Family Court with continuing jurisdiction over any support proceeding brought under Family Court Act article 4 “until its judgment is completely satisfied,” and authorizes it to “modify, set aside or vacate any order issued in the course of the proceeding” without limitation as to grounds (Family Ct Act § 451[1]). * * *

Contrary to the Family Court's conclusion, the prohibition contained in Family Court Act § 451 on modifying or vacating an order or judgment so as to “reduce or annul child support arrears accrued prior to the [filing of the petition for modification]” did not preclude the modification the mother sought through her motion, inasmuch as she proposed only to suspend interest on the money judgment prospectively from the date her modification petition was filed (Family Ct Act § 451[1]). Moreover, DSS, the party in whose favor the money judgment was entered, expressly consented to the suspension of interest on the money judgment as requested by the mother.  Matter of Nassau County Dept of Social Servs v Schapp, 2014 NY Slip Op 09139, 2nd Dept 12-31-14


Recommencement of A Dismissed Action Pursuant to CPLR 205 (a) Not Allowed Where Prior Action Was Dismissed for Neglect to Prosecute

The Second Department determined that dismissal of plaintiff's action for neglect to prosecute precluded the commencement of another identical action pursuant to CPLR 205 (a):

The Supreme Court correctly concluded that a prior action commenced by the plaintiff against the defendant, which asserted the same causes of action, was dismissed for the plaintiff's failure to obtain personal jurisdiction over the defendant and neglect to prosecute, and that the order of dismissal entered in that action adequately set forth the conduct of the plaintiff that constituted the neglect and demonstrated a general pattern of delay in proceeding (see CPLR 205[a]). Accordingly, the court properly concluded that the plaintiff could not avail herself of CPLR 205(a), which provides that, under certain circumstances, an action that has been dismissed, albeit not on the merits, may be recommenced within six months after its dismissal… . Webb v Greater NY Auto Dealers Assn Inc, 2014 NY Slip Op 09121, 2nd Dept 12-31-14


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