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Complaint Can Not Be Deemed a Late Notice of Claim/Application to File a Late Notice of Claim Can Not Be Granted After the Statute of Limitations Has Run/City Is Not Required to Plead the Failure to File a Notice of Claim as a Defense/Participation in Discovery Did Not Preclude the City from Moving to Dismiss Based Upon Plaintiff’s Failure to File a Notice of Claim (After the Statute of Limitations Had Run)

The Second Department reversed Supreme Court’s determination that the complaint be deemed a late notice of claim against the city in a slip and fall case.  The court noted that Supreme Court did not have the power to accept the complaint as a late notice of claim, did not have the power to grant an application to file a late notice of claim after the statute of limitations had passed, the city was under no obligation to plead the absence of a notice of claim as a defense, and the city was not precluded from raising the defense by participating in discovery:

Here … the Housing Authority … was “under no obligation to plead, as an affirmative defense, the plaintiff’s failure to comply with the statutory notice of claim requirement” … . “Furthermore . . . participation in pretrial discovery did not preclude [it] from raising the untimeliness of the notice of claim” … . In short, there is no evidence in the record demonstrating that the Housing Authority engaged in any misleading conduct which would support a finding of equitable estoppel … . Furthermore, there is no indication in the record that the plaintiff relied upon any alleged act or omission of the Housing Authority or that such reliance caused the plaintiff to change her position to her detriment or prejudice … . Accordingly, the Supreme Court should have granted the Housing Authority’s motion for summary judgment dismissing the complaint on the ground that the plaintiff failed to serve a timely notice of claim, and denied that branch of the plaintiff’s cross motion which was to deem the complaint to be a late notice of claim and to deem it to have been timely served nunc pro tunc.  Feliciano v NYC Hous Auth, 2014 NY Slip OP 08807, 2nd Dept 12-17-14

 

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In the Absence of Allegations in the Pleadings Supporting an “Espinal” Exception to the Rule that Tort Liability to Third Persons Does Not Arise from a Contract, No Question of Fact Was Raised About a Duty Owed by the Defendant to the Plaintiff

The Second Department determined the complaint in a slip and fall case was properly dismissed.  There apparently was a contract between the defendant cleaning services company, One-A, and plaintiff’s employer.  Plaintiff slipped and fell on a wet floor. The court explained the Espinal criteria for tort liability to third parties arising from a contract and then found that, because plaintiff was not a party to the cleaning-services contract, the cleaning-services company did not owe her a duty of care:

Generally, a contractual obligation, standing alone, will not give rise to tort liability in favor of a third party … . Nonetheless, the Court of Appeals has recognized three exceptions to this general rule: (1) where the contracting party, in failing to exercise reasonable care in the performance of his or her duties, launches a force or instrument of harm; (2) where the plaintiff detrimentally relies on the continued performance of the contracting party’s duties; and (3) where the contracting party has entirely displaced another party’s duty to maintain the premises safely … . As part of its prima facie showing, a contracting defendant is only required to negate the applicability of those Espinal exceptions that were expressly pleaded by the plaintiff or expressly set forth in the plaintiff’s bill of particulars … . Here, given the allegations in the complaint and the plaintiff’s bill of particulars, One-A established its prima facie entitlement to judgment as a matter of law simply by offering sufficient proof that the plaintiff was not a party to its contract to clean the floor of the premises, and that it thus owed her no duty of care … . In opposition, the plaintiff failed to raise a triable issue of fact … . Glover v John Tyler Eters Inc, 2014 NY Slip Op 08809, 2nd Dept 12-17-14

 

Motion for a Change of Venue Made in the Wrong County–Statutory Procedure Explained

The Second Department determined that, given plaintiff’s response to the demand to change venue, defendants’ motion for a change of venue should have been made in the county where action was pending.  The court explained the applicable law:

“CPLR 511(b) provides a mechanism pursuant to which a defendant may serve a demand to change the place of a trial upon the ground of improper venue to a county the defendant specifies as being proper” … . If the plaintiff does not consent to the change, “the defendant may move to change the place of trial within fifteen days after service of the demand” (CPLR 511[b]). The defendant may notice such motion to be heard as if the action were pending in the county he or she specified, unless the plaintiff, within five days after service of the demand, serves an affidavit showing either that the county specified by the defendant is not proper or that the county designated by the plaintiff is proper (see id.).

Here, in response to the defendants’ demand to change venue, the plaintiff timely served an affidavit of her attorney containing factual averments that were prima facie sufficient to show that the county designated by her was proper (see CPLR 503[a]; 511[b]…). Accordingly, the defendants’ motion pursuant to CPLR 510(1) should have been made in the Supreme Court, Kings County, where the action was pending, and the Supreme Court, Nassau County, erred in granting the motion … .  King v CSC Holdings LLC, 2014 NY Slip OP 08813, 2nd Dept 12-17-14

 

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Criteria for Accelerated Relief Re: a Promissory Note Explained–Conclusory Allegations of Fraud in the Inducement Insufficient to Defeat Summary Judgment

Reversing Supreme Court, the Second Department determined plaintiff was entitled to accelerated summary judgment on a promissory note because the defendant’s conclusory allegations of fraud in the inducement were not sufficient to defeat the motion.  The court explained the availability of accelerated relief:

“Pursuant to CPLR 3213, a party may obtain accelerated relief by moving for summary judgment in lieu of complaint, provided that the action is based upon an instrument for the payment of money only or upon any judgment'” … . ” A promissory note is an instrument for the payment of money only, provided that it contains an unconditional promise by the borrower to pay the lender over a stated period of time'” … . “An instrument does not qualify for accelerated relief under CPLR 3213 if outside proof is needed, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document'” … . “Therefore, a plaintiff makes a prima facie showing of entitlement to judgment as a matter of law pursuant to CPLR 3213 by showing that the defendant executed the subject instrument, the instrument contains an unconditional promise to repay the plaintiff upon demand or at a definite time, and the defendant failed to pay in accordance with the instrument’s terms” … . Once the plaintiff establishes its prima facie entitlement to judgment as a matter of law, the burden shifts to the defendant to submit admissible evidence to establish the existence of a triable issue of fact with respect to a bona fide defense … .

Here, the plaintiff established its prima facie entitlement to judgment as a matter of law by showing that the defendant executed the subject instruments, which contained unconditional promises to repay the plaintiff upon demand or at a definite time, and the defendant failed to pay in accordance with the terms of the instruments … . Contrary to the Supreme Court’s determination, in opposition, the defendant failed to establish the existence of a triable issue of fact with respect to a bona fide defense. The defendant claimed that the plaintiff fraudulently induced it to execute the promissory notes. However, the evidence submitted by the defendant failed to raise a triable issue of fact in this regard. Moreover, the defendant’s conclusory allegations of fraud were insufficient to defeat the plaintiff’s entitlement to summary judgment … . Sun Convenient Inc v Sarasamir Corp, 2014 NY Slip Op 08827, 2nd Dept 12-17-14

 

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Bank Properly Sanctioned for Not Negotiating in Good Faith in Mandatory Foreclosure Settlement Conferences

The Second Department determined plaintiff bank had not negotiated in good faith in the mandatory foreclosure settlement conferences (required by CPLR 3408(f)).  The bank was sanctioned by precluding it from collecting interest on the mortgage for a period of several months:

Pursuant to CPLR 3408(f), the parties at a mandatory foreclosure settlement conference are required to negotiate in good faith to reach a mutually agreeable resolution (see CPLR 3408[f]; Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 11). ” The purpose of the good faith requirement in [CPLR 3408] is to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution'” (US Bank N.A. v Sarmiento, 121 AD3d 187, 200, quoting 2009 Mem of Governor’s Program Bill, Bill Jacket, L 2009, ch 507, at 11). To conclude that a party failed to negotiate in good faith pursuant to CPLR 3408(f), a court must determine that “the totality of the circumstances demonstrates that the party’s conduct did not constitute a meaningful effort at reaching a resolution” … .

Here, the totality of the circumstances supports the referee’s finding that the plaintiff failed to negotiate in good faith. The referee’s finding was based, in part, upon the plaintiff’s failure to follow guidelines pursuant to the federal Home Affordable Mortgage Program (hereinafter HAMP). The applicable guidelines required the plaintiff, as a lender participating in HAMP, to attempt to obtain a waiver of an investor prohibition or restriction in lowering the interest rate and to keep such evidence in the loan file (see Making Home Affordable Program, Handbook for Servicers of Non-GSE Mortgages, version 4.0, ch 2, § 6.5 at 99 [August 17, 2012]). However, despite repeated requests by the referee to produce evidence that the plaintiff attempted to obtain a waiver of the investor’s restrictions in the PSA, the plaintiff failed to do so for more than one year. Therefore, the plaintiff failed to demonstrate that it followed HAMP regulations and guidelines, which, as several trial courts have concluded, constitutes a failure to negotiate in good faith pursuant to CPLR 3408(f)… . US Bank NA v Smith, 2014 NY Slip Op 08832, 2nd Dept 12-17-14

 

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Only Parties “Aggrieved Within the Meaning of CPLR 5511” May Appeal

In finding that the appeal must be dismissed because the appellant was not “aggrieved within the meaning of CPLR 5511,” the Second Department explained the meaning of “aggrieved” in this context:

“A person is aggrieved within the meaning of CPLR 5511 when he or she asks for relief but that relief is denied in whole or in part,’ or, when someone asks for relief against him or her, which the person opposes, and the relief is granted in whole or in part'” … . Saccheri v Cathedral Props Corp, 2014 NY Slip OP 08821, 2nd Dept 12-17-14

 

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Article 78 Is Proper Mechanism for Seeking Return of Property Held by the Police Department/Here Petitioner Was Not Entitled to Return of Firearm Not Licensed in New York/Firearms Owners’ Protection Act Did Not Apply

The Second Department determined that, although an Article 78 proceeding can be used to seek the return of property from the police department, the proceeding can not be used to seek the return of contraband.  Under the facts here, the firearm at issue was contraband because the petitioner did not have a license to possess it in New York, in spite of the fact the firearm had been legally purchased and possessed in California. In addition, the court held that the petitioner was not simply transporting the firearm through New York, an act protected by the Firearms Owners’ Protection Act (18 USC 926A):

Under the circumstances of this case, the Supreme Court correctly determined that the Firearm Owners’ Protection Act (18 USC § 926A) was not applicable. “Section 926A permits a licensee, in certain circumstances, to transport a firearm from any place where he may lawfully possess and carry such firearm to any other place where he may lawfully possess and carry such firearm'” … . The firearm owner must be actually engaging in travel or acts incidental to travel …, and during the transportation, the weapon and ammunition must not be readily accessible … . Here, the petitioner failed to establish that he was only engaged in travel through New York so as to invoke the protection of section 926A … . Matter of Khoshneviss v Property Clerk of NYC Police Dept, 2014 NY Slip Op 08844, 2nd Dept 12-17-14

 

Repeated Invitations to Review 60 to 80 Banker’s Boxes of Documents In Response to a Discovery Demand Constituted Willful and Contumacious Behavior Justifying the Striking of the Complaint

The Third Department determined Supreme Court properly struck the pleadings based upon plaintiffs’ failure to comply with discovery demands.  Plaintiffs sued defendants for profits allegedly lost when plaintiffs failed to procure a printing and copying contract with the state.  The defendants sought discovery of documents related to the lost profits (alleged to be $1,500,000). Although plaintiffs supplied some relevant information, the discovery demands were repeatedly met with an invitation to review 60 to 80 banker’s boxes of documents in a warehouse:

We recognize that plaintiffs provided certain documents and that [plaintiff’s principal] appeared at a deposition. This limited cooperation does not necessarily preclude a finding of willful and contumacious behavior… . Plaintiffs had the burden to prove damages and defendants were entitled to review documents supporting the damages claim prior to trial. Notably, plaintiffs were able to create and provide annual sales summaries, but never provided the documents that were used to calculate the sales figures. The record confirms that despite Supreme Court’s frequent intervention and direction to produce the documents in a more organized fashion, plaintiffs continued to insist that their offer to have defendants sift through 60 to 80 boxes of miscellaneous business records was adequate. Indeed, plaintiffs refused to respond otherwise even after defendants narrowed their document request following [a] deposition. * * *

In our view, the record demonstrates “[a] pattern of noncompliance” sufficient to support Supreme Court’s finding that plaintiffs’ conduct was willful … . Under the circumstances, we thus conclude that the court did not abuse its discretion in granting defendants’ motion and striking plaintiffs’ complaint. BDS Copy Inks Inc, v International Paper, 2014 NY Slip Op 08692, 3rd Dept 12-11-14

 

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Court Must Consider Whether Both Parties, Not Only the Bank, Have Negotiated in Good Faith in the Mandatory Pre-Foreclosure Settlement Conferences (Re: Possible Modification of the Terms of a Mortgage Subject to Foreclosure)—Under the Totality of the Circumstances, Supreme Court’s Finding that the Bank Did Not Negotiate in Good Faith Was Not Supported

The First Department, in a full-fledged opinion by Justice Andrias, determined that Supreme Court should have considered the defendant’s actions in deciding whether the parties had negotiated in good faith during the pre-foreclosure settlement conferences mandated by CPLR 3408 (a) [Subprime Residential Loan and Foreclosure Laws].  The conferences are required to ascertain whether a modification of the terms of a mortgage otherwise subject to foreclosure can be reached in a settlement. Supreme Court’s finding that the plaintiff bank did not negotiate in good faith was not warranted, in large part, because Supreme Court did not take into account the inaccurate and inconsistent information provided by the defendant during the conferences:

CPLR 3408 was enacted in 2008, as part of the omnibus “Subprime Residential Loan and Foreclosure Laws” (L 2008, ch 472, effective August 5, 2008), remedial legislation intended to assist homeowners at risk of losing their homes to foreclosure due to the subprime credit crisis (See Sponsor’s Mem., Bill Jacket (L 2008, ch 472). As part of the protections afforded to homeowners by the legislation, CPLR 3408 requires that conferences be conducted in residential foreclosure actions “for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amounts may be modified or other workout options may be agreed to, and for whatever other purposes the court deems appropriate” (CPLR 3408[a]).

These mandatory settlement conferences are intended to “provide an opportunity for borrowers and lenders to try to reach a solution that avoids foreclosure” (see Letter of Sen Farley, Bill Jacket, L 2008, ch 472 at 6).

CPLR 3408(f), added in 2009 as part of legislation designed to provide broader protection for homeowners (L 2009, ch 507 effective February 13, 2010), states that “[b]oth the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.” “The purpose of the good faith requirement is to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution” (2009 Mem of Governor’s Program Bill, Bill Jacket, L 2009, ch 507 at 11). The language of the statute and legislative history confirm that the obligation to negotiate in good faith is intended to be a two way street, imposing reciprocal obligations on both the lender and the borrower to cooperate with the other to enable achievement of a reasonable resolution … . Towards this end, 22 NYCRR 202.12-a(c)(4) directs the court to “ensure that each party fulfills its obligation to negotiate in good faith.”

The term “good faith” is not defined in the statute. However, this Court has held that compliance with the good faith requirement of CPLR 3408 is not established by merely proving the absence of fraud or malice on the part of the lender and that “[a]ny determination of good faith must be based on the totality of the circumstances,” taking into account that CPLR 3408 is a remedial statute … .

“While the aspirational goal of CPLR 3408 negotiations is that the parties reach a mutually agreeable resolution to help the defendant avoid losing his or her home’ (CPLR 3408[a]), the statute requires only that the parties enter into and conduct negotiations in good faith … . …[T]his Court [has] noted that “there are situations in which the statutory goal is simply not financially feasible for either party” and that “the mere fact that plaintiff refused to consider a reduction in principal or interest rate does not establish that it was not negotiating in good faith. Nothing in CPLR 3408 requires plaintiff to make the exact offer desired by [the] defendant[ ] [mortgagors], and the plaintiff’s failure to make that offer cannot be interpreted as a lack of good faith” … . * * *

…[W]e find that [defendant] has not established that, under the totality of the circumstances, plaintiff failed to engage in a meaningful effort at reaching a solution during the settlement conferences. Although plaintiff presented [defendant] with repeated requests for documentation and, at times, failed to timely comply with deadlines issued by the court, the record establishes that [defendant] created a moving target for plaintiff by repeatedly changing her alleged sources of income in her loan modification applications, and failing to disclose substantial and material liens encumbering the property. Citibank NA v Barclay, 2014 NY Slip Op 08757, 1st Dept 12-11-14

 

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Nature of a “Turn-Key” or “Design-Build” Contract Explained—Three-Year Statute of Limitations for Malpractice Applied to Defendant Architects Who Were Engaged Solely to Design, Not Build, the Renovations

In a lawsuit stemming from the failure of a building facade, the Third Department determined that the contract between plaintiff property-owner and defendant architects was not a “turn-key” or “design-build” contract, which encompassed the entire construction project, but rather was a professional services contract for the design of building renovations.  Therefore the three-year statute of limitations for professional malpractice applied. The Third Department affirmed the dismissal of the complaint, explaining the nature of a “design-build” contract:

In “turnkey” or “design-build” construction projects, “an owner contracts with one entity to both design and build the project [and t]he turnkey builder is responsible for every phase of the construction from final design through subcontracting, construction, finishing and testing” … . The design-builder generally cannot shift liability and is the “single point [of] responsibility” under a design-build contract, because it is “the [d]esign-[b]uilder [who] has the responsibility of the preliminary and construction design, the responsibility of submitting a fixed sum for the construction of the project and the responsibility for holding the contracts with its trade contractors” … . As plaintiff asserts, it follows that nearly every design-build project involves the existence of two or more contracts — at least one among the members of the design-build team and one between the design-builder and the owner. Here, however, it was not defendant, the purported design-builder, who held the separate contract with the general contractor, but plaintiff as the owner. * * *

…[W]e conclude that plaintiff’s … causes of action — alleging that defendant was negligent and breached the parties’ contract by failing to use reasonable care in rendering its professional services — essentially allege professional malpractice … . Such claims “‘come[] within the purview of CPLR 214 (6),'” which sets forth a three-year statute of limitations for nonmedical malpractice, “‘regardless of whether the theory is based in tort or breach of contract'”… . We note that “‘a claim for professional malpractice against an engineer or architect accrues upon the completion of performance under the contract and the consequent termination of the parties’ professional relationship'” … . 797 Broadway Group LLC v Stracher Roth Gilmore Architects, 2014 NY Slip Op 08689, 3rd Dept 12-11-14

 

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