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Post-Judgment Restraining Order Served On a New York Branch of a Foreign Bank, Pursuant to the Separate Entity Rule, Cannot Extend to Assets Held in Branches of the Bank Which Are Outside of New York

The Court of Appeals, in a full-fledged opinion by Judge Graffeo, over a dissenting opinion, answering a certified question from the Second Circuit, determined the “separate entity” rule prohibited a restraining order served on a New York branch of a bank from extending to assets in other branches of the bank which are outside New York.  Here a restraining order was served on a New York Branch of a foreign bank headquarted in the United Kingdom and the plaintiff sought to apply the restraining order to $30 million held in a branch of that bank in the United Arab Emirates:

The separate entity rule, as it has been employed by lower New York courts and federal courts applying New York law, provides that even when a bank garnishee with a New York branch is subject to personal jurisdiction, its other branches are to be treated as separate entities for certain purposes, particularly with respect to CPLR article 62 prejudgment attachments and article 52 postjudgment restraining notices and turnover orders. In other words, a restraining notice or turnover order served on a New York branch will be effective for assets held in accounts at that branch but will have no impact on assets in other branches… . * * *

In large measure, the underlying reasons that led to the adoption of the separate entity rule still ring true today. The risk of competing claims and the possibility of double liability in separate jurisdictions remain significant concerns, as does the reality that foreign branches are subject to a multitude of legal and regulatory regimes. By limiting the reach of a CPLR 5222 restraining notice in the foreign banking context, the separate entity rule promotes international comity and serves to avoid conflicts among competing legal systems … . And although Motorola suggests that technological advancements and centralized banking have ameliorated the need for the doctrine, courts have continued to recognize the practical constraints and costs associated with conducting a worldwide search for a judgment debtor's assets … . Motorola Credit Corp v Standard Chartered Bank, 2014 NY Slip Op 07199, CtApp 10-23-14

 

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Release Given By Injured Party to a Tortfeasor Relieves that Tortfeasor of Any Liability for Contribution

The Second Department noted that a release given in good faith by the injured person to a tortfeasor relieves that tortfeasor from liability for contribution:

“A release given in good faith by the injured person to one tortfeasor as provided in [General Obligations Law § 15-108(a)] relieves him [or her] from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules” (General Obligations Law § 15-108[b]).  United States Fire Ins Co v Raia, 2014 NY Slip Op 07146, 2nd Dept 10-22-14

 

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City Estopped from Denying Property Owner the Opportunity to Seek Discretionary Relief Re: the Payment and Acceptance of Tax Arrears—City’s Actions Misled Property Owner

The Second Department determined the equitable estoppel doctrine could properly be applied to a municipality in this case. A city employee had allowed the petitioner (Emporium) to enter an installment agreement to pay back real property taxes at a time when the property had already been foreclosed and transferred.  The Second Department determined Emporium was entitled to a hearing to determine whether the city is equitably estopped from denying Emporium the opportunity to seek discretionary relief re: the payment and acceptance of tax arrears:

With respect to Emporium’s equitable estoppel claim, “[a]lthough estoppel should not be invoked against governmental entities in the absence of exceptional circumstances, we have not hesitated to do so where a municipality’s misleading nonfeasance would otherwise result in a manifest injustice” … . “To establish estoppel, the misconduct of the public agency must have induced justifiable reliance by a party who then changed his position to his detriment” … . * * *

The City respondents’ failure to contact Emporium once it determined that the installment agreements would not be honored constitutes misleading conduct … . Moreover, the City respondents maintained their silence during a period of time when action could have made a difference to Emporium … . Matter of Emporium Mgt Corp v City of New York, 2014 NY Slip Op 07157, 2nd Dept 10-22-14

 

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Denial of Property Tax Refunds by Director of Tax Commission Was Not Final—Article 78 Claims Not Ripe for Judicial Review

The Second Department determined the Article 78 proceedings seeking property tax refunds were not ripe for judicial review because the denial of the refunds by the Director of the county Tax Commission was not final:

…[T]he Supreme Court properly determined that his claims seeking CPLR article 78 relief relating to his tax refund applications were not ripe for judicial review. Administrative determinations may only be challenged via CPLR article 78 review after the determination is final (see CPLR 7801[1]). “For a challenge to administrative action to be ripe, the administrative action sought to be reviewed must be final, and the anticipated harm caused by the action must be direct and immediate” … . Moreover, a matter is not ripe where the claimed harm may be prevented or significantly ameliorated by further administrative action … . Here, the issuance of written recommendations by the Executive Director of the Westchester County Tax Commission was not a final approval or denial of the appellant’s tax refund applications (see RPTL 5565])… . Matter of Greenberg v Assessor of Town of Scarsdale, 2014 NY Slip Op 07160, 2nd Dept 10-22-14

 

In the Absence of a Showing of Possible Fraud, Income Tax Returns Not Discoverable

In an action alleging a breach of an insurance policy, defendant sought discovery of plaintiff’s income tax returns.  In affirming Supreme Court’s refusal to compel production of the returns, the Second Department explained:

Tax returns generally are not discoverable in the absence of a strong showing that the information is indispensable to a claim or defense and cannot be obtained from other sources …. Here, the defendants failed to make such a showing. Contrary to their contention, the defendants did not make a sufficiently strong showing to warrant disclosure of the plaintiff’s tax returns, such as indicia of fraud … . Katz v Castlepoint Ins Co, 2014 NY Slip Op 07128, 2nd Dept 10-22-14

 

Unexcused Failure to Comply with Discovery Orders Warranted Striking of the Pleadings

The Second Department determined plaintiff’s failure to facilitate an independent medical examination was willful and contumacious warranting the striking of the pleadings:

“The determination whether to strike a pleading for failure to comply with [*2]court-ordered disclosure lies within the sound discretion of the trial court” … . “However, the drastic remedy of striking a pleading pursuant to CPLR 3126 should not be imposed unless the failure to comply with discovery demands or orders is clearly willful and contumacious. Willful and contumacious conduct may be inferred from a party’s repeated failure to comply with court-ordered discovery, coupled with inadequate explanations for the failures to comply or a failure to comply with court-ordered discovery over an extended period of time” … . Specifically, contrary to the plaintiff’s contention, dismissal of the complaint is warranted where a party repeatedly fails to appear at scheduled IMEs without adequate excuse …. It is undisputed that the plaintiff not only missed the scheduled IMEs without any excuse, but also missed the rescheduled IMEs without offering any reasonable excuse. In addition, the plaintiff failed to provide documents reflecting her prior accidents, despite being obligated to do so pursuant to a so-ordered stipulation. Mangione v Jacobs, 2014 NY Slip Op 07133, 2nd Dept 10-22-14

 

Court Should Have Allowed Service of an Order to Show Cause by Means Other than Personal Delivery after Plaintiff Failed to Effect Personal Delivery Despite Due Diligence

The Second Department determined plaintiff’s motion for leave to serve an order to show cause by means other than personal delivery should have been granted.  The plaintiff had been unable to effect personal delivery despite due diligence:

As a general matter, an order to show cause must be served at a time and in the manner specified therein (see CPLR 403[d]; 2214[d]…). However, under the particular circumstances of this case, the Supreme Court improvidently exercised its discretion in denying that branch of the plaintiff’s motion which was, in effect, for leave to serve … by a method of personal service pursuant to CPLR 308 other than personal delivery. The plaintiff demonstrated that personal delivery … pursuant to CPLR 308(1), as required by the order to show cause, could not be effected despite the exercise of due diligence. Moreover, service pursuant to the other means set forth in CPLR 308 constitutes personal service, and is sufficient here for notice of an application to punish for contempt … . Koyachman v Paige Mgt & Consulting LLC, 2014 NY Slip Op -7130, 2nd Dept 10-22-14

 

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After a Mistrial in a Criminal Matter, a Prohibition Action Seeking to Bar Retrial on Double Jeopardy Grounds Must Be Brought Within Four Months of a Definitive Demonstration of the People’s Intent to Re-Prosecute

The Court of Appeals, over a concurring opinion which disagreed with the majority's grounds, determined that the four-month statute of limitations was not tolled under a “continuing harm” theory and the prohibition action was time-barred.  The trial court had declared a mistrial because, during deliberations, one of the 12 jurors was removed for misconduct.  It was clear shortly after the mistrial that the prosecution was preparing for a second trial. Two years after the mistrial was declared, the defendant brought a prohibition action seeking to prohibit the second trial on Double Jeopardy grounds:

A four-month limitations period applies to CPLR article 78 prohibition proceedings (see CPLR 217 [1]…) and the petition here was filed more than two years after the mistrial was declared. Although a tolling period for continuing harm has been recognized … and would be adopted by our concurring colleague, we reject its application in this situation. Once the People definitively demonstrated their intent to re-prosecute and the court began to calendar the case for eventual trial, Smith was obligated to initiate his Double Jeopardy-based article 78 challenge within the statutorily prescribed time frame. On the facts of this case, that period expired well before prohibition was sought, and therefore, the proceeding was barred by the statute of limitations. Matter of Smith v Brown, 2014 NY Slip OP 07090, CtApp 10-21-14

 

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Complaint Stated a “Mixed Opinion” Defamation Cause of Action—A “Mixed Opinion” Statement Implies It Is Based Upon Facts Unknown to the Reader—Pre-Answer Motion to Dismiss Should Not Have Been Granted

The Court of Appeals, in a full-fledged opinion by Judge Rivera, reversed the 4th Department and reinstated a defamation complaint against Syracuse University and James Boeheim, the head coach of the Syracuse University men’s basketball team. The complaint had been dismissed pursuant to CPLR 3211(a)(7) on the ground that the statements were pure opinion and were therefore not actionable as a matter of law. The Court of Appeals determined that the allegations in the complaint (accepted as true for purposes of the pre-answer motion to dismiss) included statements by Coach Boehein which implied the existence of facts within his knowledge but unknown to the reader.  Such statements are actionable as “mixed opinion.”  The plaintiffs alleged that the team’s associate coach had sexually molested them more than twenty years before.  Coach Boeheim described the plaintiffs as liars who were making the allegations for financial gain.  The court explained its role in determining a pre-answer motion to dismiss and the relevant law of defamation:

This appeal comes to us on a pre-answer motion to dismiss pursuant to CPLR 3211 (a) (7), a procedural posture which requires that “we accept as true each and every allegation made by plaintiff and limit our inquiry to the legal sufficiency of plaintiff’s claim” … . Unlike on a motion for summary judgment where the court “searches the record and assesses the sufficiency of the parties’ evidence,” on a motion to dismiss the court “merely examines the adequacy of the pleadings” … . In determining the sufficiency of a defamation pleading, we consider “whether the contested statements are reasonably susceptible of a defamatory connotation” … . As we have previously stated, “[i]f, upon any reasonable view of the stated facts, plaintiff would be entitled to recovery for defamation, the complaint must be deemed to sufficiently state a cause of action” … . We apply this liberal standard fully aware that permitting litigation to proceed to discovery carries the risk of potentially chilling free speech, but do so because, as we have previously stated, “we recognize as well a plaintiff’s right to seek redress, and not have the courthouse doors closed at the very inception of an action, where the pleading meets the minimal standard necessary to resist dismissal of the complaint” … . * * *

In order for the challenged statements to be susceptible of a defamatory connotation, they must come within the well established categories of actionable communications. Thus, a false statement “that tends to expose a person to public contempt, hatred, ridicule, aversion or disgrace constitutes defamation” … . “Since falsity is a necessary element of a defamation cause of action and only ‘facts’ are capable of being proven false, ‘only statements alleging facts can properly be the subject of a defamation action'” … .

A defamatory statement of fact is in contrast to “pure opinion” which under our laws is not actionable because “[e]xpressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action for defamation” …. For, “[h]owever pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas” … . A pure opinion may take one of two forms. It may be “a statement of opinion which is accompanied by a recitation of the facts upon which it is based,” or it may be “an opinion not accompanied by such a factual recitation” so long as “it does not imply that it is based upon undisclosed facts” … .

While a pure opinion cannot be the subject of a defamation claim, an opinion that “implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it, [] is a ‘mixed opinion’ and is actionable” … . This requirement that the facts upon which the opinion is based are known “ensure[s] that the reader has the opportunity to assess the basis upon which the opinion was reached in order to draw [the reader’s] own conclusions concerning its validity” … . What differentiates an actionable mixed opinion from a privileged, pure opinion is “the implication that the speaker knows certain facts, unknown to [the] audience, which support [the speaker’s] opinion and are detrimental to the person” being discussed ,,, .

Distinguishing between fact and opinion is a question of law for the courts, to be decided based on “what the average person hearing or reading the communication would take it to mean” … . “The dispositive inquiry … is ‘whether a reasonable [reader] could have concluded that [the statements were] conveying facts about the plaintiff” … . Davis v Boeheim, 2014 NY Slip Op 07083, CtApp 10-21-14

 

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If a Contractual Representation or Warranty is False When Made, a Claim for Breach of Contract Accrues Upon Execution

The First Department noted that if a contractual representation or warranty is false when made, a claim for breach accrues at the time of the execution of the contract, even if the contract states that the “effective date” is earlier.  US Bank NA v DLJ Mtge Capital Inc, 2014 NY Slip Op 07093, 1st Dept 10-21-14

 

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