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The Proper Vehicle to Address Fraud Which Is Alleged to Have Tainted a Completed Proceeding Is a Motion to Vacate the Judgment, Not the Institution of a New Plenary Action

The Second Department noted that the remedy for addressing fraud in a completed action is a motion to vacate the judgment in that action, not a new plenary proceeding:

“Generally, a party who has lost a case as a result of alleged fraud or false testimony cannot collaterally attack the judgment in a separate action for damages against the party who adduced the false evidence” … . The “plaintiff’s remedy lies exclusively in that lawsuit itself, i.e., by moving pursuant to CPLR 5015 to vacate the . . . judgment due to its fraudulent procurement, not a second plenary action collaterally attacking the judgment in the original action” … . Stewart v Citimortgage Inc, 2014 NY Slip Op 07648, 2nd Dept 11-12-14

 

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Town Board Is Not a Necessary Party In an Action Against the Town—Acts of the Town Board Under Statutory Authority Are the Acts of the Town—Court’s Power to Join a Necessary Party Sua Sponte Noted (Not Properly Exercised Here)

The Second Department explained that, in a declaratory judgment action against a town challenging a local law, the town board is not a necessary party:

A “court may at any stage of a case and on its own motion determine whether there is a nonjoinder of necessary parties” … . “In a matter seeking a declaratory judgment challenging a legislative act, the legislative body that enacted the challenged law or ordinance is a necessary party” … .

In this declaratory judgment action against the Town of Huntington, challenging a Local Law enacted by the Town Board of the Town of Huntington (hereinafter the Town Board), the Supreme Court, sua sponte, directed the joinder of the Town Board as a defendant on the ground that it is a necessary party without which the action cannot proceed. However, a town board “shall be vested with all the powers of such a town” (Town Law § 60[1]) and “cannot and does not exist separately and independently from the town of which it is the governing body . . . [T]he acts of a town board when performed under statutory authority are the acts of the town” … . Accordingly, as the Town is a party defendant in this action, it was unnecessary for the court to have directed the joinder of the Town Board as a defendant … . Dish Realty LLC v Town of Huntington, 2014 NY Slip Op 07616, 2nd Dept 11-12-14

 

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Individual Defendants’ Ties to New York, Including Business Activities in New York, Were Not Sufficient to Afford New York Jurisdiction, Pursuant to CPLR 302, Over a Lawsuit Stemming from a Personal Injury in New Jersey—CPLR 301, Which Affords New York Courts Jurisdiction Over Corporations Doing Business in New York, Does Not Extend to Individuals Doing Business in New York

The Second Department reversed Supreme Court’s finding that New York courts had jurisdiction over plaintiff’s personal injury action.  Plaintiff was injured by an allegedly defective saw provided by the defendants while doing work for defendants at the defendants’ home in New Jersey.  Jurisdiction pursuant to CPLR 302 was lacking because there was no real connection between the the defendants’ activities in New York (they ran a church in New York) and the personal injury action.  Jurisdiction pursuant to CPLR 301 was lacking because CPLR 301 does not apply to individuals, as opposed to corporations, doing business in New York:

In order to determine whether personal jurisdiction exists under CPLR 302(a)(1), a court must determine (1) whether the defendant transacted business in New York and, if so, (2) whether the cause of action asserted arose from that transaction … .

The Court of Appeals has interpreted the second prong of the jurisdictional inquiry to require that, in light of all the circumstances, there must be an “articulable nexus” … , between a defendant’s in-state activity and the claim asserted … . Although “causation is not required,” the Court of Appeals has stated that “at a minimum [there must be] a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former” … . “[W]here at least one element arises from the New York contacts, the relationship between the business transaction and the claim asserted supports specific jurisdiction under the statute” … .

Here, the relationship between the causes of action asserted in the complaint and the [defendants’] activities within New York were too insubstantial to warrant a New York court’s exercise of personal jurisdiction over them pursuant to CPLR 302(a)(1). * * *

In contrast to the common-law approach to corporations, the common law, as developed through case law predating the enactment of CPLR 301, did not include any recognition of general jurisdiction over an individual based upon that individual’s cumulative business activities within the State … . Since the enactment of CPLR 301 did not expand the scope of the existing jurisdictional authority of the courts of the State of New York, that section does not permit the application of the “doing business” test to individual defendants … . Accordingly, contrary to the plaintiff’s contention, since the [defendants] were served with process in New Jersey, the Supreme Court was not authorized to exercise personal jurisdiction over them pursuant to CPLR 301, based on their cumulative individual business activities within the State. Pichardo v Zayas, 2014 NY Slip Op 07639, 2nd Dept 11-12-14

 

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Provision of County Charter Requiring a Referendum to Amend the Drinking Water Protection Program Is Valid and Enforceable—Amendment Enacted Without the Referendum Is Null and Void—Both Individual and Organizational Plaintiffs Had Standing to Contest the Amendment

The Second Department reversed Supreme Court findng that: (1) the plaintiffs had standing to contest the amendment of the Suffolk County Drinking Water Protection Program (DWPP) on the ground that the referendum required by the county charter was not held; and (2) the resolution enacted in the absence of a referendum was null and void.  The court noted the fact that the pleadings were not included in plaintiffs’ motion for summary judgment, the reason Supreme Court denied the motion, was not fatal to the motion:

The Supreme Court erred in granting that branch of the defendants’ cross motion which was for summary judgment dismissing the complaint on the ground that the plaintiffs lacked standing. An action commenced by natural persons pursuant to General Municipal Law § 51 “may take the form of [an] action for a declaratory judgment” … . To have standing based upon their status as taxpayers, the individual plaintiffs were required to allege that the challenged act constituted a waste of or injury to public funds or, alternatively, that the challenged act was both illegal and “imperil[ed] the public interests or [was] calculated to work public injury or produce some public mischief” … . Here, the plaintiffs alleged, in detail, that the defendants violated the Suffolk County Charter by enacting the Amendment in the absence of approval pursuant to a public referendum, and that this enactment threatened public funds expressly dedicated to protecting the drinking water supply in the County and lands in the Pine Barrens. Under the circumstances presented here, we conclude that the plaintiffs adequately alleged that the enactment of the challenged amendment without a public referendum is illegal insofar as it violates the Suffolk County Charter, and that this enactment imperiled the public interest or was calculated to work public injury or produce some public mischief… . …

Although the Supreme Court denied the plaintiffs’ motion for summary judgment on the ground that they failed to submit a copy of the pleadings with their motion papers, we nonetheless exercise our discretion to reach the merits. Notwithstanding that CPLR 3212(b) requires that motions for summary judgment be supported by a copy of the pleadings, CPLR 2001 permits a court, at any stage of an action, to “disregard a party’s mistake, omission, defect, or irregularity if a substantial right of a party is not prejudiced” … . * * *

[The] provisions of the New York Constitution and the Municipal Home Rule Law do not prevent Suffolk County from adopting a charter provision like the one at issue here, which requires approval by a public referendum in order to amend or repeal the DWPP in the future (see Municipal Home Rule Law § 11[2][a]; § 34[4]…). Although the relevant charter provision requires a public referendum that is denominated as a “mandatory” referendum, that public referendum is not mandated by State law (cf. Municipal Home Rule Law § 23). Rather, the relevant charter provision constitutes the County’s mode of granting permission to the electorate to approve or disapprove, by means of a public referendum, proposed changes to the DWPP. Hence, the public referendum countenanced by the Suffolk County Charter can properly be characterized as a “permissive” referendum within the meaning of the New York Constitution and the Municipal Home Rule Law … . Long Is Pine Barrens Socy Inc v County of Suffolk, 2014 NY Slip Op 07633, 2nd Dept 11-12-14

 

Criteria for a Change of Venue Not Met—Party Seeking Change Must First Demonstrate Existing Venue Is Improper

Reversing Supreme Court, the Second Department held that defendant’s motion to change venue should have been denied.  The court explained the analytical criteria:

“In the context of determining the proper venue of an action, a party may have more than one residence” … . Under CPLR 503(d), the county of an individual’s principal office is a proper venue for claims arising out of that business (see CPLR 503[d]…). Here, the plaintiff seeks to recover damages for medical malpractice allegedly committed by, among others, the defendant Jung Lack Lee in his capacity as a medical doctor. Accordingly, the county in which that defendant maintains his principal office is a proper venue in this case.

To prevail on a CPLR 510(1) motion to transfer venue, a defendant bears the burden of demonstrating that the plaintiff’s choice of venue was improper on the day the action was commenced, and that the defendant’s choice of venue is proper (see CPLR 511[b]…). Only if a defendant meets this burden is the plaintiff required to establish, in opposition, that the venue selected was proper … . Here, the defendants failed to establish that Kings County was improper … . Accordingly, the Supreme Court should have denied the defendants’ motions to transfer venue and granted that branch of the plaintiff’s cross motion which was to retain venue in Kings County. Young Sun Chung v Kwah, 2014 NY Slip Op 07656, 2nd Dept 11-12-14

 

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Motion to Dismiss Pursuant to CPLR 3211 (a)(1) [Documentary Evidence] Should Not Have Been Granted—Plaintiff Rebutted the Presumption of Validity of the Forum Selection Clause of the Relevant Contract

The Second Department determined Supreme Court should not have granted defendants’ motion to dismiss based upon the forum selection clause in the relevant contract.  Plaintiff rebutted the presumption of the validity of the clause:

A party seeking dismissal of a complaint under CPLR 3211(a)(1) must submit documentary evidence that ” conclusively establishes a defense to the asserted claims as a matter of law'” … . A contract provision may constitute documentary evidence under CPLR 3211(a)(1) …, and a forum selection clause contained in a contract may provide a proper basis for dismissal of a complaint under CPLR 3211(a)(1) … . A forum selection clause is “prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court” … . Accordingly, a forum selection clause will be given effect in the absence of a ” strong showing'” that it should be set aside … .

Here, the plaintiff has made the requisite strong showing that the forum selection clause in the nondisclosure agreement was “unreasonable.” Specifically, the plaintiff has contended, without contradiction, that neither the parties nor the agreement has any connection to the State of Delaware: none of the parties is located in Delaware, the nondisclosure agreement was not executed in Delaware, and performance of the agreement was not to take place in Delaware … . Accordingly, the prima facie enforceability and validity of the forum selection clause has been rebutted and, therefore, that clause does not “conclusively establish[ ] a defense to the asserted claims as a matter of law”… . US Mdse Inc v L & R Distribs Inc, 2014 NY Slip Op 07495, 2nd Dept 11-5-14

 

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Trial Court Properly Amended Pleadings Sua Sponte and Properly Allowed Plaintiff to Reopen the Case to Present Additional Evidence of Damages

The Second Department held that Supreme Court properly amended the pleadings sua sponte and properly allowed the plaintiff to reopen its case to present additional proof:

A court may amend pleadings before or after judgment to conform them to the evidence (see CPLR 3025[c]). Where no prejudice is shown, an amendment may be allowed during or even after trial … . Furthermore, an application for a continuance or adjournment is addressed to the sound discretion of the trial court, and the grant or denial thereof will be upheld on appellate review if the trial court providently exercised its discretion … . A trial court, in the exercise of discretion and for sufficient reasons, may allow a party to reopen his or her case, and supplement the evidence to cure any defects in the evidence that have inadvertently occurred … .

Here, under the circumstances of this case, the Supreme Court providently exercised its discretion in, sua sponte, amending the pleadings, continuing the trial, and permitting the plaintiff to reopen its case to present additional proof of damages … . MRI Enters Inc v Comprehensive Med Care of NY PC, 2014 NY Slip Op 07482, 2nd Dept 11-5-14

 

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Non-Party Attorneys Properly Held in Civil Contempt for Starting a Class Action Suit In Violation of Anti-Suit Injunctive Order

In a proceeding to liquidate the Executive Life Insurance Company of New York, non-party attorneys for objectors to the liquidation filed a class action lawsuit in federal court in violation of anti-suit injunctive orders issued by Supreme Court.  In affirming Supreme Court’s finding the non-party attorneys in contempt, the Second Department explained the criteria:

To prevail on a motion to punish for civil contempt, the movant must demonstrate that the alleged contemnor violated a clear and unequivocal court order, of which the alleged contemnor had knowledge, thereby prejudicing a right of a party to the litigation (see Judiciary Law § 753[A][3]…). “To satisfy the prejudice element, it is sufficient to allege and prove that the contemnor’s actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party” … .

* * * The commencement of the class action violated the anti-suit injunctive provisions set forth in three court orders entered in this rehabilitation proceeding commenced pursuant to Insurance Law article 74, that was later converted into a liquidation proceeding … . An order of the court must be obeyed until that order is set aside, either by appeal or otherwise, where, as here, the court that issued the order had jurisdiction to issue it … . The petitioner also demonstrated that the commencement of the class action prejudiced its rights … . Matter of Executive Life Ins Co of NY, 2014 NY Slip Op 07506, 2nd Dept 11-5-14

 

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Dismissal of a Criminal Charge In the Interest of Justice Can Constitute a “Termination In Favor of the Accused” In the Context of a Malicious Prosecution Cause of Action

In affirming Supreme Court’s finding the actions time-barred, the Second Department explained when the one-year statute of limitations starts to run in false arrest (release from confinement), false imprisonment (release from confinement), and intentional infliction of emotional distress (date of arrest) causes of action.  Supreme Court had also dismissed the malicious prosecution cause of action on the ground that the “interest of justice” dismissal of the accusatory instrument in the underlying criminal case was not a favorable termination of the criminal action.  The Second Department disagreed, reinstated that cause of action and described the relevant analysis:

Here, the Supreme Court concluded that the underlying criminal proceeding, in which the accusatory instrument was dismissed in the interest of justice … , was not terminated in the plaintiff’s favor. This conclusion is incorrect. “[A]ny termination of a criminal prosecution, such that the criminal charges may not be brought again, qualifies as a favorable termination, so long as the circumstances surrounding the termination are not inconsistent with the innocence of the accused” … .

In Cantalino [96 NY2d 391], the Court of Appeals considered whether the dismissal of a criminal proceeding in the interest of justice was a ” favorable termination'” for purposes of a malicious prosecution action … . The Court explained that there was no “per se rule that a dismissal in the interest of justice can never constitute a favorable termination” … . Rather, the Court set forth a “case-specific rule,” whereby the courts are to determine whether, “under the circumstances of each case, the disposition was inconsistent with the innocence of the accused” … . In the case before it, the Court of Appeals concluded that the interest-of-justice dismissal constituted a favorable termination, citing the Criminal Court’s indication that it was dismissing the charges because they were unfounded … . It contrasted the case before it with a prior case, Ward v Silverberg (85 NY2d 993), in which it had found that an interest-of-justice dismissal was not a favorable termination of the criminal proceeding. The Court explained that, in Ward, unlike in Cantalino, the Criminal Court had “recognized that [the] plaintiff had committed the charged conduct, [but] it did not believe a criminal sanction was appropriate” … . Thus, “the criminal charges in Ward were dismissed out of mercy” … . A dismissal out of mercy “is fundamentally inconsistent with the accused’s innocence” … .

In the present case, the criminal charges against the plaintiff were not dismissed out of mercy. Rather, they were dismissed based upon “the weakness of the proof of guilt” … , a conclusion which is not inconsistent with the plaintiff’s innocence … . Bellissimo v Mitchell, 2014 NY 07464, 2nd Dept 11-5-14

 

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City Was “United in Interest” with Non-Profit Corporation Which Maintained Central Park Pursuant to a Contract with the City—Therefore Plaintiff, Who Was Allegedly Injured by a Truck Owned by the Non-Profit Corporation, Could Amend His Complaint to Include the Non-Profit Corporation After the Statute of Limitations Had Run—However the Extent to Which the City Was “United in Interest” Was Dictated by the Terms of the Contract

The First Department determined that the Conservancy, a non-profit corporation which maintains Central Park under a contract with the City of New York, was “united in interest” with the City.  Therefore, plaintiff, who allegedly had been injured by a maintenance truck owned by the Conservancy, could amend his complaint to include the Conservancy, even though the statute of limitations had run.  The ‘unity of interest” was defined by the terms of the contract.  Because the contract did not call for the City to indemnify the Conservancy for gross negligence, the complaint against the Conservancy could not include the gross negligence claim:

… [P]laintiff relied on the 2006 Central Park Agreement, a contract between the City and the Conservancy, a nonprofit organization, in which they acknowledged that they had formed an effective “public/private partnership.” Under the Agreement, the Conservancy is required to provide specified maintenance services in Central Park to the “reasonable satisfaction” of the City, and the City is broadly required to indemnify the Conservancy “from and against any and all liabilities . . . arising from all services performed and activities conducted by [the Conservancy] pursuant to this agreement in Central Park.” The City’s indemnification obligation, among other things, expressly excludes claims arising from gross negligence or intentional acts of the Conservancy or its agents or volunteers. As a result of the Agreement, the Conservancy acts, in effect, as an independent contractor fulfilling the City’s nondelegable obligation to maintain the City parks in reasonably safe condition … .

The City is vicariously liable for the Conservancy’s negligence in the course of providing maintenance in Central Park by virtue of the contractual indemnification provision, and the parties are thus united in interest … . Further, since the City has a nondelegable duty to maintain Central Park, it is vicariously liable for negligence committed by the contractor in the course of fulfilling that duty … . However, the City is correct that its interests are not united with those of the Conservancy with respect to the proposed gross negligence claim, and leave to assert that claim against the Conservancy is therefore denied. Brunero v City of New York Dept of Parks & Recreation, 2014 NY Slip Op 07444, 1st Dept 10-30-14

 

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