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Criteria for Dismissal of a Complaint Pursuant to CPLR 3211(a)(1) [Defense Based Upon Irrefutable Documentary Evidence] and CPLR 3211(a)(7) [Failure to State a Cause of Action] Explained

In the context of a legal  malpractice action, in affirming the denial of motions to dismiss, the Second Department explained the criteria for motions to dismiss pursuant to CPLR 3211(a)(1) [defense founded on documentary evidence] and CPLR 3211(a)(7) [failure to state a claim]:

A party seeking relief pursuant to CPLR 3211(a)(1) on the ground that his or her defense is founded upon documentary evidence ” has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff’s claim'” … . In the instant matter, the documentary evidence submitted by the defendants, consisting of the orders issued by the Supreme Court in the underlying action, failed to utterly refute the plaintiff’s allegations of malpractice or conclusively establish a defense as a matter of law in the instant action … . * * *

On a motion to dismiss pursuant to CPLR 3211(a)(7), the facts alleged in the complaint must be accepted as true, the plaintiff is accorded the benefit of every possible favorable inference, and the court’s function is to determine only whether the facts as alleged fit within any cognizable legal theory … . “Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove [his or her] claims, of course, plays no part in the determination of a prediscovery CPLR 3211 motion to dismiss” … . Here, the plaintiff alleged that, but for the defendants’ negligence, including their failure to assert “appropriate claims against the proper parties, . . . the Plaintiff’s medical malpractice claim would have succeeded and resulted in a different, better and/or more positive outcome.” Construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, as required, the plaintiff stated a cause of action to recover damages for legal malpractice … . Tooma v Grossbarth, 2014 NY Slip Op 07347, 2nd Dept 10-29-14

 

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Where a Witness Is Incarcerated Pursuant to the Judiciary Law, After A Finding the Witness is In Contempt, and the Incarceration Is Not Specifically Imposed for a Definite Period As Punishment, But Rather Is Imposed to Induce the Witness to Obey the Court’s Order, the Contempt Finding is Civil in Nature—Double Jeopardy Will Not Bar Prosecution of the Witness for Criminal Contempt Under the Penal Law

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined the contempt finding and incarceration of the defendant (under the Judiciary Law) following the defendant's refusal to testify at his brother's trial was civil, not criminal, in nature.  Therefore, the prohibition against double jeopardy did not bar the prosecution from charging the defendant with criminal contempt (under the Penal Law),  The Judiciary Law allows a finding of civil or criminal contempt.  Where, as here, a defendant is incarcerated in the hope that the incarceration will induce the defendant to follow the court's order (in this case the order to testify under immunity), but no period of incarceration is specifically designated and imposed as a punishment for failure to obey the court's order, the proceedings are civil in nature.

…”'[I]t is not the fact of punishment, but rather its character and purpose, that often serve to distinguish civil from criminal contempt” (… . Where a defendant is held in contempt for the remedial purpose of compelling compliance, imprisonment continues until such time as the contemnor acquiesces or is no longer able to do so … . Once the contemnor agrees, there is no remedial purpose to be served by continued confinement. The contemnor, therefore, holds “the keys of their prison in their own pockets” … .

In contrast, where a contemnor is sentenced to imprisonment for a definite period which cannot be affected — that is, ended —by the contemnor's compliance with the law, then the contempt is not remedial but punitive. As the Supreme Court has stated, “[i]f the sentence is limited to imprisonment for a definite period, the defendant is furnished no key, and [the defendant] cannot shorten the term by promising not to repeat the offense” … . * * *

For a court to summarily punish contempt, our Judiciary Law requires issuance of an order “stating the facts which constitute the offense” and “plainly and specifically prescribing the punishment to be inflicted” (Judiciary Law § 755 [emphasis added]). Notably absent from County Court's order of contempt here is a plain and specific statement of the punishment to be imposed upon defendant. The record reveals that the court issued a mandate of commitment and that defendant was confined pursuant to that mandate; no where does the record indicate the precise term of commitment. * * *

In cases where a court invokes its contempt power to coerce a defendant's obedience, the best practice would be for the court to state on the record that defendant may purge the contempt through compliance with the law. However, based on the record before us, it is clear that County Court did not summarily adjudicate defendant in criminal contempt or impose a definite sentence of punishment in accordance with the Judiciary Law. Therefore, defendant's conditional imprisonment was for the remedial purpose of compelling defendant's testimony, and as a consequence defendant's subsequent prosecution for contempt was not barred by double jeopardy. People v Sweat, 2014 NY Slip Op 07292, CtApp 10-28-14

 

Court’s Role In Reviewing a Motion to Dismiss Pursuant to CPLR 3211 Explained

In reversing Supreme Court’s dismissal of a complaint alleging breach of the terms of an employment contract, the First Department explained the court’s role in determining a motion to dismiss under CPLR 3211 (a)(1) [documentary evidence] and (a)(7) [failure to state a claim]:

Under CPLR 3211(a)(1) and (a)(7) the court is limited to examining the complaint (and, under [a][1], the proffered documentary evidence) to determine whether the complaint states a cause of action … . The law is also settled that “in assessing the adequacy of a complaint under CPLR 3211(a)(7), the court must give the pleading a liberal construction, accept the facts as alleged in the complaint to be true and afford the plaintiff the benefit of every possible inference” … . “Whether the plaintiff will ultimately be successful in establishing [its] allegations is not part of the calculus” … . Greystone Funding Corp v Kutner, 2014 NY Slip Op 07296, 1st Dept 10-28-14

 

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Nail and Mail Service Not Valid—Not Calculated to Give Timely Notice of Order to Show Cause Challenging an Independent Nominating Petition

The Third Department determined that the method of service used for petitioner’s order to show cause challenging an independent nominating petition (naming a Libertarian Independent Party candidate for state senator) was not valid and reversed the granting of the application:

The manner of service provided in the order to show cause was not “‘reasonably calculated to give notice to the necessary parties so that receipt of such notice would normally be expected within the statutory 14-day period for commencing a proceeding concerning the validity of a designating petition'” … . To institute a proceeding “under Election Law § 16-102,” a petitioner “must commence the proceeding and complete service on all the necessary parties within the period prescribed by Election Law § 16-102 (2)” … . In order to complete service, actual delivery must occur … . The Court of Appeals has held that the method of service employed here — affixing the order to show cause and papers to Bowman’s residence and mailing the same on the last day permitted for commencing a proceeding — is not a method of service reasonably calculated to give timely notice … . Contrary to petitioners’ assertions, our decision in Matter of Grimaldi v Board of Elections of the State of N.Y. (95 AD3d 1644 [2012]) is distinguishable. In that case, we concluded that service by affixing the papers to the respondent’s residence and either faxing or leaving a copy at the office of the respondent’s counsel on the last day to commence a proceeding was permissible; we did not permit affixing the papers to a residence and mailing the same on the last day to commence (id. at 1645-1646). Inasmuch as service was not completed within the time limit set forth in Election Law § 16-102 (2), the proceeding must be dismissed … . Matter of Wilson v Bowman, 2014 NY Slip Op 07289, 3rd Dept 10-24-14

 

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Organizations Representing Lakeshore Residents Should Have Been Allowed to Intervene in an Action Concerning Regulation of Lake Water Levels (Dictated by an 80-Year-Old Injunction)—Neither the Doctrine of Collateral Estoppel Nor Laches Was a Bar to the Relief Sought by the Lakeshore Residents

The Third Department determined Supreme Court should have allowed organizations representing hundreds of lakeshore residents (PLA and Sandy Knolls) to intervene in an Article 78/declaratory judgment proceeding concerning an 80-year-old injunction re: the operation of a dam to control water levels in the lake.  The court held that the neither the doctrine of collateral estoppel nor laches was a bar to the relief sought by the lakeshore residents:

“Pursuant to CPLR 7802 (d), a court may allow other interested persons to intervene” in proceedings brought against public agencies … . Further, intervention is to be granted as of right in any action or proceeding where a nonparty demonstrates that its interest in the matter is not being duly represented and the nonparty may be “bound by the judgment” (CPLR 1012 [a] [2]) or, alternatively, may be permitted by the court “when the person’s claim or defense and the main action [or proceeding] have a common question of law or fact” (CPLR 1013…). * * *

Although requests for leave to intervene invoke a court’s discretionary authority …, the thorough and well-reasoned submissions of the PLA and Sandy Knolls have shown that they have a “‘direct and substantial interest’ in the outcome of this litigation” and, therefore, Supreme Court erred in denying their motions to intervene … . Further, inasmuch as the motions to intervene were filed in the months after Supreme Court issued its order in proceeding No. 1, but before the final judgment was rendered in that proceeding more than a year and one half later, and approximately two years before judgment was entered in proceeding No. 2, we do not agree that denial of the motions on untimeliness grounds was necessitated … . Nor are there any indicia of undue prejudice to petitioners that would warrant the exclusion of the proposed intervenors from the matters . In light of this determination, the argument that the PLA and Sandy Knolls should have been joined as necessary parties has become academic.

Next, we consider Supreme Court’s finding …that collateral estoppel principles precluded respondents from challenging the [injunction]. As a “narrower species of res judicata,” the equitable doctrine of collateral estoppel precludes a party from retrying “an issue clearly raised in a prior action or proceeding and decided against that party or those in privity” … . In this regard, privity is an amorphous term not “susceptible to ease of application” …, and a court’s finding that differing parties are in privity requires consideration of “the character, right and extent of a party’s role in one proceeding as it bears on the intervention of the collateral estoppel doctrine in another” … . * * *[R]espondents were never given “a full and fair opportunity to contest the decision now said to be controlling” …, nor were their interests properly represented by [the defendant in the original injunction action], so as to warrant the application of collateral estoppel … . Borst v International Paper Co., 2014 NY Slip Op 07224, 3rd Dept 10-23-14

 

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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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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