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Constructive Trust Cause of Action Sufficiently Pled/Dismissal “With Prejudice” Not Allowed—Doctrine of Res Judicata Does Not Apply—a Dismissal for Failure to State a Cause of Action Is Not On the Merits

The Second Department determined Supreme Court should not have dismissed the constructive trust cause of action.  The court further determined that the conversion, constructive fraud and breach of contract causes of action were properly dismissed for failure to state a cause of action, but should not have been dismissed “with prejudice.”  With respect to the constructive trust and the dismissal with prejudice, the court wrote:

The equitable remedy of a constructive trust may be imposed ” [w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” … . “The elements of a cause of action to impose a constructive trust are (1) the existence of a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment” … . “To achieve equity and avoid unjust enrichment, the courts apply these factors flexibly rather than rigidly” … .

Here, the plaintiff sufficiently alleged the existence of a confidential or fiduciary relationship with the defendants. The parties were related through marriage, and the plaintiff and Atanasio, along with their respective spouses, pooled their resources in order to purchase the residential property and the boat … . Further, the plaintiff sufficiently pleaded the elements of a promise and a transfer in reliance on the promise. He alleged that, before he sold the defendants his interest in the property in November 2005, the defendants promised to reimburse him for the expenditures he made for the property and boat as long as he continued making those payments for one year after the sale of his interest. In reliance on this alleged promise and his confidential relationship with the defendants, he transferred his interest in the property to the defendants, and thereafter continued to make expenditures in connection with the property and boat. Finally, his allegations that he made all expenditures for the property and boat during a period of 7½ years, and that the defendants refused to reimburse him, despite being co-owners of the property and boat and notwithstanding their promise, were sufficient to plead the unjust enrichment element necessary to the imposition of a constructive … .

…Supreme Court, upon dismissing the second, third, and fourth causes of action, improperly did so “with prejudice.” A dismissal for failure to state a cause of action based on the insufficiency of the allegations in the pleading is not a dismissal on the merits, and does not bar the adequate repleading of the claim in a subsequent action… . Canzona v Atanasio, 2014 NY Slip Op 04458, 2nd Dept 6-18-14

In a related case, the Second Department noted that, because a dismissal for failure to state a cause of action is not on the merits, the doctrine of res judicata does not apply.  Canzona v Atanasio, 2014 NY Slip Op 04459, 2nd Dept 6-18-14

 

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Appeal Rendered Academic by Failure to Move for a Preliminary Injunction Pending Appeal

The Second Department determined the appeal had been rendered academic because the appellant did not move for a preliminary injunction pending appeal and the related development project had been completed:

In order to preserve the status quo pending the determination of this appeal, the petitioner/plaintiff was required to move in this Court pursuant to CPLR 5518 for a preliminary injunction pending appeal, prohibiting the development of the subject real property. Since the petitioner/plaintiff failed to do so, it failed to preserve its rights pending appellate review. In the absence of a preliminary injunction issued pursuant to CPLR 5518, nonparty 405 Hotel, LLC, purchased and redeveloped the subject property, and a hotel is now operated thereon. By virtue of this change in the underlying circumstances, this Court has been prevented “from rendering a decision that would effectively determine an actual controversy” … .  Matter of Yeshiva Gedolah Academy of Beth Aaron Synogogue v City of Long Beach, 2014 NY Slip Op 04502, 2nd Dept 6-18-14

 

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New York Courts Do Not Have Jurisdiction Over Intra-Tribal Matters

The First Department determined New York courts do not have subject matter jurisdiction over an election dispute concerning competing tribal councils.  The court also addressed the waiver of sovereignty by a Native American tribe and noted that the jurisdiction of a New York court conveyed by 25 USC 233 does not extend beyond the borders of the state (tribe was located in California):

New York courts do not have subject matter jurisdiction over the internal affairs of Indian tribes” … . “[A]n election dispute concerning competing tribal councils” is a “non-justiciable intra-tribal matter” … . Appellants seek a declaration that defendant Chukchansi Economic Development Authority (CEDA) is lawfully governed by a board composed of seven named individuals; however, appellants themselves allege in their counterclaim and cross claims that the members of the CEDA Board are the same as the members of defendant Tribal Council of the Tribe of Picayune Rancheria of the Chukchansi Indians. Wells Fargo Bank NA v Chukchansi Economic Dev Auth, 2014 NY Slip Op 04437, 1st Dept 6-17-14

 

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Internally Inconsistent Verdict Properly Set Aside

The Fourth Department determined Supreme Court properly set aside the verdict and ordered a new trial.  The jury had found that plaintiff’s negligence was not a substantial factor in causing her injuries but attributed 30% of the fault to the plaintiff:

…[W]e conclude that the verdict was internally inconsistent inasmuch as the jury found that plaintiff’s negligence was not a substantial factor in causing her injuries, but also attributed 30% of the fault to plaintiff … . Such an internal inconsistency in a verdict can be remedied “only . . . upon further consideration by the jury . . . or by a new trial” … . Here, of course, the jury had been discharged by the time of plaintiff’s motion, and thus it was too late to require the jury to reconsider its answers to the interrogatories on the verdict sheet.

Although plaintiff failed to object to the inconsistency in the verdict before the jury was discharged …, we conclude that, under the circumstances of this case, the court did not abuse its discretion in setting aside the verdict and ordering a new trial … . Allen v Lowczus, 2014 NY Slip Op 04288, 4th Dept 6-13-14

 

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Village’s Unauthorized Use of Dedicated Park Land Prohibited by the “Public Trust Doctrine”—Village’s Use of the Land Was a “Continuing Wrong” Which Tolled the Statute of Limitations and Precluded the Application of the Laches Doctrine

The Court of Appeals, in a full-fledged opinion by Judge Pigott, determined Supreme Court properly granted a permanent injunction, pursuant to the common law “public trust doctrine,” prohibiting the village from building public works structures on dedicated park land.  The action was brought by residents who live near the park, who were later joined by the state.  Because the park land had been used without legislative authority by the village for many decades, the village argued the action was prohibited by the statute of limitations and the doctrine of laches.  The Court of Appeals determined the “continuing wrong doctrine” tolled the statute of limitations and the laches doctrine did not apply to a continuing wrong, or to actions by the state:

The harm sustained by the public when structures having “no connection with park purposes . . . encroach upon [parkland] without legislative authority plainly conferred” … cannot be traced exclusively to the day when the illegal encroachment began. “In New York, we have consistently characterized an unlawful encroachment as a continuous trespass giving rise to successive causes of action” … . Even though here, because the Village owns the parkland, the encroachment is not trespass, it clearly bears the hallmark of continuity common to the trespass cases: defendants are, continuously, in violation of the public trust doctrine and able to abate that wrong. Just as the failure of a landlord to repair a building's common elements, in violation of by-laws, “constituted a continuing wrong that is not referable exclusively to the day the original wrong was committed” … and “[t]he alleged violation of defendants' contractual obligations to comply with the law and refrain from interfering with the rights of other lessees amounts to a continuous or recurring wrong” …, so does a municipality's ongoing failure to comply with the law and seek legislative authorization for non-park use of parkland. The harm does not consist of the lingering effects of a single, discrete incursion, but rather is a continuous series of wrongs. In short, the claim here is “predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct” …  Capruso v Village of Kings Point, 2014 NY Slip Op 04228, CtApp 5-12-14

 

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Plaintiffs in Lead-Paint Exposure Cases Are Not Required to Hire an Expert to Link Injuries to Lead-Paint Exposure at the CPLR 3121 (a) Discovery Stage—However, Plaintiffs Must Provide Medical Reports Which Include a “Recital of the Injuries and Conditions as to which Testimony Will Be Offered at the Trial”

The Court of Appeals, in a full-fledged opinion by Judge Lippman, reversed the appellate division and determined the trial judge abused his discretion in the discovery phase of a lead-paint exposure case.  The trial judge ordered the plaintiffs “to produce, prior to the defense medical examinations, medical reports detailing a diagnosis of each injury alleged to have been sustained by plaintiffs and causally relating those injuries to plaintiffs' exposure to lead-based paint.”

CPLR 3121 (a) provides that when a party's mental or physical condition is in issue, any other party may serve on the party whose condition is in controversy notice “to submit to a physical, mental or blood examination by a designated physician.” A noticed party then is obligated under 22 NYCRR 202.17 (b)(1) to deliver:

“copies of the medical reports of those medical providers who have previously treated or examined the party seeking recovery. These shall include a recital of the injuries and conditions as to which testimony will be offered at the trial, referring to and identifying those X-ray and technicians reports which will be offered at the trial, including a description of the injuries, a diagnosis and a prognosis.”

In most personal injury cases, disclosure under this rule is straightforward. The injured plaintiff goes to the doctor for diagnosis and treatment. The doctor drafts a report. The plaintiff turns over the report to the defendant.

This case is more complicated. Plaintiffs allegedly suffered lead poisoning as children. Now adults, plaintiffs allege that their childhood exposure to lead caused them numerous injuries. It appears from the dearth of medical evidence in the record that plaintiffs may never have been treated for or diagnosed with many of the alleged injuries. This raises the question of what plaintiffs must disclose in order to comply with rule 202.17 (b) (1).

Plaintiffs argue that the rule requires them to turn over only those reports that currently exist from providers who have “previously treated or examined” them. They argue that they are not required to document or create medical evidence of every alleged injury. To the extent that plaintiffs are arguing that the rule does not obligate them to hire a medical provider to examine them and create a report solely for purposes of the litigations, we agree. Requiring a personal injury plaintiff to hire a medical professional to draft a report purely to satisfy 22 NYCRR 202.17 (b) (1) could make it prohibitively expensive for some plaintiffs to bring legitimate personal injury suits. Some plaintiffs may not be able to afford a medical examination or may not even have access to a doctor. Plaintiffs therefore need only produce reports from medical providers who have “previously treated or examined” them.

To the extent, however, that plaintiffs claim that they need to turn over only those medical reports that currently exist, we disagree. The rule obligates plaintiffs to provide comprehensive reports from their treating and examining medical providers — the reports “shall include a recital of the injuries and conditions as to which testimony will be offered at the trial” (22 NYCRR 202.17 [b] [1]) [emphasis added]). Plaintiffs therefore cannot avoid disclosure simply because their treating or examining medical providers have not drafted any reports within the meaning of rule 202.17 (b) (1) … . If plaintiffs' medical reports do not contain the information required by the rule, then plaintiffs must have the medical providers draft reports setting forth that information (see id.)… . If that is not possible, plaintiffs must seek relief from disclosure and explain why they cannot comply with the rule (see 22 NYCRR 202.17 [j]). Hamilton v Miller, 2014 NY Slip Op 04230, CtApp 6-12-14

 

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Tax Assessment Reductions Can Be Sought Solely through a Tax Certiorari Proceeding Under the Real Property Tax Law, Not Through an Article 78 Proceeding

The Second Department determined the procedure under the Real Property Tax Law (RPTL) was the only avenue available to petitioner to seek a reduction of tax assessments.  Petitioner had successfully challenged the tax assessments for the 2006/2007 tax year and then sought a reduction for the following year in an Article 78 proceeding.  The Second Department determined petitioner should have sought reductions for all the relevant tax years within the time limits of RPTL 702(2) and could not use an Article 78 proceeding to collaterally attack the assessment:

“Ordinarily, the proper method for challenging excessive or unlawful real property tax assessments is by the commencement of a tax certiorari proceeding pursuant to article 7 of the Real Property Tax Law” … . Such a proceeding is properly commenced after exhaustion of the administrative grievance remedies, and within 30 days after the filing of the final assessment roll (see RPTL 702[2]…). An “excessive assessment” subject to review pursuant to RPTL article 7 includes an assessment of a special assessing unit that fails to comply with the limitations on increases in assessed value set forth in RPTL 1805 (see RPTL 701[4][d]; 706[1]…).

Collateral attacks on assessments are proper where the jurisdiction of the taxing authority is challenged, the tax itself is claimed to be unconstitutional …, or the challenge is to “the method employed in the assessment of several properties rather than the overvaluation or undervaluation of specific properties” … . None of these exceptions to the exclusive applicability of RPTL article 7 are present here, since the petitioner challenged, as excessive, the assessments of specific parcels of property by virtue of the appellants’ failure to comply with RPTL 1805 (see RPTL 701[4][d]).

The petitioner contends that, nonetheless, the commencement of a CPLR article 78 proceeding within the time provided for by CPLR 217 is the proper vehicle by which to compel the requested transition assessments because recalculation of the 2007/2008 assessments only became necessary after the assessments for the previous tax year were reduced by the Supreme Court and that reduction was affirmed pursuant to our decision and order in Matter of Rainbow Diner v Board of Assessors (71 AD3d 901). We reject this contention, since the petitioner was required to timely exhaust administrative remedies applicable to tax certiorari proceedings, and its challenge was subject to the limitations period of RPTL 702(2). Matter of Jonsher Realty Corp/Melba Inc v Board of Assessors, 2014 NY Slip Op 04195, 2nd Dept 6-11-14

 

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Prohibition Proceeding Was the Proper Vehicle to Contest the Appointment of a Special Prosecutor—the District Attorney Had Disqualified Himself from an Election-Related Investigation and Successfully Applied for the Appointment of a Special Prosecutor

The Court of Appeals determined an Article 78 proceeding sounding in “prohibition” was the appropriate vehicle to contest the appointment of  a special prosecutor. The district attorney sought to disqualify himself from an election-related investigation and successfully applied to the Deputy Chief Administrative Judge for the NYC Courts for an appointment of a special prosecutor.  The petitioner then brought the prohibition proceeding to contest the appointment.  The appellate division dismissed the petition finding the “prohibition” action inappropriate.   The Court of Appeals determined prohibition was the correct action and the special prosecutor was validly appointed:

The Appellate Division denied the petition and dismissed the proceeding. It held that relief by prohibition was unavailable because the conduct that petitioner was seeking to prevent was not “the quasi-judicial act of representing the State in its efforts to bring individuals accused of crimes to justice” but rather a “purely investigative function” that was “executive in nature” (Working Families Party v Fisher, 109 AD3d 478, 480 [2d Dept 2013]). * * *

The Appellate Division erred in holding that an article 78 proceeding in the nature of prohibition is an inappropriate remedy in this case. We recently restated the rule that “prohibition is an appropriate remedy to void the improper appointment of a [special] prosecutor when made by a court” … . While the power to grant prohibition should be exercised sparingly, its availability in cases like this serves an important purpose. When the validity of the appointment of a prosecutor is in question, the question should where possible be given a prompt and definitive answer. It is not in the public interest to allow a prosecutor to carry out a lengthy investigation when there is doubt that his or her appointment is valid, and to run the risk that the process will have to start all over again with a different prosecutor. Matter of Working Families Party v Fisher, 2014 NY Slip Op 04116, CtApp 6-10-14

 

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Record Did Not Support Striking the Answer for the Spoliation of Evidence

The First Department, over a partial and a full dissent, determined the extreme sanction of striking defendant’s answer and instructing the jury the lost evidence would have supported plaintiff’s position was not appropriate under the facts. Electronically stored information (ESI) had been lost.  The court rejected the argument that the failure to issue a written “litigation hold” to preserve the evidence constituted per se gross negligence.  Instead the court found that the record supported at most simple negligence.  The court explained the operative criteria and its appellate powers in this context:

“A party seeking sanctions based on the spoliation of evidence must demonstrate: (1) that the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and finally, (3) that the destroyed evidence was relevant to the [moving]; party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense” … .

Further, “[w];hile discovery determinations rest within the sound discretion of the trial court, the Appellate Division is vested with a corresponding power to substitute its own discretion for that of the trial court, even in the absence of abuse” … . * * *

Because the record supports, at most, a finding of simple negligence against the MP defendants, plaintiffs must prove that the lost ESI would have supported their claims … . This they have failed to do … . Pegasus Aviation I Inc, v Varig Logistica SA, 2014 NY Slip Op 04047, 1st Dept 6-5-14

 

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Ambiguous Termination Notice Will Not Trigger Four-Month Article 78 Statute of Limitations

The First Department explained that when a notice of termination of an at-will employee is ambiguous with respect to finality, the ambiguity is construed against the employer and the four-month statute of limitations for an Article 78 proceeding is not triggered:

Ordinarily, where the employment of an at-will employee, like petitioner, is terminated, the four-month statute of limitations applicable in article 78 proceedings (CPLR 217) begins to run from the date of the termination, notwithstanding the availability of optional administrative review proceedings … . However, where an administrative agency “create[s]; []; ambiguity and [the]; impression of nonfinality,” that ambiguity regarding finality is to be resolved against the agency … .

* * * We find that, notwithstanding the fact that the letter otherwise conveyed the concrete impact ordinarily associated with finality for statute of limitations purposes …, respondent created sufficient ambiguity as to finality such that the language must be construed against it and the petition must be deemed timely. Matter of Burch v New York City Health & Hosp Corp, 2014 NY Slip Op 04060, 1st Dept 6-5-14

 

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