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Documentary Evidence Can Be Considered In CPLR 3211(a)(7) Motion to Dismiss/Disclaimer Not Specific Enough to Preclude Fraud Cause of Action

In a full-fledged opinion by Justice Renwick, with a concurring opinion by Justice DeGrasse, the First Department determined that arbitration could not be compelled in the absence of a specific, written agreement and a fraud cause of action against Goldman Sachs based upon the sale of mortgage-backed securities to the plaintiff hedge fund could go forward. The court concluded that documentary evidence submitted by the defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7) was properly considered by Supreme Court, and the disclaimer relied upon by the defendant was not specific enough to warrant dismissal of the fraud cause of action:

A CPLR 3211(a)(7) motion may be used by a defendant to test the facial sufficiency of a pleading in two different ways. On the one hand, the motion may be used to dispose of an action in which the plaintiff has not stated a claim cognizable at law. On the other hand, the motion may be used to dispose of an action in which the plaintiff identified a cognizable cause of action but failed to assert a material allegation necessary to support the cause of action. As to the latter, the Court of Appeals has made clear that a defendant can submit evidence in support of the motion attacking a well-pleaded cognizable claim … When documentary evidence is submitted by a defendant “the standard morphs from whether the plaintiff has stated a cause of action to whether it has one”… . * * *

The law is abundantly clear in this state that a buyer’s disclaimer of reliance cannot preclude a claim of justifiable reliance on the seller’s misrepresentations or omissions unless (1) the disclaimer is made sufficiently specific to the particular type of fact misrepresented or undisclosed; and (2) the alleged misrepresentations or omissions did not concern facts peculiarly within the seller’s knowledge … . Accordingly, only where a written contract contains a specific disclaimer of responsibility for extraneous representations, that is, a provision that the parties are not bound by or relying upon representations or omissions as to the specific matter, is a plaintiff precluded from later claiming fraud on the ground of a prior misrepresentation as to the specific matter… . Basis Yield Alpha Fund (Master) v Goldman Sachs Group, Inc, 2014 NY Sliip Op 00587, 1st Dept 1-30-14

 

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Answer Submitted Pro Se by Corporation Is a Nullity

The Second Department noted that a corporation must be represented by counsel and an answer submitted by a corporation pro se was a nullity:

…[T]he Supreme Court erred in accepting an untimely, pro se answer from the defendant corporation, and in thereby denying that branch of the plaintiff’s motion which was for leave to enter a default judgment on the complaint. The proffered answer was a nullity, since a corporation must be represented by an attorney and cannot proceed pro se (see CPLR 321[a]…). Boente v Peter C Kurth Off of Architecture & Planning PC, 2014 NY Slip Op 00473, 2nd Dept 1-29-14

 

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Doctrine of Collateral Estoppel Applied In Civil Suit Alleging Sexual Abuse Where Defendant Pled Guilty to Offenses Described in the Civil Suit

The Second Department determined the doctrine of collateral estoppel applied where the issues raised in a civil suit, based upon allegations of sexual abuse to which the defendant pled guilty, were identical to the offenses described in the plea transcript. The doctrine, however, did not apply to the civil allegation of rape because the defendant did not plead guilty to rape:

“Where a criminal conviction is based upon facts identical to those in issue in a related civil action, the plaintiff in the civil action can successfully invoke the doctrine of collateral estoppel to bar the convicted defendant from litigating the issue of his liability” … . The doctrine applies whether the conviction resulted from a plea or a trial … . “The party seeking the benefit of collateral estoppel bears the burden of proving that the identical issue was necessarily decided in the prior proceeding, and is decisive of the present action” … . “The party against whom preclusion is sought bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination” … . Morrow v Gallagher, 2014 NY Slip Op 00489, 2nd Dept 1-29-14

 

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Court May Impliedly Vacate Note of Issue by Directing Discovery

Although the trial court did not impliedly vacate the note of issue in this case, the Third Department explained the criteria for such a vacation:

A court may be deemed to have vacated a note of issue sua sponte, even without explicitly stating so, if the court’s directives with respect to discovery “clearly evince its intent to do so and have the same practical effect”… . McDowell & Walder Inc v Micha…, 516375, 3rd Dept 1-23-14

 

Notice of Voluntary Discontinuance Filed After Opponents’ Motions to Dismiss Is Untimely

The First Department determined plaintiff’s (BDO’s) notice of voluntary discontinuance was untimely because it was filed after the defendants filed motions to dismiss:

BDO unilaterally filed a notice of voluntary discontinuance. This notice was untimely because BDO served it after defendants filed their motions to dismiss (see CPLR 3217[a][1]; … David D. Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3217:8 [“[t]he defendant who has moved to dismiss under CPLR 3211 has already done as much in the litigation (and more) than if she had merely answered the complaint”]). Indeed, if a motion to dismiss is not a “responsive pleading” within the meaning of CPLR 3217(a)(1), a plaintiff would be able to freely discontinue its action without prejudice solely to avoid a potentially adverse decision on a pending dismissal motion. This Court has made clear that such conduct is improper … . Thus, BDO’s notice was ineffective and a nullity… . BDO USA, LLP v Phoenix Four Inc, 2014 NY slip Op 00410, 1st Dept 1-23-14

 

Judicial Estoppel Applies Only to Party Who Prevailed in Prior Proceeding

The First Department explained that the concept of judicial estoppel only applies to the prevailing party in the prior action:

Contrary to defendant’s argument, plaintiffs’ previous assertion of their own claim for contractual indemnification does not judicially estop them from denying that defendant is entitled to indemnification of attorneys’ fees under the agreement. The doctrine of judicial estoppel ” precludes a party who assumed a certain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed'” … . As plaintiffs did not prevail on their contractual indemnification claim, the doctrine of judicial estoppel does not apply… . Wells Fargo Bank NA v Webster Bus Credit Corp, 2014 NY Slip Op 00412, 1st Dept 1-23-14

 

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Disclosure of Appraisal Documents Not Entitled to Conditional Immunity Even If Prepared Solely for Litigation/No Other Way for Claimants to Obtain Relevant Evidence

In a matter related to the taking of property for the construction of a highway, the Third Department determined the claimants were entitled to an appraisal done by the defendants, even if the documents were prepared solely in anticipation of litigation.  The claimants demonstrated that they had no other avenue to obtain the evidence relevant to their claims:

Even if the documents were prepared solely in anticipation of litigation, claimants demonstrated that the conditional immunity should not prevent disclosure because they have a substantial need and an inability to otherwise obtain the documents.  … The Court of Claims … acknowledged that the subpoenaed documents were relevant to the claim for property damage, to prove the condition of the property immediately before the construction.  Thus, even if the documents were drafted solely for litigation purposes, the appraisal and supporting documents would be subject to disclosure based on claimants’ substantial need and their lack of another source for that proof (see CPLR 3101 [d] [2]). Lerner v State of New York, 516774, 3rd Dept 1-9-14

 

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Rear-End Collision: No Rational Process By Which Jury Could Have Found Plaintiff Negligent

The Second Department determined there was no rational process by which the jury could have found the plaintiff negligent in a rear-end collision case.  Plaintiff’s CPLR 4401 motion for judgment as a matter of law should have been granted. The plaintiff was stopped to allow a pedestrian, who had run in front of the vehicle, to cross.  The defendant acknowledged that he took his eyes off the road briefly to look at the pedestrians and then struck the rear of plaintiff’s car:

” A rear-end collision with a stopped or stopping vehicle creates a prima facie case of negligence with respect to the operator of the moving vehicle and imposes a duty on that operator to rebut the inference of negligence by providing a nonnegligent explanation for the collision'” … . Moreover, although the issue of comparative fault generally presents a question of fact …, that issue should be submitted to a jury “only where there is a triable issue of fact as to whether the frontmost driver also operated his or her vehicle in a negligent manner” … .

Here, viewing the evidence in the light most favorable to the defendant, there is no rational process by which the jury could find that the defendant had a nonnegligent explanation for the accident, or that the plaintiff was, to any extent, at fault in the happening of the accident. Clarke v Phillps, 2013 NY Slip Op 08585, 2nd Dept 12-26-13

 

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Criteria for Pre-Action Disclosure and Defamation Explained

The Second Department determined that a request for pre-action disclosure of the name of an anonymous blogger (whom petitioners alleged posted defamatory remarks during an election campaign) should not have been granted.  Pre-action disclosure should only be allowed when the petitioner has alleged facts indicating the existence of a cause of action.  Here the facts alleged did not make out a cause of action for defamation:

Before an action is commenced, “disclosure to aid in bringing an action” may be obtained by court order (CPLR 3102[c]), including “discovery in order to obtain information relevant …to determining who should be named as a defendant” … . A petition for pre-action discovery limited to obtaining the identity of prospective defendants should be granted where the petitioner has alleged facts fairly indicating that he or she has some cause of action …

Contrary to the Supreme Court’s determination, the petitioners failed to allege facts fairly indicating that they have a cause of action to recover damages for defamation based on the two posts at issue by the blogger Q-Tip. “The elements of a cause of action for defamation are a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se” … . “In determining whether a complaint states a cause of action to recover damages for defamation, the dispositive inquiry is whether a reasonable listener or reader could have concluded that the statements were conveying facts about the plaintiff”… . Further, “[a] false statement constitutes defamation per se when it charges another with a serious crime or tends to injure another in his or her trade, business, or profession” … .

Here, given the context in which the challenged statements were made, on an Internet blog during a sharply contested election, a reasonable reader would have believed that the generalized reference to “downright criminal actions” in a post entitled “Would You Buy A Used Car From These Men?” was merely conveying opinion, and was not a factual accusation of criminal conduct … . Further, the petitioners failed to demonstrate that the remaining portions of the challenged statements by Q-Tip constituted defamation per se… .  Matter of Konig v CSC Holdings LLC, 2013 NY Slip Op 08632, 2nd Dept 12-26-13

 

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Defendant Estopped from Claiming He Was Not Properly Served Because He Never Notified DMV of His Change of Address

The Second Department determined the defendant, who brought a motion to vacate a default judgment in an automobile-accident case, was estopped from claiming he was not properly served because he never notified the Department of Motor Vehicles of his change of address:

Since the respondent failed to notify the DMV of his change of residence, as required by Vehicle and Traffic Law § 505(5), he was estopped from raising a claim of defective service … . Accordingly, that branch of the respondent’s motion which was pursuant to CPLR 5015(a)(4), based on lack of personal jurisdiction, should have been denied. Likewise, the respondent was not entitled to relief pursuant to CPLR 5015(a)(1), based upon excusable default; the respondent’s purported change of residence is not a reasonable excuse, because he failed to comply with Vehicle and Traffic Law § 505(5) … .

Moreover, the respondent was not entitled to relief pursuant to CPLR 317, since his failure to receive notice of the summons was a deliberate attempt to avoid such notice… . Canales v Flores, 2013 NY Slip Op 08584, 2nd Dept 12-26-13

 

 

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