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Health Service Provider’s Action to Recoup Overpayment of a Surcharge Subject to Six-Year Statute of Limitations

The Second Department determined a statutory provision making payment of a surcharge re: certain hospital services subject to an audit within six years imposed a six-year statute of limitations upon any attempt to recoup overpayment of the surcharge:

The statutory text of Public Health Law § 2807-j(8-a)(a) provides that “[p]ayments and reports . . . shall be subject to audit by the commissioner for a period of six years following the close of the calendar year in which such payments and reports are due, after which such payments shall be deemed final and not subject to further adjustment or reconciliation.” Giving effect to the plain meaning of the text, that section of the statute provides that all payments are deemed final and not subject to further adjustment or reconciliation after the period of six years following the close of the calendar year in which they are due. Thus, the clear language of that section establishes that the determination of the DOH to apply a six-year limitations period to a provider’s administrative application for a refund of an overpayment was not arbitrary and capricious or irrational. Contrary to the Supreme Court’s reasoning, the absence of any reference in Public Health Law § 2807-j(8)(c) to a limitations period specifically applicable to administrative requests for a refund of overpayments does not compel the conclusion that the six-year limitations period contained in Public Health Law § 2807-j(8-a)(a) is inapplicable to such requests.  Matter of New York Med & Diagnostic Ctr Inc v Shah, 2014 NY Slip Op 02592, 2nd Dept 4-16-14

 

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Brazilian Citizens Had Alternative Legal Remedies and Therefore Could Not Use a Writ of Prohibition to Stop a New York Prosecution/The Fact that the Petitioners Would Have to Come to New York to Employ the Alternative Remedies During the Course of a Criminal Prosecution Did Not Render those Remedies Inadequate

The First Department determined a writ of prohibition could not be employed by Brazilian citizens to stop a prosecution by the district attorney.  Petitioners had other legal remedies including pretrial motions and appeal if convicted.  The fact that petitioners would have to defend the prosecution in New York to use the alternative remedies did not render those remedies inadequate:

In this action for a writ of prohibition directing the DA to stay the prosecution of petitioners, Brazilian citizens (the former mayor of Sao Paolo and his son) who have been indicted in New York for crimes relating to the theft of more than $11 million in Brazilian public funds that were allegedly transferred to petitioners’ account in a bank located in New York, the petition was properly denied. The extraordinary remedy of prohibition is not available to petitioners, who assert that the underlying criminal action violates their statutory and constitutional rights to a speedy trial and their right to due process, or, in the alternative, that the indictment should be dismissed either in furtherance of justice pursuant to CPL 210.40(1) or under principles of international comity. These claims allege errors of law for which petitioners have adequate alternative remedies, including filing pretrial motions in the underlying criminal action and challenging any conviction on appeal … . That petitioners would have to voluntarily leave their home country to appear for arraignment since Brazil will not extradite its own citizens before availing themselves of such remedies does not render them inadequate … . Matter of Naluf v Vance, 2014 NY Slip Op 02546, 1st Dept 4-15-14

 

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Service of a Notice of Claim on the City Did Not Constitute the Service of a Notice of Claim on the New York City Transit Authority

The First Department determined the service of a notice of claim on the City did not constituted the service of a notice of claim on the New York City Transit Authority:

It is well settled that service of a notice of claim on the City through the Comptroller’s Office is not service upon a separate public authority … . Since plaintiff did not comply with the condition precedent of service of a notice of claim upon the Transit Authority defendants, and they deny having received the notice of claim from the Comptroller’s Office, dismissal is required.  Glasheen v Valera, 2014 NY Slip Op 02512, 1st Dept 4-10-14

 

Court Has Discretion to Deny a Motion to Dismiss for Failure to Prosecute Pursuant to CPLR 3216 Even in the Absence of an Adequate Excuse and a Showing of a Potentially Meritorious Cause of Action

In finding plaintiff did not intend to abandon the action, the Second Department explained the “extremely forgiving” nature of CPLR 3216:

Where a 90-day demand to resume prosecution of an action pursuant to CPLR 3216(b)(3) has been properly served, a plaintiff may avoid dismissal, as a matter of law, by either timely filing a note of issue or moving, before the default date, to vacate the notice or to extend the 90-day period (see CPLR 3216[c]…). Even where a plaintiff has failed to pursue either of these options, however, “the statute prohibits the Supreme Court from dismissing a complaint based on failure to prosecute whenever the plaintiff has shown a justifiable excuse for the delay and the existence of a potentially meritorious cause of action” … .

Moreover, CPLR 3216 is an “extremely forgiving” statute …, which “never requires, but merely authorizes, the Supreme Court to dismiss a plaintiff’s action based on the plaintiff’s unreasonable neglect to proceed” … . Under the plain language of CPLR 3216, a court retains some “residual discretion” to deny a motion to dismiss, even when a plaintiff fails to comply with the 90-day requirement and additionally fails to proffer an adequate excuse for the delay or a potentially meritorious cause of action … . Thus, while the statute prohibits the Supreme Court from dismissing a complaint based on failure to prosecute whenever the plaintiff has shown a justifiable excuse for the delay and the existence of a potentially meritorious cause of action (see CPLR 3216[e]…), “such a dual showing is not strictly necessary in order for the plaintiff to escape such a dismissal” … .

Here, the record demonstrates affirmative steps taken by the plaintiff to continue the prosecution of this action that are inconsistent with an intent to abandon it. Ramon v Zangari, 2014 NY Slip Op 02420, 2nd Dept 4-9-14

 

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Plaintiff Did Not Demonstrate Standing—No Proof Underlying Debt Was Transferred to the Plaintiff Along with the Mortgage

The Second Department determined the plaintiff in a mortgage foreclosure proceeding did not demonstrate standing because there was no proof the underlying debt was transferred to the plaintiff along with the mortgage:

Where, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief… .  In a mortgage foreclosure action, “[a] plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced” … . ” Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation'” … . “Where a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity” . Here, the evidence submitted by the plaintiff in support of its motion did not demonstrate that the note was physically delivered to it prior to the commencement of the action, and the plaintiff similarly failed to submit a written assignment of the note. Bank of NY Mellon v Gales, 2014 NY Slip Op 02402, 2nd Dept 4-9-14

 

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A Union Is Not an Entity Separate from Its Members—A Union, Therefore, Can Not Be Sued By a Member Unless Every Member Participated In the Action Which Gave Rise to the Suit

The Court of Appeals, in a full-fledged opinion by Judge Abdus-Salaam, over a dissent, upheld the so-called “Martin” rule (Martin v Curran, 303 NY 276 [1951]) which prohibits a suit against an unincorporated association, here a union, unless the suit can be maintained against every member of the association.  The executive board of the union decided against taking plaintiff’s grievance to arbitration. Because only the executive board participated in the decision, plaintiff’s suit against the union was prohibited by statute:

In a 4-3 decision authored by Judge Desmond, this Court held in Martin that a voluntary unincorporated association “is neither a partnership nor a corporation. It is not an artificial person, and has no existence independent of its members” (303 NY at 280). The Court determined that “for better or worse, wisely or otherwise, the Legislature has limited . . . suits against association officers, whether for breaches of agreements or for tortious wrongs, to cases where the individual liability of every single member can be alleged and proven” (id. at 282). Although there were policy considerations that might suggest a different result, the Martin Court was “under the command of a plainly stated, plainly applicable statute, uniformly held by this court, for many years, to require pleading and proof of authorization or ratification by all the members of the group” (id. at 280). That statute, General Associations Law § 13, is entitled “Action or proceeding against unincorporated association” and provides:”An action or special proceeding may be maintained, against the president or treasurer of such an association, to recover any property, or upon any cause of action, for or upon which the plaintiff may maintain such an action or special proceeding, against all the associates, by reason of their interest or ownership, or claim of ownership therein, either jointly or in common, or their liability therefor, either jointly or severally. Any partnership, or other company of persons, which has a president or treasurer, is deemed an association within the meaning of this section.”The Martin Court also noted that McCabe v Longfellow (133 NY 89 [1892]), the leading case on the right to maintain an action against an unincorporated association, held that a plaintiff could not maintain an action against the officer of an unincorporated association “unless the debt which he seeks to recover is one upon which he could maintain an action against all the associates by reason of their liability therefor” (303 NY at 281…), and that there had been a “line of consistent decisions to that effect” since McCabe. Ultimately, the Martin Court concluded that, because a labor union is a voluntary unincorporated association, the plaintiff was required to plead and prove that each member of the union authorized or ratified the alleged wrongful conduct.  Palladino v CNY Centro Inc, 2014 NY Slip Po 02378, CtApp 4-8-14

 

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Despite the Absence of a Motion to Dismiss on Forum Non Conveniens Grounds, the Court Properly Dismssed the Action on that Ground (After Briefing by the Parties)/The Fact that the Underlying Transaction Was to Be In American Dollars Was Not Enough to Justify Bringing the Action (Involving Foreign Banks and Parties) in New York State

The Court of Appeals, in a full-fledged opinion by Judge Smith, determined Supreme Court properly dismissed the action on “forum non conveniens” grounds, even though no motion to dismiss on that ground had been made.  Although Supreme Court raised the issue, the court asked to parties to brief it.  In addition, the Court of Appeals noted that, although the underlying dispute involved millions of dollars, the fact that American dollars were involved was not enough to hold the case in New York State.  The dispute was between a bank in Dubai and a partnership (AHAB) in Saudi Arabia.  The third-party defendant, Al-Sanea, was a citizen of Saudi Arabia, and another third-party defendant, Awal Bank BSC, was headquartered in Bahrain:

We held in VSL Corp. v Dunes Hotels & Casinos, Inc. (70 NY2d 948 [1988]) that it was error for the Appellate Division to dismiss a complaint sua sponte on forum non conveniens grounds, adding that such a dismissal may occur “only upon the motion of a party” (id. at 949). Here, though no party formally moved to dismiss plaintiff’s complaint because of the inconvenience of the forum, the issue was briefed and argued at Supreme Court. We hold that VSL did not bar the court from dismissing the complaint under these circumstances. We also hold that, on this record, Supreme Court was correct as a matter of law in dismissing both the complaint and the third-party complaint. *  *  *

While the idea of dismissing the main complaint on forum non conveniens grounds was first mentioned by the Supreme Court Justice, he gave the parties a full opportunity to address the issue — indeed, he asked them to do so. Al-Sanea argued in favor of dismissing the complaint on forum non conveniens grounds, though he did not serve motion papers seeking that relief. We see no reason to read CPLR 327(a) as prohibiting a forum non conveniens dismissal where only the formality of a document labeled “notice of motion” was lacking, and where AHAB, the only party opposed to dismissal, neither objected to nor was prejudiced by the omission of that formality. * * *

Our State’s interest in the integrity of its banks is indeed compelling, but it is not significantly threatened every time one foreign national, effecting what is alleged to be a fraudulent transaction, moves dollars through a bank in New York. Indeed, the parties here agree that, as a practical matter, any dollar transaction comparable in size to the one now at issue must go through New York … . That does not mean that every major fraud case in the world in which dollars are involved belongs in the New York courts. New York’s interest in its banking system “is not a trump to be played whenever a party to such a transaction seeks to use our courts for a lawsuit with little or no apparent contact with New York” … . Mashreqbank PSC v Ahmed Hamad Al Gosaib i & Bros Co, 2014 NY Slip Op 02381, CtApp 4-8-14

 

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Alleged Discriminatory Acts Did Not Have an “Impact” in New York—Therefore the Lawsuit Could Not Be Maintained Under the New York City and New York State Human Rights Law

The First Department determined a lawsuit based on alleged violations of  New York State and New York City Human Rights Law could not be maintained because the defendants were out-of-state residents and because the discriminatory actions complained of took place outside the United States, despite plaintiff’s being employed in New York:

The State and City Human Rights Laws do not apply to acts of discrimination against New York residents committed outside their respective boundaries by foreign defendants … . In analyzing where the discrimination occurred, “courts look to the location of the impact of the offensive conduct” … . A non-New York City resident cannot avail him or herself of the protections of the City Human Rights Law unless he or she can demonstrate that the alleged discriminatory act had an impact within the City’s boundaries … . Although plaintiff does not reside in New York City, she resides within the state and is employed by the NBA which is based in New York City. However, the order on appeal addresses plaintiff’s claims against [defendants], none of which are residents of this state. Thus, the focus is on whether the actions these defendants are alleged to have committed had an impact within the respective boundaries of the City and State of New York, in order for the court to exercise jurisdiction over them. Plaintiff contends that the decision to reassign her and later reduce her responsibilities took place within the City boundaries and, therefore, her place of employment is where the impact of the alleged discriminatory acts occurred. However, it is the place where the impact of the alleged discriminatory conduct is felt that controls whether the Human Rights Laws apply, not where the decision is made … . This standard applies whether the claim is made under the City or State Human Rights Laws … . Without more, plaintiff’s mere employment in New York does not satisfy the “impact” requirement. Hardwick v Auriemma, 2014 NY Slip Op 02383, 1st Dept 4-8-14

 

Notice Requirements for a Nonparty Subpoena Pursuant to CPLR 3101(a)(4) Explained/Criteria for a Motion to Quash and Opposition to the Motion to Quash Explained

In a full-fledged opinion by Judge Pigott, the Court of Appeals determined the nature of the notice requirements for subpoenaing a nonparty pursuant to CPLR 3101 (a)(4), and the criteria for determining a motion to quash the subpoena:

We conclude that the subpoenaing party must first sufficiently state the “circumstances or reasons” underlying the subpoena (either on the face of the subpoena itself or in a notice accompanying it), and the witness, in moving to quash, must establish either that the discovery sought is “utterly irrelevant” to the action or that the “futility of the process to uncover anything legitimate is inevitable or obvious.” Should the witness meet this burden, the subpoenaing party must then establish that the discovery sought is “material and necessary” to the prosecution or defense of an action, i.e., that it is relevant. Matter of Kapon v Koch, 2014 NY Slip Op 02327, CtApp 4-3-14

 

Motion for Voluntary Discontinuance Should Not Have Been Granted “With Prejudice”

The Second Department determined a motion for the voluntary discontinuance of an action should not have been granted “with prejudice:”

In general, absent a showing of special circumstances, including prejudice to a substantial right of the defendant or other improper consequences, a motion for a voluntary discontinuance should be granted without prejudice (see CPLR 3217[c]…).  Here, there was no showing of any such special circumstances. Contrary to the respondents’ contention, there is no evidence in the record that the action was settled, discontinued, or dismissed on the merits … . Rather, it is undisputed that the settlement reached by the parties was a forbearance agreement. Accordingly, the action should have been discontinued without prejudice. New York Mtge Trust Inc v Dasdemir, 2014 NY Slip Op, 2nd Dept 4-2-14

 

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