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Motion to Vacate Pursuant to CPLR 5015 Should Have Been Granted On “Subject Matter Jurisdiction” and “Fraud Upon the Court” Grounds

In a full-fledged opinion by Justice Centra, the Fourth Department determined Wells Fargo had either perpetrated a fraud upon the court or failed to reveal all the facts to the court which granted a nunc pro tunc order adding a second parcel to a foreclosure action. The Fourth Department noted that Wells Fargo knew the foreclosure action did not relate to the second parcel and therefore knew the nunc pro tunc order purporting merely to correct a mistake should not have been granted:

First, we agree … that the court … should have granted the motion to vacate the nunc pro tunc order because the court … was without subject matter jurisdiction to issue the nunc pro tunc order (see CPLR 5015 [a] [4]). Wells Fargo moved for the nunc pro tunc order pursuant to CPLR 2001, which provides that a “court may permit a mistake, omission, defect or irregularity . . . to be corrected, upon such terms as may be just, or, if a substantial right of a party is not prejudiced, the mistake, omission, defect or irregularity shall be disregarded.” The court erred in granting the nunc pro tunc motion because Wells Fargo was not seeking to correct a mere ministerial or clerical mistake… . * * *

…[W]e agree … that the court … also should have granted the motion to vacate the nunc pro tunc order based on “fraud, misrepresentation, or other misconduct of an adverse party” (CPLR 5015 [a] [3]…).. In its nunc pro tunc motion, Wells Fargo asserted that the “common address” of 124-128 East Main Street contained both Parcel No. 1 and Parcel No. 2. Wells Fargo failed to advise the court …., however, that the metes and bounds descriptions of the two parcels are different. Wells Fargo does not dispute that, “when there is a discrepancy between the street address and the legal description of a piece of real property, the legal description controls” … . Wells Fargo also failed to advise the court of the second mortgage that encumbered Parcel No. 2, which, as noted earlier, was executed on the same date as the first mortgage. Further, Wells Fargo failed to advise the court that there was a two-family dwelling on Parcel No. 1 and a separate four-family dwelling on Parcel No. 2. Had Wells Fargo made the court aware of those facts, the court may have realized that there was no clerical error in omitting Parcel No. 2 from schedule A. Wells Fargo Bank NA … v Podeswik…, 81, 4th Dept 2-14-14

 

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Public Interest Privilege (Protecting Government Documents from Disclosure) Explained

In determining Supreme Court erred when it ordered the county to produce documents sought during discovery without reviewing them to determine the applicability of the asserted public interest privilege, the Second Department wrote:

CPLR 3101(a) broadly mandates “full disclosure of all matter material and necessary in the prosecution or defense of an action.” This provision is to be liberally interpreted in favor of disclosure … . Nonetheless, a party from whom disclosure is sought may seek to prevent disclosure by properly invoking a recognized privilege. “A party asserting that material sought in disclosure is privileged bears the burden of demonstrating that the material it seeks to withhold is immune from discovery” … .”A public interest privilege inheres in certain official confidential information in the care and custody of governmental entities” … . “This privilege permits appropriate parties to protect information from ordinary disclosure, as an exception to liberal discovery rubrics” … . “Specifically, the privilege envelops confidential communications between public officers, and to public officers, in the performance of their duties, where the public interest requires that such confidential communications or the sources should not be divulged” … “The justification for the privilege is that the public interest might otherwise be harmed if extremely sensitive material were to lose this special shield of confidentiality”… . Ren Zheng Zheng v Bermeo, 2014 NY Slip Op 00979, 2nd Dept 2-13-14

 

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Landowners Who Have Been Granted a Variance Are Necessary Parties In an Action Challenging the Variance (CPLR 1001 (b))

The Second Department determined that landowners who were issued a zoning variance were necessary parties in the action challenging the variance. The landowners had not been properly served and Supreme Court went ahead and determined the merits without the landowners in the suit. On appeal the petitioners did not dispute that the landowners were necessary parties, but argued their presence should be excused under the factors in CPLR 1001 (b). The Second Department disagreed, finding that, under the facts, factors 2 through 5 required the landowners to be parties to the action:

A court may excuse the failure to join a necessary party and allow an action to proceed in the interest of justice upon consideration of five factors enumerated in CPLR 1001(b):   (1) whether the petitioner has another remedy if the action is dismissed for nonjoinder, (2) the prejudice that may accrue from nonjoinder to the respondent or to the nonjoined party, (3) whether and by whom prejudice might have been avoided or may in the future be avoided, (4) the feasibility of a protective provision, and (5) whether an effective judgment may be rendered in the absence of the nonjoined party… . Matter of Feder v Town of Islip Zoning Board of Appeals, 2014 NY Slip Op 00998, 2nd Dept 2-13-14

 

Court-Ordered Period for Bringing Summary Judgment Motion Which Was Shorter than the Statutory Period Cannot Be Modified Absent Good Cause—Law Office Failure Not Enough

The First Department determined that the court-ordered deadline for bringing a summary judgment motion could not be modified absent good cause, even though the court-ordered deadline shortened the statutory 120 period:

As the Court of Appeals has repeatedly reiterated, court-ordered time frames are requirements to be taken seriously by the parties … . Contrary to the distinction defendant seeks to draw, it does not matter whether a motion for summary judgment has been made more than 120 days after the filing of the note of issue or after the expiration of a shorter time limit set by a court order or stipulation. Whatever the source of the deadline with which a party fails to comply, the lateness may not be excused without a showing of good cause within the meaning of CPLR 3212(a)—a showing of something more than mere law office failure… . Quinones v Joan & Sanford I Weill Med Coll, 2014 NY slip Op 00882, 1st Dept 2-11-13

 

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Florida Choice of Law Provision Re: Covenants Not to Compete Unenforceable in New York/the Nonsolicitation Covenant at Issue Was Overbroad and Unenforceable

In a full-fledged opinion by Justice Whalen, the Fourth Department determined that Florida law re: covenants not to compete was “truly obnoxious” to New York law and the nonsolicitation covenant at issue was overbroad and unenforceable:

…[W]e conclude that Florida law prohibiting courts from considering the hardship imposed on the person against whom enforcement is sought is “ ‘truly obnoxious’ ” to New York public policy …, inasmuch as under New York law, a restrictive covenant that imposes an undue hardship on the employee is invalid and unenforceable for that reason ‘’’ .  Furthermore, while New York judicially disfavors such restrictive covenants, and New York courts will carefully scrutinize such agreements and enforce them “only to the extent that they are reasonably necessary to protect the legitimate interests of the employer and not unduly harsh or burdensome to the one restrained”…, Florida law requires courts to construe such restrictive covenants in favor of the party seeking to protect its legitimate business interests (see Florida Statutes § 542.335 [1] [h]). * * *

A non-solicitation covenant is overbroad and therefore unenforceable “if it seeks to bar the employee from soliciting or providing services to clients with whom the employee never acquired a relationship through his or her employment” … .  Here, the non-solicitation covenant purported to restrict [defendant] from, inter alia, soliciting, diverting, servicing, or accepting, either directly or indirectly, “any insurance or bond business of any kind or character from any person, firm, corporation, or other entity that is a customer or account of the New York offices of the Company during the term of [the] Agreement” for two years following the termination of Johnson’s employment, without regard to whether defendant acquired a relationship with those clients. We conclude that the language of the non-solicitation covenant renders it overbroad and unenforceable … . Brown and Brown Inc… v Johnson…, 1109, 4th Dept 2-7-14

 

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Malpractice by Chiropractor Governed by Three-Year Statute of Limitations

In a full-fledged opinion by Justice Sweeney, the First Department determined that a malpractice action against a chiropractor (Dr. Fitzgerald) is governed by the three-year statute of limitations (CPLR 214(6)), not the 2 ½ year statute of limitations (CPLR 214-a) governing actions against physicians and those providing medical services at the direction of a physician:

Here, plaintiff was not referred to Dr. Fitzgerald by a licensed physician and Dr. Fitzgerald’s chiropractic treatment was not an integral part of the process of rendering medical treatment to a patient or substantially related to any medical treatment provided by a physician. Indeed, plaintiff did not even inform her physicians, including her primary care physician, that she was receiving chiropractic treatment for her neck and back. Further, the record establishes that the treatment provided by Fitzgerald, consisting of adjusting or applying force to different parts of the spine, massages, heat compression, and manipulation of plaintiff’s neck, constituted chiropractic treatment (see Education Law § 6551). The fact that defendant provided treatment to the human body to address a physical condition or pain, which may be within the broad statutory definition of practicing medicine (Education Law § 6521), does not, by itself, render the treatment “medical” within the meaning of CPLR 214-a, since the use of such a broad definition would result in the inclusion of many “alternative and nontraditional approaches to diagnosing [and] treating . . . human disease'” which are clearly nonmedical in nature … .

…Here, there is no doubt that Dr. Fitzgerald’s treatment was separate and apart from any other treatment provided by a licensed physician and was not performed at a physician’s request. Accordingly, as with the psychologist in Karasek [92 NY2d 171], and the optometrist in Boothe [107 AD2d 730], defendant is not entitled to invoke the benefit of the shortened limitations period applicable to medical, dental and podiatric malpractice, and is subject to the three-year statute of limitations of CPLR 214(6). Perez v Fitzgerald, 2014 NY Slip Op 00744, 1st Dept 2-6-14

 

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Analytical Criteria Re: Res Judicata and the Interpretation of a Release Explained

The Second Department, in grappling with the effect of stipulations and a release stemming from divorce proceedings, explained the principles of res judicata (precluding mother’s action for payment of Bar Mitzvah fees) and the interpretation of a release (allowing mother’s action for teen tour expenses):

“Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation” … . Under New York’s transactional approach to res judicata, “once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy” … . Here, the Family Court properly granted the father’s objection to that portion of the Support Magistrate’s order which awarded the mother reimbursement of Bar Mitzvah fees. The father presented evidence showing that the mother’s claim against him arose from the same operative facts as a claim which was decided on the merits in the Supreme Court matrimonial action, in which she sought, inter alia, a finding of contempt against him for his nonpayment of the same Bar Mitzvah fees. The father thus demonstrated that the claim for Bar Mitzvah fees that was asserted against him in this proceeding could have been raised in the Supreme Court action. Thus, this claim was properly dismissed as barred by the doctrine of res judicata.

… ” A release is a contract, and its construction is governed by contract law'” … . Where a release is unambiguous, the intent of the parties must be ascertained from the plain language of the agreement … . Here, the mother established her prima facie entitlement to judgment as a matter of law on her claim for reimbursement of the teen-tour expenses. In opposition, the father failed to raise a triable issue of fact as to whether the claim was barred by the release contained in the parties’ stipulation of settlement. That release contained an exception that clearly and unambiguously allowed either party to pursue claims seeking to enforce the terms of the stipulation of settlement, as well as all prior stipulations entered into by the parties. This exception was applicable to the mother’s claim in this proceeding for reimbursement of teen-tour expenses. Viewed in its entirety, the terms of the stipulation of settlement make clear that it was not intended to preclude the mother’s claim in this regard. Matter of Singer v Windfield, 2015 NY Slip Op 00890, 2nd Dept 2-4-14

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Malpractice Cause of Action Stated Against an Attorney Who Died Just Before the Statute of Limitations on Plaintiffs’ Action Ran Out

In a full-fledged opinion by Justice Tom, the First Department determined that plaintiffs had stated a valid malpractice claim against an attorney who died just before the statute of limitations expired:

That a cause of action might accrue when the plaintiff actually sustains a loss, however, does not require the conclusion that an attorney is absolved of responsibility for any and all consequences of his neglect of the matter simply because it occurred prior to accrual of an actionable claim. Giving plaintiff the benefit of every possible favorable inference that can reasonably be drawn from the pleadings … , as we must on a pre-answer motion to dismiss … it appears that the inaction of counsel rendered the lapse of plaintiff’s cause of action not merely possible—or even probable—but inevitable. On a motion directed at the sufficiency of the pleadings, the issue is whether the facts alleged fit within any cognizable theory of recovery, not whether the complaint is artfully pleaded …, and the circumstances of this matter do not warrant dismissal of the action, at this juncture, as against the … defendants. Cabrera v Collazo, 2014 NY Slip Op 00622, 1st Dept 2-4-14

 

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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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