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No Private Right of Action Against Bank for Failure to Comply with Exempt Income Protection Act (CPLR Article 52)

In answering certified questions from the Second Circuit, the Court of Appeals, in a full-fledged opinion by Judge Graffeo, determined a judgment debtor does not have a private right of action against a bank which, when served with a restraining notice by a judgment creditor, fails to forward the appropriate forms to the judgment debtor as required by the Exempt Income Protection Act (EIPA).  The forms alert the judgment debtor to the restraining notice, describe funds which are exempt from restraint, and provide information about seeking vacatur of the money judgment.  The court wrote:

…[A] private right to bring a plenary action for injunctive relief and money damages cannot be implied from the EIPA — and we therefore answer the first certified question in the negative.  As for the second certified question, a judgment debtor can secure relief from a bank arising from a violation of the EIPA in a CPLR Article 52 special proceeding… .  And our determination that the legislation created no private right of action compels the conclusion that the statutory mechanisms for relief are exclusive.  Banks had no obligation under the common law to forward notices of exemption and exemption claim forms to judgment debtors.  It therefore follows that any right debtors have to enforce that obligation, among others imposed under CPLR 5222-a, arises from the statute and, since the EIPA does not give rise to a private right of action, the only relief available is that provided in CPLR Article 52 … . Cruz v TD Bank NA…, 191, CtApp 11-21-13

 

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Cause of Action for Legal Malpractice Accrues When Malpractice Is Committed, Not When Client Learns of It

A cause of action for legal malpractice accrues when the malpractice is committed, not when the client learns of it.  In this case the alleged malpractice was advice that selling property would not have adverse tax consequences.  The IRS disagreed and the client and his attorney fought the determination. After the unsuccessful fight, the client sued the attorney for malpractice. The action was deemed time-barred (the continuous representation doctrine did not apply):

“A legal malpractice claim accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court’” … . Here, the defendants met their prima facie burden by establishing that the cause of action alleging legal malpractice accrued on March 5, 2003, the date they allegedly issued the opinion letter advising the plaintiff that the proposed sale would not result in the loss of his tax deferment status … . Although the plaintiff did not discover that his attorneys’ alleged advice was incorrect until years later, “ [w]hat is important is when the malpractice was committed, not when the client discovered it’” … . Therefore, since the defendants demonstrated that the plaintiff did not commence this action until December 29, 2011, more than three years after his claim for legal malpractice accrued, the defendants established, prima facie, that the claim was time-barred.  Landow v Snow Becker Krauss PC, 2013 NY Slip Op 07710, 2nd Dept 11-20-13

 

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Criteria for Exercising Jurisdiction Over Foreign Corporation Based On Presence of Subsidiary Within Jurisdiction—the “Department Doctrine”

The Second Department explained when the presence of a subsidiary within the jurisdiction of the court can be sufficient to exercise jurisdiction over the foreign parent under the so-called “department doctrine” (the subsidiary must be a virtual “department” of the parent):

If control exercised by the domestic corporation over the foreign corporation … . Such control may be manifested in numerous ways and, thus, the method by which such control may be demonstrated will necessarily depend on the attendant facts … . Although the Court of Appeals has noted that it “has never held a foreign corporation present on the basis of control, unless there was in existence at least a parent-subsidiary relationship,” it has nevertheless indicated that this factor is not dispositive … . “The control over [a] subsidiary’s activities . . . must be so complete that the subsidiary is, in fact, merely a department of the parent” … . It is only when the two corporations are “in fact, if not in name . . . one and the same corporation, [that] there is realistically no basis for distinguishing between them” for jurisdictional purposes … .  Goel v Ramachandran, 2013 NY Slip Op 07708, 2nd Dept 11-20-13

 

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Supreme Court Did Not Have Subject Matter Jurisdiction In an Action Seeking Compensation for an Alleged Unconstitutional Taking of Land Based Upon the Denial of a Subdivision Application—the Court of Claims Has Exclusive Jurisdiction

The plaintiff landowner wished to subdivide a 16 acre parcel and build homes with septic systems.  The land is in a watershed.  The town rejected the subdivision because the septic systems would violate the watershed regulations. The plaintiff then sued in Supreme Court seeking $1,000,000 as compensation for the alleged unconstitutional taking of his property.  In concluding that Supreme Court did not have subject matter jurisdiction, the Second Department wrote:

The plaintiff acknowledges that the instant action for a judgment declaring an unconstitutional taking is a precursor to the commencement of an action to recover damages in the Court of Claims based on that taking. The plaintiff, in effect, seeks to bifurcate its claim: to establish the State’s liability in the Supreme Court, and then to establish damages in the Court of Claims. The State Constitution, however, vests the Court of Claims with exclusive subject matter jurisdiction over claims against the State for appropriation of real property (see NY Const, art VI, § 9; Court of Claims Act § 9[2]). The plaintiff’s action runs afoul of this exclusive grant. Therefore, we agree with the Supreme Court that it lacks subject matter jurisdiction over the plaintiff’s claim… . Monroe Equities LLC v New York State, 2013 NY Slip Op 07715, 2nd Dept 11-20-13

 

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Admissibility of Medical Records as Business Records Does Not Preclude Evidentiary Objections to Admission

In the context of a personal injury case, the Fourth Department noted that the failure to object to the admissibility of medical records within 10 days (CPLR 3122-a [c]) did not render the documents automatically admissible:

Defendants contend that the court erred in denying their request at the commencement of trial to admit all of plaintiff’s medical records in evidence pursuant to CPLR 3122-a (c).  According to defendants, the records were automatically admissible because plaintiff raised no objection within 10 days of trial (see id.).  We reject that contention.  Plaintiff’s failure to object within 10 days before the trial waived any objection plaintiff had to the admissibility of the records as business records (see CPLR 3122-a [c]; 4518 [a]), but he did not waive any objection to their admissibility based on other rules of evidence … .  Indeed, plaintiff properly objected at trial on relevancy grounds with respect to the admissibility of some of the records… . Siemucha v Garrison…, 1145, 4th Dept 11-15-13

 

Plaintiff Entitled to Summary Judgment Against Third-Party Defendant Under Doctrine of Collateral Estoppel

The Fourth Department determined plaintiff was entitled to summary judgment against a third-party defendant under the doctrine of collateral estoppel.  Plaintiff was injured in a snowmobile collision.  Plaintiff sued one snowmobile driver and the other snowmobile driver was brought into the case as a third-party defendant. The jury found each driver 50% liable:

…[W]e agree that plaintiff is entitled to summary judgment in the amount sought in the complaint based on the doctrine of collateral estoppel.  We therefore modify the order accordingly.  “The doctrine of collateral estoppel precludes a party from relitigating ‘an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point’ ” … .  “The party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action” … .  Here, the issues are identical because in the prior action defendant was required to defend against the claim that he was negligent in the operation of his snowmobile and that his negligence was a proximate cause of this accident.  Moreover, he had a full and fair opportunity to litigate those issues in the prior action and was in no way limited by virtue of the fact that he was a third-party defendant as opposed to a direct defendant.  Specifically, CPLR 1008 grants to a third-party defendant all of the rights a direct defendant has to defend against a plaintiff’s claims, including the full rights of discovery afforded by CPLR article 31… .  Given that defendant had a full and fair opportunity to litigate the negligence claim against him in the prior action as well as to contest the value of plaintiff’s injuries, plaintiff is entitled to summary judgment… . Ackman v Haberer, 1059, 4th Dept 11-15-13

 

Relation-Back Doctrine Allowed Amendment of Complaint After S/L Had Run

The Fourth Department determined the relation-back doctrine allowed plaintiff to amend the complaint.  The court noted that the addition of “piercing the corporate veil” allegations in the amended complaint was “of no moment” because no new cause of action was stated thereby:

In order for the relation back doctrine to apply, a plaintiff must establish that “(1) both claims arose out of the same conduct, transaction, or occurrence, (2) the additional party is united in interest with the original party, and by reason of that relationship can be charged with notice of the institution of the action such that he or she will not be prejudiced in maintaining a defense on the merits, and (3) the additional party knew or should have known that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against the additional party as well” … .

Here, we conclude that the first prong of the relation back doctrine test is satisfied because the claims against DelMonte P.C. arise out of the same occurrence as that alleged against DelMonte, doing business as Niagara Chiropractic Office, i.e., Venne’s treatment of plaintiff … .  We further conclude that plaintiffs satisfied the second prong of that test inasmuch as DelMonte P.C. employed Venne and therefore may be held vicariously liable for his conduct … .  We conclude that plaintiffs also satisfied the third prong of that test inasmuch as they established that their failure to include DelMonte P.C. as a defendant in the original or first amended complaint “ ‘was a mistake and not . . . the result of a strategy to obtain a tactical advantage’ ” … .  Nasca… v Delmonte…, 1191, 4th Dept 11-15-13

 

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German Museum Proved It Had Superior Title to Ancient Assyrian Gold Tablet in Decedent’s Estate/Doctrine of Laches Did Not Apply

In an estate proceeding, the Court of Appeals determined the doctrine of laches did not apply and the German Museum was entitled to the return of the Assyrian gold tablet, which was in decedent’s estate but had been missing from the museum since World War II:

We agree with the Appellate Division that the Estate failed to establish the affirmative defense of laches, which requires a showing “that the museum failed to exercise reasonable diligence to locate the tablet and that such failure prejudiced the [E]state” …. .  While the Museum could have taken steps to locate the tablet, such as reporting it to the authorities or listing it on a stolen art registry, the Museum explained that it did not do so for many other missing items, as it would have been difficult to report each individual object that was missing after the war. Furthermore, the Estate provided no proof to support its claim that, had the Museum taken such steps, the Museum would have discovered, prior to the decedent’s death, that he was in possession of the tablet … .  As we observed …in a related discussion of the defense of statute of limitations, “[t]o place a burden of locating stolen artwork on the true owner and to foreclose the rights of that owner to recover its property if the burden is not met would . . . encourage illicit trafficking in stolen art” … .

Additionally, the Estate failed to demonstrate “the essential element of laches, namely prejudice” … .  While the Estate argued that it had suffered prejudice due to the Museum’s inaction, there is evidence that at least one family member (decedent’s son) was aware that the tablet belonged to the Museum.  And, although the decedent’s testimony may have shed light on how he came into possession of the tablet, we can perceive of no scenario whereby the decedent could have shown that he held title to this antiquity. Matter of Flamenbaum, 178, CtApp 11-14-13

 

Evidence Not Sufficient to Demonstrate Spanish Document Was an Enforceable Judgment; In Motion for Summary Judgment in Lieu of Complaint (CPLR 3213) There Is No Impediment to Plaintiff’s Supplementing Its Papers After Defendant’s Response

The First Department determined Supreme Court should not have decided, as a matter of law, a Spanish document was a judgment enforceable in New York. Only differing expert affidavits were provided and the operative statutes were not translated and submitted to the court. In addition, the court noted that the plaintiff’s submission of papers after defendant responded to the motion for summary judgment in lieu of complaint was properly allowed. Defendant was able to respond to the additional documents:

CPLR 5302 provides that New York will recognize foreign decrees that are “final, conclusive and enforceable where rendered even though an appeal therefrom is pending.” * * * The motion court was provided with the affidavits of the experts whose opinions differed, but was not provided with translated copies of the [statutes] cited by both experts. Thus, the court was not provided adequate information to determine as a matter of law that the document is a final judgment under Spanish law and ripe for enforcement in New York. * * *

There is no absolute rule that in a CPLR 3213 motion, a plaintiff cannot supplement its papers in response to a defendant’s arguments, so as to establish its entitlement to summary judgment in lieu of complaint. “Nothing that is curable by the mere addition of papers should result in a denial of the motion, unless it is a denial with leave to renew on proper papers” (David D. Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3213:8). “Mere omissions from the affidavits” that can be rectified by filing and serving additional affidavits should be cured by a continuance or adjournment in order for the additional affidavits to be served and filed (id.). * * * Here, defendant had an opportunity to address the merits of the later-submitted documents, in the form of a reply in the cross motion, and therefore plaintiff’s failure initially to include all the documents did not result in prejudice to defendant and require denial of the motion… .  Sea Trade Mar Corp v Coutsodontis, 2013 NY Slip Op 07560, 1st Dept 11-14-13

 

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Improper Notice of Benefit Termination; Four-Month S/L Never Triggered; Termination Annulled

The Second Department determined the four-month statute of limitations for Article 78 review was never triggered because the NYC Housing Authority’s (NYCHA’s) failed to provide proper notice of termination of Section 8 housing benefits.  Therefore the termination was properly annulled and the subsidy was properly reinstated:

Pursuant to paragraph 22(f) of the Williams first partial consent judgment, the four-month statute of limitations of CPLR 217 begins to run on the date of receipt of the NYCHA’s notice of default letter … . Paragraph 22(f) cannot be read in a vacuum. Relying on contract principles, as urged by the NYCHA, and reading the Williams first partial consent judgment as a whole, we conclude that the NYCHA has the burden of satisfying the condition precedent of serving all three notices upon the Section 8 participant before its determination to terminate a participant’s subsidy can be considered final and binding upon the participant … . * * *

Here, the NYCHA failed to show that it mailed two of the three required notices. It did not present any proof that it mailed the initial warning letter and it submitted insufficient proof with respect to the mailing of the T-1 letter. As a result of this failure to abide by the notice provisions set forth in the Williams first partial consent judgment, the statute of limitations was not properly triggered and did not begin to run … . Matter of Dial v Rhea, 2013 NY Slip Op 07475, 2nd Dept 11-13-13

 

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