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Jurisdiction Was Gained Over Out-of State Manufacturer Under Two Provisions of CPLR 302

Plaintiff was injured when he fell from a tree stand made by an out-of-state manufacturer and distributed in New York through Dick’s Sporting Goods.  In denying defendant’s motion to dismiss for lack of jurisdiction, the Fourth Department outlined the statutory and due process requirements for good service upon a foreign corporation under CPLR 302.  The court wrote:

Here, defendant had an exclusive distributorship agreement with Dick’s, and maintained a website that provided information relating to its products, directed consumers to retail locations where they could purchase the products, and allowed for the direct purchase of the products through a credit card. Therefore, defendant was transacting business in New York through the use of its website, and the court properly concluded that there is long-arm jurisdiction under CPLR 302 (a) (1).

… [D]efendant is subject to long- arm jurisdiction pursuant to CPLR 302 (a) (3) (ii). Under that provision, courts “may exercise personal jurisdiction over any non-domiciliary . . . who . . . commits a tortious act without the state causing injury to person . . . within the state . . . if he .expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” “The conferral of jurisdiction under [that] provision rests on five elements: First, that defendant committed a tortious act outside the State; second, that the cause of action arises from that act; third, that the act caused injury to a person or property within the State; fourth, that defendant expected or should reasonably have expected the act to have consequences in the State; and fifth, that defendant derived substantial revenue from interstate or international commerce” ….  Halas v Dick’s Sporting Goods…Big Dog Treestands, Inc, CA 12-01868, 336, 4th Dept, 4-26-13

 

E-Mail Service to Defendant Living in Iran Deemed Valid

The Fourth Department held that service by e-mail upon the defendant in a matrimonial action was valid.  The defendant was living in Iran and the trial judge (Supreme Court, Monroe County, Dollinger, J.) ordered that service be accomplished by e-mail pursuant to CPLR 308 (5).  The Fourth Department wrote:

“CPLR 308 (5) vests a court with the discretion to direct an alternative method for service of process when it has determined that the methods set forth in CPLR 308 (1), (2), and (4) are ‘impracticable’ ” …. “Although the impractability standard is not capable of easy definition” …, “[a] showing of impracticability under CPLR 308 (5) does not require proof of actual prior attempts to serve a party under the methods outlined pursuant to subdivisions (1), (2) or (4) of CPLR 308” ….“The meaning of ‘impracticable’ will depend upon the facts and circumstances of the particular case” ….

Here, we conclude that plaintiff made a sufficient showing that service upon defendant pursuant to CPLR 308 (1), (2), or (4) was impracticable, and thus that the court providently exercised its discretion in directing an alternative method of service …. Plaintiff submitted evidence that defendant left the United States with the parties’ child and declared her intention to remain in Iran with her family … . Further, plaintiff established that Iran and the United States do not have diplomatic relations and that Iran is not a signatory to the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (20 UST 361, TIAS No. 6638). Plaintiff thus requested alternative service upon defendant’s parents in Iran, with whom defendant was residing.

In light of those unique circumstances, we conclude that the court properly determined that service upon defendant was “impracticable by any method of service specified in CPLR 308 (1), (2), and (4).”

“Once the impracticability standard is satisfied, due process requires that the method of service be ‘reasonably calculated, under all the circumstances, to apprise’ the defendant of the action” ….

“In order to be constitutionally adequate, the method of service need not guarantee that the defendant will receive actual notice” ….

Here, the court initially ordered service of the summons by (1) personal service upon defendant’s parents; (2) mail service upon defendant at her parents’ address in Iran; and (3) service upon defendant by plaintiff’s Iranian attorneys in accordance with Iranian law.

Pursuant to that order, plaintiff mailed the summons and notice to defendant at her parents’ last known address in Tehran and submitted a declaration by his Iranian attorney that at least two attempts were made to effect personal service upon defendant at that address.

Although defendant contended that the address used for service was “bogus,” the record reflects that the address was in fact used by defendant and/or her parents in some capacity.

Indeed, defendant supplied that address to the child’s pediatrician in requesting the child’s medical records, and she averred that her father ultimately received the documents from a “tenant” who lived at that address.

When plaintiff was unable to effect personal service upon defendant’s parents pursuant to the court’s order, the court relieved him of that obligation and instead permitted service “via email at each email address that [p]laintiff knows [d]efendant to have.” Although service of process by email “is not directly authorized by either the CPLR or the Hague Convention, it is not prohibited under either state or federal law, or the Hague Convention” … and, indeed, “both New York courts and federal courts have, upon application by plaintiffs, authorized [e]mail service of process as an appropriate alternative method when the statutory methods have proven ineffective” … .
Contrary to the contention of defendant, we conclude that plaintiff made the requisite showing that service by email was “reasonably calculated to apprise defendant of the pending lawsuit and thus satisfie[d] due process” … .
The record reflects that, for several months prior to the application for alternative service, the parties had been communicating via email at the two email addresses subsequently used for service. Although defendant claimed that she did not receive either of the emails, she acknowledged receipt of a subsequent email from plaintiff’s attorney sent to the same two email addresses.
We thus conclude that, under the circumstances of this case, the court properly determined that service of the summons with notice upon defendant by email was an appropriate form of service … .  Safadjou v Mohammadi, CA 12-00271, 359, 4th Dept, 4-26-13

 

 

Leave To Amend Complaint Should Have Been Granted

The Fourth Department reversed the trial court’s denial of a motion to amend a complaint, noting:

“Leave to amend a pleading should be freely granted in the absence of prejudice to the nonmoving party where the amendment is not patently lacking in merit… “.

… A “court should not examine the merits or legal sufficiency of the proposed amendment unless the proposed pleading is clearly and patently insufficient on its face” … .  Holst…v Liberatore…, CA 12-01575, 243, 4th Dept, 4-26-13

 

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Question of Fact Raised by Verified Pleadings Re When Accident Happened

The Court of Appeals (with a dissent) held that a question of fact about when an accident occurred had been raised by plaintiff’s verified pleadings.  The defendant submitted evidence the accident occurred on February 5, making plaintiff’s action untimely.  Plaintiff’s verified pleadings stated the accident occurred on February 10, making plaintiff’s action timely.  In light of the question of fact raised by the verified pleadings, the Court of Appeals reversed the grant of summary judgment to the defendant.  Sanchez v National Railroad Passenger Corp, No 76, CtApp, 4-25-13

 

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Product Warranty Does Not Extend Statute of Limitations

In finding that a 10-year warranty on windows and doors did not extend the relevant statute of limitations, the First Department wrote:

Although initially it may seem somewhat unfair for defendant to have given plaintiffs a 10-year warranty and then argue that plaintiffs cannot sue for breach of warranty at any time during that 10-year period, the case law is clear on when this cause of action accrues …. Katopodis v Marvin Windows & Doors, 2013 NY Slip Op 02817, 1st Dept, 4-25-13

 

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Class Certification Properly Granted; Rent Overcharge and Attorney’s-Fees Claims Did Not Seek “Penalties” In Violation of CPLR 901

The First Department affirmed the grant of class certification in a landlord-tenant action finding that plaintiff’s rent overcharge claim and attorney’s-fees claim did not seek “penalties” in violation of CPLR 901.  There was a dissent.  The First Department wrote:

Although plaintiff did not waive her right to reimbursement for alleged overcharges and interest, these claims did not render her action an action for a penalty for purposes of CPLR 901(b), even though such recovery is denominated a penalty by the RSL [Rent Stabilization Law], because they lack a punitive, deterrent and litigation-incentivizing purpose ….

Nor did the attorneys’ fees request seek a penalty, as the general right to attorneys’ fees in landlord-tenant proceedings (Real Property Law § 234) does not apply to administrative proceedings …, and the RSL provision should be understood as having the same nonpunitive purpose as the statute applicable to actions and summary proceedings. Notably, the reference in Rent Stabilization Code (9 NYCRR) § 2526.1(d) to attorneys’ fees as an “additional penalty,” while otherwise not dispositive, is absent from the attorney fee provision in the legislatively enacted RSL. Gudz v Jemrock Realty Co, LLC, 2013 NY SlipOp 02814, 1st Dept, 4-25-13

 

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Class Certification Should Have Been Granted; Plaintiffs Waived Statutory Treble Damages

The First Department reversed the dismissal of a putative class action by tenants against a landlord alleging the landlord deregulated the apartments while receiving tax incentive benefits from the city.  Because the tenants waived the statutory treble damages provision, the First Department determined that the case no longer involved “penalties” and was therefore not precluded by CPLR 901.  In a full-fledged opinion by Justice Andrias, the First Department wrote:

Pursuant to CPLR 901(b), “[u]nless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained in a class action.” However, even where a statute creates or imposes a penalty, the restriction of CPLR 901(b) is inapplicable where the class representative seeks to recover only actual damages and waives the penalty on behalf of the class, and individual class members are allowed to opt out of the class to pursue their punitive damages. … . * * * Rent Stabilization Code (9 NYCRR) § 2520.13, which states that “[a]n agreement by the tenant to waive the benefit of any provision of the RSL or this Code is void,” does not require a different result. “[P]laintiffs are seeking to waive their entitlement to treble damages unilaterally, not through agreement. Thus, allowing the class action to proceed would not frustrate the RSC’s purpose of [avoiding] situations whereby the landlord attempts to circumvent the [RSC’s] benefits” … . Downing v First Lenox Terrace Assoc, 2013 NY Slip Op 02853, 1st Dept, 4-25-13

 

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Class Certification in Landlord-Tenant Action Upheld

The First Department upheld Supreme Court’s grant of class certification in an action alleging defendant landlord charged market rents while accepting J-51 [tax incentive] benefits.  The First Department wrote:

The issues of when defendant received J-51 benefits, whether defendant deregulated apartments while receiving those benefits, which tenants resided in those apartments during those time periods, and whether defendant wrongfully charged market rents while accepting J-51 benefits are common issues that “predominate,” thereby meeting the commonality requirement of CPLR 902(a)(2)… . The need to conduct individualized damages inquiries does not obviate the utility of the class mechanism for this action, given the predominant common issues of liability … .

Defendant’s counterclaim for rent arrears does not cause plaintiff to be an atypical member of the class. Her claim is typical of the claims of all class members in that each flows from defendant’s alleged unlawful deregulation of apartments while receiving J-51 benefits … . “[T]hat the underlying facts of each individual plaintiff’s claim vary, or that [defendant’s] defenses vary, does not preclude class certification” …. Defendant’s counterclaim does not materially add to the complexity or difficulty of resolving plaintiff’s individual claim, and defendant’s suggestion that plaintiff might be inclined to settle her case to evade liability on the counterclaim is speculative.  Bordern v 400 East 55th Street Associates, LP, 2013 NY Slip Op 02815, 1st Dept, 4-25-13

 

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Slander Per Se Complaint Not Based Upon “Serious Crime” (Trespass) ​

In affirming the dismissal of a complaint alleging slander per se based upon the accusation defendant had committed trespass, the Third Department explained:

A statement will fall into one of the four categories of slander per se when  it is so noxious and injurious by nature that the law presumes that pecuniary damages will result and, thus, special damages need not be alleged ….  As relevant here, “slander per se” includes “statements . . . charging [a] plaintiff with a serious crime,” but “the law distinguishes between  serious and  relatively minor offenses, and  only statements regarding the former are actionable without proof of damage” … .  * * *

In any event, even construing the complaint liberally and according plaintiff the benefit of every favorable inference, it does not set forth the allegedly defamatory statement with sufficient particularity to satisfy the requirement of CPLR  3016… .  Martin v Hayes, 515024, 3rd Dept, 4-25-13

 

 

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Role of Appellate Court in Reviewing an Arbitral Award Which Has Been Confirmed in a Judgment Explained

In a full-fledged opinion by Justice Acosta (with a dissent), the First Department held that payment, by the respondent investment fund, of an arbitral award in stocks as opposed to cash required a hearing to determine the value of the stocks.  The First Department outlined its role where the satisfaction of an arbitral award which has been confirmed in a judgment is before them:

As a threshold matter, we begin by observing that a party may oppose an arbitral award either by motion pursuant to CPLR 7511(a) to vacate or modify the award within 90 days after delivery of the award or by objecting to the award in opposition to an application to confirm the award notwithstanding the expiration of the 90-day period … . Here, respondent did neither. Indeed, it was petitioner who appealed the lower court’s refusal to enforce the judgment. Under such circumstances, contrary to our dissenting colleague, we do not have the authority to grant a non-appealing party relief that it did not seek by vacating a judgment entered against it …. Moreover, we are not empowered to remit the matter to the arbitrator for clarification ….

Where a dispute exists as to the meaning of an arbitration award that has been confirmed in a judgment, it becomes “the Court’s function to determine and declare the meaning and intent of the arbitrator []” …. To that end, a court may review the text of the arbitrator’s award in conjunction with whatever findings, if any, the arbitrator has made …. In so doing, a court should adopt the most reasonable meaning of the text by avoiding any potential interpretations of the award that would render any part of its language superfluous or lead to an absurd result .. . Furthermore, the award must be interpreted in the light most favorable to the prevailing party … .  Matter of Pine St Assoc, LP v Southridge Partners, LP, 2013 NY Slip Op 02854, 1st Dept, 4-25-13

 

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