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THE BANK IN THIS FORECLOSURE ACTION FAILED TO PROVIDE THE ORIGINAL LOAN DOCUMENT AND THE LOST NOTE AFFIDAVIT WAS INSUFFICIENT; THE MOTION FOR A DEFAULT JUDGMENT SHOULD HAVE BEEN DENIED, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s motion for a default judgment in this foreclosure action should not have been granted because the original loan document was not provided and the lost note affidavit was insufficient:

A plaintiff moving for leave to enter a default judgment against a defendant must submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defendant’s failure to answer or appear … . Pursuant to UCC 3-804, “[t]he owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his [or her] own name and recover from any party liable thereon upon due proof of his [or her] ownership, the facts which prevent his [or her] production of the instrument and its terms.” Here, the plaintiff failed to set forth the facts that prevented the production of the original home equity line of credit agreement … . The lost note affidavit submitted by the plaintiff in support of its motion, inter alia, for leave to enter a default judgment against the defendants failed to state when the search for the credit agreement occurred, did not identify who conducted the search for the credit agreement, or explain when or how the credit agreement was lost … . JPMorgan Chase Bank, N.A. v Morton, 2024 NY Slip Op 01802, Second Dept 4-3-24

Practice Point: Here in this foreclosure action, in moving for a default judgment the bank did not provide the original loan document and did not provide a sufficient lost note affidavit. The motion should have been denied, criteria explained.

 

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IF THE STATUTE OF LIMITATIONS DEFENSE IS NOT RAISED BY A PARTY IT IS WAIVED AND CANNOT BE ASSERTED, SUA SPONTE, BY A JUDGE; IN ADDITION, A JUDGE CANNOT DECIDE A MOTION ON A GROUND NOT RAISED BY THE PARTIES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a judge, sua sponte, cannot raise the statute of limitations defense. If it is not raised by the parties, it is waived:

The statute of limitations is an affirmative defense that is waived by a party unless it is raised either in a responsive pleading or by motion prior to the submission of a responsive pleading … . “‘A court may not take judicial notice, sua sponte, of the applicability of a statute of limitations if that defense has not been raised'” … .

Here, none of the defendants answered the complaint, and the record does not show that any defendant made a pre-answer motion that raised the statute of limitations … . Therefore, a statute of limitations defense was waived. Moreover, even if the defense was not waived, no defendant opposed the instant motion, and the issue of the statute of limitations was not raised on the motion. Thus, the Supreme Court improperly determined the motion on a ground not raised by the parties … . Associates First Capital Corp. v Roth, 2024 NY Slip Op 01789, Second Dept 4-4-24

Practice Point: The stature of limitations defense cannot be raised, sua sponte, by a judge. If it is not raised by a party it is waived.

Practice Point: A judge cannot not based a motion-decision on a ground not raised by the parties.

 

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THE THIRD DEPARTMENT DETERMINED THE NEW YORK STATE UNIFORM FIRE PREVENTION AND BUILDING CODE PROVIDES SUFFICIENT STANDARDS AND MECHANISMS FOR ENFORCEMENT OF THE CODE PROVISIONS; A TENANT WHOSE BUILDING WAS DECLARED UNSAFE AFTER ORDERS TO REMEDY DEFECTS WERE IGNORED BY THE LANDLORD BROUGHT A PETITION FOR A WRIT OF MANDAMUS TO COMPEL THE SECRETARY OF STATE TO STRENGTHEN CODE ENFORCEMENT STANDARDS AND MECHANISMS; THE PETITION WAS DENIED (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice McShan, over a two-justice dissent, determined that the regulations associated with the enforcement of the NYS Uniform Fire Prevention and Building Code (Uniform Code) are adequate. Petitioner, a former tenant in a building which was ultimately declared unsafe after several orders to remedy building-defects were ignored by the landlord, brought a petition for a writ of mandamus requiring the NYS Secretary of State to provide standards for the enforcement of the Uniform Code. The petition was dismissed after an exhaustive discussion of the relevant regulations and enforcement standards and mechanisms. The opinion is too detailed to fairly summarize here. Matter of Clements v New York Secretary of State, 2024 NY Slip Op 01756, Third Dept 3-28-24

 

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DISPUTES ABOUT ENCROACHMENTS ON EASEMENTS RESOLVED; UNCLEAN HANDS AND LACHES DEFENSES REINSTATED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, modifying Supreme Court, determined the unclean hands and laches defenses should not have been dismissed in this complicated case resolving the removal of encroachments from easements. The case is too complex and entails too much minutia to fairly summarize. 214 Lafayette House LLC v Akasa Holdings LLC, 2024 NY Slip Op 01762, First Dept 3-28-24

 

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THE DEFENDANT SCHOOL DID NOT ELIMINATE TRIABLE QUESTIONS OF FACT ABOUT WHETHER IT HAD CONSTRUCTIVE NOTICE OF THE TEACHER’S ABUSIVE PROPENSITIES; THE NEGLIGENT HIRING AND NEGLIGENT SUPERVISION CAUSES OF ACTION IN THIS CHILD VICTIMS ACT CASE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court in this Child Victims Act case, determined the negligent hiring and negligent supervision causes of action against defendant school stemming from a teacher’s alleged abuse of plaintiff-student should not have been dismissed. There was a question of fact about whether the school district had constructive notice of the teacher’s abusive propensities:

… [G]iven the frequency of the alleged abuse, which occurred over a three-year period, and always occurred inside the same classroom during the school day, the defendants did not eliminate triable issues of fact as to whether they should have known of the abuse … . Additionally, the defendants failed to eliminate triable issues of fact as to whether their supervision of the teacher or the plaintiff was not negligent, in light of, among other things, the teacher was on “probationary” status during the relevant period, the special education lessons during which the alleged abuse occurred were one-on-one and behind closed doors, the plaintiff testified at his deposition that the school principal “never came in” or “checked” on him during the lessons, and only a single observation report from Columbus Avenue Elementary School is available in the teacher’s employment file during the relevant period. MCVAWCD-DOE v Columbus Ave. Elementary Sch., 2024 NY Slip Op 01703, Second Dept 3-27-24

Practice Point: Here the defendant school did not eliminate questions of fact about whether it had constructive notice of the teacher’s abusive propensities in this Child Victims Act case. The alleged abuse took place often behind closed doors when the teacher, who was on probation, was alone with the plaintiff.

 

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COURTS HAVE THE POWER TO LIMIT THE REACH OF OVERLY BROAD RESTRICTIVE COVENANTS IN COMMERCIAL CONTRACTS (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Connelly, affirming Supreme Court, discussed in detail the courts’ power to limit the reach of overly broad restrictive covenants in commercial contracts. Here the plaintiff and defendant collaborated for decades in the design and manufacture of fabrics to be used in solar shades. Upon terminating the contractual arrangement, the question became whether the restrictive covenants in the contract are enforceable. Because the opinion addresses the issues in the context of motions to dismiss, most of the findings were preliminary and must await a more complete record. But the Second Department did conclude courts have the power to limit the enforcement of overly broad restrictive covenants in commercial contracts, short of re-writing the contract:

This appeal requires us to analyze the factors to consider when evaluating whether a restrictive covenant in an ordinary commercial contract is enforceable. Although there is a dearth of New York state case law on this issue, we agree with those courts that have analyzed these types of covenants under a rule of reason, considering (1) whether the covenant protects a legitimate business interest; (2) the reasonableness of the geographic scope and temporal duration; and (3) the degree of hardship upon the party against whom the covenant is enforced.

This appeal also requires us to consider whether courts have the power to sever and grant partial enforcement of overly broad restrictive covenants in ordinary commercial contracts. Because the Court of Appeals has held that courts have such power with regard to overly broad restrictive covenants in employment agreements (see BDO Seidman v Hirshberg, 93 NY2d 382, 395), we similarly hold that courts have the power to sever and grant partial enforcement of overly broad restrictive covenants in ordinary commercial contracts and may do so under the appropriate circumstances. Twitchell Tech. Prods., LLC v Mechoshade Sys., LLC, 2024 NY Slip Op 01744, Second Dept 3-27-24

Practice Point: Courts have to power to limit the reach of overly broad restrictive covenants in commercial contracts, criteria explained in depth.

 

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THE JUDGE’S SUA SPONTE DISMISSAL OF THE COMPLAINT FOR FAILURE TO COMPLY WITH A STATUS CONFERENCE ORDER REVERSED; A JUDGE’S POWER TO DISMISS A COMPLAINT, SUA SPONTE, IS LIMITED AND SHOULD BE USED SPARINGLY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s failure to comply with a status conference order in this foreclosure action was not an adequate ground for the judge’s sua sponte dismissal of the complaint:

“‘[A] court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal'” … .

Here, the plaintiff’s failure to comply with the directive of the status conference order that it file an application for an order of reference by April 1, 2015, was not a sufficient ground upon which to dismiss the complaint … .

… [D]ismissal of the action also was not warranted based on the plaintiff’s alleged neglect to prosecute. “A court may not dismiss an action based on neglect to prosecute unless the CPLR 3216 statutory preconditions to dismissal are met” … . HSBC Bank USA, NA v Sung Eun Oh, 2024 NY Slip Op 01700, Second Dept 3-27-24

Practice Point: A judge’s power to dismiss a complaint sua sponte is limited and should be used sparingly. To dismiss a complaint pursuant to CPLR 3216, all the statutory criterial must be met. Here dismissal was not warranted.

 

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A PRETRIAL RULING ON THE ADMISSIBILITY OF EVIDENCE IS AN UNAPPEALABLE ADVISORY RULING; THE MOTION IN LIMINE SEEKING TO SET A LIMIT ON THE VALUE OF AN LLC WAS ACTUALLY AN UNTIMELY SUMMARY JUDGMENT MOTION WHICH SHOULD NOT HAVE BEEN CONSIDERED BY THE COURT (SECOND DEPT).

The Second Department, reversing Supreme Court in this divorce action, determined: (1) an advisory pretrial ruling on the admissibility of evidence is not appealable, and (2) the motion to limit the evidence of the valuation of the LLC to $2,450,000, although couched as a motion in limine, was actually an untimely summary judgment motion:

“[A]n order, made in advance of trial, which merely determines the admissibility of [*2]evidence is an unappealable advisory ruling” … . * * *

… [P]laintiff’s motion which sought, in effect, to set the minimum value of the LLC at $2,450,000 and preclude any evidence of a lower value, while styled as a motion in limine, was the functional equivalent of an untimely motion for partial summary judgment determining that the value of the LLC was at least $2,450,000 … . “[A] motion in limine is an inappropriate substitute for a motion for summary judgment” … , and “in the absence of any showing of good cause for the late filing of such a motion,” should not have been considered … . Desantis v Desantis, 2024 NY Slip Op 01699, Second Dept 3-27-24

Practice Point: A pretrial ruling on the admissibility of evidence is an unappealable advisory ruling.

Practice Point: The motion in limine seeking to set a limit on the value of an LLC in this divorce proceeding was actually an untimely motion for summary judgment which should not have been considered.

 

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SM STABBED INFANT PLAINTIFF SHORTLY AFTER BEING TREATED BY DEFENDANT HOSPITAL WHICH ALLEGEDLY NEGLIGENTLY FAILED TO DETAIN OR REPORT SM; ALTHOUGH SM DID NOT WAIVE THE PATIENT-PHYSICIAN PRIVILEGE, PLAINTIFF WAS ENTITLED TO AN IN CAMERA REVIEW OF SM’S MEDICAL RECORDS AND DISCLOSURE OF ANY RELEVANT NONMEDICAL INFORMATION (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the demand for disclosure of SM’s medical records was properly denied because SM had not waived the physician-patient privilege, but the request for an in camera review of the records for nonmedical information should have been granted. SM has been treated by defendant New York City Health + Hospital/Lincoln Medical Center (NYCHH) shortly before SM stabbed infant plaintiff. Plaintiff alleged NYCHH should have reported SM and detained her or taken some other measures to protect infant plaintiff:

Infant plaintiff and her father allege that NYCHH’s employees negligently treated SM when she presented to the hospital on April 26 and April 27, 2016, shortly before she stabbed the infant plaintiff and brother, resulting in the brother’s death. They allege that SM had a history of mental illness for which she had been treated by NYCHH on “scores of previous occasions,” and that NYCHH failed to detain SM, call a report to the Statewide Central Register of Child Abuse and Maltreatment, or “take any other action to protect” the infant plaintiff. SM, who is currently incarcerated, has not waived the physician-patient privilege and is believed to be unable or unwilling to do so.

Supreme Court properly determined that Mental Hygiene Law § 33.13(c)(1) does not apply to allow disclosure of SM’s hospital records in the interests of justice, absent SM’s consent or express or implied waiver of the physician-patient privilege provided by CPLR 4504, 4507 … . … Supreme Court should have granted plaintiffs’ alternative request for in camera review to determine whether the records include information of a nonmedical nature, such as observations of SM’s conduct, language, and appearance and factual matters, which is subject to disclosure … . S.M. v City of New York, 2024 NY Slip Op 01689, First Dept 3-26-24

Practice Point: Although medical records are protected from disclosure by the patient-physician privilege, relevant nonmedical, factual information in the records may be disclosed pursuant to an in camera review.

 

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A RULING ON A MOTION TO DISMISS DEALS ONLY WITH THE SUFFICIENCY OF THE PLEADINGS AND DOES NOT CONSTITUTE THE LAW OF THE CASE WITH RESPECT TO A SUBSEQUENT MOTION FOR SUMMARY JUDGMENT (FOURTH DEPT). ​

The Fourth Department, reversing the Court of Claims, determined the judge improperly refused to consider evidence submitted by defendants in opposition to claimant’s summary judgment motion citing the law of the case doctrine. The judge’s “law of the case” ruling, however, was based on her prior ruling on a motion to dismiss. Because a motion to dismiss addresses only the sufficiency of the pleadings, a ruling on a motion to dismiss is not the law of the case with respect to a subsequent summary judgment motion:

It is well settled that the law of the case doctrine “applies only to legal determinations that were necessarily resolved on the merits in a prior decision” … , and that a court’s order denying a motion to dismiss is “addressed to the sufficiency of the pleadings” and does not “establish the law of the case for the purpose of” motions for summary judgment … . We thus agree with defendants that the court erred in refusing to consider defendants’ proof in opposition to the motion … . Riley v State of New York, 2024 NY Slip Op 01647, Fourth Dept 3-22-24

Practice Point: A ruling on a motion to dismiss is not the law of the case for a subsequent summary judgment motion.

 

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