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THE BANK DID NOT DEMONSTRATE IT HAD STANDING TO FORECLOSE; THERE WAS INSUFFICIENT PROOF THE ALLONGE WAS FIRMLY AFFIXED TO THE NOTE AS REQUIRED BY UCC 3-202 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not prove it had standing to bring the action:

A plaintiff has standing to commence a mortgage foreclosure action when it is the holder or assignee of the underlying note at the time the action is commenced … . The plaintiff can establish standing by attaching a properly endorsed note to the complaint when commencing the action … . However, where an endorsement is on an allonge to the note, the plaintiff must establish that the allonge was “so firmly affixed to the note so as to become a part thereof” pursuant to UCC 3-202(2) at the time the action was commenced … . “Where there is no allonge or note that is either endorsed in blank or specially endorsed to the plaintiff, mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note” … .

Here, the plaintiff’s submissions failed to eliminate triable issues of fact as to whether the allonges were so firmly affixed to the note as to become a part thereof … . [The bank vice president’s] affidavit did not clarify whether the allonges were firmly affixed to the note … . U.S. Bank N.A. v Duvivier, 2023 NY Slip Op 03496, Second Dept 6-28-23

Practice Point: If the endorsement is on an allonge to the note, the allonge must be firmly affixed to the note (UCC 3-202). If the bank does not prove the endorsed allonge is firmly affixed to the note, it has not proved standing to foreclose.

 

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DEFENDANT IN THIS TRAFFIC ACCIDENT CASE SHOULD HAVE BEEN ALLOWED TO AMEND HIS ANSWER TO ASSERT A GRAVES AMENDMENT AFFIRMATIVE DEFENSE (AVAILABLE TO THE LESSOR OF A VEHICLE); PLAINTIFF WAS NOT PREJUDICED BY THE LATENESS OF THE MOTION (FIRST DEPT). ​

The Second Department, reversing Supreme Court, determined the defendant’s (Lubman;s) motion to amend his answer in this traffic accident case should have been granted. The lateness of the motion to amend did not cause sufficient prejudice to plaintiff to justify denial:

… [T]he court … improperly determined that the Graves Amendment is inapplicable here. Although Lubman did not clearly establish that he was a commercial lessor of motor vehicles … , he proffered sufficient evidence to create a question of fact as to the Graves Amendment’s applicability. He submitted evidence that he owned between four and seven cars that he rented fifty-nine times over a nine-month period through Turo, a peer-to-peer car sharing service. This volume of rental activity, which involved several vehicles, demonstrated more than a casual or occasional endeavor. The fact that Lubman operated under his own name rather than a corporate entity was not determinative. The Graves Amendment defines “owner” as “a person,” which it defines, in part, as “any individual” as well as a “corporation, company . . . or any other entity” … . Thus, by its own terms, the Graves Amendment is intended to cover both individuals and corporate entities.

Supreme Court should have granted Lubman’s motion for leave to amend his answer to assert a Graves Amendment affirmative defense. Lubman demonstrated that his proposed amended answer was not palpably insufficient or clearly devoid of merit …  Although plaintiff … claimed that they would be prejudiced by the amendment because Lubman waited ten months after his deposition before seeking leave to amend his answer, such delay was not significant prejudice that hindered their case preparation or prevented them from acting in support of their position … , as the note of issue had not yet been filed and Lubman could have been deposed further on the limited issue of the Graves Amendment affirmative defense. Ventura v Lubman, 2023 NY Slip Op 03444, First Dept 6-27-23

Practice Point: Although the motion to amend the answer was made 10 months after depositions, the note of issue had not been filed and defendant could be deposed further. The delay therefore did not prejudice plaintiff sufficiently to warrant denial of the motion.

Practice Point: The Graves Amendment limits the liability of a lessor of a vehicle involved in an accident to negligent maintenance or repair. The affirmative defense is available to individuals as well as business entities.

 

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NO APPEAL LIES FROM AN ORDER ISSUED ON DEFAULT, A MOTION TO VACATE IS THE ONLY REMEDY; NO APPEAL LIES FROM AN ORDER ISSUED ON CONSENT (FIRST DEPT).

The First Department, dismissing the appeal in this custody case, determined (1) no appeal lies from an order issued on mother’s default, and (2) no  appeal lies from an order entered with mother’s consent:

Because the fact-finding order was issued on the mother’s default, it is not appealable as of right and her remedy was to move to vacate (CPLR 5511 …). Although the mother appeared on the final date of the inquest after petitioner’s witnesses had testified, she was not present during the majority of the fact-finding hearing, and her counsel was not authorized to proceed in her absence … . The mother also did not offer any evidence or seek to testify.

Furthermore, no appeal lies from the dispositional order, as it was entered on the mother’s consent and she is therefore not an aggrieved party under CPLR 5511 … .  Matter of P. A. (Joseph M.), 2023 NY Slip Op 03432, First Dept 6-27-23

Practice Point: No appeal lies from an order issued on default. The only available remedy is a motion to vacate the default.

Practice Point: No appeal lies from an order issued on consent because the consenting party is not “aggrieved.”

 

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PLAINTIFF’S DECEDENT WAS SHOT IN A DARK AREA OF DEFENDANT NEW YORK CITY HOUSING AUTHORITY’S (NYCHA’S) APARTMENT COMPLEX; THE NOTICE OF CLAIM ALLEGED THE LACK OF LIGHTING CONSTITUTED NEGLIGENT SECURITY; THE ADDITIONAL ALLEGATIONS OF SECURITY-RELATED NEGLIGENCE IN THE BILL OF PARTICULARS SHOULD HAVE BEEN STRUCK (SECOND DEPT).

​The Second Department, reversing Supreme Court, determined certain allegations of negligence in the bill of particulars should have been struck because the notice of claim did not provide notice of them. The appellate division interpreted the notice of claim to allege that the lack of security at defendant’s apartment complex stemmed from inadequate lighting. Plaintiff’s decedent was shot and killed in an area which, allegedly, was completely dark. The additional claims of negligence in the bill of particulars were struck:

… [T]he crux of the notice of claim is that [defendant] NYCHA was negligent in failing to provide adequate security by failing to provide adequate lighting at the location where the decedent was shot and killed … .

… [T]he notice of claim did not directly or indirectly reference those allegations raised in … the bill of particulars that concern NYCHA’s failure to protect tenants from criminal activities and criminal intrusions, NYCHA’s failure to remove alleged known criminals from its premises in violation of its Permanent Exclusion Policy and Real Property Law § 231(2), NYCHA’s failure to install CCTV cameras, and the alleged sale of drugs on NYCHA premises. These allegations go beyond mere amplification of the inadequate lighting allegation and are instead new, distinct, and independent theories of liability that cannot be corrected pursuant to General Municipal Law § 50-e(6) … .Mosley v City of New York, 2023 NY Slip Op 03345, Second Dept 6-21-23

Practice Point: The General Municipal Law section 50-e(6) allows mistakes or omissions from a notice of claim to be overlooked where the defendant is not prejudiced. Here the appellate division interpreted the notice of claim to allege the defendant housing authority’s only negligence was the failure to provide adequate lighting in the area where plaintiff’s decedent was shot. Therefore the additional allegations of negligent security in the bill of particulars (“failure to protect tenants from criminal activities and criminal intrusions, NYCHA’s failure to remove alleged known criminals from its premises in violation of its Permanent Exclusion Policy and Real Property Law § 231(2), NYCHA’s failure to install CCTV cameras, and the alleged sale of drugs on NYCHA premises“) should have been struck.

 

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THE APPLICABLE STATUTES OF LIMITATIONS FOR DECLARATORY-JUDGMENT CAUSES OF ACTION DEPEND ON THE NATURE OF THE UNDERLYING ALLEGATIONS; HERE THE ALLEGATIONS SOUNDED IN FRAUD, UNJUST ENRICHMENT AND VIOLATIONS OF THE REAL PROPERTY LAW; ALL WERE TIME-BARRED (SECOND DEPT).

​The Second Department, revering Supreme Court, determined the declaratory judgment causes of action were time-barred according to the statutes of limitations applicable to the underlying allegations, i.e., fraud, unjust enrichment, Real Property Law (RPL) and Real Property Actions and Proceedings Law (RPAPL) causes of action:

“Actions for declaratory judgments are not ascribed a certain limitations period. The nature of the relief sought in a declaratory judgment action dictates the applicable limitations period. Thus, if the action for a declaratory judgment could have been brought in a different form asserting a particular cause of action, the limitations period applicable to the particular cause of action will apply” … . Here, the cause of action for declaratory relief could have been, and previously was, brought in the form of causes of action to recover damages for fraud and intentional misrepresentation. Since the instant action was commenced more than six years after the plaintiff allegedly was fraudulently induced to convey title to the property and more than two years from the discovery of the alleged fraud, the cause of action for declaratory relief was time-barred … .

… [T]he second cause of action … seeks to void the defendant’s title to the property by virtue of the plaintiff’s claim that the plaintiff was fraudulently induced into conveying title to the defendant. Accordingly, this cause of action is governed by the six-year statute of limitations governing actions based upon fraud and, therefore, was untimely.

… [T]he cause of action to recover damages for unjust enrichment accrued … when the deed conveying title to the defendant was executed, and, therefore, this cause of action was also time-barred.

… [T]he cause of action alleging a violation of Real Property Law § 265-a was time-barred since it was commenced more than two years after recordation of the subject deed and more than six years after the alleged fraudulently induced conveyance. Mahabir v Snyder Realty Group, Inc., 2023 NY Slip Op 03342, Second Dept 6-21-23

Practice Point: The applicable statutes of limitations for declaratory-judgment causes of action depend on the nature of the underlying allegations. Here the underlying allegations sounded in fraud, unjust enrichment and Real Property Law causes of action. All were time-barred.

 

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APPELLANT PHYSICIAN’S ASSISTANT HAD LEFT DEFENDANT-PRACTICE AT THE TIME THE MEDICAL MALPRACTICE ACTION WAS BROUGHT AGAINST THE PRACTICE; THE PLAINTIFFS DID NOT DEMONSTRATE APPELLANT HAD TIMELY NOTICE OF THE SUIT; THEREFORE THE RELATION-BACK DOCTRINE DID NOT SUPPORT THE MOTION TO ADD THE APPELLANT AS A DEFENDANT AFTER THE STATUTE OF LIMITATIONS HAD RUN (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the motion to amend the complaint to add appellant, a physician’s assistant, to this medical malpractice action should not have been granted. The statute of limitations has run and the relation-back theory was not supported by evidence appellant had timely notice of the suit. Appellant had stopped working for defendant practice at the time the suit was commenced:

“In order for a claim asserted against a new defendant to relate back to the date the claim was filed against another defendant, the plaintiffs must establish that (1) both claims arose out of [the] same conduct, transaction, or occurrence; (2) the new defendant is united in interest with the original defendant, 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 his [or her] defense on the merits; and (3) the new defendant knew or should have known that, but for a mistake by the plaintiffs as to the identity of the proper parties, the action would have been brought against him [or her] as well” … . “The linchpin of the relation-back doctrine is whether the new defendant had notice within the applicable limitations period” … .

Here, the plaintiffs failed to meet their burden as to the third prong of the relation-back doctrine. The record establishes that the appellant was no longer working for the practice at the time of the commencement of the action, and there is no evidence that she had actual or constructive knowledge within the limitations period of the commencement of the action … . Dixon v Jones, 2023 NY Slip Op 03336, Second Dept 6-21-23

Practice Point: To add a defendant to a complaint after the statute of limitations has run under the relation-back doctrine, plaintiff must demonstrate the party to be added had timely notice of the suit, not the case here.

 

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THE BANK’S SECOND MOTION IN THIS FORECLOSURE ACTION DID NOT MEET THE CRITERIA FOR A MOTION TO RENEW AND VIOLATED THE “SUCCESSIVE SUMMARY JUDGMENT MOTION” RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the second motion for summary judgment made by the bank in this foreclosure action was not a valid motion to renew and violated the “successive summary judgment rule:”

“While a court has discretion to entertain renewal based on facts known to the movant at the time of the original motion, the movant must set forth a reasonable justification for the failure to submit the information in the first instance. When no reasonable justification is given for failing to present new facts on the prior motion, the Supreme Court lacks discretion to grant renewal” … . … [P]laintiff failed to provide any justification for its failure to present the new evidence supporting the second motion as part of its prior motion.

“Even considered as a successive motion for summary judgment, such a motion ‘should not be entertained in the absence of good cause, such as a showing of newly discovered evidence'” … . Here, the plaintiff failed to present good cause.

The second motion also did not fit within the “narrow exception” to the successive summary judgment rule … . This narrow exception permits entertainment of a successive motion when it is “substantively valid and the granting of the motion will further the ends of justice and eliminate an unnecessary burden on the resources of the courts” … . Here, entertaining a second summary judgment motion involved review of multiple disputed issues, including whether the plaintiff established the defendants’ default, the plaintiff’s compliance with the contractual condition precedent, and the plaintiff’s compliance with RPAPL 1304. Thus, rather than eliminating a burden on the Supreme Court, the court’s consideration of the second motion actually imposed an additional burden on the court. “‘Successive motions for the same relief burden the courts and contribute to the delay and cost of litigation. A party seeking summary judgment should anticipate having to lay bare its proof and should not expect that it will readily be granted a second or third chance'” … . Wells Fargo Bank, N.A. v Gittens, 2023 NY Slip Op 03373, Second Dept 6-21-23

Practice Point: The failure to explain why available evidence was not submitted in the first summary judgment motion will result in denial of a motion to renew.

Practice Point: The second motion here violated the “successive summary judgment motion” rule. The criteria are explained.

 

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OUTSTANDING DISCOVERY CONSTITUTED GOOD CAUSE FOR A LATE (POST-NOTE-OF-ISSUE) MOTION FOR SUMMARY JUDGMENT; PLAINTIFF ENTITLED TO SUMMARY JUDGMENT ON THE LABOR LAW 240(1) CAUSE OF ACTION IN THIS LADDER-FALL CASE; DEFENDANTS ENTITLED TO SUMMARY JUDGMENT ON THE LABOR LAW 200 CAUSE OF ACTION (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined outstanding discovery furnished good cause for plaintiff’s late (post-note-of-issue) motion for summary judgment in this Labor Law 240(1) ladder-fall case. The appellate division then reached the merits and granted plaintiff’s motion for summary judgment on the Labor Law 240(1) cause of action and granted defendant’s cross-motion for summary judgment on the Labor Law 200 cause of action:

… [P]laintiff demonstrated good cause for his delay in moving for summary judgment … . As an initial matter, we note that the court directed the plaintiff, over the plaintiff’s objection, to file a note of issue or face sanctions or dismissal of the action, despite the fact that a significant amount of discovery, including … the depositions of the parties, had yet to occur … . * * *

… [P]laintiff established … entitlement to judgment as a matter of law by demonstrating that his injuries were proximately caused by the defendants’ failures, as the owner and the general contractor at the construction site, to satisfy their nondelegable duty to provide him with a safe and adequate ladder necessary for him to perform his elevation-related work at the site … . * * *

… [D]efendants established … entitlement to judgment as a matter of law dismissing the causes of action alleging a violation of Labor Law § 200 and common-law negligence by demonstrating that they did not create or have actual or constructive notice of the condition that the plaintiff alleged caused his injuries and that they had no authority to supervise or control the means and methods of the plaintiff’s work at the time of his accident … . Panfilow v 66 E. 83rd St. Owners Corp., 2023 NY Slip Op 03357, Second Dept 6-21-23

Practice Point: Outstanding discovery constitutes good cause for a late (post-note-of-issue) motion for summary judgment.

Practice Point: Plaintiff entitled to summary judgment on the Labor Law 240(1) cause of action in this ladder-fall cause.

Practice Point: Defendants entitled to summary judgment on the Labor Law 200 cause of action–no notice of the condition and no authority to control the means and methods of plaintiff’s work.

 

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IN THIS DIVORCE PROCEEDING (1) THE HUSBAND’S REQUEST FOR CLOSURE OF THE COURTROOM SHOULD HAVE BEEN PUBLIC, NOT CONCEALED FROM THE PUBLIC IN EMAILS, AND (2), THE COURTROOM CLOSURE WAS IMPROPERLY BASED ON AN EXCEPTION TO THE PUBLIC-TRIAL REQUIREMENT WHICH IS NOT INCLUDED IN JUDICIARY LAW SECTION 4 (FIRST DEPT).

The First Department, reversing Supreme Court, determined the judge should not have ordered closure of the courtroom pursuant to Judiciary Law section 4 in this divorce proceeding. The criteria for closure of a courtroom are discussed in some detail. Here the judge ordered some documents to be submitted under seal and then based the closure on the existence of sealed documents as evidence. That justification for closure is not one of the exceptions in Judiciary Law section 4:

The motion court did not provide the public and the press adequate notice of the husband’s courtroom closure request. Because it directed the parties to file their submissions on the application for courtroom closure by email, the submissions were not reflected on “the publicly maintained docket entries,” as required … .

We also reverse on substantive grounds. “Public access to court proceedings is strongly favored, both as a matter of constitutional law . . . and as statutory imperative …” … . In the order appealed here, the motion court improperly read an exception into the “statutory imperative” of NY Judiciary Law §4 that does not exist. The first part of that statute, entitled “Sittings of courts to be public,” states: “The sittings of every court within this state shall be public, and every citizen may freely attend the same . . .” The only exceptions to this rule are set forth in the statute’s next sentence: “except that in all proceedings and trials in cases for divorce, seduction, rape, assault with intent to commit rape, criminal sexual act, bastardy or filiation, the court may, in its discretion, exclude therefrom all persons who are not directly interested therein, excepting jurors, witnesses, and officers of the court” … .

Here, the motion court used its discretion to insert another, unwritten category of cases into the statutory exception: proceedings that could entail arguments that implicate documents filed under seal. We find its decision to do so to have been improper … . Paulson v Paulson, 2023 NY Slip Op 03310, First Dept 6-20-23

Practice Point: A request for courtroom closure must be accessible by the public, not concealed in email exchanges.

Practice Point: Courtroom closure based on a reason not included in the public-trial exceptions in Judiciary Law section 4 is an abuse of discretion.

 

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THE LETTER OF INTENT WAS AN AGREEMENT TO AGREE WHICH CONTEMPLATED ONLY OUT-OF-POCKET DAMAGES FOR A BREACH; THE JUDGE SHOULD NOT HAVE RELIED ON CREDIBILITY DETERMINATIONS TO, SUA SPONTE, AWARD SUMMARY JUDGMENT TO PLAINTIFFS (FIRST DEPT).

​The First Department, reversing Supreme Court, determined that the letter of intent (LOI) was an agreement to agree which, if breached, supported only out-of-pocket damages, not cover damages. The judge improperly relied on credibility determinations to, sua sponte, award summary judgment to plaintiffs:

… [R]ecovery for breach of a preliminary agreement’s confidentiality provision could not be based on “the theory that it would have acquired” the company at issue, as the “defendant[] w[as] not bound to go forward with the transaction” … . * * *

… [T]he text of the LOI and the surrounding circumstances support a finding that the parties did not contemplate cover damages at the time of contracting. That the parties entered only a preliminary agreement with no obligation to close a transaction and no specific damage provision for breach conclusively shows that defendant did not wish to assume the risk of covering whatever replacement transaction plaintiffs might pursue … .

… [T]he court improperly relied on credibility determinations to resolve material issues that should have been resolved by the jury. It is “not the function of a court deciding a summary judgment motion to make credibility determinations” … . Cresco Labs N.Y., LLC v Fiorello Pharms., Inc., 2023 NY Slip Op 03305, First Dept 6-20-23

Practice Point: Here the letter of intent was an agreement to agree which contemplated only out-of-pocket damages for a breach.

Practice Point: The judge should not have relied on credibility determinations to, sua sponte, award summary judgment to plaintiffs.

 

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