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IN A HYBRID PROCEEDING SEEKING REVIEW UNDER CPLR ARTICLE 78 AND SEEKING A DECLARATORY JUDGMENT AND DAMAGES, A MOTION FOR SUMMARY JUDGMENT MUST BE MADE FOR BOTH; HERE THERE WAS NO MOTION TO DISMISS THE DECLARATORY JUDGMENT AND DAMAGES CAUSES OF ACTION; MATTER REMITTED (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, determined the declaratory judgment causes action should not have been dismissed because the motion for summary judgment did not seek that relief. Summary judgment on the CPLR Article 78 causes of action was properly granted, however:

“In a hybrid proceeding and action, separate procedural rules apply to those causes of action which are asserted pursuant to CPLR article 78, on the one hand, and those which seek to recover damages and declaratory relief, on the other hand” … . “The Supreme Court may not employ the summary procedure applicable to a CPLR article 78 cause of action to dispose of causes of action to recover damages or seeking a declaratory judgment” … . “Thus, where no party makes a request for a summary determination of the causes of action which seek to recover damages or declaratory relief, it is error for the Supreme Court to summarily dispose of those causes of action” … .

Here, since no party made such a motion, the Supreme Court erred in summarily disposing of the petitioner/plaintiff’s third through eighth causes of action. Accordingly, we remit the matter to the Supreme Court … for further proceedings on those causes of action … . Matter of Kelly v Farmingdale State Coll., State Univ. of N.Y., 2023 NY Slip Op 01895, Second Dept 4-12-23

Practice Point: In a hybrid Article 78 and declaratory judgment/damages action, a motion for summary judgment must be made for both. Here the motion only concerned the Article 78 causes of action so the court should not have summarily disposed of the declaratory judgment/damages causes of action.

 

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ALTHOUGH THE COURT DID NOT HAVE THE POWER TO GRANT THE MOTION TO INTERVENE BECAUSE THE PROPOSED ANSWER WAS NOT INCLUDED IN THE PAPERS, A THRESHOLD SHOWING INTERVENTION WAS WARRANTED WAS MADE AND THE DENIAL SHOULD HAVE BEEN “WITH LEAVE TO RENEW” (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the motion to intervene by Poloncarz was properly denied because the proposed answer was not included with the motion papers. but because Poloncarz made a showing warranting intervention, the motion should have been denied with leave to renew:

“A motion seeking leave to intervene, whether made under CPLR 1012 or 1013, must include the proposed intervenor’s . . . complaint or answer (CPLR 1014)” … . “The court has no power to grant leave to intervene where, as here, the prospective intervenor[ ] did not include in [his] motion papers ‘a proposed pleading setting forth the claim or defense for which intervention is sought'” … . Here, Poloncarz, in his official capacity as Erie County Executive, failed to include his proposed answer in his motion papers. Nevertheless, he made a threshold showing that his defense and the Nassau action have a common question of law and fact, that he has a real and substantial interest in the outcome of the proceedings, and that intervention will not unduly delay the determination of the Nassau action or prejudice the substantial rights of any party … . Accordingly, although the Supreme Court was “without the power to grant such relief inasmuch as [Poloncarz, in his official capacity as Erie County Executive,] has failed to comply with CPLR 1014,” the court should have denied the motion with leave to renew that branch of the motion which was for leave to intervene in the Nassau action on proper papers … . Landa v Poloncarz, 2023 NY Slip Op 01891, Second Dept 4-12-23

Practice Point: A court cannot grant a motion to intervene if the proposed complaint or answer is not submitted with the motion papers. Here, because a threshold showing intervention was appropriate was made, the denial should have been “with leave to renew.”

 

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THE LESSOR OF THE CAR INVOLVED IN THE TRAFFIC ACCIDENT DID NOT SUBMIT THE BUSINESS RECORDS DEMONSTRATING THE ASSIGNMENT OF THE LEASE; THEREFORE DISMISSAL OF THE COMPLAINT PURSUANT TO THE GRAVES AMENDMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Chase, the defendant – lessor of the car involved in a traffic accident, did not present sufficient evidence of its status as the lessor for purposes of asserting the Graves-Amendment defense. The business records which would have established the lessor-lessee relationship were either illegible or were not submitted:

When evidentiary material is considered on a motion to dismiss pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment, the motion should not be granted unless the evidentiary material “conclusively [establishes] that the plaintiff has no cause of action” … .

Pursuant to the Graves Amendment, the owner of a leased or rented motor vehicle cannot be held liable for personal injuries resulting from the use of the vehicle if (1) the owner is engaged in the trade or business of renting or leasing motor vehicles, and (2) there is no negligence or criminal wrongdoing on the part of the owner … .

… Chase attempted to establish the fact that it leased the subject vehicle to [defendant] through the business records exception to the hearsay rule (see CPLR 4518[a]). … [E]ven assuming that the … affidavit had established a proper foundation, “it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … .. Since Chase failed to submit the purported assignment of the lease agreement, it failed to conclusively establish that … it was shielded by the Graves Amendment. Tello v Upadhyaya, 2023 NY Slip Op 01913, Second Dept 4-12-23

Practice Point: Here the lessor of the car involved in the accident attempted to raise the Graves-Amendment defense but did not submit the business records showing the assignment of the lease. Therefore the affidavit laying a foundation for those records was hearsay and the motion to dismiss should not have been granted.

 

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DEFENDANT DEMONSTRATED HE WAS NOT REPRESENTED BY THE ATTORNEY WHO PURPORTED TO WAIVE SERVICE OF PROCEES AND PERSONAL JURISDICTION DEFENSES ON BEHALF OF ALL DEFENDANTS; TWO-JUSTICE DISSENT (FIRST DEPT). ​

The First Department, reversing (modifying) Supreme Court, over a two-justice dissent, determined that one foreign defendant (Koukis) demonstrated he was not represented by an attorney (Santamarina) who purported to waive all defenses based on service of process or lack of personal jurisdiction on behalf of all defendants. Supreme Court agreed Koukis demonstrated Santamarina did not represent him, but found personal jurisdiction over Koukis pursuant to CPLR 302(a)2). The First Department held the court did not have personal jurisdiction over Koukis:

The motion court correctly found that there was no basis to conclude that Koukis authorized Santamarina to appear and waive all jurisdictional defenses on his behalf … . … Koukis emailed Santamarina, with a copy to his attorney, specifically stating that “I have not authorized you to represent me in any legal or other matters.” Koukis also averred that he never communicated with Santamarina and that he never represented him, and there is no indication in the record that Koukis was even aware of Santamarina for any significant time prior to his … email. The two … emails referenced by the dissent were not from or to Santamarina and made no mention of any representation by Santamarina. Gibson, Dunn & Crutcher LLP v Koukis, 2023 NY Slip Op 01863, First Dept 4-11-23

​Practice Point: Here defendant demonstrated he was not represented by an attorney who purported to waive service of process and personal jurisdiction defenses on behalf of all defendants.

 

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THE SPOLIATION OF EVIDENCE AFFECTED ONLY THE COUNTERCLAIMS, STRIKING THE ENTIRE ANSWER AND COUNTERCLAIMS WAS TOO SEVERE A SANCTION (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the sanctions imposed for spoliation of evidence were too severe:

… [T]he drastic remedy of striking the entire answer and all the counterclaims was not warranted … . Here, plaintiff failed to establish that the unavailability of the lost and destroyed evidence prejudiced it and left it unable to prosecute its action. Indeed, plaintiff argued only that its ability to defend the counterclaims was compromised. Therefore, the appropriate sanction under the circumstances should have been directed solely to the counterclaims. Harry Winston, Inc. v Eclipse Jewelry, Corp., 2023 NY Slip Op 01840, First Dept 4-6-23

Practice Point: Striking the answer as a spoliation sanction was not warranted. Plaintiff demonstrated only that the ability to prove the counterclaims was affected. The sanctions should have been confined to striking the counterclaims.

 

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THE BANK DID NOT DEMONSTATE IT HAD STANDING TO FORECLOSE BECAUSE IT DID NOT ADEQUATELY EXPLAIN HOW IT CAME INTO POSSESSION OF THE NOTE (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that plaintiff did not demonstrate it had standing to bring the foreclosure action and its summary judgment motion should not have been granted:

A plaintiff demonstrates standing in a mortgage foreclosure action by establishing that “it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” … . “With respect to the note, either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation” … . …

Other than alleging that he reviewed the electronic records that were kept in the normal course of business, [the affiant] failed to provide details with regard to how plaintiff came into possession of the note … . Wilmington Sav. Fund Socy., FSB v LaFrate, 2023 NY Slip Op 01824, Third Dept 4-6-23

Practice Point: When the defendant raises lack-of-standing as an affirmative defense in a foreclosure action, the bank must demonstrate it came into possession of the note before commencing the action. Here the proof of standing was conclusory and lacking in detail. The bank’s motion for summary judgment should not have been granted.

 

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THE ORIGINAL CUSTODY ORDER WAS ISSUED IN NEW JERSEY, WHERE FATHER RESIDES; THE NEW YORK CUSTODY ORDER MUST BE REVERSED BECAUSE FAMILY COURT DID NOT COMMUNICATE WITH THE NEW JERSEY COURT AND NO FINDING WAS MADE ON WHETHER NEW JERSEY HAD RELINQUISHED EXCLUSIVE JURISDICTION OR WHETHER NEW YORK WAS A MORE CONVENIENT FORUM; MATTER REMITTED (THIRD DEPT).

​The Third Department, reversing Family Court, determined Family Court lacked jurisdiction to issue the custody order on appeal because the court failed to communicate with the court in New Jersey, where father resides, which issued the original custody order:

… [P]rior to modifying a custody determination from another state, a court of this state must have jurisdiction to make the initial determination pursuant to Domestic Relations Law § 76, and “[t]he court of the other state [must] determine[ that] it no longer has exclusive, continuing jurisdiction under [Domestic Relations Law § 76-a] or that a court of this state would be a more convenient forum under [Domestic Relations Law § 76-f]” … . Inasmuch as the child has resided in this state since 2018, Family Court had jurisdiction to make an initial determination of custody (see Domestic Relations Law §§ 76 [1] [a]; 75-a [7]). However, the record is devoid of any indication that the New Jersey court relinquished its jurisdiction or that it determined that this state was a more convenient forum, and Family Court failed to communicate with the New Jersey court to make such inquiry. … Family Court lacked jurisdiction to issue the order on appeal … , and we must vacate said order and remit this matter to Family Court to conduct the required inquiry…. . Matter of Alda X. v Aurel X., 2023 NY Slip Op 01826, Third Dept 4-6-23

Practice Point: Here the original custody order was issued in New Jersey, where father resides. Family Court in Albany did not communicate with the New Jersey court before issuing an order modifying custody. Family Court did not have jurisdiction and the New York order was reversed.

 

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WHEN PURELY ECONOMIC INJURY IS ALLEGED, THE CAUSE OF ACTION ACCRUES WHERE THE PLAINTIFF RESIDES; HERE PLAINTIFF RESIDED IN FLORIDA AND, PURSUANT TO NEW YORK’S BORROWING STATUTE, THE FLORIDA STATUTE OF LIMITATIONS APPLIED, RENDERING THE FRAUDULENT-TRANSFER ACTION UNTIMELY (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the borrowing statute required that the Florida statute of limitations for an action alleging the fraudulent transfer of property be applied, rendering the action time-barred. Plaintiff, a Florida resident, alleged the transfer of property in New York, by defendant, a New York resident, was fraudulent in that it rendered the defendant judgment proof. The Third Department determined the injury occurred in Florida, not New York:

… [T]he parties dispute the applicability of CPLR 202, New York’s “borrowing” statute, which … provides that “[w]hen a nonresident sues on a claim that accrued outside of New York, the cause of action must be commenced within the time period provided by New York’s statute of limitations, as well as the statute of limitations in effect in the jurisdiction where the cause of action in fact accrued” … . “[A] cause of action accrues at the time and in the place of the injury . . . in tort cases involving the interpretation of CPLR 202” … . Relevant here, “[w]hen an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss” … .

While plaintiff asks that we draw a distinction between tort and contract matters as it pertains to the principle that locates his economic harm — and thus accrual of his various causes of action — in his state of residence, we find little support for that premise. Although the tortious act may have occurred when the property was transferred in this state, that does not establish that the accompanying injury to plaintiff was also felt in this state or that the cause of action accrued here … . Erdely v Estate of Airday, 2023 NY Slip Op 01827, Third Dept 4-6-23

Practice Point: Here plaintiff, a Florida resident, alleged defendant, a New York resident, fraudulently transferred New York property, making defendant judgment proof. Because plaintiff alleged purely economic injury (the inability to collect money judgments), the injury occurred where plaintiff resided. Therefore, pursuant to New York’s borrowing statute, the Florida statute of limitations applied, rendering the action untimely.

 

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COURTS HAVE ONLY A LIMITED POWER TO REVIEW AN ARBITRATOR’S RULING; HERE SUPREME COURT SHOULD NOT HAVE FOUND THE ARBITRATOR EXCEEDED HER AUTHORITY BY ORDERING BACK PAY FOR A REINSTATED COUNTY EMPLOYEE (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined the arbitrator in this employment dispute did not exceed her authority when she ordered that the employee be reinstated with back pay. The employee had been absent from work and the employer (the county) the absence a voluntary resignation. Supreme Court had affirmed the employee’s reinstatement but found the arbitrator had exceeded her authority by ordering the back pay:

… “[J]udicial review of arbitral awards is extremely limited. Pursuant to CPLR 7511 (b) (1), a court may vacate an award when it violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator’s power” … . “Outside of these narrowly circumscribed exceptions, courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact” … . “[I]t is well settled that an arbitrator has broad discretion to determine a dispute and fix a remedy, and that any contractual limitation on that discretion must be contained, either explicitly or incorporated by reference, in the arbitration clause itself” … .

We discern no basis to vacate the arbitrator’s award as to back pay and benefits. Notably, the CBA [collective bargaining agreement] does not contain “a specifically enumerated limitation on the arbitrator’s power” … . In fact, it does not explicitly limit the arbitrator’s authority in any way other than stating that the arbitrator does not have the power to “amend, modify or delete any provision of the CBA,” which does not set any limitations on the arbitrator’s power to order the remedy that he or she sees fit … . Matter of County of Albany (Civil Serv. Empls. Assn., Inc., Local 1000, AFSCME, AFL-CIO, Albany County Local 801), 2023 NY Slip Op 01828, Third Dept 4-6-23

Practice Point: Here the arbitrator ordered a county employee reinstated with back pay. Supreme Court held the arbitrator exceeded her powers by ordering back pay. The Third Department noted the courts’ limited review powers re: arbitration rulings and found no basis for concluding the arbitrator had exceeded her powers.

 

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