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DEFENDANT DID NOT UPDATE ITS ADDRESS FILED WITH THE SECRETARY OF STATE FOR SERVICE OF PROCESS AND DID NOT HAVE A REASONABLE EXCUSE FOR DEFAULT IN THIS SLIP AND FALL CASE; HOWEVER, NO REASONABLE EXCUSE NEED BE SHOWN IN A MOTION TO VACATE A DEFAULT PURSUANT TO CPLR 317; DEFAULT VACATED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant property-owner’s (St. Andrews’) motion to vacate the default judgment in this slip and fall case should have been granted. St. Andrews had not updated its address with the Secretary of State and did not have a reasonable excuse. However a reasonable excuse is not required by CPLR 317:

St. Andrews’s principal demonstrated that he had received a letter notification of plaintiff’s accident before commencement of the action which he forwarded to his insurance broker, but that he never received any further notice until he received the information subpoena. The principal of DP Realty [designated by St. Andrews to receive service of process] also averred that he was unaware of the summons and complaint ever having been received, and therefore it would not have forwarded any papers to St. Andrews. That evidence was sufficient under CPLR 317 to establish St. Andrews’s lack of personal notice of the summons in time to defend. St. Andrews also demonstrated a meritorious defense in that the Yonkers City Code “does not expressly make the landowner liable for failure to perform” the duty to clean snow and ice from the sidewalk, and an abutting landowner is not liable in the absence of such a statute for failure to clear snow, ice and dirt … .

… [P]laintiff demonstrated that St. Andrews never updated its address with the Secretary of State, and thus could not show a reasonable excuse for its default under CPLR 5015(a)(1). However, no showing of a reasonable excuse is required under CPLR 317 … , and it cannot be inferred solely from the failure to update defendant’s address with the Secretary of State that defendant was deliberately avoiding receiving notice … . In light of the strong public policy favoring resolution of cases on their merits … , we find that St. Andrews demonstrated entitlement to vacatur under CPLR 317… . Gomez v Karyes Realty Corp., 2022 NY Slip Op 07187, First Dept 12-20-22

Practice Point: No reasonable excuse for a default need be shown in a motion the vacate the default pursuant to CPLR 317, Here the defendant’s failure to update its address for the service of process with the Secretary of State was not an attempt to avoid service. The motion to vacate the default should have been granted.

 

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THE MOTION TO SET ASIDE THE VERDICT AS A MATTER OF LAW SHOULD NOT HAVE BEEN GRANTED; THE MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED; A NEW TRIAL IS NECESSARY BECAUSE AN APPELLATE COURT CANNOT MAKE NEW FINDINGS OF FACT IN A JURY TRIAL (SECOND DEPT).

The Second Department, reversing Supreme Court in this medical malpractice case. determined the motion to set aside the verdict as a matter of law should not have been granted. but the motion to set aside the verdict as against the weight of the evidence should have been granted, explaining the difference:

“‘A motion for judgment as a matter of law pursuant to CPLR 4404(a) may be granted only when the trial court determines that, upon the evidence presented, there is no valid line of reasoning and permissible inferences which could possibly lead rational persons to the conclusion reached by the jury upon the evidence presented at trial, and no rational process by which the jury could find in favor of the nonmoving party'” … . “In considering such a motion, the facts must be considered in a light most favorable to the nonmovant” … . …

… “[A] motion to set aside a jury verdict as contrary to the weight of the evidence should be granted ‘[o]nly where the evidence so preponderates in favor of the unsuccessful litigant that the verdict could not have been reached on any fair interpretation of the evidence'” … . … “‘Whether a particular factual determination is against the weight of the evidence is itself a factual question. In reviewing a judgment of the Supreme Court, the Appellate Division has the power to determine whether a particular factual question was correctly resolved by the trier of facts. If the original fact determination was made by a jury, as in this case, and the Appellate Division concludes that the jury has made erroneous factual findings, the court is required to order a new trial, since it does not have the power to make new findings of fact in a jury case'” … . * * *

As to the weight of the evidence, based on the record, we find that the verdict in favor of the plaintiffs could not have been reached on any fair interpretation of the evidence, and must be set aside (see CPLR 4404[a] …). Accordingly, we reverse the judgment, reinstate the complaint, grant that branch of the defendants’ motion which was pursuant to CPLR 4404(a) to set aside the verdict as contrary to the weight of the evidence and for a new trial, and remit the matter to the Supreme Court, Queens County, for a new trial…. . Osorio v New York City Health & Hosps. Corp., 2022 NY Slip Op 07072, Second Dept 12-14-22

Practice Point: When an appellate court determines the verdict should be set aside as against the weight of the evidence in a jury trial it must order a new trial because an appellate court does not have the authority to make new findings of fact in a jury trial.

 

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RESETTLEMENT OF THE JUDGMENT OF DIVORCE WAS PROPER ONLY TO THE EXTENT OF CORRECTING A MISTAKE IN THE JUDGMENT; RESETTLEMENT SHOULD NOT HAVE BEEN USED TO AMEND THE JUDGMENT (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the judgment of divorce should have been resettled to the extent that the judgment conform with the stipulation. But the judgment should not have been modified to include a provision which was not in the stipulation. Resettlement cannot be used to amend the judgment, as opposed to correcting a mistake:

Resettlement of a judgment of divorce pursuant to CPLR 5019(a) is an appropriate remedy when the judgment does not accurately incorporate the terms of a stipulation of settlement … . Here, although the judgment of divorce provided that the defendant was responsible for providing health insurance for the parties’ children, that provision was inconsistent with the terms of the stipulation. Specifically, the stipulation contained a provision which set forth that the plaintiff was responsible for providing health insurance for the parties’ children through her employer unless she became unemployed, and then the defendant would be responsible for providing health insurance for them through his employer. …

… Supreme Court should have denied that branch of the defendant’s motion which was to resettle the judgment of divorce to the extent it sought to replace the provision requiring the defendant to provide health insurance for the parties’ children with a provision requiring the plaintiff to be solely responsible to provide health insurance for the parties’ children … . The amendment proposed by the defendant failed to comport with the terms of the stipulation regarding the responsibility of the parties as to the health insurance for their children and was a substantive modification beyond the court’s inherent authority to correct a mistake, defect, or irregularity in the original judgment “not affecting a substantial right of a party” (CPLR 5019[a] …). Ferrigan v Ferrigan, 2022 NY Slip Op 07058, Second Dept 12-14-22

Practice Point: Here resettlement of the judgment of divorce pursuant to CPLR 5019 was appropriate only to the extent of correcting a mistake by conforming the judgment to the stipulation. Resettlement should not have been used to amend the judgment to include a provision which was not in the stipulation.

 

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PLAINTIFF BANK MADE A DEFECTIVE MOTION (WHICH WAS REJECTED) FOR AN ORDER OF REFERENCE WITHIN ONE YEAR OF DEFENDANT’S DEFAULT AND DID NOT CORRECT THE ERRORS IN THE MOTION FOR TEN YEARS; THE MAJORITY HELD THE ACTION HAD NOT BEEN ABANDONED, THE JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT AND THE ACTION SHOULD BE RESTORED TO THE CALENDAR (SECOND DEPT).

The Second Department, reversing Supreme Court’s sua sponte dismissal of the complaint, over an extensive dissent, determined plaintiff bank in this foreclosure action, by filing a motion for an order of reference within one year of defendant’s default, demonstrated it did not intend to abandon the action and the matter, therefore, should be restored to the calendar. The facts that the motion was initially rejected and plaintiff delayed ten years before addressing the defects in the motion did not require a different result:

Supreme Court erred in, sua sponte, directing dismissal of the complaint in this action pursuant to CPLR 3215(c). The plaintiff demonstrated that it filed a motion, inter alia, for an order of reference on October 24, 2008, which was within one year of the defendants’ default in the action. Presenting this motion to the court was sufficient to demonstrate the plaintiff’s intent to have the action proceed, notwithstanding that the motion papers were ultimately rejected by the court as defective … .. Although our dissenting colleague notes that the plaintiff thereafter failed to explain its failure to fix the defects that resulted in the motion papers being rejected for a period of 10 years, once a plaintiff establishes “compliance with CPLR 3215(c),” it is “not required, under the plain language of that subdivision, to account for any additional periods of delay that may have occurred subsequent to the initial one-year period contemplated by CPLR 3215(c)” ,,, ,Thus, because the plaintiff did not abandon the action, the court should have granted the plaintiff’s motion to vacate the dismissal order and to restore the action to the active calendar … . Deutsche Bank Natl. Trust Co. v Lamarre, 2022 NY Slip Op 07056, Second Dept 12-14-22

Practice Point: The plaintiff bank in this foreclosure action made a defective motion for an order of reference within one year of defendant’s default. That motion was sufficient to demonstrate plaintiff did not intend to abandon the action, even though motion was rejected and plaintiff did not correct the defects in the motion for ten years. The judge should not have, sua sponte, dismissed the complaint and the matter should have been restored to the calendar.

 

AFTER DEFENDANT’S DEFAULT AND FOLLOWING AN INQUEST ON DAMAGES PLAINTIFF WAS AWARDED ABOUT $275,000; THE JUDGE ORDERED PLAINTIFF TO SUBMIT A NOTICE OF SETTLEMENT AND A PROPOSED JUDGMENT WITHIN 60 DAYS AS REQUIRED BY 22 NYCRR 202.48; PLANTIFF DID NOT DO SO FOR MORE THAN TWO AND A HALF YEARS; THE ORDER GRANTING THE DEFAULT JUDGMENT AND THE DECISION ON THE INQUEST WERE VACATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the order granting a default judgment and the decision awarding nearly $275,000 must be vacated because plaintiff did not submit a notice of settlement and a proposed judgment within 60 days as required by 22 NYCRR 202.48:

Pursuant to 22 NYCRR 202.48(a), “[p]roposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted.” “Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown” (id. § 202.48[b]). Here, it is undisputed that, on January 10, 2017, the plaintiff was directed to settle a judgment on notice. Thus, pursuant to 22 NYCRR 202.48(a), the plaintiff was required to submit a notice of settlement and proposed judgment within 60 days after January 10, 2017 … . It is also undisputed that the plaintiff failed to submit a notice of settlement and proposed judgment until July 2, 2019, nearly 2½ years after the Supreme Court directed the plaintiff to settle a judgment on notice. Thus, the plaintiff failed to timely settle a judgment pursuant to the requirements of 22 NYCRR 202.48(a).

… [T]he plaintiff failed to show good cause for his lengthy delay in submitting a notice of settlement and proposed judgment in compliance with the Supreme Court’s directive … . Thus, under the particular circumstances of this case, the court should have granted that branch of the defendant’s motion which was pursuant to 22 NYCRR 202.48 to vacate the order dated July 23, 2014. … [T]he decision rendered after the inquest must also be vacated. Cruz v Pierce, 2022 NY Slip Op 07054, Second Dept 12-14-22

Practice Point: Here plaintiff was granted a default judgment and, after an inquest of damages, was awarded nearly $275,000. The judge ordered plaintiff to submit a notice of settlement and a proposed judgment within 60 days as required by 22 NYCRR 202.48. Plaintiff failed to do so and the order granting the default judgment and the decision awarding damages were vacated.

 

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IN THIS COMPLEX CASE INVOLVING ALLEGED MISUSE OF LAND GIFTED TO THE AUDUBON SOCIETY AS “FOREVER WILD” AND SUBSEQUENTLY SOLD, THE ATTORNEY GENERAL’S ARGUMENT THE DEED WAS VOID AB INITIO AND THEREFORE NEVER TRIGGERD THE STATUTE OF LIMITATIONS WAS REJECTED; THE DEED WAS DEEMED “VOIDABLE” AND THE STATUTE HAD THEREFORE RUN; THE TWO-JUSTICE DISSENT ARGUED THE MAJORITY SHOULD NOT HAVE SENT THE MATTER BACK TO BE HEARD BY A DIFFERENT JUDGE (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Garry, determined the deed which was the subject of the action was not void ab initio, but rather was voidable, such that the statute of limitations had run on the action. Had the deed been void ab initio, the statute of limitations would not have run. This complex case, which involves alleged misuse of land gifted to the Audubon Society and subsequently sold is fact-specific and cannot be fairly summarized here. There was a two-justice partial dissent which argued the majority should not have ordered the matter be transferred to a different judge:

… [W]e find that the 2013 conveyance of parcel B, held by the Audubon Society in fee simple absolute, was not void but instead merely voidable for any resultant diversion of the subject gift. The Attorney General’s recission claim was thus required to be brought within the applicable limitations period. It was not. We therefore agree with Supreme Court that this challenge to the validity of the 2013 conveyance is time-barred … .

From the dissent:

According to the majority, when deciding the motions at issue, Supreme Court offered its interpretation of the pertinent gift instruments and made certain findings and, therefore, cannot be impartial in resolving the merits … . In our view, it is premature at this stage to conclude that the court has predetermined and/or already addressed central issues in that action such that it cannot be fair. When the time comes, the parties can offer their competing interpretations of the gift instruments. At that time, the parties may rely on the court’s rationale and findings made in the April 2021 order. Alternatively, the parties might not do so. Regardless, any remaining issues to be resolved concerning the gift instruments will be better developed and briefed for the court to make an informed decision. Given that “every court retains continuing jurisdiction to reconsider its prior interlocutory orders during the pendency of the action” … , it cannot be presumed how the court will decide any remaining issues.

Moreover, no party has requested that a new judge be assigned. There have been no claims of hostility, bias or lack of impartiality by Supreme Court. Nor does the record bear out any such behavior. Accordingly, the parties seemingly have no qualms with the current judge. In view of the foregoing, we see no basis to assign a new judge for the underlying actions. Rockwell v Despart, 2022 NY Slip Op 06971, Thrid Dept 12-8-22

Practice Point: Here, if the deed which was the subject of the action had been void ab initio, the statute of limitations would never have been triggered. But the deed was deemed “voidable” and the statute had therefore run. The two-justice dissent argued the parties were happy with the judge and there was no reason to assume the judge had permanently predetermined any issues. Therefore the majority should not have ordered the matter transferred to a different judge.

 

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PLAINTIFF NURSING HOME CAN BRING A PLENARY ACTION TO DETERMINE A RESIDENT’S MEDICAID ELIGIBILITY WITHOUT BEING BOUND BY THE RESIDENT’S FAILURE TO REQUEST AN ADMINISTRATIVE APPEAL OR THE FOUR-MONTH STATUTE OF LIMITATIONS (SECOND DEPT).

The Second Department, reversing Supreme Court, held plaintiff nursing home can bring a plenary action in its own right to determined the Medicaid eligibility of a resident. The nursing home is not bound by the resident’s failure to request an administrative appeal and is not constrained the the four-month statute of limitations in CPLR 217:

The plaintiff, an operator of a nursing home facility, commenced this action seeking a judgment declaring that one of its residents was entitled to Medicaid coverage for the period February 7, 2013, through August 31, 2014, with an appropriate transfer penalty. The defendant moved to dismiss the complaint on the grounds, inter alia, that the plaintiff failed to exhaust its administrative remedies, the statute of limitations had expired, and the plaintiff failed to join a necessary party. In an order dated November 26, 2019, the Supreme Court granted the motion. The plaintiff appeals.

The Supreme Court erred in granting the defendant’s motion pursuant to CPLR 3211(a) to dismiss the complaint. “It is well established that a nursing home may, as here, bring a plenary action in its own right against the agency designated to determine Medicaid eligibility” … . In such a plenary action, the nursing home is “not bound by the patient’s failure to request an administrative appeal of the local agency’s denial of medical assistance” or “by the four-month Statute of Limitations contained in CPLR 217” … . Moreover, authorizations executed by the resident allowing designated employees of the plaintiff to represent him “during the Medicaid eligibility process” and during “any Fair Hearings” did not impair the plaintiff’s right to commence its own plenary action … . Kings Harbor Multicare Ctr. v Pierre, 2022 NY Slip Op 06920, Second Dept 12-7-22

Practice Point: A nursing home can bring a plenary action in its own right to determine the Medicaid eligibility of its resident without regard for whether the resident pursued an administrative appeal and is not constrained by the four-month statute of limitations in CPLR 217.

 

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ALTHOUGH DEFENDANTS’ MOTION TO SET ASIDE THE VERDICT AS A MATTER OF LAW IN THIS TRAFFIC ACCIDENT CASE WAS PROPERLY DENIED, THE MOTION TO SET ASIDE THE VERDICT AS AGAINST THE WEIGHT OF THE EVIDENCE SHOULD HAVE BEEN GRANTED; NEW TRIAL ORDERED (SECOND DEPT).

The Second Department, reversing Supreme Court and ordering a new trial, determined defendants’ motion to set aside the verdict in this traffic accident case as against the weight of the evidence should have been granted. The evidence, including video evidence, demonstrated defendant’s bus had a green left-turn arrow when the bus collided with plaintiff’s oncoming vehicle as the bus was turning. The court also found the damages for future pain and suffering excessive:

… [V]iewing the evidence in the light most favorable to the plaintiff, there was a “valid line of reasoning” that could lead a rational person to the liability verdict in this case … . Accordingly, the Supreme Court properly denied that branch of the defendants’ motion which was pursuant to CPLR 4404(a) to set aside the jury verdict on the issue of liability and for judgment as a matter of law.

However, the jury verdict on the issue of liability was contrary to the weight of the evidence, as “the evidence preponderate[d] so heavily in the [defendants’] favor that it could not have been reached on any fair interpretation of the evidence” … . * * * … [W]e remit the matter to the Supreme Court … for a new trial on the issue of liability.  Blair v Coleman, 2022 NY Slip Op 06902, Second Dept 12-7-22

Practice Point: In this traffic accident case, defendants’ motion to set aside the verdict as a matter of law was properly denied. But the motion to set aside the verdict as against the weight of the evidence should have been granted. The appellate court ordered a new trial on liability.

 

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DEFENDANT DID NOT MEET THE CRITERIA FOR VACATION OF A DEFAULT JUDGMENT UNDER EITHER CPLR 5015 OR 317; CRITERIA EXPLAINED (FIRST DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to vacate the default judgment did not meet the criteria of either CPLR 5015(a)(1) or CPLR 317:

“A defendant seeking to vacate a judgment pursuant to CPLR 5015(a)(1) must demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action” … . * * *

Here, the defendant failed to provide a “detailed and credible explanation” for the default … . Rather, the defendant submitted only an affidavit of an employee of its loan servicer averring that the defendant’s agent for process had emailed the summons and complaint to the servicer, and the complaint had been “routed in error to the incorrect email address within” the servicer, which prevented the servicer from “timely notify[ing] its counsel of the [instant] action.” That conclusory and nondetailed allegation does not constitute a reasonable excuse warranting vacatur of the default … . * * *

Although the defendant expressly moved pursuant to CPLR 5015(a)(1) only, the Supreme Court properly considered whether the defendant set forth grounds to vacate its default pursuant to CPLR 317 … . CPLR 317 provides, in relevant part, that a party served with a summons other than by personal delivery and who does not appear “may be allowed to defend the action within one year after he [or she] obtains knowledge of entry of the judgment . . . upon a finding of the court that he [or she] did not personally receive notice of the summons in time to defend and has a meritorious defense.” A defendant moving pursuant to CPLR 317 is not required to set forth a reasonable excuse for the delay in answering the complaint … . However, “‘to support a determination granting relief under CPLR 317, a party must still demonstrate, and the Court must find, that the party did not receive actual notice of the summons and complaint in time to defend the action'” … .

… [T]he defendant did not even deny receipt of the summons and complaint. 259 Milford, LLC v FV-1, Inc., 2022 NY Slip Op 06898, Second Dept 12-7-22

Practice Point: The criteria for vacation of a default judgment pursuant to CPLR 5015 and 317 are different and are explained in this decision. The defendant did not meet the criteria for either statute.

 

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PLAINTIFF-INVESTOR’S COMPLAINT ALLEGING THE REGISTRATION STATEMENT FILED BY DEFENDANT PHARMACEUTICAL COMPANY ABOUT THE EFFICACY OF ITS DRUG WAS MISLEADING AND VIOLATED THE FEDERAL SECURITIES ACT SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gische, reversing Supreme Court, determined defendant pharmaceutical company’s, Genfit’s, motion to dismiss the complaint alleging the company misrepresented the efficacy of a drug in violation of the Federal Securities Act should have been granted. The court noted that the pleading requirements for misrepresentation in this context are not the heightened pleading requirements for fraud:

The gravamen of plaintiff’s complaint is that Genfit made misrepresentations and/or omissions in the registration statement and prospectus (collectively offering documents) it filed with the Securities and Exchange Commission in connection with the IPO (initial public offering). Before a company may sell securities in interstate commerce, it must file a registration statement with the SEC. Pursuant to section 11 of the 1933 Securities Act, if … the registration statement contains an untrue statement of material fact or omits a material fact necessary to make the statement therein not misleading, a purchaser of the stock may sue for damages (15 USC § 77 [k] …). * * *

Plaintiff … objects to certain statements in the offering documents, which we characterize as opinions. … Opinions in offering documents are subject to an analysis under the Supreme Court Decision in Omnicare, Inc. v Laborers Dist. Council Constr. Indus. Pension Fund (575 US 175, 184 [2015]). Under Omnicare, an opinion is actionable if (1) the speaker does not actually hold the stated belief … ; or (2) the opinion affirms an underlying fact … a registration statement omits material facts about the issuer’s inquiry into or knowledge concerning a statement of opinion, and if those facts conflict with what a reasonable investor would take from the statement itself … .

[The] statements of opinion do not affirm underlying facts. … … Plaintiff claims … [the] statements are misleading because Genfit does not actually believe the opinions stated and that the offering documents omit material facts and knowledge. The complaint, however, alleges no facts supporting these conclusions. Schwartz v Genfit, S.A., 2022 NY Slip Op 06892, First Dept 12-6-22

Practice Point: The allegation that a company’s registration statement is misleading in violation of the Federal Securities Act is not subjected to the heightened pleading requirements for fraud. Here the allegations in the complaint did not support even the less stringent pleading requires for misleading statements.

 

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