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IF THE NOTE OF ISSUE HAS BEEN VACATED, THE CPLR 3404 REQUIREMENTS FOR RESTORING THE ACTION TO THE CALENDAR DO NOT APPLY; THERFORE THE MOTION TO RESTORE NEED NOT BE MADE WITHIN A YEAR AND NEED NOT DEMONSTRATE A MERITIORIOUS CAUSE OF ACTION, REASONABLE EXCUSE, NO INTENT TO ABANDON, AND LACK OF PREJUDICE TO DEFENDANT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to restore the action to the active calendar should have been granted. Although the action had been stricken from the trial calendar more than a year before, the requirements of CPLR 3404 (demonstration of a meritorious cause of action, reasonable excuse, no intent to abandon and lack of prejudice to defendant) did not apply because the note of issue had been vacated:

Supreme Court erred in denying the plaintiff’s renewed motion to restore the action to the active calendar. While a party moving to restore an action more than one year after it was stricken from the trial calendar pursuant to CPLR 3404 must demonstrate a meritorious cause of action, a reasonable excuse for the delay in prosecuting the action, a lack of intent to abandon the action, and a lack of prejudice to the defendant … , CPLR 3404 did not apply here because the case reverted to its pre-note of issue status once the note of issue was vacated … . “[S]ince this action could not properly be marked off pursuant to CPLR 3404, the plaintiff was not obligated to move to restore within any specified time frame,” or to establish his entitlement to restoration of the action under the standard applicable to automatic dismissals pursuant to CPLR 3404 … . Thus, in the absence of a 90-day demand pursuant to CPLR 3216, the plaintiff’s renewed motion should have been granted … . Insuasti v La Boom Disco, Inc., 2022 NY Slip Op 05684, Second Dept 10-12-22

Practice Point: Once an action has been stricken from the trial calendar, CPLR 3404 requires that a motion to restore be made within a year and demonstrate a meritorious cause of action, reasonable excuse, no intent to abandon, and lack of prejudice to defendant. However, CPLR 3404 does not apply where, as here, the note of issue has been vacated and no 90-day demand pursuant to CPLR 3216 has been made.

 

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THE JUDGE SHOULD HAVE GRANTED DEFENDANTS’ ATTORNEY’S REQUEST FOR AN INTERPRETER; A NEW HEARING TO DETERMINE THE VALIDITY OF SERVICE OF PROCESS IN THIS FORECLOSURE ACTION WAS REQUIRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ attorney’s request for an interpreter should have been granted. Defendant Rowshan claimed she was never served in this foreclosure action and she testified at the hearing on the validity of the service of process:

Pursuant to 22 NYCRR 217.1(a), “[i]n all civil . . . cases, when a court determines that a party . . . is unable to understand and communicate in English to the extent that he or she cannot meaningfully participate in the court proceedings, the clerk of the court or another designated administrative officer shall schedule an interpreter . . . from an approved list maintained by the Office of Court Administration.” “‘The determination whether a court-appointed interpreter is necessary lies within the sound discretion of the trial court, which is in the best position to make the fact-intensive inquiries necessary to determine whether there exists a language barrier'” so as to require an interpreter … .

Here, the record reflects that Rowshan was unable to meaningfully participate in the hearing due to her limited capacity to understand and communicate in English … . In multiple instances throughout her testimony, Rowshan’s testimony was not responsive to the questions posed to her, Rowshan did not know the meaning of simple words, and she made confusing statements demonstrating her limitations in understanding English. * * *

Since the Supreme Court determined, after the hearing, that Rowshan’s testimony was lacking in credibility due to “contradictions, misstatements and inconsistencies,” the record reflects that the denial of the defendants’ application for an interpreter may have influenced the court’s determination. HSBC Bank USA, N.A. v Parvez, 2022 NY Slip Op 05683, Second Dept 10-12-22

Practice Point: Here the judge’s failure to grant defendants’ attorney’s request for an interpreter required reversal and a new hearing. The defendant’s testimony revealed her limited understanding of English and the court’s ruling was based upon a determination of her credibility.

 

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AN ORDER DISMISSING AN ACTION DOES NOT CONCLUDE THE ACTION WHICH CAN ONLY BE ACCOMPLISHED BY FINAL JUDGMENT ENTERED BY THE CLERK; HERE, ALTHOUGH THE ACTION HAD BEEN DISMISSED BY AN ORDER, ABSENT A JUDGMENT THE ACTION REMAINED VIABLE AND THE COURT SHOULD HAVE CONSIDERED PLAINTIFF’S POST-DISMISSAL MOTION ON THE MERITS (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Dillon, determined: (1) an order dismissing an action does not terminate the action which can only be accomplished by a judgment; and (2) here, although the action had been dismissed, the action was still viable in the absence of a judgment and plaintiff’s motion for the appointment of a receiver should have been considered on the merits:

… [A]n order of dismissal is not the same as a judgment under CPLR 5011. CPLR 5011 is routinely utilized by practitioners and courts without controversy, as its mechanics are well-understood and not particularly complicated. A judgment is a paper that reflects the resolution of an action or proceeding … . A judgment may be either interlocutory or final. It “shall refer to, and state the result of, the verdict or decision, or recite the default upon which it is based” (CPLR 5011 …). A judgment is entered by the clerk at the conclusion of an action or proceeding (see CPLR 5016[a]). An action is not actually concluded until a final judgment is entered … . HSBC Bank USA, N.A. v Rubin, 2022 NY Slip Op 05682, Second Dept 10-12-22

Practice Point: An order dismissing an action does not conclude the action. Only a final judgment entered by the clerk terminates an action. Here there was an order dismissing the action but no judgment had been entered. Therefore, plaintiff’s post-dismissal motion should have been considered on the merits.

 

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A QUESTION OF FACT WHETHER THE PARTIES AGREED TO ARBITRATE THE DISPUTE REQUIRES A FRAMED-ISSUE HEARING; THE PROPER PROCEDURE IF ARBITRATION IS REQUIRED IS TO STAY THE UNDERLYING SUIT, NOT DISMISS IT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined: (1)  there was a question of fact whether the parties agreed to arbitrate the dispute, requiring a framed-issue hearing; and (2) arbitration is not a defense to an action; so where arbitration is required the underlying action is stayed, not dismissed:

… [Q]uestions of fact exist as to whether the parties agreed to arbitrate the instant dispute, which questions require a hearing (see CPLR 7503[a] …). We therefore remit the matter … for a framed-issue hearing, and thereafter, a new determination of that branch of [the] motion which was pursuant to CPLR 7503 to compel arbitration.

… Supreme Court should have denied [the] motion which was pursuant to CPLR 3211(a)(1) to dismiss the … complaint based upon the arbitration agreement. “An agreement to arbitrate is not a defense to an action,” and “[t]hus, it may not be the basis for a motion to dismiss” … . The proper remedy, should a valid agreement to arbitrate exist, is an order compelling arbitration, which operates to stay the action (see CPLR 7503[a] …). Ferarro v East Coast Dormer, Inc., 2022 NY Slip Op 05679, Second Dept 10-12-22

Practice Point: If there is a question of fact whether the parties agreed to arbitrate a dispute, a framed-issue hearing is required. If there is a valid agreement to arbitrate, the underlying action should be stayed pending the arbitration, not dismissed.

 

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THE COMPLAINT DID NOT STATE A CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT BECAUSE IT DID NOT ADEQUATELY ALLEGE “OUT OF POCKET” DAMAGES (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint did not state a cause of action for fraudulent inducement because it did not allege “out of pocket” damages:

… [T]he complaint fails to plead a cause of action for fraudulent inducement because it does not adequately allege that plaintiff suffered any ascertainable out-of-pocket pecuniary damages resulting from the alleged fraud … . Although plaintiff alleges unspecified reputational damages and lost revenue or profits, these allegations are not sufficient to sustain a cause of action based on fraud … . Similarly, plaintiff fails to allege that it paid any particular amount to acquire the G&P law practice or name, alleging only the value of G&P’s practice when plaintiff acquired it; this allegation is insufficient to measure plaintiff’s damages … . Furthermore, although plaintiff states that G&P “carried undisclosed liabilities,” it does not elaborate on what those might be…. . CKR Law LLP v Dipaolo, 2022 NY Slip Op 05587, First Dept 10-6-22

Practice Point: A complaint alleging fraudulent inducement does not state a cause of action unless it adequately alleges “out of pocket” damages.

 

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THE FRAUD CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE “OUT OF POCKET” DAMAGES WERE NOT DEMONSTRATED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the fraud causes of action should have been dismissed because plaintiffs failed to demonstrate “out of pocket” damages:

Defendants are entitled to summary judgment because plaintiffs failed to show the “out of pocket” damages required for a fraud claim (see e.g. Kumiva Group, LLC v Garda USA Inc., 146 AD3d 504, 506 [1st Dept 2017]). Plaintiffs failed to submit evidence of the value of the … stock they received … . Danco Enters., LLC v Livexlive Media, Inc., 2022 NY Slip Op 05589, First Dept 10-5-22

Practice Point: Here the fraud causes of action were dismissed because plaintiffs did not demonstrate “out of pocket” damages. Decisions relied upon by the plaintiffs concerning exceptions to the “out-of-pocket” damages rule were deemed inapplicable.

 

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THE HOSTILE WORK ENVIRONMENT ALLEGATIONS STATED CLAIMS UNDER THE STATE AND CITY HUMAN RIGHTS LAW (HRL); THE SEXUAL HARASSMENT ALLEGATIONS STATED A CLAIM UNDER ONLY THE CITY HRL; THE CONTINUING VIOLATION DOCTRINE DID NOT APPLY TO ISOLATED STATEMENTS MADE OUTSIDE THE STATUTE OF LIMITATIONS (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined plaintiff stated a hostile work environment claim under the state and city Human Rights Law (HRL) and sexual harassment claim under the city, but not the state, HRL: The isolated statement made outside the statute of limitations were not subject to the continuing violation doctrine:

Plaintiff’s allegations, that several times a week over a period of at least two years, plaintiff’s coworker spoke to him in a mock Chinese accent, told plaintiff to “open your eyes,” and tormented him about his mandatory drug testing in a sexually and racially charged manner, are sufficient to state a hostile work environment claim based on national origin discrimination under both the State and City HRLs … .

… [T]he allegations that his coworker regularly made statements about plaintiff’s penis size when plaintiff took bathroom breaks or reported for drug testing “fall within the broad range of conduct that falls between ‘severe and pervasive’ on the one hand and a ‘petty slight or trivial inconvenience’ on the other,” such that they are sufficient under the City HRL but not under the State HRL … . The continuing violation doctrine does not apply to the isolated statements made outside the limitations period because they do not form part of “a single continuing pattern of unlawful conduct extending into the [limitations] period . . . , but rather discrete events, involving different actors, occurring months to years apart” … . Lum v Consolidated Edison Co. of N.Y., Inc., 2022 NY Slip Op 05594, First Dept 10-6-22

Practice Point: The allegations that a coworker spoke using a mock Chinese accent and told plaintiff “open your eyes” stated hostile work environment claims under the state and city Human Rights Law (HRL). The allegations that a coworker made comments about the size of plaintiff’s penis stated a sexual harassment claim under the city, but not the state, HRL. Isolated statements made outside the statute of limitations were not subject to the continuing violation doctrine.

 

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THE PARTIES HAD ALREADY STIPULATED TO RESTORE THE ACTION TO THE CALENDAR; THE JUDGE SHOULD HAVE GRANTED PLAINTIFF’S MOTION TO VACATE THE DISMISSAL OF THE ACTION FOR FAILURE TO APPEAR AT CONFERENCES OR OUTLINE REMAINING DISCOVERY (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s motion to vacate the order dismissing the action based on plaintiff’s failure to appear at conferences or file a stipulation outlining discovery should have been granted. The parties had already stipulated to restore the action to the calendar and the court should have enforced the stipulation:

The motion court improvidently exercised its discretion when it denied plaintiff’s motion to vacate the order for failure to appear at conferences or to file a stipulation outlining the remaining discovery … . Defendants had already stipulated to restore the matter to the calendar, and stipulations between the parties are binding on the parties and generally enforced by the courts … . Moreover, the assertion by plaintiff’s counsel that two of the court’s notices were inadvertently routed to counsel’s spam folder constitutes an excusable law office failure … . Nor is there evidence in the record that counsel has engaged in a pattern of dilatory behavior … . Finally, plaintiff’s pleadings, along with the depositions of the witnesses, established a potentially meritorious cause of action … . Navarro v Joy Constr. Corp., 2022 NY Slip Op 05602, First Dept 10-6-22

Practice Point: Here excusable law office failure explained plaintiff’s failure to appear at conferences or outline remaining discovery. The parties had already stipulated to restore the action to the calendar. Plaintiff’s motion to vacate the dismissal of the action should have been granted. The parties’ stipulation should have been enforced, not ignored, by the judge.

 

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IN THIS SLIP AND FALL CASE, THE DEFENDANTS DEMONSTRATED MEDICAL RECORDS PERTAINING TO PLAINTIFF’S PRIOR ANKLE INJURY WERE MATERIAL AND NECESSARY TO THE DEFENSE; DISCOVERY OF THOSE RECORDS SHOULD HAVE BEEN ALLOWED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants were entitled to discovery of the medical records for plaintiff’s prior injuries in this slip and fall case. Although the facts are not explained, the appellate court deemed he medical records relevant to whether plaintiff was negligent:

The plaintiff Shadia Hamed allegedly sustained personal injuries when she slipped and fell in a building owned and operated by the defendants. The plaintiff commenced this action alleging, inter alia, that the defendants negligently maintained their premises in an unsafe condition.

The defendants moved pursuant to CPLR 3124 to compel the plaintiff to provide certain discovery, including authorizations to obtain medical records related to the plaintiff’s treatment for pre-existing injuries to her right ankle. The defendants argued that these medical records were material and necessary to their defense of this action because these records were necessary to establish the plaintiff’s negligence. …

… Supreme Court improvidently exercised its discretion in only conditionally granting that branch of the defendants’ motion which was to compel the plaintiff to provide medical records pertaining to her pre-existing injury to her right ankle only in the event that the plaintiff ‘claims any effects on her gait or mobility as a result of this incident.’ The defendants established that these records are material and necessary to the defense of this action (see CPLR 3101[a][1]). Hamed v Alas Realty Corp., 2022 NY Slip Op 05518, Second Dept 10-5-22

Practice Point: In this slip and fall case, the medical records pertaining to plaintiff’s prior ankle injury were deemed material and necessary to the the defense, i.e., necessary to demonstrate plaintiff’s negligence. Therefore discovery of those records should not have been restricted.

 

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THE BANK DID NOT DEMONSTRATE THE NOTICE OF DEFAULT COMPLIED WITH THE REQUIREMENTS IN THE MORTGAGE AGREEMENT BECAUSE THE NOTICE OF DEFAULT WAS NOT ATTACHED TO THE PAPERS; THE JUDGE SHOULD NOT HAVE DENIED DEFENDANT’S CROSS MOTION FOR A HEARING ON WHETHER PLAINTIFF NEGOTIATED IN GOOD FAITH AS REQUIRED BY CPLR 3408 (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the plaintiff bank did not demonstrate compliance with the provision in the mortgage agreement requiring certain advisements in the notice of default. The affidavit purporting to demonstrate compliance did not have the notice of default attached. In addition, Supreme Court should not have denied defendant’s cross motion for a hearing on whether plaintiff bank met its obligation to negotiate in good faith (CPLR 3408):

… [T]he plaintiff failed to demonstrate, prima facie, that it complied with the provision in the mortgage agreement requiring the plaintiff to send to the defendant a notice of default containing certain advisements and setting forth a 30-day cure period. The affidavit of its employee, Lindsay Hodges, was insufficient for this purpose inasmuch as Hodges failed to attach business records upon which she relied—specifically, the notice of default itself—in averring that notice was provided in compliance with the mortgage agreement. … Hodges’s averment was therefore hearsay lacking in probative value … . …

Supreme Court improperly denied the defendant’s cross motion for a hearing to determine whether the plaintiff met its obligation to negotiate in good faith pursuant to CPLR 3408(f). “The purpose of the good-faith requirement in CPLR 3408 is to ensure that both the plaintiff and the defendant are prepared to participate in a meaningful effort at the settlement conference to reach a resolution” … . To conclude that a party failed to negotiate in good faith pursuant to CPLR 3408(f), a court must determine that “the totality of the circumstances demonstrates that the party’s conduct did not constitute a meaningful effort at reaching a resolution” … .

… [T]he defendant’s submissions in support of her cross motion raised a factual issue as to whether the plaintiff failed to negotiate in good faith and deprived her of a meaningful opportunity to resolve the action through loan modification or other potential workout options … . Citimortgage, Inc. v Rose, 2022 NY Slip Op 05516, Second Dept 10-5-22

Practice Point: Here the mortgage agreement required that the notice of default include certain information. The affidavit submitted to prove the contents of the notice of default was hearsay because the notice was not attached.

 

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