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IN THIS FORECLOSURE ACTION, THE BANKRUPTCY STAY DID NOT TERMINATE WHEN DEFENDANT BOUGHT THE SUBJECT PROPERTY FROM THE BANKRUPTCY ESTATE; THE STAY TERMINATED LATER WHEN DEFENDANT RECEIVED A DISCHARGE FROM THE BANKRUPTCY COURT; THE FORECLOSURE ACTION WAS THEREFORE TIMELY (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Dowling, in a matter of first impression, determined the foreclosure action, which had been stayed when defendant twice filed for bankruptcy, was timely brought. If the stay ceased when defendant bought the subject property from the bankruptcy estate, the foreclosure would have been untimely. But the Second Department held that the stay did not cease until the subsequent discharge order, rendering the action timely:

… [D]efendant’s purchase of the Middle Pond Road property from the bankruptcy estate pursuant to the November 26, 2013 order did not terminate the automatic bankruptcy stay barring commencement of the instant foreclosure action, but rather, under the circumstances of this case, the automatic bankruptcy stay terminated when the defendant received a discharge from the Bankruptcy Court on November 3, 2014.

Pursuant to the plain language of 11 USC § 362(c)(1), the discharge of the … property from the bankruptcy estate pursuant to the November 26, 2013 order terminated the stays of an act against “property of the estate,” which stays are established by 11 USC § 362(a)(3) and (4). Here, however, upon the defendant’s purchase of the … property from the bankruptcy estate pursuant to November 26, 2013 order, ownership of the … property returned to the defendant, as debtor in the bankruptcy proceeding … . Consequently, the termination of the stay of an act against “property of the estate” provided for by 11 USC § 362(c)(1) has no bearing on the stays established by 11 USC § 362(a)(1) and (5), which expressly apply to acts taken against “the debtor” or “property of the debtor,” and which continued in effect. Deutsche Bank Natl. Trust Co. v Lubonty, 2022 NY Slip Op 04288, Second Dept 7-6-22

Practice Point: Here whether the foreclosure action was timely depended on when the bankruptcy stay terminated. The defendant in the foreclosure action was the “debtor” in the bankruptcy proceeding. The defendant bought the property which was the subject of the foreclosure action from the bankruptcy estate. Based on the applicable bankruptcy statute, the bankruptcy stay did not terminate when defendant bought the property. It terminated later when defendant received a discharge from the Bankruptcy Court. Because the stay terminated on the later date, the foreclosure action was timely.

 

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THE IDENTITY OF PLAINTIFF’S EMPLOYER WAS NOT A DISPUTED ISSUE IN THE WORKERS’ COMPENSATION PROCEEDING; THEREFORE DEFENDANTS WERE NOT COLLATERALLY ESTOPPED FROM CONTESTING THE IDENTITY OF PLAINTIFF’S EMPLOYER IN THIS RELATED NEGLIGENCE ACTION AND ARGUING PLAINTIFF’S EXCLUSIVE REMEDY IS WORKERS’ COMPENSATION; HOWEVER DEFENDANTS PRESENTED CONFLICTING EVIDENCE OF THE IDENTITY OF PLAINTIFF’S EMPLOYER AND THEREFORE WERE NOT ENTITLED TO SUMMARY JUDGMENT (SECOND DEPT).

The Second Department determined the collateral estoppel doctrine preclude defendants from disputing the identity of plaintiff’s employer because the issue was not in dispute the Workers’ Compensation proceeding. Plaintiff was a matron on a school bus and was injured when the bus was involved in a collision. Plaintiff sued the bus driver (Bonhome) and the bus company (Reliant). Defendants alleged plaintiff and Bonhome were both employed by Reliant and, therefore, Workers’ Compensation was plaintiff’s only remedy. But the defendants submitted conflicting evidence of the identity of plaintiff’s employer and therefore were not entitled to summary judgment:

… Bonhome and Reliant were not barred by the doctrine of collateral estoppel from disputing the identity of the plaintiff’s employer. “Under the doctrine of collateral estoppel, a party is precluded from ‘relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same'” … . “The quasi-judicial determinations of administrative agencies are entitled to collateral estoppel effect where the issue a party seeks to preclude in a subsequent civil action is identical to a material issue that was necessarily decided by the administrative tribunal and where there was a full and fair opportunity to litigate before that tribunal” … . Here, the plaintiff failed to demonstrate that the identity of her employer was a disputed issue at a proceeding before the Workers’ Compensation Board, or that the Workers’ Compensation Board specifically adjudicated that issue…. .

… [T]he defendants submitted conflicting evidence regarding the identity of the plaintiff’s employer. Thus, they failed to demonstrate, prima facie, that both Bonhome and the plaintiff were employees of Reliant at the time of the accident … . Calixte v City of New York, 2022 NY Slip Op 04286, Second Dept 7-6-22

Practice Point: In this traffic accident case the identity of plaintiff’s employer was not in dispute in the prior Workers’ Compensation proceeding. The collateral estoppel doctrine, therefore, did not apply and defendant can contest the identity of plaintiff’s employer in the related negligence proceeding. If both plaintiff and defendant were employees of the same employer, Workers’ Compensation would be plaintiff’s only remedy.

 

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THE PLAINTIFF’S VERDICT IN THIS MEDICAL MALPRACTICE ACTION SHOULD HAVE BEEN SET ASIDE IN THE INTEREST OF JUSTICE; THE JUDGE PRECLUDED CROSS-EXAMINATION OF PLAINTIFF’S EXPERT ABOUT WHETHER THE OTHER DOCTORS WHO CONSULTED ON PLAINTIFF’S TREATMENT DEPARTED FROM ACCEPTED PRACTICE BY FAILING TO DO FURTHER DIAGNOSTIC TESTING; IF SO, FAULT WOULD BE SHARED PURSUANT TO CPLR 1601 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant doctor’s (Sourour’s) motion to set aside the verdict in the interest of justice in this medical malpractice action should have been granted. The evidence supported the jury’s finding that the failure to do diagnostic testing decreased the plaintiff’s chance of a better outcome. During the trial Sourour sought to but was precluded from cross-examining plaintiff’s expert about whether other doctors who consulted on the case also departed from accepted practice by not performing the additional diagnostic testing. That was deemed reversible error:

“A motion pursuant to CPLR 4404(a) to set aside a verdict and for a new trial in the interest of justice encompasses errors in the trial court’s rulings on the admissibility of evidence, mistakes in the charge, misconduct, newly discovered evidence, and surprise” … . “In considering such a motion, [t]he Trial Judge must decide whether substantial justice has been done, whether it is likely that the verdict has been affected . . . and must look to his [or her] own common sense, experience and sense of fairness rather than to precedents in arriving at a decision” … . …

If, as Sourour proposes, a jury were to find that these doctors departed from accepted medical practice and that their departures were a substantial factor in depriving the decedent of a chance for an improved outcome, they could be found at fault together with Sourour … . As a result, any evidence as to the culpability of these doctors was relevant under CPLR 1601(1) … . The court’s error in precluding testimony on this issue deprived Sourour of “substantial justice” … . Schuster v Sourour, 2022 NY Slip Op 04317, Second Dept 7-6-22

Practice Point: Here the defendant doctor’s failure to do further diagnostic testing for cancer was deemed to have decreased the chance of a better outcome. Therefore the plaintiff’s verdict was supported by the evidence and properly survived a motion set aside as a matter of law. However, the judge erroneously precluded cross-examination of plaintiff’s expert about whether the other doctors who consulted on plaintiff’s treatment departed from accepted practice failing to order further diagnostic testing. If so, fault would have been shared pursuant to CPLR 1601.

 

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A PLAINTIFF BRINGING A SUMMARY JUDGMENT MOTION MUST ADDRESS AFFIRMATIVE DEFENSES RAISED IN THE ANSWER; HERE IN THIS TRAFFIC ACCIDENT CASE THE GRAVES AMENDMENT, WHICH PROVIDES THAT THE OWNER OF A LEASED CAR IS NOT LIABLE FOR THE NEGLIGENCE OF THE DRIVER, WAS RAISED AS AN AFFIRMATIVE DEFENSE; BECAUSE PLAINTIFF DID NOT ADDRESS THAT ISSUE IN THE SUMMARY JUDGMENT MOTION, THE MOTION SHOULD HAVE BEEN DENIED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff in this traffic accidence case did not demonstrate the owner of defendants’ vehicle, PV Holding, was vicariously liable for the negligence of the driver of the vehicle. Therefore plaintiff’s summary judgment motion with respect to PV Holding should not have been granted. Defendants apparently raised the affirmative defense that the vehicle was leased from PV Holding and therefore was not liable under the Graves Amendment. Because that defense was not addressed in plaintiff’s summary judgment papers, the motion should have been denied:

… [I]n 2005, Congress enacted the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users. That act included the Graves Amendment (49 USC § 30106), which provides that the owner of a leased or rented motor vehicle cannot be held liable for personal injuries resulting from the use of such vehicle if the owner (1) is engaged in the trade or business of renting or leasing motor vehicles, and (2) engaged in no negligence or criminal wrongdoing contributing to the accident … .* * *

“CPLR 3212(b) requires the proponent of a motion for summary judgment to demonstrate the absence of genuine issues of material fact on every relevant issue raised by the pleadings, including any affirmative defenses” … . Pierrelouis v Kuten, 2022 NY Slip Op 04314, Second Dept 7-6-22

Practice Point: A plaintiff bringing a motion for summary judgment must address affirmative defenses raised in the answer. Failure to do so requires denial of the motion. Here the Graves Amendment was raised as an affirmative defense in this traffic accident case. The Graver Amendment provides that companies in the business of leasing cars are not vicariously liable for the negligence of the drivers. Plaintiff did not address that defense in the motion for summary judgment.

 

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IN THIS “CHILD VICTIMS ACT” ACTION ALLEGING SEXUAL ABUSE IN THE 1950’S BY EMPLOYEES OF THE NOW DISSOLVED YMCA NIAGARA FALLS, THERE ARE QUESTIONS OF FACT WHETHER THE DE FACTO MERGER DOCTRINE APPLIES RENDERING YMCA BUFFALO LIABLE FOR THE TORTS OF YMCA NIAGARA FALLS (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined this “Child Victims Act” action against YMCA Buffalo, alleging sexual abuse in the 1950’s by employees at the now dissolved YMCA Niagara Falls, should not have been dismissed. The decision is comprehensive and cannot be fairly summarized here. There exist triable issues of fact whether the de facto merger doctrine applies rendering YMCA Buffalo liable for the torts of YMCA Niagara Falls:

… [A]s a general rule, “a corporation which acquires the assets of another is not liable for the torts of its predecessor” ,,, . There are exceptions, however, and thus “[a] corporation may be held liable for the torts of its predecessor if (1) it expressly or impliedly assumed the predecessor’s tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations” … . Plaintiff relies exclusively on the second exception, which implicates the de facto merger doctrine … . The de facto merger doctrine is “based on the concept that a successor that effectively takes over a [corporation] in its entirety should carry the predecessor’s liabilities as a concomitant to the benefits it derives from the good will purchased,” which “is consistent with the desire to ensure that a source remains to pay for the victim’s injuries” … . Dutton v Young Men’s Christian Assn. of Buffalo Niagara, 2022 NY Slip Op 04238, Fourth Dept 7-1-22

Practice Point: In this Child Victims Act action alleging sexual abuse in the 1950’s by employees of the now dissolved YMCA Niagara Falls, there are questions of fact about whether the de facto merger doctrine makes defendant YMCA Buffalo liable for the torts of YMCA Niagara Falls. The decision is comprehensive and discusses every conceivable aspect of the de facto merger doctrine as it applies to not-for-profit corporations.

 

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PLAINTIFF’S TWO SEPARATE TRAFFIC ACCIDENTS SHOULD BE TRIED TOGETHER BECAUSE PLAINTIFF ALLEGED THE INJURIES FROM THE FIRST ACCIDENT WERE EXACERBATED BY THE SECOND ACCIDENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s two separate traffic accidents should be tried jointly because plaintiff claimed the second accident exacerbated the injuries from the first accident:

… [I]n view of the plaintiff’s allegations that certain injuries which he sustained in the first automobile accident were exacerbated by the second automobile accident, in the interest of justice and judicial economy, and to avoid inconsistent verdicts, the two actions should be tried jointly … . The respondents failed to demonstrate prejudice to a substantial right if the actions are tried jointly … . Although the plaintiff moved to consolidate the two actions, the appropriate procedure is a joint trial, particularly since the actions involve different defendants … . Frank v Y. Mommy Taxi, Inc., 2022 NY Slip Op 04151, Second Dept 6-29-22

Practice Point: Here two separate traffic accidents should be tried together because plaintiff alleged the second accident exacerbated his injuries from the first accident.

 

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PLAINTIFF SERVED THE COMPLAINT ON NOVEMBER 27, 2018; DEFENDANT ATTEMPTED TO SERVE AN ANSWER, WHICH WAS REJECTED, ON JANUARY 9, 2019; DEFENDANT’S EXCUSE WAS “THE DELAY WAS CAUSED BY THE INSURANCE CARRIER;” THAT EXCUSE WAS INSUFFICIENT AND DEFENDANT’S MOTION TO COMPEL PLAINTIFF TO ACCEPT THE ANSWER SHOULD HAVE BEEN DENIED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant did not offer a reasonable excuse for serving a late answer (which was rejected) in this slip and fall case. Therefore, defendant’s motion to compel plaintiff to accept the answer should not have been granted. Defendant was served with the complaint on November 27, 2018, and defendant attempted to serve the answer on January 9, 2019:

The bare allegation by the defendant’s attorney that the delay was caused by the defendant’s insurance carrier is insufficient to excuse the delay in answering the complaint … . The absence of a reasonable excuse for the defendant’s default renders it unnecessary to determine whether she demonstrated the existence of a potentially meritorious defense … . Goldstein v Ilaz, 2022 NY Slip Op 04154, Second Dept 6-29-22

Practice Point: Here the defendant attempted to serve an answer, which was rejected, about a month and a half after plaintiff served the complaint. Defendant moved to compel the plaintiff to accept the answer. Defendant’s excuse was that the “delay was caused by the insurance carrier” with no further explanation. The Second Department deemed the excuse insufficient and ruled that the motion to compel acceptance of the answer should not have been granted.

 

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THE RELATIONSHIP BETWEEN PETITIONER AND RESPONDENT IN THIS FAMILY OFFENSE PROCEEDING MET THE DEFINITION OF “INTIMATE RELATIONSHIP” SUCH THAT FAMILY COURT HAD SUBJECT MATTER JURISDICTION (SECOND DEPT). ​

The Second Department, reversing Family Court, determined the family-offense petition should not have been dismissed for lack of subject matter jurisdiction. The Second Department determined the respondent met the “intimate relationship” criteria which provided Family Court with subject matter jurisdiction:

“[T]he determination as to whether persons are or have been in an ‘intimate relationship’ within the meaning of Family Court Act § 812(1)(e) is a fact-specific determination which may require a hearing” … . Although Family Court Act § 812(1)(e) expressly excludes a “casual acquaintance” and “ordinary fraternization between two individuals in business or social contexts” from the definition of “intimate relationship,” “the legislature left it to the courts to determine on a case-by-case basis what qualifies as an intimate relationship within the meaning of Family Court Act § 812(1)(e) based upon consideration of factors such as ‘the nature or type of relationship, regardless of whether the relationship is sexual in nature; the frequency of interaction between the persons; and the duration of the relationship'” …. .

… [T]he record demonstrated that the petitioner knew the respondent for more than 20 years, and the respondent and the petitioner’s sister held themselves out as husband and wife. During that period of time, the petitioner and the respondent engaged in general social activities at each other’s homes, attended holiday and birthday celebrations together, and traveled together. The petitioner’s sister and the respondent had a daughter together who identified the petitioner as her aunt. The petitioner resided in one of the units of a three-family home. The petitioner’s sister, the respondent, and their daughter, who was approximately 18 years old at the time of the hearing, resided in one of the other units of that three-family home. The home was owned by the mother of the petitioner and the petitioner’s sister. Under the circumstances, the Family Court should have denied the respondent’s application to dismiss the petition for lack of subject matter jurisdiction (see Family Ct Act § 812[1]). Matter of Charter v Allen, 2022 NY Slip Op 04167, Second Dept 6-29-22

Practice Point: This case demonstrates that an “intimate relationship” which gives Family Court subject matter jurisdiction in a family offense proceeding need not be a sexual relationship.

 

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QUESTIONS OF FACT ABOUT WHETHER THE INCAPACITATED PERSON (IP) WAS “INSANE” WITHIN THE MEANING OF THE CPLR WHEN HE WAS REPRESENTED BY THE DEFENDANT ATTORNEY MUST BE DETERMINED AT THE LEGAL MALPRACTICE TRIAL; IF THE IP WAS INSANE, THE MALPRACTICE STATUTE OF LIMITATIONS WILL BE TOLLED; IF NOT THE MALPRACTICE ACTION IS UNTIMELY (FIRST DEPT).

The First Department determined questions about the incapacitated person’s (IP’s) sanity should be part of the legal malpractice trial. If the IP is determined to have been “insane” at the time he was represented by defendant attorney, the statute of limitations for the legal malpractice action would have been tolled, if not, the action was not timely:

The parties do not dispute that [defendant attorney] established prima facie that this action asserting breach of fiduciary duty and related causes of action (the malpractice action) was commenced after the applicable statutes of limitations had expired. However, plaintiff raised an issue of fact whether the statutes of limitations were tolled for “insanity” (… CPLR 208[a]). Viewed in the light most favorable to plaintiff, the record presents issues of fact as to the IP’s ability to protect his legal rights and his overall ability to function in society at the time his claims against [defendant attorney] accrued … . Matter of Verdugo v Smiley & Smiley, LLP, 2022 NY Slip Op 04138, First Dept 6-28-22

Practice Point: There is an “insanity” statute-of -imitations toll in the CPLR. Here there a question of fact whether an incapacitated person was insane when he was represented by defendant attorney such that the legal malpractice statute of limitations was tolled.

 

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PLAINTIFF’S ATTORNEY WAS NOT AWARE OF COVID-RELATED PROCEDURAL CHANGES FOR CONDUCTING COMPLIANCE CONFERENCES; PLAINTIFF’S MOTION TO VACATE DISMISSAL OF THE ACTION SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the COVID-related law office failure was an adequate excuse and plaintiff’s motion to vacate the dismissal of the action should have been granted:

Supreme Court improvidently exercised its discretion in denying plaintiffs’ motion to vacate the dismissal, as plaintiffs showed both a reasonable excuse for their default and a meritorious cause of action (see CPLR 2005 …). Under the circumstances, law office failure constitutes a reasonable excuse for the default, since plaintiffs’ counsel was unaware that procedures for conducting compliance conferences had changed during the COVID-19 pandemic and, as a result, inadvertently failed to submit stipulations before a scheduled conference … .. Furthermore, plaintiffs demonstrated a meritorious cause of action by submitting the complaint, a bill of particulars, and the injured plaintiff’s deposition testimony … . Defendants also were not prejudiced by plaintiffs’ failure to appear, and indeed, did not oppose the motion to vacate … . Willner v S Norsel Realties LLC, 2022 NY Slip Op 04111, First Dept 6-23-22

Practice Point: Plaintiff’s attorney was not aware of procedural changes related to COVID and the action was dismissed because counsel did not submit stipulations before the scheduled compliance conference. This “law office failure” was a “reasonable excuse.” Plaintiff’s motion to vacate the dismissal of the action should have been granted.

 

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