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DEFENDANT FAILED TO DEMONSTRATE PLAINTIFF RECEIVED AND REVIEWED THE “TERMS AND CONDITIONS” ADDENDUM TO THE CONTRACT WHICH INCLUDED THE ARBITRATION CLAUSE; DEFENDANT’S EFFORT TO COMPEL ARBITRATION DENIED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, determined the defendant energy company did not demonstrate plaintiff agreed to an arbitration clause which defendant claimed was included in a four-page “Terms and Conditions” addendum to the contract. Essentially plaintiffs argued they were never provided with the four-page “Terms and Conditions.” Defendant relied on weak and contradictory evidence to the contrary, some of which was provided for the first time in a reply document (generally not considered by a motion court):

As a procedural matter, defendant could not employ its reply to remedy a basic deficiency in its prima facie showing … . After all, defendant’s theory of actual notice rested on its sales representative’s adherence to a business practice and defendant was unable to establish, in its underlying submission, the actual relevant practice (if any) that [the sales representative] used.

As a substantive matter, the inconsistent factual presentation between defendant’s underlying submission and its reply submission leaves a void on the critical question of what documents were reviewed with [plaintiff], undermining defendant’s contention that a particular business practice was employed and followed such that [plaintiff] received actual notice of the arbitration provision. Knight v Family Energy Inc., 2026 NY Slip Op 01599, First Dept 3-17-26

 

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A STIPULATION TOLLING THE STATUTE OF LIMITATIONS IS ENFORCEABLE, DESPITE THE RETROACTIVE APPLICATION OF THE FORECLOSURE ABUSE PREVENTION ACT (FAPA) (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Michael, reversing Supreme Court, determined that, although the foreclosure action would have been untimely pursuant to the Foreclosure Abuse Protection Act (FAPA) because the plaintiff’s voluntary discontinuance no longer can stop the running of the statute of limitations, here the parties had entered a stipulation tolling the statute of limitations. Supreme Court erred by finding the stipulation unenforceable:

Plaintiff’s prior mortgage foreclosure action against defendant was commenced on July 25, 2008, which indisputably accelerated the entire loan. On May 4, 2011, the parties agreed to discontinue the foreclosure action without prejudice via written stipulation. They also agreed that “the statute of limitations for any claims of plaintiff or defendant against the other is hereby tolled from July 22, 2008 . . . until June 1, 2013.” The stipulation was executed by the parties’ respective counsel and filed with the court. Plaintiff subsequently commenced this foreclosure action on February 16, 2018 and moved for summary judgment. Defendant cross-moved to dismiss the complaint, arguing that plaintiff’s action was time-barred under FAPA. * * *

Simply put, despite FAPA’s retroactive application, the parties’ 2011 stipulation in which they expressly agreed to toll the limitations period to June 1, 2013 effectively tolled the limitations period to that date. Plaintiff’s commencement of this action on February 16, 2018, less than six years later, was thus timely. HSBC Bank USA, N.A. v Nicholas, 2026 NY Slip Op 01461, First Dept 3-27-26

Practice Point: A valid stipulation tolling the statute of limitations will be enforced even where, pursuant to FAPA, the revived foreclosure action would otherwise have been untimely.

 

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ALTHOUGH A JURY TRIAL WAIVER IN A CONTRACT IS NOT ENFORCED WHERE A COUNTERCLAIM ASSERTS FRAUDULENT INDUCEMENT, HERE THE FRAUDULENT-INDUCEMENT COUNTERCLAIM SOUGHT RESCISSION OF THE CONTRACT, EQUITABLE RELIEF WHICH MUST BE TRIED BY THE COURT; THE MOTION TO STRIKE DEFENDANTS’ JURY-TRIAL DEMAND SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing the denial of plaintiff’s motion to strike defendants’ jury demand, determined defendants were not entitled to a jury trial on the counterclaims. Defendants asserted fraudulent inducement and sought rescission of the contract in addition to seeking damages as an alternative. Because rescission in equitable relief, a jury trial is not available:

… [D]efendants are not entitled to a jury trial on their counterclaims. Generally, a party asserting a fraudulent inducement claim may pursue a jury trial, notwithstanding the existence of a jury waiver clause, when that party primarily seeks money damages … . Here, by contrast, defendants’ counterclaims seek rescission of the contract and side letter agreement, with damages only sought in the alternative. As the Court of Appeals has held, “[a]ll issues pertaining to [an] equitable defense and counterclaim, whether matters of fact or law, [are] to be determined by the court under CPLR 4101” … and “[r]escission claims, of course, are equitable in nature” … . Accordingly, defendants’ counterclaims must be tried by the court, not a jury, by virtue of the equitable relief they seek. Penske v National Holding Corp., 2026 NY Slip Op 00978, First Dept 2-19-26

Practice Point: Where a cause of action seeks equitable relief, here rescission of a contract, it must be tried by the court, not a jury, even if damages are demanded in the alternative.

 

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THIS LAWSUIT BY AN EMPLOYER AGAINST AN EMPLOYEE WHO ALLEGEDLY USED PLAINTIFF’S PROPRIETARY INFORMATION AFTER RESIGNING PRESENTS FACT-SPECIFIC ISSUES IN THE CONTEXT OF RESTRICTIVE COVENANTS IN THE EMPLOYMENT CONTRACT, COPYRIGHT LAW (PRE-EMPTION OF STATE LAW CLAIMS), TRADE SECRETS, AND THE PROPRIETY OF A PRELIMINARY INJUNCTION; ALL OF THESE COMPLEX ISSUES CANNOT BE FAIRLY SUMMARIZED HERE; THE DECISION IS WORTH CONSULTING (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the Copyright Act pre-empted some but not all of plaintiff’s breach of confidentiality and breach of employment contract claims, defendants’ cross-motions to dismiss sounding in unfair competition should not have granted; the complaint stated a cause of action for unfair competition based on misappropriation of proprietary information; the complaint stated a cause of action for violation of a restrictive covenant prohibiting disclosure of trade secrets; the record was insufficient to support Supreme Court’s ruling that plaintiff engaged in overreaching to obtain the restrictive covenants; and plaintiff’s motion for a preliminary injunction should have been granted. These complex, fact-specific issues cannot be fairly summarized here. With regard to pre-emption and the preliminary injunction, the court wrote:

“Section 301 of the Copyright Act preempts a state law claim if: ‘(i) the work at issue comes within the subject matter of copyright and (ii) the right being asserted is equivalent to any of the exclusive rights within the general scope of copyright'” … . Section 106 of the Copyright Act provides copyright owners the exclusive rights, among other things, to reproduce a copyrighted work, to prepare derivative works, to distribute copies of the work to the public, and to display the work publicly … . “A state law right is equivalent to one of the exclusive rights of copyright if it may be abridged by an act which, in and of itself, would infringe one of the exclusive rights” … . A claim is not equivalent “if an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action,” and in such circumstances, there is no preemption … . Here, contrary to the defendants’ contentions, the plaintiff sufficiently alleged an extra element—violation of a duty of confidentiality and breach of the employment agreement—in addition to acts of reproduction, adaptation, performance, distribution, or display, that renders the state right qualitatively distinct from the federal right, thereby foreclosing preemption … . * * *

To obtain a preliminary injunction, the moving party must establish, by clear and convincing evidence, (1) a likelihood of success on the merits, (2) irreparable injury absent a preliminary injunction, and (3) that the equities balance in his or her favor” (… see CPLR 6301). Here, the plaintiff showed that trade secrets existed and established a likelihood of success on the merits … . Premium Prods., Inc. v O’Malley, 2026 NY Slip Op 00918, Second Dept 2-18-26

Practice Point: Consult this decision for insight into the wide range of issues raised by the allegation that a former employee has appropriated and used the employer’s proprietary information after resigning.​

 

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THE RESTAURANT’S INSURANCE POLICY COVERED INJURY INCURRED IN THE OPERATION OF THE “PREMISES” AND THEREFORE DID NOT COVER INJURY CAUSED BY A RESTAURANT EMPLOYEE WHO WAS DELIVERING FOOD BY BICYCLE; IF THE POLICY HAD USED THE WORD “BUSINESS” RATHER THAN “PREMISES,” THE OFF-PREMISES INJURY WOULD HAVE BEEN COVERED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Landicino, determined the restaurant’s insurance policy did not cover an injury cause by a restaurant employee a block away from the restaurant. Plaintiff was struck by a restaurant employee who was on a bicycle returning from a food delivery. The policy limited coverage to injury arising out of use of the restaurant “premises … and operations necessary or incidental to those premises.” The Second Department focused on the word “premises” and concluded an accident a block away from the “premises” was not covered. The court noted that had the coverage limitation used the word “business,” as opposed to “premises,” the injury would have been covered:

There is … a glaring difference between an insurance policy that insures against losses arising from operations necessary or incidental to a business, which would ostensibly include all claims of bodily injury arising from an employee’s negligence while that employee is acting within the scope of his or her employment for the business, and a policy that insures against losses arising from operations necessary or incidental to a premises, which include claims of bodily injury that must have some premises-based connection to the covered premises. Here, the insurance policy at issue covered only those damages that arose from the operations “necessary or incidental” to the premises, which is a narrower category of coverage. Despite the fact that the alleged incident occurred while the restaurant’s employee may have been acting in the scope of his employment, the incident did not occur as a result of any activity that was connected to the operation of the premises. Normile v DB Ins. Co., Ltd., 2026 NY Slip Op 00788, Second Dept 2-11-26

Practice Point: Consult this opinion for insight into how a court will interpret a limitation of coverage in an insurance policy.

 

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PLAINTIFF ALLEGED SHE WAS COVERED AS AN ADDITIONAL INSURED UNDER THE POLICY AND ATTACHED A CERTIFICATE OF INSURANCE TO HER COMPLAINT; A CERTIFICATE OF INSURANCE IS NOT SUFFICIENT PROOF OF THE EXISTENCE OF AN INSURANCE CONTRACT; PLAINTIFF’S COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint alleging plaintiff was an additional insured based upon the certificate of insurance should have been dismissed. A certificate of insurance does not prove the existence of an insurance contract:

Only those named as an insured or additional insured on an insurance policy are entitled to coverage … . As the party claiming coverage, plaintiff bears the burden of showing that the policy covers her … .

Supreme Court should have granted [the insurer’s] motion to dismiss the complaint because plaintiff failed to plead facts showing that she was covered under the policy. The certificate of liability insurance is insufficient to prove that plaintiff was an additional insured because “[a] certificate of insurance is only evidence of a carrier’s intent to provide coverage but is not a contract to insure the designated party nor is it conclusive proof, standing alone, that such a contract exists” … . Furthermore, the certificate contains a disclaimer stating that it was “issued as a matter of information only and confers no rights upon the certificate holder” … . Itzhak v Briarwood Ins. Servs. Inc., 2026 NY Slip Op 00616, First Dept 2-10-26

Practice Point: A certificate of insurance is not proof of the existence of an underlying insurance contract. Here plaintiff relied solely on a certificate of insurance to allege she was covered under the policy as an additional insured. That was not enough to state a cause of action.

 

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PLAINTIFF WAS STRUCK BY A SHED WHICH WAS BEING TRANSPORTED AS AN OVERSIZED LOAD; AN EMPLOYER WHICH HIRES AN INDEPENDENT CONTRACTOR WILL GENERALLY NOT BE VICARIOUSLY LIABLE FOR THE CONTRACTOR’S NEGLIGENCE UNLESS THE CONTRACTOR IS TASKED WITH AN “INHERENTLY DANGEROUS ACTIVITY;” TRANSPORTING AN OVERSIZED LOAD BY TRUCK IS NOT AN “INHERENTLY DANGEROUS ACTIVITY;” THEREFORE THE EMPLOYER WAS NOT VICARIOUSLY LIABLE FOR THE TRUCK DRIVER’S NEGLIGENCE WHICH CAUSED PLAINTIFF’S INJURY (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Powers, over a dissent, determined defendant ACS, which hired defendant St. Mary as an independent contractor, was not vicariously liable for the negligence of a driver working for St. Mary. Plaintiff was struck by a shed which was being transported by truck as an oversized load. Although the employer is usually not vicariously liable for the negligence of an independent contractor, there is an exception where the employer assigns an “inherently dangerous” task to the independent contractor. The majority concluded that moving a shed on a truck as an oversized load did not meet the definition of “inherently dangerous:”

​It is undisputed that St Mary was an independent contractor of ACS and, as a general rule, “a party who retains an independent contractor, as distinguished from a mere employee or servant, is not liable for the independent contractor’s negligent acts” … . Certain exceptions exist to this general rule, however. These exceptions include, as is relevant here, ” ‘where the employer . . . has assigned work to an independent contractor which the employer knows or has reason to know involves special dangers inherent in the work or dangers which should have been anticipated by the employer’ ” … . * * *

… “[A]n actor who hires an independent contractor to do work that the actor knows or should know involves an abnormally dangerous activity is subject to vicarious liability for physical harm when the abnormally dangerous activity is a factual cause of any such harm within the scope of liability” (Restatement [Third] of Torts § 58). “[A]n activity is abnormally dangerous if: (1) the activity creates a foreseeable and highly significant risk of physical harm even when reasonable care is exercised by all actors; and (2) the activity is not one of common usage” … .

​… [N]o view of the facts presented on this motion supports the conclusion that the trucking of the oversized load in question was an inherently dangerous activity because there was not a significant risk of harm if reasonable care were exercised by those involved — namely, Rousell [the driver]. Plaintiff alleges that his injuries resulted from Rousell failing to take notice of his surroundings on one side of the vehicle and crossing the line separating lanes of travel. This ordinary incident of negligence — i.e., failing to appropriately observe one’s surroundings — is not inherent in the trucking of oversized loads and could have been avoided with the exercise of reasonable care. “Demanding though it may be, the activity of transporting [oversized loads on public highways] — successfully accomplished countless times daily — does not involve that sort of inherent risk for the nonnegligent driver and is simply not an inherently dangerous activity so as to trigger vicarious liability” … . Deitrich v Binghamton Rd. Elec., LLC, 2026 NY Slip Op 00557, Third Dept 2-5-26

Practice Point: Consult this opinion for insight into what constitutes an “inherently dangerous activity” which can trigger an employer’s vicarious liability for the negligence of an independent contractor.​

 

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IF THE UNDERLYING INSURANCE POLICY DOES NOT INDICATE THAT A WRITTEN AGREEMENT NAMING A PARTY AS AN ADDITIONAL INSURED MUST BE SIGNED, AN UNSIGNED DOCUMENT TO THAT EFFECT IS ENFORCEABLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the fact the the change order, which required defendant (Arsenal) to name plaintiff as an additional insured, was unsigned, it was enforceable:

​An unsigned document may qualify as a written agreement requiring a party to be named as an additional insured, provided that the additional insured provisions in the insurance policy itself do not explicitly require that the agreement be signed … . If such agreement is unsigned, it may still be enforceable, “provided there is objective evidence establishing that the parties intended to be bound” … . * * *

Since the change order qualifies as a written agreement requiring Arsenal to name plaintiff as an additional insured, Supreme Court should have granted plaintiff’s motion for partial summary judgment and found that defendant insurer is required to provide plaintiff a defense in the underlying litigation, as the duty to defend was triggered … . A1 Specialized, Inc. v James Riv. Ins. Co., 2026 NY Slip Op 00570, First Dept 2-5-26

Practice Point: An unsigned document requiring a party to be named as an additional insured is enforceable if the underlying policy does not require the agreement to be signed.

 

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EXCLUSIONS FROM COVERAGE IN AN INSURANCE POLICY ARE STRICTLY CONSTRUED AGAINST THE INSURER; HERE DAMAGE CAUSED BY “INTERIOR TILE” WORK WAS COVERED UNDER THE POLICY; IN PREPARING THE BATHROOM FLOOR FOR TILING THE INSURED USED WELDING EQUIPMENT WHICH CAUSED A FIRE; THE INSURER DID NOT DEMONSTRATE THE PREPARATORY WORK WAS NOT ENCOMPASSED BY THE COVERAGE FOR “INTERIOR TILE” WORK (FIRST DEPT).

The First Department, reversing Supreme Court, determined that plaintiff insurance company was, by the terms of the policy, obligated to cover property damage caused by defendant contractor, who was retained to refurbish a bathroom. The policy issued by plaintiff to defendant excluded from coverage any property damage caused by  the defendant. There was an “exception to the exclusion” for “interior tile” work. In preparing the bathroom floor for tiling, defendant’s worker used welding equipment which started a fire, causing damage. The question before the court was whether the “interior tile” work “exception to the exclusion” included the preparation for the tile work using welding equipment:

Policy exclusions must be stated “in clear and unmistakable terms so that no one could be misled” … and “are to be accorded a strict and narrow construction” … . To avoid coverage pursuant to an exclusion, the insurer must establish that the exclusions or exemptions apply to the incident in question and are subject to “no other reasonable interpretation” … .

Plaintiff here failed to meet this burden. The Policy fails to define “interior tile” work. Nor does it indicate the scope or extent of what constitutes “tiling work” or articulate whether the phrase was meant to encompass closely related preparatory tasks, which is a reasonable interpretation advanced by defendants … . Accordingly, the Policy’s exclusions and the “interior tile” exception is ambiguous. The record before us is conclusory and does not resolve these ambiguities. Well-settled “precedent[] require us to adopt the readings that narrow the exclusion[]” and construe ambiguities against the insurer plaintiff, resulting in coverage as a matter of law … . Mt. Hawley Ins. Co. v Michelle Kuo Corp., 2026 NY Slip Op 00427, Frist Dept 1-29-26

Practice Point: Consult this decision for insight into how a court will strictly construe “exceptions” to “exclusions from coverage” in an insurance policy.

 

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DEFENDANTS OPENED A COMPETING HAIR SALON AND WRONGFULLY ACCESSED PLAINTIFF’S ACCOUNT SOFTWARE TO BOOK CLIENTS; THE COMPLAINT STATED CAUSES OF ACTION FOR TRESPASS TO CHATTELS, TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS AND BREACH OF THE EMPLOYMENT CONTRACT (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that plaintiff’s causes of action for trespass to chattels, tortious interference with business transactions and breach of contract should not have been dismissed. Plaintiff alleged defendants opened a competing hair salon and accessed and used plaintiff’s computer program for booking clients by using plaintiff’s username and password:

To establish a cause of action to recover damages for trespass to chattels, the plaintiff is required to establish that the defendants “intentionally, and without justification or consent, physically interfered with the use and enjoyment of personal property in [plaintiff’s] possession” … . “Liability for trespass to chattels will be imposed only if the interference results in harm to the physical condition, quality or value of the chattel or if the owner is deprived of use of the chattel for a substantial time” … . Interference with information stored on a computer may give rise to trespass to chattels if the plaintiff is dispossessed of the information or the information is impaired as to its condition, quality, or value … . …

[To] “… set forth a cause of action sounding in tortious interference with business relations, a plaintiff is required to plead that the defendant interfered with the plaintiff’s business relationships either with the sole purpose of harming the plaintiff or by means that were unlawful or improper” … . “This standard is met where the interference with prospective business relations was accomplished by wrongful means or where the offending party acted for the sole purpose of harming the other party” … . The wrongful means supporting a cause of action alleging intentional interference with a business relationship includes acts that constitute a crime or independent tort or other egregious wrongdoing … . Hello Beautiful Salons, Inc. v Dimoplon, 2026 NY Slip Op 00242, Second Dept 1-21-26

Practice Point: Using plaintiff hair salon’s credentials to access plaintiff’s business-account software to wrongfully book clients for defendants’ competing hair salon constitutes the tort of “trespass to chattels.”

 

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