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PLAINTIFF RECEIVED THE FULL BENEFIT OF A LOAN AGREEMENT; THE DOCTRINE OF EQUITABLE ESTOPPEL PRECLUDED PLAINTIFF’S CLAIM THE LOAN AGREEMENT IS UNENFORCEABLE BECAUSE THE UNDERLYING RECORDED MORTGAGE DID NOT BEAR HIS SIGNATURE (SECOND DEPT).

The Second Department determined the defendants” motion to dismiss was properly granted. Plaintiff contended the underlying mortgage which was part of a loan agreement was void because it was not signed, rendering the loan agreement unenforceable. Plaintiff had however accepted the proceeds of the loan and therefore was precluded from contesting the agreement by the doctrine of equitable estoppel:

… [T]he plaintiff does not … deny that he executed a copy of the mortgage in accordance with the loan agreement, he merely contends that the copy that was recorded … , did not bear his signature. The plaintiff contends that this defect rendered the recorded mortgage void ab initio and therefore unenforceable … . * * *

… [T]he defendants’ uncontradicted submissions demonstrated that the plaintiff “had the full benefit” of the loan agreement … . … [T]he plaintiff does not seek to rescind the loan agreement, but he nevertheless seeks to recoup “all closing costs paid to Defendants with any payments to [Citibank] since June 22, 2007,” the date the loan agreement was executed … . Under the circumstances, the doctrine of equitable estoppel precludes the plaintiff from asserting that the recorded mortgage was void … . Bernard v Citibank, N.A., 2021 NY Slip Op 03822, Second Dept 6-16-21

 

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THE CITY OF ROCHESTER LOCAL LAW WHICH PURPORTED TO TRANSFER THE POWER TO DISCIPLINE POLICE OFFICERS TO THE POLICE ACCOUNTABILITY BOARD (PAB) IS INVALID AND CANNOT BE ENFORCED (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice NeMoyer, determined the City of Rochester Local Law which transferred the power to discipline police officers from the police chief to the Police Accountability Board (PAB) is invalid and cannot be enforced:

… [t]he challenged Local Law No. 2 necessarily falls insofar as it takes police discipline out of collective bargaining because, in that respect, it conflicts with the general law mandating collective bargaining over police discipline (see Civil Service Law § 204 [2] … ). As the Court of Appeals has explained, “a local law is inconsistent [with the general law] where local laws prohibit what would be permissible under State law”… , and by creating a permanent administrative apparatus for disciplining police officers that is impervious to alteration or modification at the bargaining table, Local Law No. 2 necessarily and structurally prohibits something that … is statutorily mandated for the City of Rochester: collective bargaining of police discipline. The court therefore properly invalidated Local Law No. 2 insofar as it imbues PAB with disciplinary authority over Rochester police officers without regard to collective bargaining. Matter of Rochester Police Locust Club, Inc. v City of Rochester, 2021 NY Slip Op 03787, Fourth Dept 6-11-21

 

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THE FORECLOSURE ACTION WAS PROPERLY DISMSSED AS TIME-BARRED; RPAPL 1304 IS A CONDITION PRECEDENT, NOT A STATUTORY PROHIBITION WHICH WOULD TOLL THE STATUTE OF LIMITATIONS (SECOND DEPT).

The Second Department, over a two-justice partial dissent, determined the defendant’s motion to dismiss the foreclosure action as time-barred, cancel the notice of pendency and cancel and discharge the mortgage (RPAPL article 15) was properly granted. The decision is too complex and factually specific to fairly summarize here (but well worth reading). One of the issues addressed was the difference between a statutory prohibition, which would toll the statute of limitations, and a condition precedent, which would not:

CPLR 204(a) provides that “[w]here the commencement of an action has been stayed by a court or by a statutory prohibition, the duration of the stay is not part of the time within which the action must be commenced” … . RPAPL 1304, which the plaintiff argues is a “statutory prohibition,” requires that “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” RPAPL 1304 describes the required content and manner of service of the notice. “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action” … .

“A statutory prohibition and a condition precedent are separate concepts” … . The salient feature of a “statutory prohibition” is the plaintiff’s lack of control. Since a plaintiff has complete control over the acts necessary to effectuate compliance with a condition precedent, a condition precedent is not a statutory prohibition … . Thus, because the plaintiff had control over when to serve the RPAPL 1304 notice, and could have done so at least 90 days prior to the expiration of the statute of limitations, RPAPL 1304 is not a statutory prohibition within the meaning of CPLR 204(a) … . Everhome Mtge. Co. v Aber, 2021 NY Slip Op 03574, Second Dept 6-9-21

 

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PLAINTIFF FAILED TO DEMONSTRATE STANDING TO SUE UNDER AN INSTALLMENT CONTRACT ALLEGEDLY ASSIGNED TO HIM; THE DOCUMENTS UPON WHICH PLAINTIFF RELIED DID NOT MEET THE CRITERIA FOR THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff should not have been granted summary judgment on an installment contract for the purchase of a car which plaintiff alleged was assigned to him. Plaintiff did not demonstrate the documents he relied on for standing fit the criteria for the business records exception to the hearsay rule:

“A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures” … . As a general rule, “the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records” … . “However, such records may be admitted into evidence if the recipient can establish personal knowledge of the maker’s business practices and procedures, or establish that the records provided by the maker were incorporated into the recipient’s own records and routinely relied upon by the recipient in its own business” … .

Here, Dunn [plaintiff’s record manager] failed to attest to her personal knowledge of the business practices of either Baron Auto City, Inc., [the dealer which sold the car] or the entity to which Baron Auto City, Inc., allegedly assigned the installment contract. She also failed to allege that either the installment contract or the initial assignment of the installment contract to the third party were incorporated into the plaintiff’s records and routinely relied upon by the plaintiff in its business. Accordingly, under the circumstances, Dunn’s affidavit was insufficient to lay a proper foundation for either the installment contract or the initial assignment of the installment contract to the third party … . Autovest, LLC v Cassamajor, 2021 NY Slip Op 03570, Second Dept 6-9-21

 

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THE ARBITRATOR EXCEEDED HIS AUTHORITY UNDER THE COLLECTIVE BARGAINING AGREEMENT BY DISMISSING TWO CHARGES BECAUSE OF THEIR PUPORTED FACIAL DEFICIENCIES AND FAILING TO ASSESSS THE EVIDENCE IN SUPPORT OF THE CHARGES (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the arbitrator’s dismissal of two of the disciplinary charges against a corrections officer (Norde) based solely on alleged defects in the charges, as opposed to the relevant evidence, exceeded the arbitrator’s authority under the collective bargaining agreement (CBA):

… [R]espondent complied with the CBA by pleading in the notice of discipline that the exception [to the usual time limits] applied, and by citing and quoting the language of the specific criminal statute that Norde had allegedly violated; respondent would then need to prove the elements of that statute at the hearing to establish the basis of the timeliness exception … . Accordingly, by requiring respondent to prove the underlying crime in the notice to support the CBA’s time exception, the arbitrator essentially added a term to the CBA and, thus, exceeded his authority … . …

… [T]he arbitrator modified the CBA and exceeded his authority by dismissing the first two charges as facially deficient due to an alleged lack of particularization in the notice of discipline. As the charges in the notice were sufficiently stated, the arbitrator should have rendered a determination as to Norde’s guilt based on the evidence presented at the hearing. Matter of New York State Corr. Officers & Police Benevolent Assn., Inc. (New York State Dept. of Corr. & Community Supervision), 2021 NY Slip Op 03504, Third Dept 6-3-21

 

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PLAINTIFFS, ATTORNEYS PRACTICING LANDLORD-TENANT LAW, ALLEGED DEFENDANT PUBLISHER OF “NEW YORK LANDLORD-TENANT LAW” OMITTED OR INACCURATELY PRESENTED SOME OF THE RELEVANT STATUTES AND REGULATIONS AND THEREFORE VIOLATED GENERAL BUSINESS LAW 349 (DECEPTIVE BUSINESS PRACTICES); THE COMPLAINT FAILED TO ADEQUATELY ALLEGE DEFENDANT’S ACT OR PRACTICE WAS MATERIALLY MISLEADING (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, over a dissent, determined plaintiffs did not state a cause of action for deceptive business practices (General Business Law (GBL) 349) against the defendant-publisher of a legal resource book, “New York Landlord-Tenant Law” (commonly called the “Tanbook”). Plaintiffs, attorneys who practice landlord-tenant law, alleged the Tanbook, which is published annually, purported to include all the relevant statutes and regulations but, in fact, omitted or inaccurately presented some statutes and regulations. The Court of Appeals found that the complaint adequately alleged a cause of action that was consumer-oriented, but did not adequately allege defendant’s act or practice was misleading in a material way:

… [P]laintiffs’ cause of action is based on purchases of yearly editions of the Tanbook, under a sales agreement that charged extra for any updates of the year’s materials contained in the corresponding edition. Plaintiffs’ allegations are limited to omissions and inaccuracies in a section of the Tanbook they knew was subject to legislative amendment, which they concede were corrected in the 2017 edition after the errors were brought to defendant’s attention, and which were specifically contemplated by defendant’s express disclaimer of the currentness of the Tanbook’s contents. Under the circumstances, plaintiffs, or any reasonable consumer, could not have been materially misled to believe that defendant guaranteed Part III of the Tanbook was complete and accurate at any given time. Thus, because plaintiffs failed to adequately plead this element, their GBL § 349 cause of action was properly dismissed. Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v Matthew Bender & Co., Inc., 2021 NY Slip Op 03485, CtApp 6-3-21

 

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COLLATERAL ESTOPPEL PRECLUDED THE GENERAL CONTRACTOR’S INDEMNIFICATION ACTION AGAINST A SUBCONTRACTOR BECAUSE THE SUBCONTRACTOR HAD BEEN GRANTED SUMMARY JUDGMENT IN THE UNDERLYING PERSONAL INJURY ACTION BROUGHT BY THE GENERAL CONTRACTOR’S EMPLOYEES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that Conrad Geoscience Corp was not required to indemnify Kento, the general contractor for the removal of contaminated soil. Kento had hired Conrad to draw up environmental safety plans. The underlying lawsuit was brought by four Kento dump truck drivers who experienced dizziness during work and were treated at a hospital. Conrad won its motion for summary judgment in the underlying action because it did not exercise and supervisory control over the work done by the Kento employees. Collateral estoppel precluded Kento’s indemnification action against Conrad:

Several days prior to the Supreme Court’s denial of Conrad’s motion for summary judgment in this action, the court had granted that branch of Conrad’s motion, made in the underlying action commenced by the Ketco employees, which was for summary judgment dismissing the complaint in that action insofar as asserted against it. That determination was affirmed by this Court in a prior appeal, in which we concluded, “Conrad submitted evidence that, as the entity charged with creating environmental safety plans, it exercised no supervisory authority at the highway construction project work site and owed no duty of care to the plaintiffs. In opposition, the plaintiffs failed to raise a triable issue of fact” … . Based upon Ketco’s concession in its papers submitted in opposition to Conrad’s motion for summary judgment in this action, Conrad contends, in effect, that Ketco is collaterally estopped from seeking contractual indemnification against it. “Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity” … . Privity may be found where a nonparty to a prior litigation has “a relationship with a party to the prior litigation such that his [or her] own rights or obligations in the subsequent proceeding are conditioned in one way or another on, or derivative of, the rights of the party to the prior litigation” … . Here, we agree with Conrad’s contention that, under the circumstances, Ketco, which was clearly in privity with the Ketco employees, is bound by the prior determination of Conrad’s nonliability for the Ketco employees’ alleged injuries. New York State Thruway Auth. v Ketco, Inc., 2021 NY Slip Op 03462, Second Dept 6-2-21

 

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THE FIRST NOTICE OF CLAIM DEMANDED ONLY AN EXTENSION OF THE CONTRACTUAL TIME-LIMIT FOR COMPLETION OF THE PLUMBING CONTRACT; THE PURPORTED AMENDED NOTICE OF CLAIM DEMANDED $2.5 MILLION IN DAMAGES; THE AMENDMENT WAS NOT TECHNICAL IN NATURE AND THEREFORE THE MOTION TO AMEND WAS PROPERLY DENIED (SECOND DEPT).

The Second Department determined plaintiff’s motion for leave to amend its notice of claim was properly denied. The original demanded only an extension of time to complete the plumbing work plaintiff was hired to do by the NYC School Construction Authority. The proposed amended notice of claim included a demand for nearly $2.5 million in damages:

Public Authorities Law § 1744(2) requires the plaintiff to serve a notice of claim upon the defendant within three months after the accrual of such claim … . Under Public Authorities Law § 1744(3), a notice of claim “must set forth in detail . . . (i) the amount of the claim; (ii) a specific and detailed description of the grounds for the claim, relating the dollar amount claimed to the event purportedly giving rise to the claim and indicating how the dollar amount is arrived at; and (iii) the date of the event allegedly underlying the claim.” Here, the original notice of claim filed by the plaintiff failed to comply with Public Authorities Law § 1744(3) … .

The Supreme Court properly denied that branch of the plaintiff’s motion which was for leave to amend the original notice of claim, inter alia, to include damages in the total principal sum of $2,455,740.63. “A notice of claim may be amended only to correct good faith and nonprejudicial technical mistakes, omissions, or defects, not to substantively change the nature of the .. .claim or the theory of liability” . Here, the proposed amendments to the original notice of claim were not technical in nature, and thus, are not permitted as late-filed amendments to a notice of claim … . In addition, the plaintiff failed to explain the inordinate delay in seeking leave to amend the original notice of claim. BG Natl. Plumbing & Heating, Inc. v New York City Sch. Constr. Auth., 2021 NY Slip Op 03435, Second Dept 6-2-21

 

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PLAINTIFF BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE STANDING WITH SUFFICIENT PROOF THAT THE NOTE WAS LOST (PURSUANT TO THE UCC) AND DID NOT PRESENT EVIDENCE SUFFICIENT TO WARRANT CORRECTION OF THE LEGAL DESCRIPTION OF THE PREMISES IN THE MORTGAGE BASED UPON MUTUAL MISTAKE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate the note was lost and did not present sufficient evidence to warrant correction of the legal description of the premises in the mortgage:

“Pursuant to UCC 3-804, which is intended to provide a method of recovery on instruments that are lost, destroyed, or stolen, a plaintiff is required to submit ‘due proof of [the plaintiff’s] ownership, the facts which prevent [its] production of [the note,] and its terms'” … . Here, the copy of the note annexed to the lost note affidavit provided sufficient evidence of the terms of the note … . However, the lost note affidavit failed to sufficiently establish Wells Fargo’s ownership of the note, as it “failed to establish when the note was acquired and failed to provide sufficient facts as to when the search for the note occurred, who conducted the search, or how or when the note was lost” … .Thus, the affidavit failed to sufficiently establish Wells Fargo’s ownership of the note at the time the action was commenced. …

… Supreme Court should have denied that branch of [plaintiff’s] ]motion which was for summary judgment … to reform the mortgage to correct the legal description of the premises. “A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” … . Wells Fargo Bank, N.A. v Zolotnitsky, 2021 NY Slip Op 03482, Second Dept 6-2-21, Second Dept 6-2-21

 

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THE PORTION OF THE NONCOMPETE AGREEMENT WHICH PROHIBITED ENGAGING IN A SIMILAR PRACTICE OF LAW WITHIN 90 MILES OF NYC FOR 36 MONTHS WAS NULL AND VOID; HOWEVER THE PORTION WHICH PROHIBITED THE SOLICITATION OF CLIENTS WAS ENFORCEABLE AND SURVIVED SUMMARY JUDGMENT (FIRST DEPT).

The First Department determined that, although part of the noncompete agreement was null and void, the prohibition of soliciting plaintiff’s clients was enforceable. Therefore defendants’ motion for summary judgment was properly denied.

Plaintiff Feiner & Lavy, P.C., is a law firm that specializes in immigration law. Defendant Gadi Zohar, Esq. was a former associate attorney with plaintiff, and defendant Jihan Asli was its office manager for several years before joining Zohar’s law firm, Zohar Law PLLC. … According to plaintiff, the employment agreement prohibited Zohar from engaging in any business that conducts the same or similar business as plaintiff for a period of 36 months, within 90 miles of New York City or in the Israeli community. The agreement also purported to prohibit Zohar from directly or indirectly soliciting any business from customers or clients of plaintiff for a period of 36 months within 90 miles of New York City or in the Israeli community; or advertise on Israeli/Hebrew websites, TV or newspaper ads. * * *

Rule 5.6(a)(1) of the Rules of Professional Conduct … bars lawyers from “participat[ing] in offering or making a partnership, shareholder, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship,” except under limited circumstances that are not relevant to this appeal. To the extent the noncompete provision in the employment agreement that Zohar executed with plaintiff seeks to prevent him from “conducting business activities that are the same or similar to those of [plaintiff]” within 90 miles of New York City or in the Israeli community, it is void and unenforceable … .

However, the noncompete clause here may be enforceable to the extent that it prohibits Zohar from soliciting plaintiff’s clients … . Feiner & Lavy, P.C. v Zohar, 2021 NY Slip Op 03407, First Dept 6-1-21

 

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