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HUMAN RIGHTS LAW CLAIMS DID NOT ALLEGE DISCRIMINATION; INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS DOES NOT APPLY TO TERMINATION OF AT WILL EMPLOYMENT; WORKERS’ COMPENSATION IS THE EXCLUSIVE REMEDY FOR NEGLIGENCE ACTIONS AGAINST AN EMPLOYER; PUNITIVE DAMAGES NOT AVAILABLE FOR THE EMPLOYMENT DISCRIMINATION OR BREACH OF CONTRACT CAUSES OF ACTION (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that several of plaintiff’s causes of action, as well as claims for punitive damages, should have been dismissed. Plaintiff’s lawsuit stemmed from alleged wrongful conduct in terminating the plaintiff’s employment and evicting him from a work-provided apartment:

… [P]laintiff alleges that he engaged in “protected activity” when his attorney sent a letter to one or more defendants about an altercation between plaintiff and a neighbor. We agree with defendants that … sending the letter did not constitute “protected activity” because the letter did not suggest, much less allege, that anyone had engaged in “unlawful discrimination,” i.e., conduct prohibited by the [Human Rights Law]. …

… [I]t is well established that “[t]ort causes of action alleging intentional infliction of emotional distress . . . ‘cannot be allowed in circumvention of the unavailability of a tort claim for wrongful discharge or the contract rule against liability for discharge of an at-will employee’ ” … . …

With respect to the fifth and eighth causes of action (negligent infliction of emotional distress and negligent hiring, training, and supervision, respectively), it is well established that workers’ compensation benefits are the “exclusive remedy for . . . injuries allegedly caused by the negligence of [a person’s] employer and fellow employee” … . …

Punitive damages are not available for the employment discrimination claims in the complaint … . … [T]he breach of contract claim … does not qualify for punitive damages because plaintiff does not allege that [the] alleged breach of contract was ” ‘aimed at the public generally’ ” … . Miller v National Prop. Mgt. Assoc., Inc., 2021 NY Slip Op 00729, Fourth Dept 2-5-21

 

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THE ESTATE OF A PARTY TO A SEPARATION AGREEMENT MAY SEEK A DOWNWARD MODIFICATION OF THE AGREED MAINTENANCE PAYMENTS; THE DISSENT ARGUED ONLY THE PARTY, NOT THE ESTATE OF THE PARTY, CAN SEEK A DOWNWARD MODIFICATION AND THE MATTER SHOULD BE HANDLED IN PROBATE (FOURTH DEPT).

The Fourth Department, over a dissent, determined that the estate of a party to a separation agreement that was merged but not incorporated into a judgment of divorce could seek a downward modification of the maintenance payments. The dissent argued only the party to the agreement, not the estate of the party, could seek a downward modification based on extreme hardship:

FROM THE DISSENT:

… [T]his Court recently held that plaintiff and defendant’s decedent entered into a Separation and Property Settlement Agreement (settlement agreement), which was incorporated but not merged into a judgment of divorce, whereby decedent agreed to pay lifetime maintenance to plaintiff that continued even in the event of decedent’s death … . * * *

Pursuant to the Domestic Relations Law, “[w]here . . . [a separation agreement] remains in force, no modification of an order or judgment incorporating the terms of said agreement shall be made as to maintenance without a showing of extreme hardship on either party” (§ 236 [B] [9] [b] [1] …). A modification of maintenance based on extreme hardship is thus, personal to the parties who contracted as to the amount of maintenance in the separation agreement and, as noted, a modification of that amount has only been awarded in situations involving personal hardships. In my view, an “estate” can never establish a personal hardship and thus, is never entitled to a downward modification of maintenance. While defendant in this case submitted evidence that the continued payment of the maintenance obligation would pose a hardship on the estate, such a hardship is not upon any party to the settlement agreement. Indeed, it is only a hardship upon the beneficiaries of decedent’s estate who wish to maximize their inheritance. In my view, any difficulty in the estate’s ability to pay the amount of lifetime maintenance agreed to by decedent is an issue that should be raised by the estate in the probate court when determining the reserve funds to be set aside to satisfy the maintenance obligation. Gardner v Zammit, 2021 NY Slip Op 00707, Fourth Dept 2-5-21

 

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SETTLEMENT CONFESSIONS OF JUDGMENT WERE VALID AND SHOULD NOT HAVE BEEN VACATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the settlement confessions of judgment were valid and should not have been vacated. The Second Department noted that vacating a judgment entered by filing a confession of judgment requires bringing a plenary action, which the defendants did not do. But, because Supreme Court reached the merits, the Second Department reversed on the merits:

“Generally, a person seeking to vacate a judgment entered upon the filing of an affidavit of confession of judgment must commence a separate plenary action for that relief”… . Here, as acknowledged by the Supreme Court in its order, the grounds for vacatur relied upon by the defendants do not fall within an exception to the general rule. Accordingly, the court should have denied the defendants’ motion for failure to commence a plenary action … . However, the court did address the merits of the defendants’ motion, and in the interest of judicial economy, we also consider the merits.

“Construction of an unambiguous contract is a matter of law, and the intention of the parties may be gathered from the four corners of the instrument and should be enforced according to its terms” … . Here, contrary to the Supreme Court’s determination, there is no language in the merchant agreements limiting the plaintiff’s authority to file the settlement confessions of judgment. Moreover, the settlement agreement and settlement confessions of judgment clearly and unambiguously permitted the plaintiff to file the settlement confessions of judgment in the event the defendants breached the terms of the settlement agreement. Ace Funding Source, LLC v Myka Cellars, Inc., 2021 NY Slip Op 00538, Second Dept 2-3-21

 

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UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT PLAINTIFF MUST ARBITRATE HIS RACIAL DISCRIMINATION CLAIMS; AFTER THE UNION REFUSED TO ARBITRATE THE CLAIMS PLAINTIFF BROUGHT THE INSTANT HUMAN RIGHTS LAW CAUSES OF ACTION; THE COMPLAINT WAS STAYED PENDING ARBITRATION (SECOND DEPT).

The Second Department, in a comprehensive opinion by Justice Christopher, determined plaintiff’s racial discrimination claims were subject to mandatory arbitration under the controlling collective bargaining agreement (CBA). The union had declined to pursue the arbitration of the discrimination claims and plaintiff then commenced the instant action pursuant to the NYS and NYC Human Rights Law. The opinion is to detailed to fairly summarize here. The plaintiff’s complaint was stayed pending arbitration:

“[A]rbitration must be preferred unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute” … . An agreement to arbitrate must be “clear, explicit and unequivocal” … . “Arbitration is a matter of contract, and arbitration clauses, which are subject to ordinary principles of contract interpretation, must be enforced according to their terms” … . * * *

… [I]n order for the plaintiff to be required to arbitrate his employment discrimination claims, the CBA must “clearly and unmistakably” waive the plaintiff’s right to proceed in a judicial forum … . Here, the mandatory arbitration clause “clearly and unmistakably” waives the plaintiff’s right to proceed in a judicial forum. It explicitly references the employment discrimination statutes that the plaintiff has alleged were violated, and states that “[a]ll such claims shall be subject to the grievance and arbitration procedure . . . as the sole and exclusive remedy for violations.” * * *

The Supreme Court’s determination to grant that branch of the defendants’ motion which was, in effect, pursuant to CPLR 3211(a) to dismiss the complaint was improper. “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” … . However, upon granting that branch of the defendants’ motion which was to compel arbitration pursuant to CPLR 7503(a), the court should have stayed the action …, the order granting a motion to compel “shall operate to stay a pending . . . action.” Wilson v PBM, LLC, 2021 NY Slip Op 00593, Second Dept 2-3-21

 

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A PLENARY ACTION WAS REQUIRED TO SET ASIDE THE STIPULATION OF SETTLEMENT WHICH WAS INCORPORATED BUT NOT MERGED INTO THE JUDGMENT OF DIVORCE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court did not have the authority to declare certain portions of the stipulation of settlement invalid. A plenary action was necessary:

… [A] plenary action was required to seek to set aside the stipulation of settlement, which was incorporated but not merged into the judgment of divorce … . There are exceptions to this general rule, such as where reformation of a separation agreement is sought to conform the agreement with the intent of the parties … , or where the matrimonial action is still pending and was not terminated with entry of a judgment … , or in certain circumstances where enforcement of child support is sought … . None of these exceptions are applicable here.

In view of the foregoing, those branches of the plaintiff’s cross motion which were to vacate the provisions of the stipulation of settlement concerning equitable distribution and maintenance should have been denied. Jagassar v Deonarine, 2021 NY Slip Op 00549, Second Dept 2-3-21

 

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DAMAGES FOR EMOTIONAL DISTRESS ARE NOT AVAILABLE FOR BREACH OF CONTRACT; INSURANCE LAW 2601 DOES NOT CREATE A PRIVATE RIGHT OF ACTION; A GENERAL BUSINESS LAW 349 DECEPTIVE BUSINESS PRACTICES CAUSE OF ACTION WILL SUPPORT A CLAIM FOR PUNITIVE DAMAGES (SECOND DEPT).

The Second Department, modifying Supreme Court, determined emotional-distress damages are not available for breach of contract and Insurance Law 2601 does not create a private right of action. Plaintiff’s property was damaged by Hurricane Sandy. Plaintiff and defendant insurers reached a settlement agreement in which defendants agreed to pay plaintiff $1.6 million within 21 days. Defendants paid only about $400,000, claiming that the over $1 million already paid, together with the $400,000, satisfied the $1.6 million agreed to. Supreme Court and the Second Department disagreed finding that the settlement agreement was unambiguous. Plaintiff was therefore entitled to summary judgment on the breach of contract cause of action (the defendants’ mutual and unilateral mistake arguments were rejected). The deceptive business practices (General Business Law 349) cause of action, together with the related punitive damages claim, survived defendants’ motion to dismiss. With respect to damages for emotional distress, the court wrote:

… Supreme Court should have granted that branch of the defendants’ cross motion which was to dismiss the plaintiff’s demand for damages for emotional distress. A breach of a contractual duty does not create a right of recovery for damages for emotional distress … . Here, the plaintiff alleges no facts giving rise to a relationship between him and the defendants apart from the insurance contract and settlement agreement. An alleged breach of the implied covenant of good faith and fair dealing does not support an award of damages for emotional distress … . Inasmuch as Insurance Law § 2601 serves to regulate insurers’ performance of their contractual obligations rather than to create a separate duty of care and does not give rise to a private cause of action … , the defendants’ alleged violation of their obligations under Insurance Law § 2601 does not support a claim for damages for emotional distress. Perlbinder v Vigilant Ins. Co., 2021 NY Slip Op 00439, Second Dept 1-27-21

 

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THE EXECUTIVE ORDERS AND LEGISLATION PROHIBITING EVICTIONS DURING THE PANDEMIC APPLIED TO A HOLDOVER TENANT WHO HAD ENTERED AN AGREEMENT TO VACATE THE APARTMENT (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Mulvey, determined the Executive Orders and legislation prohibiting evictions during the COVID pandemic precluded the eviction of a holdover tenant based upon an agreement by the tenant to vacate the apartment:

On August 27, 2020, petitioner commenced a summary eviction proceeding seeking a warrant of eviction to remove respondents from the premises (see RPAPL 711 [1]). At an appearance before Supreme Court on September 17, 2020, the parties, with the assistance of counsel, reached an agreement in which respondents agreed to vacate the premises on or before October 2, 2020. Pursuant to the agreement, the court issued a warrant of eviction, effective October 3, 2020, to be executed if respondents failed to vacate. Respondents remained on the premises and, on October 5, 2020, the Sullivan County Sheriff’s Office, in accordance with the warrant, served respondents a 14-day notice indicating that the eviction would take place on October 21, 2020. After counsel for respondent Kaia Humphrey (hereinafter respondent) contacted the County Attorney’s office regarding the suspension of evictions via a new executive order issued by Governor Andrew Cuomo, petitioner moved for an order seeking, among other things, enforcement of the parties’ agreement to vacate and of the warrant of eviction. Following a virtual appearance on October 20, 2020, Supreme Court granted petitioner’s motion and ordered enforcement of the warrant of eviction. Respondent appeals. * * *

Because these executive orders prohibit enforcement of residential evictions, without any exceptions for holdover proceedings or warrants issued based on stipulations, Supreme Court was precluded from ordering enforcement of the warrant to evict respondents. Further executive orders have extended the stay on enforcements to December 3, 2020 … . …

Furthermore, on December 28, 2020, the Legislature passed, and the Governor signed, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 … . That act, which was effective immediately … , allows tenants to file a hardship declaration, which will prevent an eviction until at least May 1, 2021 … . Matter of Cabrera v Humphrey, 2021 NY Slip Op 00358, Third Dept 1-21-21

 

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THE TIME-OF-THE-ESSENCE DATE WAS PROPERLY SET; THE BUYER WAS NOT ABLE TO CLOSE ON THAT DATE: DEFENDANTS-SELLERS ENTITLED TO KEEP THE DOWNPAYMENT (SECOND DEPT).

The Second Department determined defendants-sellers were entitled to retain the downpayment after the buyer was not ready, willing and able to close on the time-of-the-essence date:

… [T]he defendants established, prima facie, that they effectively made September 3, 2014, a time of the essence closing date, and that, although they were ready, willing, and able to close on September 3, 2014, the plaintiff was not ready, willing, and able to close on that date  … . The defendants also established, prima facie, that the plaintiff was in default by demonstrating that the plaintiff did not appear at the closing and admitted that he did not have the funds to close … . In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, we agree with the Supreme Court’s determination to grant those branches of the defendants’ motion which were for summary judgment dismissing the complaint and to cancel the notice of pendency.

A buyer “who defaults on a real estate contract without lawful excuse, cannot recover the down payment,” at least where, as here, that down payment represents 10% or less of the contract price … . Ashkenazi v Miller, 2021 NY Slip Op 00140, Second Dept 1-13-21

 

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AN ANSWER TO AN AMBIGUOUS QUESTION ON AN APPLICATION FOR INSURANCE COVERAGE IS NOT A MATERIAL MISREPRESENTATION; THEREFORE THE ANSWER DID NOT VOID THE POLICY WHICH REMAINS IN FULL FORCE AND EFFECT (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined a question in the application for insurance coverage was ambiguous. Therefore the answer to the question was not a material misrepresentation and the policy remains in full force and effect:

A misrepresentation in an insurance application is material, voiding the policy ab initio, if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium … . Even an innocent misrepresentation is sufficient to void the policy … . However, “an answer to an ambiguous question on an insurance application cannot be the basis for a claim of misrepresentation” in procuring insurance … .

Here, on defendants-respondents’ insurance application submitted to plaintiff, Question 9, which asked “Any uncorrected code violations?” is ambiguous. While the plain language asks whether there are “any uncorrected fire code violations” and not uncorrected fire code notices of violation, different witnesses provided five different understandings as to what the question was asking. In any event, this Court has used the term “violation” to mean the issuance of a citation … . Indeed, the question is not even posed as a complete sentence but a sentence fragment lacking a verb, which could have clarified the question. Starr Indem. & Liab. Co. v Monte Carlo, LLC, 2021 NY Slip Op 00044, First Dept 1-5-21

 

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DEFENDANT INSURER DID NOT ELIMINATE ALL QUESTIONS OF FACT ABOUT WHETHER PLAINTIFFS (INSUREDS) VIOLATED THE COOPERATION CLAUSE IN THE POLICY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant insurer did not eliminate all questions of fact whether the plaintiffs (insureds) violated the cooperation clause in the policy:

“An unexcused and willful refusal to comply with disclosure requirements in an insurance policy is a material breach of the cooperation clause and precludes recovery on a claim. Compliance with such a clause is a condition precedent to coverage, properly addressed by the court” … . “In order to establish breach of a cooperation clause, the insurer must show that the insured engaged in an unreasonable and willful pattern of refusing to answer material and relevant questions or to supply material and relevant documents” … .

Here, the defendant failed to eliminate all triable issues of fact as to whether the plaintiffs breached the cooperation clause of the policy. Jahangir v Tri-State Consumer Ins. Co., 2020 NY Slip Op 08049, Second Dept 12-30-20

 

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