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EVEN THOUGH PLAINTIFF MAY HAVE ACCEPTED DEFECTIVE GOODS WITHIN THE MEANING OF THE UCC, THE UCC PROVIDES REMEDIES, INCLUDING THE RIGHT TO BE MADE WHOLE AND THE RIGHT TO REVOKE THE ACCEPTANCE; PLAINTIFF’S VERDICT SHOULD NOT HAVE BEEN SET ASIDE (SECOND DEPT). ​

The Second Department, in a full-fledged opinion by Justice Christopher, reversing Supreme Court, determined the verdict should not have been set aside in this consumer law case. Plaintiff ordered kitchen cabinets. When they arrived one box was opened by defendant-seller’s representative to confirm the color. Plaintiff then signed a “Completion Certificate” which indicated the cabinets had been found satisfactory. In fact the cabinets were not satisfactory as revealed when they were installed. The Second Department noted that, although under the UCC plaintiff, based on the “Completion Certificate,” could not reject the goods, the UCC provides that she could be made whole, and, in fact, could revoke her acceptance, in addition to other available remedies. Therefore plaintiff’s verdict awarding $30,000 should not have been set aside:

“Acceptance of goods by the buyer precludes rejection of the goods accepted” (UCC 2-607[2]; see Comment 2). However, “acceptance does not of itself impair any other remedy provided by [article 2 of the UCC] for non-conformity” (UCC 2-607[2] …). “Thus, ‘acceptance leaves unimpaired the buyer’s right to be made whole, and that right can be exercised by the buyer not only by way of cross-claim for damages, but also by way of recoupment in diminution or extinction of the [purchase] price'” … . …

Moreover, after the buyer has accepted allegedly non-conforming goods, the buyer may revoke acceptance of the goods under certain limited circumstances and “obtain the same remedies as are available upon rejection” … . …

… [E]ven if the jury found that the plaintiff did not properly revoke her acceptance of the cabinets, the jury could have found that the plaintiff was entitled to other remedies pursuant to UCC 2-607 … .

… [T]he jury’s verdict that … the defendant breached their contract with the plaintiff, breached the implied warranty of fitness, and that the plaintiff was entitled to damages in the amount of $30,000 was supported by a valid line of reasoning and permissible inferences from the evidence at trial … . Campbell v Bradco Supply Co., 2021 NY Slip Op 01745, Second Dept 3-24-21

 

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CPLR 7515, ENACTED IN 2018, DOES NOT APPLY RETROACTIVELY TO PROHIBIT MANDATORY ARBITRATION OF SEXUAL HARASSMENT CLAIMS (FIRST DEPT).

The First Department, reversing Supreme Court, determined CPLR 7515, enacted in 2018, should not be applied retroactively to prohibit arbitration of a sexual harassment claim:

The provisions of CPLR 7515 relied on by plaintiff are not retroactively applicable to arbitration agreements, like the one at issue, that were entered into preceding the enactment of the law in 2018, so that plaintiff’s argument that this law prohibits arbitration of her claims is unavailing … . Newton v LVMH Moet Hennessy Louis Vuitton Inc., 2021 NY Slip Op 01558, First Dept 3-18-21

 

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PLAINTIFF SHOULD NOT HAVE BEEN ALLOWED TO AMEND THE BILL OF PARTICULARS AFTER DISCOVERY WAS CLOSED TO RAISE A NEW THEORY OF LIABILITY STEMMING FROM FACTS NOT PREVIOUSLY ALLEGED; DEFENDANT OUT-OF-POSSESSION LANDLORD DEMONSTRATED THE LEASE DID NOT REQUIRE THE LANDLORD TO MAINTAIN THE DOOR WHICH PLAINTIFF ALLEGED CLOSED ON HER HAND (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to amend the bill of particulars after discovery was complete should not have been granted and defendant out-of-possession landlord’s motion for summary judgment should have been granted. Plaintiff alleged the door of a retail store closed on her hand as she was pushing a cart with merchandise through the doorway. She alleged the door was not properly maintained. After discovery she sought to amend her bill of particulars to allege there was a crack in the floor which caused the cart to get stuck as she was attempting to pass through the doorway:

“While leave to amend a bill of particulars is ordinarily to be freely given in the absence of prejudice or surprise” … , “once discovery has been completed and the case has been certified as ready for trial, [a] party will not be permitted to amend the bill of particulars except upon a showing of special and extraordinary circumstances” … . In such a case, leave may properly be granted “where the plaintiff makes a showing of merit, and the amendment involves no new factual allegations, raises no new theories of liability, and causes no prejudice to the defendant” … . However “where a motion for leave to amend a bill of particulars alleging new theories of liability not raised in the complaint or the original bill is made on the eve of trial, leave of court is required, and judicial discretion should be exercised sparingly, and should be discreet, circumspect, prudent, and cautious” … . “In exercising its discretion, the court should consider how long the party seeking the amendment was aware of the facts upon which the motion was predicated, whether a reasonable excuse for the delay was offered, and whether prejudice resulted therefrom” … .

… [T]he proposed amendment to the bill of particulars raised an entirely new theory of liability well after discovery had been completed, and was advanced only in response to the defendant’s motion for summary judgment. Moreover, the plaintiff failed to proffer a reasonable excuse for her delay in seeking the amendment … , and the proposed amendment was prejudicial to the defendant … . * * *

… [T]he defendant [out-of-possession landlord] demonstrated its … entitlement to summary judgment dismissing the complaint by submitting, inter alia, the lease, which established that the tenant enjoyed complete and exclusive possession of the demised premises at the time of the plaintiff’s injury and that the defendant was not responsible for maintenance of the door. King v Marwest, LLC, 2021 NY Slip Op 08225, Second Dept 3-17-20

 

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THE ELEVATOR COMPANY, BY CONTRACT, HAD COMPLETE RESPONSIBILITY FOR ELEVATOR MAINTENANCE; THEREFORE THE BUILDING OWNER AND MANAGER WERE ENTITLED TO SUMMARY JUDGMENT DISMISSING THE COMPLAINT AGAINST THEM IN THIS RES IPSA LOQUITUR ELEVATOR-MALFUNCTION-ACCIDENT CASE (FIRST DEPT).

The First Department, recalling and vacating a decision in this case released on December 8, 2020, determined the building owner (1067 Fifth) and manager (Elliman) did not have constructive or action notice of the defect in the elevator door which allegedly caused it to close on plaintiff’s shoulder, pinning her while the elevator descended. However liability may be demonstrated under the res ipsa loquitur theory. But because the building owner and manager had, by contract, relinquished all control over the maintenance of the elevator to defendant elevator company, American, their motions for summary judgment were granted:

… [U]nder the terms of its contract with 1067 Fifth, American was responsible for providing “full comprehensive maintenance and repair services” for the elevators, which included maintaining “[t]he entire vertical transportation system,” including “all engineering, material, labor, testing, and inspections needed to achieve work specified by the contract.” Further, under the terms of the contract, maintenance “include[s], but is not limited to, preventive services, emergency callback services, inspection and testing services, repair and/or direct replacement component renewal procedures.” The contract also provided for American to “schedule [ ] systematic examinations, adjustments, cleaning and lubrication of all machinery, machinery spaces, hoistways and pits,” and to do all “repairs, renewals, and replacements . . . as soon as scheduled or other examinations reveal the necessity of the same.” Further, American agreed to provide emergency call-back service 24 hours a day, 7 days a week. Given such broad contractual responsibilities, American’s contract can be said to have “entirely displaced” the responsibility of 1067 Fifth and Elliman to maintain the safety of the building’s elevators, which gave rise to a duty owed directly to plaintiff by American (see Espinal v Melville Snow Contrs., 98 NY2d 136, 140 [2002]). Sanchez v 1067 Fifth Ave. Corp., 2021 NY Slip Op 01522, First Dept 3-16-21

 

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ALTHOUGH THE PUBLIC HEALTH LAW GAVE THE DECEDENT’S DAUGHTER THE AUTHORITY TO EXECUTE THE NURSING HOME’S ADMISSION AGREEMENT ON BEHALF OF HER FATHER, THE PUBLIC HEALTH LAW DID NOT GIVE HER THE AUTHORITY TO SIGN A BINDING ARBITRATION AGREEMENT ON HER FATHER’S BEHALF; THEREFORE THE DECEDENT’S WIFE WAS NOT BOUND BY THE ARBITRATION AGREEMENT IN HER SUIT AGAINST THE NURSING HOME (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff wife’s adult daughter had the authority, pursuant to the Public Health Law, to execute the nursing home’s admission agreement on behalf of plaintiff’s husband (her father), who was deemed incapable of making health-care related decisions. In addition to the admission agreement, plaintiff’s daughter signed a binding arbitration agreement on her father’s behalf. After plaintiff’s husband died, plaintiff sued the nursing home which asserted that that the matter was subject to the arbitration agreement. The First Department held that, pursuant to the Public Health Law, plaintiff’s daughter had the authority to sign the admission agreement, because it related to her father’s health care, but she did not have the authority to sign the arbitration agreement:

The authority of the decedent’s daughter to act as a “surrogate” decision-maker pursuant to PHL 2994-d at the time decedent was admitted to JHL was limited to making decisions regarding “[a]ny treatment, service, or procedure to diagnose or treat an individual’s physical or mental condition” (PHL 2994-a[12]). Although she had authority, pursuant to PHL 2994-d, to execute the Agreement for purposes of admitting her father into the facility for health care treatment, she did not have the authority to execute the Binding Arbitration Agreement on his behalf. Such agreement was entirely optional and had no bearing on the father’s health care. Accordingly, it is entirely outside of the purview of surrogate decision-maker’s authority set forth in PHL 2994-d. Gayle v Regeis Care Ctr., LLC, 2021 NY Slip Op 01197, First Dept 2-25-21

 

FORBEARANCE CAN BE ADEQUATE CONSIDERATION CREATING A VALID CONTRACT (FIRST DEPT)

The First Department, reversing (modifying) Supreme Court, in a full-fledged opinion by Justice Gonzalez, determined summary judgment should not have been awarded dismissing the breach of contract cause of action in the multi-million dollar lawsuit involving Russian oil and gas. The opinion is too detailed to summarize here. On the breach of contract cause of action, the court noted that forbearance can be adequate consideration creating a valid contract:

“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other” … . Indeed, “any basic contemporary definition would include the idea that [consideration] consists of either a benefit to the promisor or a detriment to the promisee” … . “The slightest consideration is sufficient to support the most onerous obligation” … . …

When plaintiff first agreed to join defendants in the oil business, he allegedly did so as a one-third partner. According to the Undisputed Statement of Facts, the parties disputed their respective obligations and “discussed [for several years] options for compensating [plaintiff] for the stock and cash he caused to be transferred.” In 2001, when the parties drafted the Investment Agreement, plaintiff agreed to a 15% stake and a 15% share of the profits, a marked reduction in what he would have expected to receive as an alleged one-third partner. Plaintiff also agreed to forego any right to profits pre-dating October 2001. …

The record thus suggests … that the 2001 Investment Agreement was a binding contract supported by plaintiff’s forbearance. Notably, … defendants began to perform under the agreement … , … suggesting that it was a binding accord for which plaintiff’s forbearance had supplied consideration. Lebedev v Blavatnik, 2021 NY Slip Op 01002, First Dept 2-16-21

 

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PETITIONERS WERE ENTITLED TO SUMMARY DETERMINATION IN THIS EXECUTIVE LAW 63 SPECIAL PROCEEDING SOUNDING IN FRAUD STEMMING FROM UNCONSCIONABLE EQUIPMENT FINANCE LEASES AND OPPRESSIVE DEBT COLLECTION PRACTICES; RESPONDENTS’ REQUEST FOR FURTHER DISCOVERY, WHICH IS DISFAVORED IN SPECIAL PROCEEDINGS, WAS PROPERLY DENIED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Webber, determined the respondents in this Executive Law 63 special proceeding were not entitled to additional discovery, including depositions, and petitioners were entitled to summary determination in this fraud and deceptive business practices action. The petition, brought by the NYS Attorney General, alleged respondents engaged in fraud and deception in having small businesses sign unconscionable equipment finance leases (EFLs) for credit card processing equipment leading to oppressive debt collection practices. The court noted that discovery in a special proceeding is disfavored and is permitted only on leave of court upon a showing of “ample need:”

Supreme Court correctly found that petitioners demonstrated respondents’ liability under Executive Law § 63(12). Under Executive Law § 63(12), “the test for fraud is whether the targeted act has the capacity or tendency to deceive or creates [*5]an atmosphere conducive to fraud” … . “Executive Law § 63(12) was meant to protect not only the average consumer, but also the ignorant, the unthinking, and the credulous” … . “[P]ublic reports and lawsuits of alleged fraud are sufficient to put a plaintiff on inquiry notice of fraud” … . * * *

We held in our prior decision that allegations that the [respondents] created legal obligations through misrepresentations and fraud and then attempted to enforce those obligations through abusive pre-litigation and litigation practices sufficiently demonstrated that the [respondents’] debt collection activities and procuring of default judgments were “objectively baseless” … . Matter of People of the State of New York v Northern Leasing Sys., Inc., 2021 NY Slip Op 00914, First Dept 2-11-21

 

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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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