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ELEVATOR MAINTENANCE COMPANY DID NOT DISPLACE THE BUILDING OWNER’S AND MANAGER’S DUTY TO KEEP THE ELEVATORS SAFE AND DID NOT LAUNCH AN INSTRUMENT OF HARM; IT’S MOTION FOR SUMMARY JUDGMENT IN THIS ELEVATOR ACCIDENT CASE SHOULD HAVE BEEN GRANTED; A VIOLATION OF THE NYC BUILDING CODE IS NOT NEGLIGENCE PER SE (FIRST DEPT).

The First Department, modifying Supreme Court in this elevator accident case, noted that violation of the NYC Building Code is some evidence of negligence but not negligence per se, and held that Dunwell’s (the elevator maintenance company’s) motion for summary judgment should have been granted. Dunwell had demonstrated two Espinal factors did not apply (it did not displace the building defendants’ obligation to keep the elevators safe and it did not launch an instrument of harm, i.e., it did not exacerbate or create the defects in the elevator):

Dunwell’s motion for summary judgment dismissing all claims against it should be granted. Dunwell cannot be held liable to plaintiff, because it did not owe the decedent any duty. There is no evidence in the record that Dunwell created or exacerbated any of the alleged elevator defects, including the missing door rollers and link arms, even if it were found to have wrongfully failed to diagnose or correct them (see Espinal v Melville Snow Contrs., 98 NY2d 136, 140, 142-143 [2002] … ). Moreover, Dunwell in fact did recommend that these parts be replaced, but its proposal was not accepted by the Building Defendants, and the governing maintenance agreement did not allow Dunwell to replace them without authorization … . The maintenance agreement was not comprehensive and exclusive and therefore did not displace the Building Defendants’ obligations to maintain the elevators in a safe condition … . Plaintiff does not argue that the decedent detrimentally relied on Dunwell’s continued performance of its duties … . Baez v 1749 Grand Concourse LLC, 2019 NY Slip Op 08948, First Dept 12-12-19

 

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IN THIS ELEVATOR ACCIDENT CASE, ONE DEFENDANT FAILED TO DEMONSTRATE IT HAD NOT DISPLACED THE BUILDING OWNER’S DUTY TO KEEP THE PREMISES SAFE, AND ANOTHER DEFENDANT DEMONSTRATED IT DID NOT LAUNCH AN INSTRUMENT OF HARM; FAILING TO MAKE DANGEROUS CONDITION SAFER DOES NOT EQUATE WITH LAUNCHING AN INSTRUMENT OF HARM (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined that one defendant in this elevator accident case, Cooper Square, did not demonstrate that it did not displace the building owner’s duty to keep the premises safe, and another defendant, PS Marcato [elevator company] , sufficiently demonstrated it did not launch an instrument of harm.  The court noted that PS Marcato’s failure to make the elevator safer did not equate to launching and instrument of harm:

Cooper Square failed to establish prima facie that it did not displace [the building owner’s] duty to maintain the premises in a reasonably safe condition. Its management agreement with [the owner] authorized Cooper Square to make repairs or alterations to the premises and to purchase supplies and materials for the building. Cooper Square also agreed to “directly supervise the work of, hire and discharge all maintenance and security personnel,” and was “clothed with such general authority and powers as may be necessary or advisable to carry out the spirit and intent of th[e] Agreement.” An amendment to the management agreement recognized that Cooper Square “ha[d] been delegated significant authority and discretion in the operation of the Building under th[e] Agreement.” * * *

PS Marcato, which inspected and made repairs to the elevator before plaintiff was injured by it, established prima facie that it did not create or exacerbate the dilapidated condition of the elevator, and therefore did not launch a force or instrument of harm (see Espinal, 98 NY2d at 142-143 …). While the record suggests that PS Marcato knew that the elevator was in disrepair and being tampered with, it “did nothing more than neglect to make the [elevator] safer — as opposed to less safe — than it was before” the inspection and repairs were made … . Ileiwat v PS Marcato El. Co., Inc., 2019 NY Slip Op 08946, First Dept 12-12-19

 

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DEFENDANT ASKED PLAINTIFF TO WIRE THE LOAN PROCEEDS TO A BANK IN NEW YORK; NEW YORK THEREFORE HAD JURISDICTION, PURSUANT TO CPLR 302, OVER THIS BREACH OF CONTRACT ACTION STEMMING FROM DEFENDANT’S ALLEGED FAILURE TO REPAY THE LOAN (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that defendant’s motion to dismiss for lack of personal jurisdiction should not have been granted. Plaintiff demonstrated defendant had a bank account in a New York bank to which the funds defendant borrowed from plaintiff were wired. Plaintiff alleged defendant breached a contract requiring the repayment of the loan:

CPLR 302(a)(1) provides that “a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state.” “The CPLR 302(a)(1) jurisdictional inquiry is twofold: under the first prong the defendant must have conducted sufficient activities to have transacted business in the state, and under the second prong, the claims must arise from the transactions” … . The sufficient activities requirement is satisfied “so long as the defendant’s activities here were purposeful” … . “Purposeful activities are those with which a defendant, through volitional acts, avails [himself or herself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws” … .

“To satisfy the second prong of CPLR 302(a)(1) that the cause of action arise from the contacts with New York, there must be an articulable nexus . . . or substantial relationship . . . between the business transaction and the claim asserted” … . “This inquiry is relatively permissive, and does not require causation, but merely a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former, regardless of the ultimate merits of the claim” … . “CPLR 302(a)(1) is a single act statute and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted” … . Skutnik v Messina, 2019 NY Slip Op 08725, Second Dept 12-4-19

 

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ALTHOUGH THE CONTRACT WAS NEVER SIGNED, IT IS CLEAR THE PARTIES INTENDED TO BE BOUND BY IT (FIRST DEPT)

The First Department noted that a contract need not be signed to be valid. Here the contract was a “termination agreement” which addressed a real estate broker’s entitlement to commissions for sales pending upon termination:

It is true that neither party signed the Termination Agreement. However, where the evidence supports a finding of intent to be bound, a contract will be unenforceable for lack of signature only if the parties “positive[ly] agree[d] that it should not be binding until so reduced to writing and formally executed” … . While the Termination Agreement contained a counterparts clause and signature lines indicating that it could be accepted by signature and countersignature, it did not positively state that the parties could assent only by signing. By contrast, the Engagement Agreement, also drafted by defendants, expressly provided that “in unsigned form [it] does not become an offer of any kind and does not become capable of acceptance.” Thus, defendants knew how to draft an agreement that could be accepted only by signature, but they did not so draft the Termination Agreement. The evidence, i.e., the parties’ months-long email exchanges, during which plaintiff submitted his list of pending transactions, defendants drafted the Termination Agreement and forwarded it to plaintiff, and the parties disagreed about the extent to which transactions listed by plaintiff were covered, supports a finding that the parties intended to be bound by the Termination Agreement, despite their failure to sign it … . Lerner v Newmark & Co. Real Estate, Inc., 2019 NY Slip Op 08611, First Dept 12-3-19

 

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PLAINTIFF TRUSTEE’S RESIDENCE IS CALIFORNIA AND THE CAUSES OF ACTION IN THIS RESIDENTIAL-MORTGAGE-BACKED-SECURITIES BREACH OF CONTRACT ACTION THEREFORE ACCRUED IN CALIFORNIA; UNDER NEW YORK’S BORROWING STATUTE, CPLR 202, THE ACTIONS MUST BE DISMISSED BECAUSE THEY ARE UNTIMELY UNDER CALIFORNIA LAW (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a two-judge dissent, determined that California, the residence of the plaintiff, here a residential-mortgage-backed-securities trustee, was where the breach of contract action accrued, not New York. Therefore, pursuant to CPLR 202, New York’s borrowing statute, the action must be timely under both California and New York law. The action was not timely under California law which has a four-year statute for breach of contract:

Defendants argued that as a resident of California, plaintiff suffered economic injury in California, and therefore plaintiff’s causes of action accrued in California for the purposes of CPLR 202. Plaintiff conceded that it was a resident of California. It argued, however, that instead of applying the general rule that an economic injury is suffered where the plaintiff resides to determine where the cause of action accrued, the court should apply a multi-factor analysis. Plaintiff asserted that because it was suing in a representative capacity on behalf of the trusts, it did not suffer real economic loss, and its residence was irrelevant, or at least not the primary consideration, for determining the place of accrual. * * *

We reaffirm that “a cause of action accrues at the time and in the place of the injury” … . Although courts may, in appropriate cases, conclude that an economic loss was sustained in a place other than where the plaintiff resides, we decline to apply the multi-factor analysis that plaintiff proposes. * * *

… [W]e conclude that plaintiff’s residence applies to determine the place of injury in this case. As trustee, plaintiff is authorized to enforce, on behalf of the certificateholders, the representations and warranties in the relevant agreements. Accordingly, it is appropriate for us to look to plaintiff’s residence as the place where the economic injury was sustained and, consequently, where plaintiff’s causes of action accrued for purposes of CPLR 202. Deutsche Bank Natl. Trust Co. v Barclays Bank PLC, 2019 NY Slip Op 08519, Ct App 11-25-19

 

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DEFENDANTS DID NOT DEMONSTRATE THAT THE DOCTRINE OF ECONOMIC DISTRESS VOIDED THE PURCHASE AGREEMENT; DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT IN THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined that the criteria for the doctrine of economic duress to void a contract were not met by the defendants. The defendants had entered an agreement to purchase four McDonald’s restaurants from plaintiffs. The defendants alleged they agreed to an amendment of the contract because of the actions of the plaintiffs which amounted to economic distress:

A party seeking to void a contract on the basis of economic duress must show that he or she was compelled to agree to it because of a wrongful threat precluding the exercise of his or her free will … . “The existence of economic duress is demonstrated by proof that one party to a contract has threatened to breach the agreement by withholding performance unless the other party agrees to some further demand” … . A mere threat to breach a contract, however, does not amount to economic duress if the party who has been threatened can obtain performance of the contract from another source and pursue normal legal remedies for a breach of contract … . …

As the parties relying on economic duress, defendants bore the burden of proving that the agreement could not have been performed by another party. Defendants, however, failed to tender any proof in this regard. …

The record also fails to establish that other legal remedies were not available to defendants. Indeed, [one defendant] testified that, before agreeing to the amendment, [defendants]  weighed whether to take possession of the restaurants and then sue to have the original agreement enforced or not to take possession and then sue plaintiffs for specific performance. The fact that neither of those options was ultimately desirable does not mean that defendants did not have available legal remedies. Because defendants could resort to legal recourse, they cannot claim economic duress … . CRG at Arnot Mall, Inc. v Feehan, 2019 NY Slip Op 08467, Third Dept 11-21-19

 

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THE TERMS OF THE CONTRACT CONTROL WHETHER THE COURT OR THE ARBITRATOR DETERMINES THE MATTER IS ARBITRABLE; HERE THAT DETERMINATION HAS BEEN DELEGATED TO THE ARBITRATOR BY THE CONTRACT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, determined that the contract controls and the arbitrator, not the court, must rule on whether the matter is arbitrable:

The motion court correctly declined to enjoin the arbitration proceeding filed by respondent Baltimore Orioles with the American Arbitration Association [AAA]. The duty to arbitrate arises from contract … .

Pursuant to section 19.3 of the partnership agreement, the Orioles and the Nationals agreed to arbitrate “any disputes” before the AAA when MLB has … a financial interest, and to do so pursuant to AAA Commercial Rules. Those rules include Rule 7(a), pursuant to which an “arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”

These provisions evince a clear and unmistakable intent to delegate the threshold arbitrability question of whether MLB had a financial interest in the Nationals to the AAA … . …

“When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract. In those circumstances, a court possesses no power to decide the arbitrability issue. That is true even if the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless” … . Matter of WN Partner, LLC v Baltimore Orioles Ltd. Partnership, 2019 NY Slip Op 08383, First Dept 11-19-19

 

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TO BE ENFORCEABLE, A WAIVER OF APPEAL MUST BE SUPPORTED BY A SENTENCING COMMITMENT OR OTHER CONSIDERATION (FOURTH DEPT).

The Fourth Department noted that a waiver of appeal, to be enforceable, must be supported by a sentence promise as consideration:

Defendant correctly argues in his main brief that his waiver of the right to appeal is invalid because he pleaded guilty to the sole count of the indictment ” without receiving a sentencing commitment or any other consideration’ ” … . County Court’s promise to consider imposing a sentence below the statutory maximum merely restated its preexisting statutory and common-law obligation to impose an appropriate legal sentence … , and we agree with defendant that such a promise is the equivalent of no promise at all and cannot supply the consideration necessary to enforce a waiver of the right to appeal . As the Second Circuit explained in invalidating a waiver of the right to appeal under similar circumstances… , such an illusory promise is not consideration for a waiver because it affords the defendant “no benefit . . . beyond what he would have gotten by pleading guilty without an agreement” … . People v Schmidinger, 2019 NY Slip Op 08324, Fourth Dept 11-15-19

 

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THE BANK DID NOT PRESENT SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE OF DEFAULT PROVISIONS OF THE MORTGAGE; THE BANK NEED NOT AFFIRMATIVELY ADDRESS COMPLIANCE WITH RPAPL 1304 NOTICE REQUIREMENTS IF THE ISSUE IS NOT RAISED IN THE ANSWER; REPLY PAPERS CAN PRESENT EVIDENCE FOR THE FIRST TIME IN RESPONSE TO ISSUES FIRST RAISED IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT; BUT REPLY PAPERS MAY NOT PRESENT, FOR THE FIRST TIME, EVIDENCE ADDRESSING AN ISSUE RAISED IN THE DEFENDANT’S ANSWER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank (Aurora) did not provide sufficient proof of providing notice of default to defendants. The Second Department noted that the bank need not affirmatively prove compliance with the notice requirements of RPAPL 1304 because the issue was not raised in defendant’s answer. The court also noted that evidence submitted in reply papers addressing matters raised for the first time in opposition to plaintiff’s motion for summary judgment can be considered, but evidence submitted for the first time in reply papers addressing issues which were raised in the answer should not be considered:

In support of its motion, Aurora submitted two affidavits. The first affidavit was from Laura McCann, Vice President of Aurora, the loan servicer responsible for sending the notices of default. The second affidavit was from A.J. Loll, Vice President of Nationstar Mortgage, LLC, the current plaintiff and loan servicer. While McCann attested that Aurora was responsible for “providing notices pursuant to the terms of the note and mortgage evidencing the mortgage loan at issue, and specifically for providing notices such as the notice required under Section 22 of the mortgage,” nowhere in her affidavit did she attest to the actual mailing or delivery of those notices. As to the second affidavit, while Loll attested, inter alia, that “[t]he servicing records show that a 30-day letter was mailed to [the] defendants . . . … , which letter advised Defendants of their default,” and attached a purportedly “true copy” of the 30-day letter as Exhibit I, the affidavit did not contain a statement that the 30-day notice was sent in a manner according with the terms of the mortgage, i.e., “mailed by first class mail or . . . actually delivered to [borrower’s] notice address if sent by other means.” Moreover, Loll’s affidavit “did not contain a statement that [Loll] was familiar with [Aurora’s] mailing practices and procedures,” so as to establish “proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed” … . While Loll claimed that servicing records show that a 30-day letter was mailed to the defendants, she did not identify what those records are and did not authenticate them as business records and attach them to her affidavit … . Nationstar Mtge., LLC v Tamargo, 2019 NY Slip Op 08197, Second Dept 11-13-19

 

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BANK DID NOT SUBMIT SUFFICIENT PROOF OF DEFENDANT’S DEFAULT OR COMPLIANCE WITH RPAPL 1304 NOTICE REQUIREMENTS; THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s (Chase’s) motion for summary judgment in this foreclosure action should not have been granted, The court held: (1) the conclusory affidavit submitted by the bank  to prove defendant’s default had no probative value, the business record itself should have been provided; (2) compliance with the mailing provisions of RPAPL 1304 was not proven by the bank; (3) failure to comply with the notice provisions of RPAPL 1304 can be raised as a defense at any time; and (4) by not raising the failure to provide the notice required by the mortgage in the answer or a motion to amend the answer, the defendant waived that defense:

Here, the affidavit of Mimoza Petreska, a vice president of Chase, submitted in support of Chase’s motion, inter alia, for summary judgment on the complaint insofar as asserted against the defendant, was insufficient to establish the defendant’s default in payment under the note … . The only business record annexed to Petreska’s affidavit with regard to the default was a copy of the notice of default dated May 15, 2012, which merely stated, in conclusory fashion, that the defendant’s loan was in default. Conclusory affidavits lacking a factual basis are without evidentiary value … . Moreover, “[w]hile a witness may read into the record from the contents of a document which has been admitted into evidence, a witness’s description of a document not admitted into evidence is hearsay” … . “[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . JPMorgan Chase Bank, N.A. v Akanda, 2019 NY Slip Op 08180, Second Dept 11-13-19

 

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