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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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QUESTION OF FACT WHETHER CONTRACTORS WHICH DID SIDEWALK/GRATE WORK LAUNCHED AN INSTRUMENT OF HARM IN THIS SLIP AND FALL CASE; THE CONTRACTORS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the actions against two contractors (MPM and VRD) which did sidewalk/grate work should not have been dismissed in this slip and fall case. The two contractor defendants did not demonstrate, as a matter of law, that they did not launch an instrument of harm:

In general, a contractual obligation, standing alone, will not give rise to tort liability in favor of a third party (see Espinal v Melville Snow Contrs., 98 NY2d 136, 138). Nonetheless, the Court of Appeals has recognized three exceptions to this general rule: “(1) where the contracting party, in failing to exercise reasonable care in the performance of his [or her] duties, launches a force or instrument of harm . . . (2) where the plaintiff detrimentally relies on the continued performance of the contracting party’s duties . . . and (3) where the contracting party has entirely displaced the other’s party’s duty to maintain the premises safely” … .

Here, the owner, MPM, and VRD failed to establish their prima facie entitlement to judgment as a matter of law by demonstrating that the work performed on the grate and vault did not create the allegedly dangerous condition that caused the plaintiff to trip and fall and, thus, launched a force or instrument of harm … . Randazzo v Consolidated Edison Co. of N.Y., Inc., 2019 NY Slip Op 08236, Second Dept 11-13-19

 

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THERE IS A REASONABLE RELATIONSHIP BETWEEN THE GRIEVANCE AND THE COLLECTIVE BARGAINING AGREEMENT (CBA); THE CITY’S PETITION TO PERMANENTLY STAY ARBITRATION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the city-employer’s motion to permanently stay arbitration should not have been granted:

In determining whether a grievance is arbitrable, a court must “first ask whether there is any statutory, constitutional or public policy prohibition against arbitration of the grievance,” and if there is no prohibition against arbitration, the court must “then examine the CBA [collective bargaining agreement] to determine if the parties have agreed to arbitrate the dispute at issue” … . …

Where, as here, the relevant arbitration provision of the CBA is broad, providing for arbitration of any grievance “involving the interpretation or application of any provision of this Agreement,” a court “should merely determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA” … . “If there is none, the issue, as a matter of law, is not arbitrable. If there is, the court should rule the matter arbitrable, and the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the CBA, and whether the subject matter of the dispute fits within them” … . …

According to Local 628, the City, by offering a paramedic training course to its firefighters, violated article 33 of the CBA, which contains various provisions concerning the EMS Program, including a provision stating that the “EMS Program shall mean the level of services provided as of the date of this Agreement.” Contrary to the City’s contention, a reasonable relationship exists between Local 628’s grievance and the general subject matter of the CBA … . “[T]he question of the scope of the substantive provisions of the CBA is a matter of contract interpretation and application reserved for the arbitrator” … . Matter of City of Yonkers v Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 2019 NY Slip Op 07776, Second Dept 10-30-19

 

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PLAINTIFF SUBMITTED INSUFFICIENT PROOF THAT THE NOTICE REQUIRED BY RPAPL 1304 AND THE MORTGAGE WAS PROVIDED TO DEFENDANTS; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not present sufficient evidence to demonstrate compliance with Real Property Actions and Proceedings Law (RPAPL) 1304 or with the notice provisions of the mortgage:

… [T]he plaintiff failed to attach, as exhibits to the motion, any documents to prove that the mailing actually happened … . Nor did [plaintiff’s employee] attest that she had personal knowledge of the mailing practices of her employer at the time the RPAPL 1304 notices allegedly were sent. Accordingly, “[s]ince the plaintiff failed to provide proof of the actual mailing, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure, the plaintiff failed to establish its strict compliance with RPAPL 1304” … .

The plaintiff also failed to establish, prima facie, that a notice of default in accordance with section 22 of the mortgage was properly transmitted to the defendants prior to the commencement of this action. [Plaintiff’s employee’s] unsubstantiated and conclusory statements that a representative … mailed such notice “[i]n accordance with the provisions of the Mortgage” to the defendants at their last known address at least 30 days prior to commencement of the action, even combined with copies of the notices of default and envelopes, with no evidence as to the date the envelopes were sent, “failed to establish that the required notice was mailed to the defendant[s] by first-class mail or actually delivered to [their] notice address’ if sent by other means, as required by the mortgage agreement” … . U.S. Bank N.A. v defendants., 2019 NY Slip Op 07806, Second Dept 10-30-19

 

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A REGULATORY AGREEMENT ENTERED INTO BY THE OUT-OF-POSSESSION LANDLORD IN CONNECTION WITH AN FHA MORTGAGE, WHICH REQUIRED THAT THE LANDLORD KEEP THE PROPERTY IN GOOD REPAIR, DID NOT CHANGE THE TERMS OF THE LEASE WHICH MADE THE TENANT RESPONSIBLE FOR REPAIRS; THE OUT-OF-POSSESSION LANDLORD THEREFORE IS NOT LIABLE FOR A SLIP AND FALL CAUSED BY A ROOF LEAK (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over a two-judge dissenting opinion, determined the owner of a nursing home, Hamilton Inc., as an out-of-possession landlord, was not liable to plaintiff who slipped and fell on the premises. It was alleged the pool of water which caused plaintiff to slip and fall was the result of a leak in the roof. The lease had made the tenant, Grand Manor, responsible for repairs. However a HUD regulatory agreement subsequently entered into by Hamilton Inc in connection with an FHA mortgage required that the property be kept in good repair by Hamilton. The Court of Appeals held that the regulatory agreement did change the terms of the lease:

… [T]he HUD regulatory agreement, as incorporated into the 1978 amendment to the lease, did not alter the contractual relationship between the Hamilton defendants and Grand Manor regarding control of the premises or replace Grand Manor’s contractual duty to perform maintenance and repairs at the facility. Although the terms of the HUD agreement were to supersede all other requirements in conflict therewith, the regulatory agreement did not conflict with, or absolve Grand Manor of, its responsibilities under the original lease. Indeed, as previously noted, the amendment continued all terms from the lease that did not conflict with the regulatory agreement. Given the absence of a conflict on the issue of Grand Manor’s duties to make repairs, the HUD agreement, as incorporated into the lease amendment, was not a covenant that could be said to displace Grand Manor’s duties or alter the relationship between landlord and tenant … .  * * *

… [T]he “exception to the general rule” set forth in Putnam is inapplicable to the regulatory agreement, and the general rule applies — that is, the “landlord is not liable for conditions upon the land after the transfer of possession” (38 NY2d at 617). Indeed, adoption of plaintiff’s proposed rule — that would require us to extend the exception set forth in Putnam to any agreement made by the lessor to make repairs — would mean that lessees could assume the sole obligation in a lease to maintain premises in good repair but avoid making repairs in reliance on a covenant later discovered between the land owner and a third party, a result not intended or supported by Putnam. Henry v Hamilton Equities, Inc., 2019 NY Slip Op 07642, CtApp 10-24-19

 

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