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ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT).

The Third Department, partially reversing Supreme Court, over a two-justice concurrence, determined plaintiff’s General Business Law (deceptive business practices) cause of action should not have been dismissed for failure to state a cause of action. The plaintiff alleged the defendant insurance company pressured physicians to find no causal connection between the injury and the accident (no-fault claims). The Third Department further found that the claims for consequential damages for emotional distress and punitive damages, stemming from breach of contract, were properly dismissed. The concurring justices argued that the emotional distress was a legitimate damages-claim for breach of contract:

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… [P]laintiff alleged that defendant engaged in a consumer-oriented pattern and practice aimed at the public at large of wrongfully denying claims for no-fault benefits by pressuring the physicians it hired to perform IMEs to provide medical reports that would support the denial of benefits and, further, that she suffered injury as a result of that practice. Such allegations are sufficient to plead a cause of action pursuant to General Business Law § 349 “‘at this early prediscovery stage'”… . …

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 It has long been the rule that “absent a duty upon which liability can be based, there is no right of recovery for mental distress resulting from the breach of a contract-related duty”… .. As Supreme Court noted, plaintiff failed to satisfy this standard because she did not allege the existence of any relationship or duty between the parties separate from the contractual obligation. …

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Plaintiff’s claim for punitive damages was likewise properly dismissed. Punitive damages may be recovered for breach of contract “only where a defendant’s conduct was (1) actionable as an independent tort, (2) egregious, (3) directed toward the plaintiff and (4) part of a pattern directed at the public” … . Plaintiff’s allegations that defendant engaged in unfair claim settlement practices do not allege a tort independent of the parties’ contract sufficient to state a claim for recovery of punitive damages … . Brown v Government Employees Ins. Co., 2017 NY Slip Op 08774, Third Dept 12-14-17

 

CONTRACT LAW (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/INSURANCE LAW ( ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/GENERAL BUSINESS LAW (ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/DECEPTIVE BUSINESS PRACTICES  (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/EMOTIONAL DISTRESS (BREACH OF CONTRACT, DAMAGES, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/PUNITIVE DAMAGES  (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/DAMAGES (CONTRACT LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))

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UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moskowitz, modifying Supreme Court, in actions stemming from the sale of allegedly defective residential mortgage-backed securities, determined that, according to the terms of the relevant contracts, plaintiff did not have standing to sue in one aspect of the action because a critical assignment had not been accomplished in accordance with the contract. The opinion is fact-specific and too complex to fairly summarize here. With respect to Supreme Court’s failure to interpret the two relevant agreements such that both are given effect, the court explained:

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In interpreting a contract a court should favor an interpretation that gives effect to all the terms of an agreement rather than ignoring terms or interpreting them unreasonably … . Indeed, “where two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so and to give both effect” … . We have also found that “agreements executed at substantially the same time and related to the same subject matter are regarded as contemporaneous writings and must be read together as one” … . Thus, in failing to harmonize the … agreement[s], the motion court essentially read … terms out of existence. U.S. Bank N.A. v GreenPoint Mtge. Funding, Inc., 2017 NY Slip Op 08644, First Dept 12-12-17

 

SECURITIES (RESIDENTIAL MORTGAGE-BACKED SECURITIES, CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))/CONTRACT LAW (RESIDENTIAL MORTGAGE-BACKED SECURITIES, CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))/RESIDENTIAL MORTGAGE-BACKED SECURITIES (CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))

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THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive two-judge dissent, determined plaintiff trustee (HSBC) was limited to the cure and replurchase remedy described in the contracts for these residential mortgage-backed securities, and could not sue for general contract damages:

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In these appeals stemming from four residential mortgage-backed securities (RMBS) transactions, we are asked to decide whether claims for general contract damages based on alleged breaches of a “no untrue statement” provision can withstand a motion to dismiss based on a contract provision mandating cure or repurchase as the sole remedy for breaches of mortgage loan-specific representations and warranties. We hold that, inasmuch as the claims for general contract damages at issue here are grounded in alleged breaches of the mortgage loan-specific representations and warranties to which the limited remedy fashioned by the sophisticated parties applies, plaintiffs’ claims for general contract damages should be dismissed. * * *

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.. .[I]t is readily apparent from the face of the complaints that the alleged breaches of the No Untrue Statement Provision are, in fact, based upon alleged breaches of the Mortgage Representations. … [T]he sole remedy for breaches of the Mortgage Representations is cure or repurchase. HSBC cannot “subvert this ‘exclusive remedies’ limitation” of liability by simply re-characterizing its claims … . Rather, “[r]eading the [contracts] as a harmonious and integrated whole” …  and honoring “the exclusive remedy that the[se] [sophisticated] parties fashioned” … , we conclude that the Sole Remedy Provision applies, precluding HSBC from seeking general contract damages for the particular claims challenged on this appeal. Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 2017 NY Slip Op 08622, CtApp 12-12-17

 

SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/CONTRACT LAW (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/RESIDENTIAL MORTGAGE-BACKED SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/SOLE REMEDY PROVISIONS (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))

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TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT).

The Third Department determined plaintiff lessee’s lawsuit against the lessor’s insurance carrier for denial of a claim for water damage was properly dismissed. Under New York law plaintiff could not sue the landlord’s carrier directly unless plaintiff first procured a judgment against the landlord which was not satisfied:

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… [I]t was well-established under the common law that an injured party has no direct cause of action against the insurer of a tortfeasor … . That is, an injured party, as a stranger to the policy between the insured tortfeasor and its insurer, could not, at common law, bring a claim against the tortfeasor’s insurer due to the lack of privity between the injured party and the insurer, even where the injured party had obtained a judgment against the insured … . As a result of the hardships and inequities this rule created, the Legislature created a “limited statutory cause of action on behalf of injured parties directly against insurers,” which is applicable where the injured party has obtained a judgment against an insured and the judgment has gone unsatisfied for 30 days … . It is undisputed that plaintiff has not obtained a judgment against [the landlord], which is “a condition precedent to a direct action” against [the landlord’s] insurer and, thus, plaintiff cannot avail itself of this limited statutory cause of action … . Thus, even liberally construing the complaint, accepting the facts as alleged as true and affording plaintiff the benefit of every inference, plaintiff has not stated a statutory cause of action against [the insurer]. … . As plaintiff is not a named insured under the policy and did not obtain a judgment against [the landlord], Supreme Court properly granted Cincinnati’s motion dismissing the complaint due to plaintiff’s lack of standing and failure to state a cause of action … . GM Broadcasting, Inc. v Cornelius Enters., LLC, 2017 NY Slip Op 08593, Third Dept 12-7-17

 

INSURANCE LAW (LANDLORD-TENANT, CONTRACT LAW, TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))/LANDLORD-TENANT (INSURANCE LAW, CONTRACT LAW,  TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))/CONTRACT LAW (INSURANCE LAW, LANDLORD-TENANT, TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))

ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT).

The Third Department, in a comprehensive “offer and acceptance” decision too detailed to fairly summarize here, determined that the defendant’s motion for summary judgment in this breach of a real estate contract action was properly granted on statute of frauds grounds. Although a typed name on an email is the equivalent of a signature, the same is not true for an attachment to an email, which can easily be signed by the sender. Here plaintiff’s breach of contract theory depended upon an attachment to an email sent by the defendant to the plaintiff. Because the attachment was not signed, there was no contract:

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Under ESRA [Electronic Signatures and Records Act}, plaintiff would have a viable argument that defendant signed the emails she sent, as they are electronic records and she typed her name at the end of each. As confirmed at oral argument, however, plaintiff does not contend that the emails constituted signed documents forming the contract, but that defendant’s typed name at the end of the proposed side letter constituted her signature. That document was separately typed and attached to emails for transmission. Although emails are electronic records, not every attachment to an email qualifies as an electronic record under ESRA. One of the purposes of ESRA is “to promote the use of electronic technology in the everyday lives and transactions” of government entities, businesses and average citizens… . To fulfill this purpose, it was necessary for the Legislature to permit emails to be considered equivalent to signed writings when that was the sender’s intent … , because it was not possible to place a handwritten signature on an email or similar electronic record that was being transmitted electronically.

The same logic does not apply to ordinary typed documents that are scanned and attached to emails, because a party could easily affix a handwritten signature to those documents. Solartech Renewables, LLC v Vitti, 2017 NY Slip Op 08574, Third Dept 12-6-17

 

CONTRACT LAW (STATUTE OF FRAUDS, EMAILS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/STATUTE OF FRAUDS (EMAILS, ATTACHMENTS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/EMAILS (CONTRACT LAW, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/ATTACHMENTS (EMAILS, CONTRACT LAW, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/ELECTRONIC SIGNATURES AND RECORDS ACT (CONTRACT LAW, EMAILS, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))

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BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT).

The First Department determined this breach of contract action stemming from a mortgage-backed-securities trust, brought by a California plaintiff (trustee) ,and concerning California lenders must be timely under both California and New York law. The action, although timely in New York, was not timely under California law, which has a four-year statute of limitations. The New York choice-of-law provisions in the agreements did not expressing incorporate the NY statute of limitations:

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CPLR 202 requires that an action brought by a nonresident plaintiff, “based upon a cause of action accruing without the state,” be timely under the respective statutes of limitations of both New York and “the place without the state where the cause of action accrued.” In Global Fin. Corp. v Triarc Corp. (93 NY2d 525, 529-530 [1999]), the Court of Appeals set forth the general rule that, in cases where (as here) the alleged injury is purely economic, a cause of action is deemed, for purposes of CPLR 202, to have accrued in the jurisdiction of the plaintiff’s residence. …

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it is undisputed that the domiciles of the trust beneficiaries, which are in various jurisdictions, do not provide a workable basis for determining the place of accrual. As to the New York choice-of-law clauses of the relevant agreements, because these provisions do not expressly incorporate the New York statute of limitations, they “cannot be read to encompass that limitation period” … . By contrast, the subject trust in each action comprises a pool of mortgage loans, originated by California lenders and encumbering California properties, either exclusively … or predominantly ,,,, and … administered in California by plaintiff, a California-based trustee …. Further, it is undisputed that the relevant pooling and servicing agreement (PSA) for each trust contemplates the payment of state taxes, if any, in California … . To the extent the physical location of the notes memorializing the securitized mortgage loans has relevance to the analysis, each trust’s PSA contemplates that the notes may be maintained in California, but neither contemplates maintaining the notes in New York … . ​Deutsche Bank Natl. Trust Co. v Barclays Bank PLC, 2017 NY Slip Op 08459, First Dept 12-5-17

 

CIVIL PROCEDURE (BORROWING STATUTE, CONTRACT LAW, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/BORROWING STATUTE (CIVIL PROCEDURE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/CONTRACT LAW (CIVIL PROCEDURE, BORROWING STATUTE, STATUTE OF LIMITATIONS, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/SECURITIES (MORTGAGE-BACKED SECURITIES, CONTRACT LAW, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/TRUSTS AND ESTATES (MORTGAGE-BACKED SECURITIES TRUST, BREACH OF CONTRACT, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))

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ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT).

The Third Department, over a two-justice dissent, determined that the trial court’s finding that an oral agreement concerning the repayment of a $170,000 loan was enforceable, because the loan could have been paid off within a year (re: the statute of frauds). Both plaintiff and defendant were bookmakers who had been convicted of promoting gambling. The fact that plaintiff refused to answer questions about whether he paid income tax on the proceeds, based upon the Fifth Amendment, did not affect the result because there was nothing illegal about the loan agreement itself. The two dissenters argued the parties were engaged in money laundering and the loan agreement should not be enforced as a matter of public policy:

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We are mindful that plaintiff testified that the source of the loan proceeds was cash obtained through his illegal bookmaking activities. Indeed, both plaintiff and defendant were convicted of promoting gambling and required to pay fines in the amount of $100,000 and $50,000, respectively. Although plaintiff asserted his Fifth Amendment right against self-incrimination when asked whether he ever reported the cash as income, we are not persuaded by defendant’s contention that Supreme Court erred in failing to draw a negative inference because the source and/or taxable status of the funds was not probative of the issue presented. According due deference to Supreme Court’s credibility assessments, we find ample evidence to support the determination that plaintiff and defendant agreed to the loan that defendant breached by failing to make all of the payments due… . Contrary to defendant’s argument, because there was nothing prohibiting defendant from repaying the loan within one year, the statute of frauds did not bar enforcement of the oral agreement … .

We also find that defendant waived his right to challenge the loan on the basis of illegality because it was not raised as an affirmative defense … . Were we to consider the issue, we would find that, because neither the agreement nor the performance of the agreement was illegal, the judgment was enforceable … . Centi v McGillin, 2017 NY Slip Op 08430, Third Dept 11-30-17

 

DEBTOR-CREDITOR (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CONTRACT LAW (STATUTE OF FRAUDS, DEBTOR-CREDITOR, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CRIMINAL LAW (DEBTOR-CREDITOR, MONEY LAUNDERING, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/MONEY LAUNDERING (DEBTOR-CREDITOR, CONTRACT LAW, (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))

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THE TERMS OF THE SETTLEMENT AGREEMENT DID NOT ALLOW THE COURT TO ALLOCATE ALL THE PROCEEDS OF AN INSURANCE POLICY TO THE WORKERS’ COMPENSATION BOARD, RESPONDENT, A FORMER MEMBER OF AN INSOLVENT WORKERS’ COMPENSATION TRUST WHICH HAD SETTLED WITH THE BOARD, WAS ENTITLED TO SOME OF THE PROCEEDS AND AN ACCOUNTING PURSUANT TO CPLR 7702 (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that Supreme Court should not have allocated all the proceeds of an insurance policy to the Workers’ Compensation Board and should have ordered the Board to file an accounting pursuant to CPLR 7702. The Board is seeking compensation from members of a workers’ compensation trust which was found to be insolvent. Respondent was a member of the trust and settled with the Board, paying over $1,000,000. Subsequently, in accordance with the terms of the settlement agreement, both the Board and the respondent separately sought to recover funds from an insurance policy. Supreme Court ordered all the recovered proceeds to be paid to the Board and did not order the filing of a verified accounting. The Third Department found that respondent, under the terms of the settlement agreement with the Board, was entitled to some of the funds and an accounting should be filed by the Board. The matter was remitted:

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The provision of the settlement agreement governing allocation of damages obtained from third parties by petitioner is unambiguously applicable by its terms only to the share of the jointly-recovered settlement proceeds that are ultimately allocated to petitioner. This interpretation gives full meaning and effect to the material terms at issue, including respondent’s reservation of its claims against the parties formerly responsible for administration of the trust, the agreement that allocation of the jointly-recovered settlement proceeds would be made in the instant CPLR article 77 proceeding and the provision precluding respondent from using activities undertaken after May 31, 2012 to justify a claim to allocation of the settlement proceeds. Petitioner’s contrary view — that it is entitled to all settlement proceeds because they were insufficient to satisfy the trust’s outstanding obligations and, therefore, that no surplus existed for allocation to former trust members, including respondent — is counter to the plain language of the settlement agreement and would impermissibly render meaningless the express reservation to respondent of all of its claims against former trustees, administrators and professionals. For petitioner’s argument — that all damages recovered from any third party from any source must first be used to satisfy the trust’s outstanding obligations — to prevail, the settling members, like respondent, would have had to have waived their claims against such third parties or subordinated their independent claims to petitioner’s claims. The settlement agreement contains no such terms. Thus, the matter must be remitted for allocation of the jointly-recovered settlement proceeds between petitioner and respondent and, as to any such proceeds allocated to petitioner, a determination of whether there are surplus funds remaining for distribution among the settling former trust members, including respondent. Matter of New York State Workers’ Compensation Bd. v Murray Bresky Consultants, Ltd, 2017 NY Slip Op 08244, Third Dept 11-22-17

 

WORKERS’S COMPENSATION LAW (THE TERMS OF THE SETTLEMENT AGREEMENT DID NOT ALLOW THE COURT TO ALLOCATE ALL THE PROCEEDS OF AN INSURANCE POLICY TO THE WORKERS’ COMPENSATION BOARD, RESPONDENT, A FORMER MEMBER OF AN INSOLVENT WORKERS’ COMPENSATION TRUST WHICH HAD SETTLED WITH THE BOARD, WAS ENTITLED TO SOME OF THE PROCEEDS AND AN ACCOUNTING PURSUANT TO CPLR 7702 (THIRD DEPT))/CONTRACT LAW (WORKERS’ COMPENSATION LAW, SETTLEMENT AGREEMENT,  (THE TERMS OF THE SETTLEMENT AGREEMENT DID NOT ALLOW THE COURT TO ALLOCATE ALL THE PROCEEDS OF AN INSURANCE POLICY TO THE WORKERS’ COMPENSATION BOARD, RESPONDENT, A FORMER MEMBER OF AN INSOLVENT WORKERS’ COMPENSATION TRUST WHICH HAD SETTLED WITH THE BOARD, WAS ENTITLED TO SOME OF THE PROCEEDS AND AN ACCOUNTING PURSUANT TO CPLR 7702 (THIRD DEPT))/CIVIL PROCEDURE (WORKERS’ COMPENSATION LAW, SETTLEMENT AGREEMENT, VERIFIED ACCOUNTING, (THE TERMS OF THE SETTLEMENT AGREEMENT DID NOT ALLOW THE COURT TO ALLOCATE ALL THE PROCEEDS OF AN INSURANCE POLICY TO THE WORKERS’ COMPENSATION BOARD, RESPONDENT, A FORMER MEMBER OF AN INSOLVENT WORKERS’ COMPENSATION TRUST WHICH HAD SETTLED WITH THE BOARD, WAS ENTITLED TO SOME OF THE PROCEEDS AND AN ACCOUNTING PURSUANT TO CPLR 7702 (THIRD DEPT))/CPLR 7702  (WORKERS’ COMPENSATION LAW, SETTLEMENT AGREEMENT, VERIFIED ACCOUNTING, (THE TERMS OF THE SETTLEMENT AGREEMENT DID NOT ALLOW THE COURT TO ALLOCATE ALL THE PROCEEDS OF AN INSURANCE POLICY TO THE WORKERS’ COMPENSATION BOARD, RESPONDENT, A FORMER MEMBER OF AN INSOLVENT WORKERS’ COMPENSATION TRUST WHICH HAD SETTLED WITH THE BOARD, WAS ENTITLED TO SOME OF THE PROCEEDS AND AN ACCOUNTING PURSUANT TO CPLR 7702 (THIRD DEPT))

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THICKNESS OF THE ICE RAISED A QUESTION OF FACT ABOUT CONSTRUCTIVE NOTICE IN THIS SIDEWALK SLIP AND FALL CASE, PROMISE TO PURCHASE LIABILITY INSURANCE IS NOT THE SAME AS A PROMISE TO INDEMNIFY (THIRD DEPT).

The Third Department determined defendant property maintenance company’s motion for summary judgment in this ice slip and fall case was properly denied. Plaintiff’s testimony about the thickness of the ice raised a question of fact whether defendant had constructive notice of it. The property owner’s motion for summary judgment on the breach of contract action against the property maintenance company was properly granted. In the contract, the property maintenance company agreed to purchase liability insurance, which it did not do. An agreement to purchase insurance is not the same as a promise to indemnify and an action on the agreement need not await a judgment in the slip and fall case:

… [T]he record … includes plaintiff’s testimony that there was no lighting in the sidewalk area and no witness was able to contradict her account that there was ice in the area at the time that she fell. Further, there was no proof that anyone had performed a routine inspection of the area after 7:00 a.m. on the day of her alleged fall, i.e., at any time within 10 hours of the fall, but also no proof that there had been further accumulation of snow after the snowfall the day before. … [I]t is clear that plaintiff raised a triable issue of fact with regard to whether defendant had constructive notice of any dangerous conditions… . The key question to be resolved by the trier of fact is whether, during this 10-hour lapse of time … there was further precipitation that created a dangerous or unsafe condition on the sidewalk and, if so, whether there was sufficient time for defendant[s] … “to reasonably have discovered and remedied it” … .Plaintiff’s description of the thickness and extent of ice on the sidewalk, if accepted, is relevant to the factual question of how long it was present and whether it was visible and apparent such that it would have been discovered upon routine inspection, with sufficient time to remedy it … . Calvitti v 40 Garden, LLC, 2017 NY Slip Op 08241, Third Dept 11-22-17

NEGLIGENCE (SLIP AND FALL, THICKNESS OF THE ICE RAISED A QUESTION OF FACT ABOUT CONSTRUCTIVE NOTICE IN THIS SIDEWALK SLIP AND FALL CASE, PROMISE TO PURCHASE LIABILITY INSURANCE IS NOT THE SAME AS A PROMISE TO INDEMNIFY (THIRD DEPT))/SLIP AND FALL (THICKNESS OF THE ICE RAISED A QUESTION OF FACT ABOUT CONSTRUCTIVE NOTICE IN THIS SIDEWALK SLIP AND FALL CASE, PROMISE TO PURCHASE LIABILITY INSURANCE IS NOT THE SAME AS A PROMISE TO INDEMNIFY (THIRD DEPT))/SIDEWALKS (SLIP AND FALL, THICKNESS OF THE ICE RAISED A QUESTION OF FACT ABOUT CONSTRUCTIVE NOTICE IN THIS SIDEWALK SLIP AND FALL CASE, PROMISE TO PURCHASE LIABILITY INSURANCE IS NOT THE SAME AS A PROMISE TO INDEMNIFY (THIRD DEPT))/INSURANCE LAW (SLIP AND FALL, PROMISE TO PURCHASE LIABILITY INSURANCE IS NOT THE SAME AS A PROMISE TO INDEMNIFY (THIRD DEPT))

, ,

TRANSMISSION REPAIR COMPANY OWED A DUTY TO PLAINTIFF’S DECEDENT AS A THIRD PARTY BENEFICIARY OF A TRUCK REPAIR CONTRACT WITH PLAINTIFF’S DECEDENT’S EMPLOYER, IF THE TRUCK HAD BEEN EQUIPPED WITH A FUNCTIONING NEUTRAL INTERLOCK SYSTEM IT WOULD NOT HAVE LURCHED BACK, KILLING PLAINTIFF’S DECEDENT (SECOND DEPT).

The Second Department determined plaintiff’s decedent could properly have been found to be a third-party beneficiary of a contract between a transmission repair company (Advanced) and plaintiff’s decedent’s employer (CCC).  CCC owned a garbage truck which was repaired by Advanced. There was no neutral interlock system on the truck. Such a system would have prevented the truck from lurching backward and pinning plaintiff’s decedent between the truck and a dumpster:

 

… [T]he record demonstrates that Advanced owed the decedent a duty as a third-party beneficiary of its contractual relationship between itself and CCC … . If the parties to the contract intended to confer a direct benefit on the decedent, a duty is owed to the decedent… . Although there was no written contract between the contracting parties, an intent to confer a direct benefit on the decedent may also be inferred from the circumstances …  including the parties’ oral agreement and course of conduct … .

An employee is not automatically a third-party beneficiary of a service contract between his or her employer and another party … . However, if the employer’s intent was to benefit its employees, third-party beneficiary status may be inferred …

At trial, the plaintiffs asserted that a proximate cause of the accident was the absence of a functioning neutral interlock system on the truck. The neutral interlock system would have prevented the truck from going backward while garbage was being loaded in the truck. CCC recognized that a neutral interlock system was an important safety feature of the truck. That system was part of the transmission system, which was serviced by Advanced. At trial, Advanced acknowledged that when the truck was road tested in November 2006, some six months prior to the accident, CCC should have been informed if a neutral interlock system was not working or not present, since this was one of the primary safety features of the truck.

The evidence indicated that Advance and CCC recognized that the neutral interlock system was an important safety feature. Further, it is clear from the record that Advance and CCC recognized that this safety feature’s primary benefit was to CCC’s employees who loaded the garbage trucks. Accordingly, it could be inferred that the decedent was a third-party beneficiary of the contractual relationship between CCC and Advanced. Vargas v Crown Container Co., Inc., 2017 NY Slip Op 08297, Second Dept 11-22-17

 

NEGLIGENCE (DUTY ARISING FROM CONTRACT, TRANSMISSION REPAIR COMPANY OWED A DUTY TO PLAINTIFF’S DECEDENT AS A THIRD PARTY BENEFICIARY OF A TRUCK REPAIR CONTRACT WITH PLAINTIFF’S DECEDENT’S EMPLOYER, IF THE TRUCK HAD BEEN EQUIPPED WITH A FUNCTIONING NEUTRAL INTERLOCK SYSTEM IT WOULD NOT HAVE LURCHED BACK, KILLING PLAINTIFF’S DECEDENT (SECOND DEPT))/CONTRACT LAW (NEGLIGENCE, DUTY ARISING FROM CONTRACT, TRANSMISSION REPAIR COMPANY OWED A DUTY TO PLAINTIFF’S DECEDENT AS A THIRD PARTY BENEFICIARY OF A TRUCK REPAIR CONTRACT WITH PLAINTIFF’S DECEDENT’S EMPLOYER, IF THE TRUCK HAD BEEN EQUIPPED WITH A FUNCTIONING NEUTRAL INTERLOCK SYSTEM IT WOULD NOT HAVE LURCHED BACK, KILLING PLAINTIFF’S DECEDENT (SECOND DEPT))/EMPLOYMENT LAW (DUTY TO EMPLOYEE ARISING FROM EMPLOYER’S CONTRACT FOR REPAIR, TRANSMISSION REPAIR COMPANY OWED A DUTY TO PLAINTIFF’S DECEDENT AS A THIRD PARTY BENEFICIARY OF A TRUCK REPAIR CONTRACT WITH PLAINTIFF’S DECEDENT’S EMPLOYER, IF THE TRUCK HAD BEEN EQUIPPED WITH A FUNCTIONING NEUTRAL INTERLOCK SYSTEM IT WOULD NOT HAVE LURCHED BACK, KILLING PLAINTIFF’S DECEDENT (SECOND DEPT))/THIRD PARTY BENEFICIARY (NEGLIGENCE, DUTY ARISING FROM CONTRACT, TRANSMISSION REPAIR COMPANY OWED A DUTY TO PLAINTIFF’S DECEDENT AS A THIRD PARTY BENEFICIARY OF A TRUCK REPAIR CONTRACT WITH PLAINTIFF’S DECEDENT’S EMPLOYER, IF THE TRUCK HAD BEEN EQUIPPED WITH A FUNCTIONING NEUTRAL INTERLOCK SYSTEM IT WOULD NOT HAVE LURCHED BACK, KILLING PLAINTIFF’S DECEDENT (SECOND DEPT))

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