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THE DISMISSAL OF PLAINTIFF’S FEDERAL EMPLOYMENT DISCRIMINATION (RETALIATION) ACTION PURSUANT TO THE NEW YORK STATE HUMAN RIGHTS LAW PRECLUDED A RELITIGATION OF THE RETALIATION CLAIMS IN STATE COURT PURSUANT TO THE NEW YORK CITY HUMAN RIGHTS LAW (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Shulman, determined plaintiff’s employment discrimination (retaliation) cause of action pursuant to the New York City Human Rights Law (NYCHRL) was collaterally estopped by the dismissal of plaintiff’s action in federal court pursuant to the New York State Human Rights Law (NYSHRL):

Plaintiff asserts that his cooperation in [an] investigation [of another employee] provoked animus from his supervisors … who allegedly retaliated by reducing his business opportunities and ultimately terminating him.

Plaintiff alleged seven discrete adverse employment actions: (1) the artificial depression of his revenue; (2) denial of his request to transfer to a new position; (3) reassignment of his clients; (4) denial of funding to attend conferences; (5) a negative performance review; (6) no bonus in 2015; and (7) termination in August 2016. * * *

The City HRL is “uniquely broad and remedial,” requiring courts to construe its provisions “independently from similar or identical provisions of New York state or federal statutes” … . However, the requirement to interpret the City HRL under a more liberal lens does not relieve plaintiff of his burden to produce evidence of a retaliatory motive behind the adverse actions.

* * * Plaintiff’s arguments … invite relitigating facts already adjudicated by two federal courts after full and fair litigation. The federal courts expressly found no retaliatory animus after reviewing extensive evidence. … [T]his compels preclusion.

We emphasize that the City HRL’s liberal construction rule lowers the causation threshold, not the evidentiary one. Once the federal record established the absence of any retaliatory motive, no genuine factual issue remained even under the City HRL’s mixed-motive framework. To allow this case to go to a jury under the guise of liberal construction finds no support in the record. Abromavage v Deutsche Bank Sec. Inc., 2026 NY Slip Op 00052, First Dept 1-8-25

Practice Point: Here the federal courts’ dismissal of plaintiff’s employment discrimination (retaliation) claims pursuant to the New York State Human Rights Law (NYSHRL) precluded relitigation of those claims in state court pursuant to the New York City Human Rights Law (NYCHRL). Consult this opinion for insight into when collateral estoppel will be invoked to preclude a state action under the NYCHRL which raises retaliation claims identical to those dismissed by the federal courts under the NYSHRL. Although the NYCHRL lowers the causation threshold in comparison with the NYSHRL, it does not lower the evidentiary threshold.

 

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UNDER THE LIEN LAW, THE GENERAL CONTRACTOR IN A FAILED SOLAR ENERGY PROJECT, AS TRUSTEE OF THE SETTLEMENT FUNDS, WAS PROPERLY PRECLUDED FROM USING THE FUNDS TO PAY ITSELF FIRST; THE SUBCONTRACTORS MUST BE PAID FIRST; THERE WAS A TWO JUSTICE DISSENT (THIRD DEPT).

The Third Department, affirming Supreme Court, over a two-justice dissent, in a matter of first impression, determined the subcontractors’ motion to enjoin the general contractor from using settlement funds to pay itself for expenditures in a failed solar-energy project was properly granted. The Lien Law created a trust for the settlement funds and required the general contractor, as trustee, to pay the subcontractors before paying itself:

“Article 3-A of the Lien Law impresses with a trust any funds paid or payable to a contractor ‘under or in connection with a contract for an improvement of real property’ ” ( … Lien Law § 70 [1]). Given this statutory definition, we readily conclude that the settlement funds at issue constitute trust funds under Lien Law article 3-A … . The Court of Appeals has “repeatedly recognized that the primary purpose of [Lien Law] article 3-A . . . is to ensure that those who have directly expended labor and materials to improve real property . . . at the direction of the owner or a general contractor receive payment for the work actually performed” … . With respect to a contractor’s trust, the parties entitled to a beneficial status are expressly enumerated in Lien Law § 71 (2) (a)-(f) … Pursuant to Lien Law § 71 (2) (a), “[t]he trust assets of which a contractor . . . is trustee shall be held and applied for [enumerated] expenditures arising out of the improvement of real property,” including “payment of claims of subcontractors, architects, engineers, surveyors, laborers and materialmen” (Lien Law § 71 [2] [a] … ). The language is mandatory and does not include the “cost[s] of improvement,” which is a term specifically defined to address an owner’s costs (Lien Law § 2 [5]; see Lien §§ 70 [5]; 71 [1] …).  L.C. Whitford Co., Inc. v Babcock & Wilcox Solar Energy, Inc., 2025 NY Slip Op 07063, Third Dept 12-18-25

Practice Point: Under the Lien Law the general contractor here is the trustee of the settlement funds and must use the funds to pay the subcontractors before paying itself.

 

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THE MINISTERIAL EXCEPTION DOES NOT PRECLUDE THIS HOSTILE-WORK-ENVIRONMENT ACTION BY EMPLOYEES OF A PRIVATE CATHOLIC HIGH SCHOOL; THE MINISTERIAL EXCEPTION PRECLUDES ACTIONS AGAINST RELIGIOUS INSTITUTIONS WHICH INTERFERE WITH RELIGIOUS DOCTRINE; THE ALLEGATIONS OF HARASSMENT BY SCHOOL OFFICIALS DO NOT INVOLVE RELIGIOUS DOCTRINE (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the-hostile work-environment causes of action by employees of a private Catholic high school should not have been dismissed pursuant to the “ministerial exception” which, in certain circumstances, will preclude employment discrimination actions against a religious institution:

Plaintiffs … were all employed by … a private Catholic school . The case stems from plaintiffs’ allegations that the school’s Principal … regularly subjected them to vulgar, sexist, ageist, racist and homophobic remarks and epithets. Plaintiffs further allege that … the school’s Vice Principal … and … the school’s Dean of Men, regularly repeated [the Principal’s] vile language and assisted in his efforts to discriminate against staff. In addition, plaintiffs allege that … the head of defendant Archdiocese of New York … and the defendant Archdiocese knew about [the Principal’s] conduct but did nothing to stop it.

Plaintiffs’ claims for hostile work environment were improperly dismissed under the ministerial exception, which precludes some employment claims against religious institutions on First Amendment grounds … . Although the ministerial exception was created to protect churches from state interference in their decisions to employ and supervise ministerial employees, it was not intended as a shield from all types of workplace conduct … . * * *

Here, plaintiffs are correct that there is no religious justification for [the Principal’s] appalling conduct, and analyzing their hostile work environment claims would not require the Court to improperly interfere with religious doctrine or defendants’ personnel decisions. Boliak v Reilly, 2025 NY Slip Op 07088, First Dept 12-18-25

Practice Point: Some employment discrimination actions against religious institutions are barred by the ministerial exception. Here the allegations plaintiffs, employees of a private Catholic School, were harassed by school officials did not require a court’s interference with religious doctrine and therefore were not precluded by the ministerial exception.​

 

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PLAINTIFF, WHO WAS HIRED BY DEFENDANT TEMPLE AS A “FULL TIME JEWISH EDUCATOR,” WAS FIRED AFTER WRITING A BLOG POST CRITICIZING ISRAEL AND ZIONISM; PLAINTIFF SUED ALLEGING HER FIRING WAS A VIOLATION OF THE LABOR LAW; THE COURT DID NOT ADDRESS THE LABOR-LAW-VIOLATION THEORY FINDING THAT THE “MINISTERIAL EXCEPTION” PRECLUDED THE APPLICATION OF EMPLOYMENT DISCRIMINATION LAWS TO THE RELATIONSHIP BETWEEN A RELIGIOUS INSTITUTION AND ITS MINISTERS (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Halligan, over two concurrences, determined the ministerial exception precluded this employment discrimination action brought by plaintiff, a “full time Jewish educator” employed by the Westchester Reform Temple. Plaintiff was fired after writing a blog post criticizing Israel and Zionism. She alleged her firing was a violation of Labor Law 201-d (2) which prohibits an employer from taking adverse action against an employee based on legal “recreational activities.” The court did not address the viability of the Labor-Law theory. The court held that plaintiff’s lawsuit was precluded by the ministerial exception, which precludes application of employment discrimination laws to relationships between a religious institution and its ministers:

We need not resolve today questions such as whether the [Labor Law 201-d (2)] covers blogging specifically or public expression generated during any protected activity, because the ministerial exception dispositively bars Plaintiff’s claim. That exception “precludes application of [employment discrimination] legislation to claims concerning the employment relationship between a religious institution and its ministers” … . Requiring a religious institution “to accept or retain an unwanted minister, or punishing [them] for failing to do so” both “infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments” and “violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions” … . * * *

Defendants invoked the ministerial exception here as grounds for dismissal on a CPLR 3211 (a) (1) motion. Such a motion “may be appropriately granted only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” … . Defendants rely on Plaintiff’s offer letter, which is appended as an exhibit to the motion to dismiss. It states that Plaintiff was responsible for guiding the development of programs such as “Shabbat, Havdalah, and other teen led events and initiatives”; planning, supporting, and attending “Confirmation” experiences; and supporting the “Rabbi’s Table initiative.” In her fifteen weekly hours of teaching, she was responsible for “Chevruta (1:1 tutoring for our learners),” “Pre-bimah tutoring,” and “Parsha of the week.” And she was responsible for furthering the Temple’s “mission,” including by “support[ing] the development of a strong Jewish identity” and “bringing Torah to life and inspiring Jewish dreams.” Sander v Westchester Reform Temple, 2025 NY Slip Op 06958, CtApp 12-16-25

Practice Point: The “ministerial exception” precludes the application of employment discrimination laws to the relationship between a religious institution and its ministers. Here the ministerial exception precluded a suit alleging plaintiff was fired from her teaching job at the defendant temple for a blog post criticizing Israel and Zionism.

 

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CERTAIN EMPLOYEES OF THE DEPARTMENT OF CORRECTIONS AND COMMUNITY SUPERVISION (DOCCS) WERE NOT ENTITLED TO “PANDEMIC UNEMPLOYMENT ASSISTANCE” DURING THE SUMMER OF 2020 PURSUANT TO THE “CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY (CARES) ACT;” THE COURT’S ANALYSIS IS TOO DETAILED TO FAIRLY SUMMARIZE HERE (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Singas, determined certain employees of the Department of Corrections and Community Supervision (DOCCS) who were not offered employment during the summer of 2020 because of the COVID-19 pandemic were not entitled to “pandemic unemployment assistance” under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The opinion has a detailed analysis of the federal and state unemployment insurance systems and how they interact with the COVID-related legislation. Matter of Klosterman v New York State Dept. of Corr. & Community Supervision, 2025 NY Slip Op 06960, CtApp 12-16-25

 

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PLAINTIFF HVAC CONTRACTOR WAS NOT LICENSED TO DO HOME IMPROVEMENT IN NASSAU COUNTY; THEREFORE THE CONTRACTOR COULD NOT SUE FOR BREACH OF CONTRACT AND COULD NOT ENFORCE A MECHANIC’S LIEN; THE FACT THAT THE HVAC INSTALLATION WAS DONE BY A LICENSED SUBCONTRACTOR MADE NO DIFFERENCE (SECOND DEPT).

The Second Department, reversing Supreme Court and dismissing the complaint, determined that plaintiff, a heating, ventilation and air-conditioning (HVAC) contractor, could not recover on his breach of contract claim and could not enforce a mechanic’s lien because the company was not licensed to do home improvement in Nassau County. The fact that the installation was actually done by a licensed subcontractor made no difference:

Pursuant to Nassau County Administrative Code § 21-11.2, anyone operating a home improvement business must be licensed. “Licensing statutes are to be strictly construed and an unlicensed contractor forfeits the right to recover damages based either on breach of contract or quantum meruit” … . “Moreover, a home improvement contractor must plead possession of a valid license in order to commence an action to foreclose a mechanic’s lien” … .

Here, the complaint, even as supplemented by an affidavit from the plaintiff’s president, failed to allege that the plaintiff was licensed to perform home improvement work in the County. As the plaintiff was not licensed to perform home improvement work in the County, it may not recover damages for breach of contract against the defendant and has forfeited the right to foreclose the mechanic’s lien … . The plaintiff’s contention that recovery should not be denied because the installation of the HVAC system was performed by a duly licensed subcontractor is without merit, as such a relationship is insufficient to permit an unlicensed contractor to recover for work performed … . Nationwide HVAC Supply Corp. v Mosby, 2025 NY Slip Op 06712, Second Dept 12-3-25

Practice Point: Municipal home-improvement licensing requirements are strictly enforced. Here the HVAC contractor was not licensed in Nassau County but the subcontractor who did the work was licensed. The contractor could not sue for breach of contract and could not enforce the mechanic’s lien. The contractor’s complaint was dismissed.

 

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PETITIONERS, THE NEW YORK TAXI WORKERS ALLIANCE, HAD STANDING TO CONTEST THE NYC TAXI AND LIMOUSINE COMMISSION’S PILOT PROGRAM WHICH WOULD ADD 2500 FOR-HIRE VEHICLES TO THE CITY STREETS; PETITIONERS DEMONSTRATED THE ADDED VEHICLES WOULD REDUCE MEMBERS’ INCOME (INJURY-IN-FACT) IN VIOLATION OF A LOCAL LAW (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, reversing Supreme Court, determined the petitioners, the New York Taxi Workers Alliance and two individual drivers, had standing to challenge a pilot program initiated by the NYC Taxi and Limousine Commission as violating a Local Law. The pilot program would put 2500 more for-hire vehicles (FHV’s} on the street. Petitioners argued standing based on evidence the pilot program will lower the income of the members of the Taxi Workers Alliance. Supreme Court had held the loss-of-income claim was speculative:

… [P]etitioners established both an injury in fact and that their alleged harm satisfies the zone of interest requirement, and they therefore have standing.

… [P]etitioners allege a concrete, particularized harm: a loss of income and a deterioration of driver well-being occasioned by the introduction or potential introduction of additional vehicles into the for-hire market. That harm is neither speculative nor conjunctural; rather, it is well-demonstrated by the legislative facts underpinning Local Law 147, which facts are based, in part, on industry data. Moreover, petitioners’ alleged harm is supported by the findings of the Committee on For-Hire Vehicles as expressed in their reports. The legislative materials evince a clear connection between the number of FHVs on the streets and driver income: when the number of FHVs increases without a corresponding increase in passenger demand, driver income decreases. * * *

… [P]etitioners demonstrated that the alleged harms of loss of income and deterioration of driver well-being fall within the zone of interests or concerns promoted or protected by Local Law 147. Two of the principal interests or concerns expressly promoted or protected by the law are driver income and driver well-being (see Administrative Code § 19-550[a]; 35 RCNY 59A-06[a][1]), and the significant legislative history of Local Law 147 confirms that the City Council was concerned with the human costs associated with the exceptional growth in the FHV market, particularly drivers’ ability to earn a living. Matter of New York Taxi Workers Alliance v New York City Taxi & Limousine Commission, 2025 NY Slip Op 06551, First Dept 11-25-25

Practice Point: To have standing to challenge a local law, the challenger must demonstrate an injury-in-fact and the injury is within the scope of the protections afforded by the local law.

 

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PLAINTIFF RADIATION ONCOLOGIST, THE SOLE SHAREHOLDER IN PLANTIFF PROFESSIONAL SERVICE CORPORATION, WHICH PAID PLAINTIFF ONCOLOGIST’S SALARY, SUCCESSFULLY SUED THE HOSPITAL WHICH EMPLOYED HIM FOR BREACH OF CONTRACT; THE COURT, IN A MATTER OF FIRST IMPRESSION, HELD THAT PLAINTIFF’S SALARY WAS NOT A CORPORATE EXPENSE AND THEREFORE WAS RECOVERABLE AS LOST PROFITS IN THE BREACH OF CONTRACT ACTION (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Fisher, determined plaintiff’s salary, paid to hm as the sole shareholder in a professional service corporation, was not a corporate expense and therefore could be recoverable as damages for lost profits in this breach of contract action. Plaintiff, a radiation oncologist, successfully sued the hospital for breach of contract after the hospital terminated him. The instant dispute is about the available damages. In addition to ruling plaintiff could recover his lost salary from his professional service corporation as damages, the Third Department held defendant could present proof plaintiff mitigated his damages by finding employment, through another professional service corporation, with another hospital. The Third Department affirmed Supreme Court’s rulings:

Plaintiffs commenced this action asserting causes of action for, among others, breach of contract, wrongful termination, libel and slander. Following the completion of disclosure and motion practice, a judgment was entered in favor of plaintiffs on the four remaining causes of action for breach of contract. A jury trial on damages was scheduled, and the parties filed respective motions in limine disputing the method of calculating damages and whether evidence of ]plaintiffs’] duty to mitigate the damages suffered from defendant’s breach may be submitted to the jury. Such dispute essentially distills to whether the salary paid by a professional service corporation to its sole shareholder must be treated as an expense in calculating the lost profits, thus subtracting it from the corporation’s profits and correspondingly reducing its damages. Supreme Court, in a pair of well-reasoned decisions, determined that [plaintiff’s] salary as paid by [plaintiff professional service corporation] under the coverage agreement is not an expense and could be recoverable as damages for lost profits. Supreme Court further found that evidence of [plaintiffs’] efforts to mitigate the damages suffered from defendant’s breach may be submitted to the jury, and whether or not [plaintiff’s] postbreach earnings are income derived because of defendant’s breach is a question to be resolved by the jury in determining damages. Radiation Oncology Servs. of Cent. N.Y., P.C. v Our Lady of Lourdes Mem. Hosp., Inc., 2025 NY Slip Op 06112, Third Dept 11-6-25

Practice Point: Here, in a matter of first impression, the Third Department ruled that plaintiff oncologist, whose salary was paid by plaintiff professional service corporation in which plaintiff oncologist was the sole shareholder, could, in a breach of contract action, recover his lost salary as lost profits. In other words, in this situation, plaintiff’s salary was not considered to be a corporate expense which must be deducted from lost profits when calculating damages for breach of contract.

 

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THE DIVISION OF CRIMINAL JUSTICE SERVICES’ (DCJS’S) DETERMINATION THAT PETITIONER POLICE OFFICER WAS TERMINATED “FOR CAUSE” WAS CONTRADICTED BY THE FACTS; THE DETERMINATION WAS REVERSED AS “ARBITRARY AND CAPRICIOUS” (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Clark, held the Division of Criminal Justice Services’ (DCJS’s) determination that petitioner police officer was terminated “for cause,” in the face of a consent order and evidence demonstrating petitioner resigned, was arbitrary and capricious.  The opinion is fact-specific and cannot be fairly summarized here:​

In its brief on appeal, DCJS states that it “interprets this regulation as requiring a causal nexus between the allegations of misconduct and the officer’s subsequent separation from service.” Although that is a facially rational interpretation of the regulation, DCJS’ determination that that is what occurred here lacks a sound basis in reason and disregards the facts … . Indeed, during the review process, DCJS had before it a copy of the consent award, which clearly stated that petitioner would be reinstated in good standing upon serving his suspension. Although the Police Chief claimed that petitioner never returned to work after the suspension period was over, petitioner submitted documentary evidence demonstrating the inaccuracy of that representation. Moreover, DCJS knew that the Police Chief had characterized petitioner’s separation from employment as a “standard resignation” … and that the consent award did not contain any provision precluding petitioner from seeking employment with the Schenectady County Sheriff’s Department, thereby raising a question as to the sincerity of the Police Chief’s representation [to that effect], as well as his subsequent “for cause” report. In these circumstances, it should have been clear to DCJS that the misconduct allegations were fully resolved upon petitioner serving his suspension and, therefore, the Police Chief’s subsequent reporting that petitioner resigned “in connection with allegations of misconduct” was materially inaccurate. Matter of Ferretti v New York State Div. of Criminal Justice Servs., 2025 NY Slip Op 06000, Third Dept 10-30-25

Practice Point: Consult this opinion for insight into when an administrative agency’s determination will be found “arbitrary and capricious.” Here the agency relied on representations by a police chief which were contradicted by the facts.

 

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THERE IS A QUESTION OF FACT WHETHER THE SCHOOL DISTRICT HAD CONSTRUCTIVE NOTICE OF THE ALLEGED SEXUAL ABUSE OF PLAINTIFF-STUDENT IN THIS CHILD VICTIMS ACT CASE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined defendants in this Child Victims Act case against the school district for negligent hiring, retention and supervision did not demonstrate a lack of constructive notice of the alleged sexual abuse of plaintiff-student by a custodian. Therefore the defendant’s motion for summary judgment should not have been granted:

“To establish a cause of action based on negligent hiring, negligent retention, or negligent supervision, it must be shown that the employer knew or should have known of the employee’s propensity for the conduct which caused the injury” … .

Here, the defendants’ evidence included testimony given by the plaintiff during his deposition that he was abused on dozens of occasions over three to four years, that there were several other students who were similarly abused, and that other custodians employed by the District were present in the school building after hours and on weekends and saw the plaintiff alone with the custodian in the building. Thus, contrary to the defendants’ contention, they failed to establish, prima facie, that the District lacked constructive notice of the custodian’s alleged abusive propensities and conduct … . PC-14 Doe v Lawrence Union Free Sch. Dist., 2025 NY Slip Op 05693, Second Dept 10-15-25

Practice Point: Consult this decision for insight into how a question of fact is raised about a school-defendant’s constructive notice of sexual abuse of a student by a school employee.