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The Failure of the Record to Indicate Whether Notes from the Jury Were Properly Addressed by the Court Constitutes a “Mode of Proceedings” Error

The Court of Appeals, in a full-fledged opinion by Judge Graffeo, over a partial dissent, determined the failure of the record to indicate whether notes from the jury were properly addressed by the court (pursuant to People v O’Rama, 88 NY2d 270) constituted “mode of proceedings” errors requiring reversal in the absence of preservation:

Although not every violation of CPL 310.30 is immune from normal preservation principles …, a failure to apprise counsel about the specific contents of a substantive note from a deliberating jury violates the fundamental tenants of CPL 310.30 and qualifies as a mode of proceedings error … . The record therefore must indicate compliance with adequate procedures under O’Rama because reviewing courts “cannot assume” that the proper procedure was utilized when the record is devoid of information as to how jury notes were handled … . The “presumption of regularity” … cannot salvage an … error of this nature … . People v Silva, 2014 NY Slip Op 08215, CtApp 11-24-14

 

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Class Action Mechanism Is Available Where the Relevant Statute Imposes a Non-Mandatory Penalty and the Penalty Is Waived by the Class

The Court of Appeals, in a full-fledged opinion by Judge Lippman, over a dissent, determined that class action suits brought by tenants pursuant to CPLR 901 (b) were properly allowed to go forward.  The suits alleged the tenants, who were in rent-stabilized apartments, were overcharged when the landlords decontrolled the apartments despite their receipt of tax benefits under the J-51 program.  The Court of Appeals, in 2009, determined that the receipt of J-51 tax benefits precluded the landlords from decontrolling the apartments.  The central issue was the availability of the class action mechanism, which is generally not available where the suit seeks the imposition of a penalty.  Here the treble damages (penalty) provision of the Rent Stabilization Law (RSL 26-516) was waived by the plaintiffs. The waiver was deemed valid, clearing the way for the class actions:

CPLR 901 (b) prohibits any claim for penalties to be brought as a class action. It states, “[u]nless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action” (CPLR 901 [b]). The language of CPLR 901 (b) itself says it is not dispositive that a statute imposes a penalty so long as the action brought pursuant to that statute does not seek to recover the penalty. * * *

From a policy standpoint, permitting plaintiffs to bring these claims as a class accomplishes the purpose of CPLR 901 (b). Preemptively responding to the argument raised by defendants here, the State Consumer Protection Board emphasized the importance of class actions: “The class action device responds to the problem of inadequate information as well as to the need for economies of scale” for “. . . a person contemplating illegal action will not be able to rely on the fact that most people will be unaware of their rights — if even one typical person files a class action, the suit will go forward and the other members of the class will be notified of the action either during the proceedings or after a judgment is rendered in their favor” (Mem of State Consumer Protection Bd, Bill Jacket, L 1975, ch 207).

Where a statute imposes a non-mandatory penalty, plaintiffs may waive the penalty in order to bring the claim as a class action … . Borden 400 E 55th St Assoc LP, 2014 NY Slip Op 08211, CtApp 11-24-14

 

Disclaimer Notice Sent to Insureds’ Insurer, But Not to Insureds, Invalid

The Court of Appeals, in a full-fledged opinion by Judge Smith, determined that the failure to notify the insureds of a disclaimer of liability invalidated the disclaimer.  The property owner and managing agent were insured under two different policies.  They were named insureds under their own policy (with GNY) and additional insureds under a contractor’s insurer (Scottsdale). An employee of the contractor was injured. The contractor’s insurer sent the notice of disclaimer to the insureds’ own carrier (GNY), but not to the insureds themselves.  The notice did not meet the requirements of Insurance law 3420(d)(2):

Insurance Law § 3420 (d) (2) says:

“If under a liability policy issued or delivered in this state, an insurer shall disclaim liability or deny coverage . . . it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant” … .

It is undisputed that Scottsdale did not give notice of its disclaimer directly to its additional insureds or to the lawyer who had been retained to represent them. Scottsdale argues that the disclaimer notice it sent to GNY was sufficient to satisfy the statute. We disagree.

GNY was not an insured under Scottsdale’s policy; it was another insurer. While GNY had acted on the insureds’ behalf in sending notice of the claim to Scottsdale, that did not make GNY the insureds’ agent for all purposes, or for the specific purpose that is relevant here: receipt of a notice of disclaimer. GNY’s interests were not necessarily the same as its insureds’ in this litigation. There might have been a coverage dispute between GNY and the insureds, or plaintiff’s claim might have exceeded GNY’s policy limits. Because the insureds had their own interests at stake, separate from that of GNY, they were entitled to notice delivered to them, or at least to an agent — perhaps their attorney — who owed a duty of loyalty in this matter to them only. … [T]he obligation imposed by the Insurance Law is “to give timely notice of disclaimer to the mutual insureds . . . not to . . . another insurer.” Sierra v 4401 Sunset Park LLC, 2014 NY Slip Op 08216, CtApp 11-24-14

 

Notifying One’s Broker of an Accident Does Not Constitute Notification of the Insurer

The Court of Appeals, over a partial dissent, determined that the plaintiff’s providing notice of an accident to plaintiff’s broker did not constitute notice to the insurer.  The decision focuses on distinguishing Mighty Midgets v Centennial Ins. Co. (47 NY2d 12 [1979]) where the roles of the broker the insurer were “uncommonly intertwined:”

We have long held that a policyholder’s timely notice to a broker does not “constitute the notice contemplated by the [insurance] policy since a broker is normally the agent of the insured and notice to the ordinary insurance broker is not notice to the liability carrier” Our decision in Mighty Midgets does not alter this fundamental principle. Strauss Painting Inc v Mt. Hawley Ins Co, 2014 NY Slip Op 08214, CtApp 11-24-14

 

Defendant’s Conviction Properly Reversed Because the Verdict Was Inconsistent/Repugnant—Charge Which Was the Subject of Conviction in the Inconsistent/Repugnant Verdict Can Be Presented to a New Grand Jury

The Court of Appeals, in a full-fledged opinion by Judge Read, determined that defendant’s conviction was properly reversed because the verdict was inconsistent/repugnant, but that the People should be allowed to resubmit that charge to a new grand jury. Defendant was convicted of manslaughter in the first degree as a hate crime, but the jury acquitted defendant of manslaughter in the first degree.  Because, to aquit, the jury must have found that at least one of the elements of manslaughter in the first degree was not proven, the manslaughter in the first degree as a hate crime necessarily suffered from the same failure of proof.  The People argued that the jury instructions gave the jurors the impression they could acquit on the non-hate-crime manslaughter and still find the defendant guilty of the hate-crime manslaughter:

The rationale for the repugnancy doctrine is that the defendant cannot be convicted when the jury actually finds, via a legally inconsistent split verdict, that the defendant did not commit an essential element of the crime … . Given that premise, “a verdict is repugnant only if it is legally impossible — under all conceivable circumstances — for the jury to have convicted the defendant on one count but not the other,” and, “[i]f there is a possible theory under which a split verdict could be legally permissible, it cannot be repugnant, regardless of whether that theory has evidentiary support in a particular case” … .

Accordingly, repugnancy does not depend on the evidence presented at trial or the record of the jury’s deliberative process, and “[t]he instructions to the jury will be examined only to determine whether the jury, as instructed, must have reached an inherently self-contradictory verdict” … . In making these determinations, it is inappropriate for the reviewing court to “attempt to divine the jury’s collective mental process” … . “Jurors are allowed to compromise, make mistakes, be confused or even extend mercy when rendering their verdicts” … . * * *

There is no constitutional or statutory provision that mandates dismissal for a repugnancy error. Given that New York’s repugnancy jurisprudence already affords defendants greater protection than required under the Federal Constitution, permitting a retrial on the repugnant charge upon which the jury convicted, but not on the charge of which the jury actually acquitted defendant, strikes a reasonable balance. This is particularly so given that a reviewing court can never know the reason for the repugnancy. Accordingly, the People may resubmit the crime of first-degree manslaughter as a hate crime to a new grand jury … . People v DeLee, 2014 NY Slip Op 08212, CtApp 11-24-14

 

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Question of Fact Whether City Had a Special Relationship with Plaintiff Such that the City Owed a Duty to the Plaintiff Over and Above the Duty Owed to the Public at Large

The Court of Appeals, in a full-fledged opinion by Judge Abdus-Salaam, over a partial dissent, determined that there was a question of fact whether the city had a special relationship with the plaintiff, such that the city had a duty to protect the plaintiff from her abusive husband. After police officers assured plaintiff her husband (Coleson), who had been arrested, was going to jail, she was attacked and stabbed by him.  Plaintiff’s seven-year-old son was with her when she was attacked but did not witness the stabbing because he had been placed in a closet for protection by a bystander.  Because plaintiff’s son did not see the stabbing, the court concluded he was not in the “zone of danger” when his mother was stabbed:

Liability for a claim that a municipality negligently exercised a governmental function “turns upon the existence of a special duty to the injured person, in contrast to a general duty owed to the public” … . “[A] duty to exercise reasonable care toward [a] plaintiff” is “born of a special relationship between the plaintiff and the governmental entity” … . This Court has determined that a special relationship can be formed in three ways:

“(1) when the municipality violates a statutory duty enacted for the benefit of a particular class of persons; (2) when it voluntarily assumes a duty that generates justifiable reliance by the person who benefits from the duty; or (3) when the municipality assumes positive direction in the face of a known blatant and dangerous safety violation”… .

In Cuffy v City of New York (69 NY2d 255), we listed the requisite elements for a duty voluntarily assumed:

“(1) an assumption by the municipality, through promises or actions, of an affirmative duty to act on behalf of the party who was injured; (2) knowledge on the part of the municipality’s agents that inaction could lead to harm; (3) some form of direct contact between the municipality’s agents and the injured party; and (4) that party’s justifiable reliance on the municipality’s affirmative undertaking (id. at 260). We noted that “the injured party’s reliance is . . . critical” (id. at 261).

Applying the Cuffy factors here, we conclude that plaintiffs raised a triable issue of fact as to whether a special relationship existed. With regard to the first factor, a jury could conclude that the police officers made promises to protect plaintiff. Plaintiff was notified by the police that Coleson was arrested, that he was in front of a judge to be sentenced, would be in jail for a while, and that the police would be in contact with her. As to the second factor, the police officers conceivably knew that Coleson would harm plaintiff if he was not apprehended, as evidenced by his arrest and the issuance of an order of protection to plaintiff. Given that plaintiff was told by Officer Reyes that everything was in process and she would keep in contact, there is an issue of fact as to whether the police knew that their inaction could lead to harm. The third factor is easily met, as plaintiff had direct contact with the police, by the police responding to her call about Coleson’s threats, making an arrest, escorting her to the police precinct, and plaintiff’s phone call with Officer Reyes. Finally, regarding a party’s justifiable reliance on the municipality’s affirmative undertaking, given the assurances that plaintiff received from Officer Reyes that Coleson was in jail and that he would be there for a while, a jury could find that it was reasonable for plaintiff to believe that Coleson would be jailed for the foreseeable future, and that the police would contact her if that turned out not to be the case. Coleson v City of New York, 2014 NY Slip Op 08213, CtApp 11-24-14

 

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Rent-Stabilized Apartment Lease Is Exempt from the Bankruptcy Estate

The Court of Appeals, in a full-fledged opinion by Judge Abdus-Salaam, over a dissent, determined that a rent-stabilized apartment lease is exempt from the bankruptcy estate because it qualifies as a “local public assistance benefit” under Debtor and Creditor Law (DCL) 282 (2):

Section 522 (b) of the Bankruptcy Code permits the debtor to exempt certain property from the bankruptcy estate, and section 522 (d) provides a list of property that may be exempt. However, the Code also permits states to create their own list of exemptions, and New York has done so. DCL § 282 sets forth the permissible exemptions in personal bankruptcy. Debtors domiciled in New York have the option of choosing either the federal exemptions or New York exemptions (11 USC § 522 (b); DCL § 285). DCL § 282 (2), entitled “Bankruptcy exemption for right to receive benefits” lists the following as exemptions:

“The debtor’s right to receive or the debtor’s interest in: (a) a social security benefit, unemployment compensation or a local public assistance benefit; (b) a veterans’ benefit; (c) a disability, illness, or unemployment benefit; (d) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; and (e) all payments under a stock bonus, pension, profit sharing, or similar plan or contract on account of illness, disability, death, age, or length of service . . . “

When the rent-stabilization regulatory scheme is considered against the backdrop of the crucial role that it plays in the lives of New York residents, and the purpose and effect of the program, it is evident that a tenant’s rights under a rent-stabilized lease are a local public assistance benefit.   Matter of Santiago-Monteverdi, 2014 NY Slip Op 08051, CtApp 11-20-14

 

Passive Website Informing Readers of a Surgical Procedure Offered In Florida Does Not Constitute “Transaction of Business” In New York—New York Courts Do Not Have Personal Jurisdiction Over the Florida Defendants

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined that a passive website explaining the availability of back surgery in Florida is not enough to afford New York courts long-arm jurisdiction (pursuant to CPLR 302—doing business in New York) over Laser Spine Institute (LSI) which subsequently treated the New York plaintiff in Florida:

In May 2008, plaintiff was suffering from severe back pain. While on the homepage of a well-known internet service provider plaintiff discovered an advertisement for LSI, a surgical facility specializing in spine surgery, with its home facility and principal place of business in Tampa, Florida. Plaintiff clicked on the LSI advertisement, and viewed a 5-minute video presentation of a testimonial from a former LSI patient and professional golfer, extolling LSI’s medical services. The advertisement appeared to hold out the promise of relief for plaintiff’s back problems so he communicated with LSI by telephone and internet to inquire about possible surgical procedures to alleviate his pain. These would be the first of plaintiff’s several contacts with LSI, which led to his eventual decision to undergo surgical procedures by LSI medical professionals in Florida. Those surgeries are the underlying basis for plaintiff’s action against defendants. * * *

In order to satisfy “‘the overriding criterion’ necessary to establish a transaction of business” within the meaning of CPLR 302 (a) (1), a non-domiciliary must commit an act by which it “purposefully avails itself of the privilege of conducting activities within [New York]” … . Plaintiff here admits that he was the party who sought out and initiated contact with defendants after viewing LSI’s website. According to plaintiff, that website informed viewers about LSI medical services and its professional staff. However, he has not asserted that it permitted direct interaction for online registration, or that it allowed for online purchase of LSI services … . Passive websites, such as the LSI website, which merely impart information without permitting a business transaction, are generally insufficient to establish personal jurisdiction … . Paterno v Laser Spine Inst, 2014 NY Slip Op 08054, CtApp 11-20-14

 

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Tenured Teacher Subject to Discipline Is Entitled to a Hearing Pursuant to Education Law 3020-a Notwithstanding an Alternative Procedure in a Collective Bargaining Agreement

The Court of Appeals, in a full-fledged opinion by Judge Lippman, over a dissent, determined that a tenured teacher subject to discipline is entitled to a hearing pursuant to Education Law 3020-a, notwithstanding the existence of an alternative procedure agreed to in a collective bargaining agreement which was negotiated (or renegotiated) after Section 3020-a went into effect in 1994:

…[I]t is plain that the legislative intent informing its 1994 amendment (L 1994, ch 691) was to assure that tenured educators against whom formal disciplinary charges were lodged could avail themselves, if they so chose, of the procedural protections set forth in contemporaneously amended Education Law § 3020-a. While section 3020 (1) does “grandfather” pre-September 1, 1994 CBA discipline review procedures contained in unaltered CBAs, its evidently dominant purpose was prospectively to secure the right of tenured employees to avail themselves of the process set forth in Education Law § 3020-a. That purpose and the indefinite retention of mandatory alternative CBA review procedures are not easily, if at all, reconcilable. With that in mind, we believe the statute must be understood to sunset CBA provisions depriving tenured employees of the § 3020-a recourse to which they are otherwise entitled. Matter of Kilduff v Rochester City School District, 2014 NY Slip Op 08056, CtApp 11-20-14

 

New “Medical Treatment Guidelines” Do Not Exceed Statutory Authority of the Workers’ Compensation Board

The Court of Appeals, in a full-fledged opinion by Judge Pigott, over a dissent, determined that the Workers’ Compensation Board did not exceed its statutory authority when in promulgated its “Medical Treatment Guidelines” ( 12 NYCRR 324.2 [a]-[f]).  The Board had rejected payment for claimant’s acupuncture treatments which exceeded the duration of such treatments allowed by the guidelines:

The Guidelines include the list of pre-authorized medical procedures and set forth limitations on the scope and duration of each procedure. They also set forth a variance procedure, under which medical treatment providers can, on behalf of a claimant, request authorization for medical care not included in the Guidelines or in excess of the scope and/or duration that is pre-authorized (see 12 NYCRR § 324.3 [a] [1]). The medical treatment provider requesting a variance must demonstrate that the requested treatment is appropriate for the claimant and medically necessary … . * * *

The Board is authorized to “adopt reasonable rules consistent with and supplemental to the [Workers’ Compensation Law]” (Workers’ Compensation Law § 117 [1]). Courts will uphold regulations that have “a rational basis and [are] not unreasonable, arbitrary, capricious or contrary to the statute under which [they were] promulgated” … . * * *

Under the regulations, the burden of proof to establish that a variance is appropriate and medically necessary rests on the treating medical provider (12 NYCRR 324.3 [a] [2]). Whether a treating medical provider has met this burden is a threshold determination that must be made whenever a carrier properly and timely articulates an objection to a variance request. Matter of Kigin v State of NY Workers’ Compensation Bd, 2014 NY Slip OP 08052, CtApp 11-20-14

 

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