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No Appeal to the Court of Appeals Lies from the Appellate Division’s Affirmance of the Denial of Resentencing Pursuant to the 2004 Drug Law Reform Act (DLRA)

The Court of Appeals determined no appeal lies from the Appellate Division’s affirmance of the denial of resentencing pursuant to the 2004 Drug Law Reform Act (DLRA). The fact that the order (denying resentencing) was consolidated with appealable orders did not confer jurisdiction to hear the appeal upon the Court of Appeals:

“It is well established that no appeal lies from a determination made in a criminal proceeding unless specifically provided for by statute,” and courts “may not resort to interpretative contrivances to broaden the scope and application of statutes” governing the availability of an appeal … . [W]e have held that no statutory provision authorizes a defendant to appeal from an Appellate Division order affirming the denial of the defendant’s resentencing application pursuant to the 2005 Drug Law Reform Act … . The 2004 DLRA includes similar language relating to appeals; accordingly, no appeal lies from an order of the Appellate Division affirming the denial of a resentencing application under the 2004 DLRA … . Faced with this barrier to our review, defendant contends that the Appellate Division’s consolidation of the order denying resentencing with other, appealable orders, transformed the nonappealable order into one that we may consider. We disagree. The Appellate Division’s authority to consolidate appeals stems from its inherent authority to administer and manage its proceedings. The Appellate Division’s use of this inherent authority does not expand or modify the scope of our jurisdiction, which is established by statute. People v Lovett, 2015 NY Slip Op 05512, CtApp 6-25-15

 

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In the Face of Defendant’s Claims Defense Counsel Did Not Adequately Represent Him, Counsel’s Answering the Judge’s Questions About Defendant’s Allegations (Which Were Rejected by the Court) Did Not Place Defense Counsel in a Position Adverse to the Defendant’s

The Court of Appeals, in a full-fledged opinion by Judge Stein, determined that defense counsel’s answering the judge’s questions about his performance did not place the attorney in a position adverse to his client’s.  The client, prior to trial, sought the appointment of new counsel by filing a form (“Affidavit in Support of Motion for Reassignment of Counsel”) circling every reason for the appointment of new counsel listed on the form, including the failure to discuss strategy, the failure to seek discovery, the failure to contest identification evidence, and the failure to communicate with the defendant. The form did not reach the judge until after the defendant’s trial and conviction. The defendant did not mention the motion or his concerns during the trial.  The judge, based on his observations during the trial, determined many of the circled claims on the form were not true. The judge asked the attorney about what he had done prior to trial and the attorney explained what he had done.  In so doing, the attorney did not take a position adverse to the defendant’s:

“The right of an indigent criminal defendant to the services of a court-appointed lawyer does not encompass a right to appointment of successive lawyers at defendant’s option” … . A defendant may be entitled to new counsel, however, “upon showing good cause for a substitution, such as a conflict of interest or other irreconcilable conflict with counsel” (id. [internal quotation marks omitted]). Here, defendant claims that he was entitled to new defense counsel because counsel’s responses to the allegations of ineffectiveness created an actual conflict of interest.

Although an attorney is not obligated to comment on a client’s pro se motions or arguments, he may address allegations of ineffectiveness “when asked to by the court” and “should be afforded the opportunity to explain his performance” … .

We have held that counsel takes a position adverse to his client when stating that the defendant’s motion lacks merit …, or that the defendant, who is challenging the voluntariness of his guilty plea, “made a knowing plea . . . [that] was in his best interest” … . Conversely, we have held that counsel does not create an actual conflict merely by “outlin[ing] his efforts on his client’s behalf” … and “defend[ing] his performance” … .

Applying these settled principles to the facts in this case, we conclude that defense counsel’s comments in response to the judge’s questions did not establish an actual conflict of interest. Defense counsel did not suggest that his client’s claims lacked merit. Rather, he informed the judge when he met with defendant and for how long, what they discussed, what the defense strategy was at trial and what discovery he gave or did not give to defendant. Thus, he never strayed beyond a factual explanation of his efforts on his client’s behalf.  People v Washington, 2015 NY Slip Op 05511, CtApp 6-25-15

 

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NYC Taxi and Limousine Commission (TLC) Had the Authority to Enter a 10-Year Exclusive Agreement with Nissan for the Production of the “Taxi of Tomorrow (T o T),” NYC’s Official Taxicab

The Court of Appeals determined the NYC Taxi and Limousine Commission (TLC) did not exceed the authority granted the commission by the City Council when it entered a 10-year exclusive agreement with Nissan to provide the “Taxi of Tomorrow (T o T),” New York City’s official taxicab:

A legislature may enact a general statutory provision and delegate power to an agency to fill in the details, as long as reasonable safeguards and guidelines are provided to the agency (see Boreali v Axelrod, 71 NY2d 1, 10 [1987]). As a creation of a legislative body, the TLC possesses the powers expressly conferred by the City Council, as well as those “required by necessary implication” … . “[A]n agency can adopt regulations that go beyond the text of [its enabling] legislation, provided they are not inconsistent with the statutory language or its underlying purposes” … . The question before us is whether the authority granted to the TLC by the City Council included the power to enact the ToT rules, or whether the agency has exceeded its authority and acted in a manner not contemplated by the legislative body … .  * * *

The City Council granted the TLC extremely broad authority to enact rules, including the ToT rules. The TLC was created with the stated purposes of “continuance, further development and improvement of taxi and limousine service in the city of New York” (NY City Charter § 2300). The City Charter provides that the TLC is authorized, “consonant with the promotion and protection of the public comfort and convenience[,] to adopt and establish an overall public transportation policy governing taxi . . . services as it relates to the overall public transportation network of the city; to establish . . . standards for equipment safety and design; . . . and to set standards and criteria for the licensing of vehicles” used in taxi service (NY City Charter § 2300 [emphasis added]). * * *

In granting the TLC this broad authority, the City Charter includes guidelines for the TLC to consider, such as “safety, and design, comfort, convenience, noise and air pollution control and efficiency in the operation of vehicles” (NY City Charter § 2303 [b] [6]). Although the TLC has generally applied the “specs method” when promulgating rules about the design of taxis, it points to a major shortcoming of that method — the situation where no available model meets the specs in the rules as, for example, when Ford discontinued the Crown Victoria … . The TLC determined that “[t]he most obvious alternative to vehicle specifications [is the] competitive selection of taxicab vehicle models,” as embodied in the ToT project … . This new method was intended to be a more efficient way to reach the same result and, in our view, falls within the broad authority granted to the TLC. Greater N.Y. Taxi Assn. v New York City Taxi & Limousine Commn., 2015 NY Slip Op 05514, CtApp 6-25-15

 

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Unambiguous Language in Rider Covered Loss Caused by Hackers Gaining Unauthorized Access to the Insured’s Computers, Not Loss Caused by Fraudulent Billing Entries by Authorized Users

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined the rider in a financial institution bond covered loss caused by hackers gaining access to the insured’s computer system, not loss caused by the entry of fraudulent billing information into the computer system by authorized users.  Here fraudulent medical claims made by authorized users of the computer system cost the insured (Universal) $18 million. The language of the relevant rider was deemed unambiguous:

… [W]e conclude that it unambiguously applies to losses incurred from unauthorized access to Universal’s computer system, and not to losses resulting from fraudulent content submitted to the computer system by authorized users. The term “fraudulent” is not defined in the Rider, but it refers to deceit and dishonesty (see Merriam Webster’s Collegiate Dictionary [10th ed 1993]). While the Rider also does not define the terms “entry” and “change,” the common definition of the former includes “the act of entering” or “the right or privilege of entering, access,” and the latter means “to make different, alter” (id.). In the Rider, “fraudulent” modifies “entry” or “change” of electronic data or computer program, meaning it qualifies the act of entering or changing data or a computer program. Thus, the Rider covers losses resulting from a dishonest entry or change of electronic data or computer program, constituting what the parties agree would be “hacking” of the computer system. The Rider’s reference to “fraudulent” does not also qualify what is actually acted upon, namely the “electronic data” or “computer program” itself. The intentional word placement of “fraudulent” before “entry” and “change” manifests the parties’ intent to provide coverage for a violation of the integrity of the computer system through deceitful and dishonest access.

Other language in the Rider confirms that the Rider seeks to address unauthorized access. First, the Rider is captioned “Computer Systems,” and the specific language at issue is found under the subtitle “Computer Systems Fraud.” These headings clarify that the Rider’s focus is on the computer system qua computer system. Second, under “EXCLUSIONS,” the Rider exempts from coverage losses resulting directly or indirectly from fraudulent instruments “which are used as source documentation in the preparation of Electronic Data, or manually keyed into a data terminal.” If the parties intended to cover fraudulent content, such as the billing fraud involved here, then there would be no reason to exclude fraudulent content contained in documents used to prepare electronic data, or manually keyed into a data terminal. Universal Am. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA., 2015 NY Slip Op 05516, CtApp 6-25-15

 

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Although a Close Case, the Evidence Supported Defendant’s Manslaughter Conviction Under an Accomplice Theory—the Judge’s Informing the Jury of the Correct Dates of the Offense, Outside the Presence of the Parties, with the Parties’ Consent, Was Not a Mode of Proceedings Error Requiring Reversal

Noting that it was a close case, the Court of Appeals determined the evidence supported defendant’s conviction for manslaughter under an accomplice theory.  Defendant struck the victim with a beer bottle and then chased after another man.  There was conflicting testimony about whether defendant was present when another man who was with the defendant struck the victim with a baseball bat.  Viewing the evidence in the light most favorable to the People, the evidence of a “community of purpose” among accomplice and principal was sufficient.  Further, the court determined the judge’s correcting an error in the jury instructions by informing the jury of the correct dates of the offenses outside the presence of the parties, but with the parties’ consent, was not a mode of proceedings error requiring reversal. People v Scott, 2015 NY Slip Op 04874, CtApp 6-11-15

 

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In a Risk Level Modification Proceeding, a Defendant Is Entitled to All the Documents Reviewed by the Board

The Court of Appeals, in a full-fledged opinion by Judge Pigott, determined defendant was entitled to access to all the documents reviewed by the New York State Board of Examiners of Sex Offenders (Board) in connection with the Board’s recommendation that defendant’s classification remain at risk level 3.  However, County Court’s refusal to grant an adjournment to allow defendant to gain access to missing documents (two emails) was not an abuse of discretion. The record evidence in support of the denial of the modification was overwhelming:

Section 168-o (4), applicable when a petitioner seeks modification of the risk level, does not contain any language entitling a petitioner to pre-hearing discovery, but simply provides that a petitioner has a right to submit “any information relevant to the review” (Correction Law § 169-o [2]). Further, the right to petition the sentencing court to be “relieved of any further duty to register” under Correction Law § 168-o (1) does not permit the court to review the correctness of the initial risk level determination (see Correction Law § 168-g [4]…). While there are statutory differences in the two [*5]proceedings, we agree with defendant that the procedural due process rights, in regard to the requested documents, were the same. Thus, defendant was entitled to access to the documents.

Nonetheless, it is well-settled that the decision to grant an adjournment is a matter of discretion for the hearing court … . “When the protection of fundamental rights has been involved in requests for adjournments, that discretionary power has been more narrowly construed” … . Under the circumstances of this case, it cannot be said the court abused its discretion as a matter of law in failing to adjourn the hearing to gather the two emails. People v Lashway, 2015 NY Slip Op 04877, CtApp 6-11-15

 

Possession of the Note, Not the Mortgage, Confers Standing to Foreclose

The Court of Appeals, in a full-fledged opinion by Judge Lippman, determined that possession of the note, not the mortgage, when the foreclosure proceedings are commenced is sufficient to confer standing upon the note-holder. ” ‘[A]ny disparity between the holder of the note and the mortgagee of record does not stand as a bar to a foreclosure action because the mortgage is not the dispositive document of title as to the mortgage loan; the holder of the note is deemed the owner of the underlying mortgage loan with standing to foreclose’… . . Accordingly, the [defendants’] argument that [plaintiff] lacked standing because it did not possess a valid and enforceable mortgage as of the commencement of this action is simply incorrect. The validity of the … assignment of the mortgage is irrelevant to [plaintiff’s]  standing;”

… [T]o have standing, it is not necessary to have possession of the mortgage at the time the action is commenced. This conclusion follows from the fact that the note, and not the mortgage, is the dispositive instrument that conveys standing to foreclose under New York law. In the current case, the note was transferred to [plaintiff] before the commencement of the foreclosure action — that is what matters.

A transfer in full of the obligation automatically transfers the mortgage as well unless the parties agree that the transferor is to retain the mortgage (Restatement [Third] of Property [Mortgages] § 5.4, Reporter’s Note, Comment b). The [defendants] misconstrue the legal principle that “an entity with a mortgage but no note lack[s] standing to foreclose” … to also mean the opposite — that an entity with a note but no mortgage lacks standing. Once a note is transferred, however, “the mortgage passes as an incident to the note” … . Aurora Loan Servs., LLC v Taylor, 2015 NY Slip Op 04872, CtApp 6-11-15

 

Where a Defendant Has Been Convicted of an Armed Felony or an Enumerated Sex Offense Pursuant to CPL (Criminal Procedure Law) 720.10(2)a)(ii ie (iii), Even If the Defendant Has Not Requested or Has Explicitly Waived “Youthful Offender” Status, the Court Must Determine, On the Record, Whether Mitigating Circumstances Exist, and, If So, Must Determine On the Record Whether the Defendant Should Be Adjudicated a Youthful Offender

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a partial three-judge dissent, determined “when a defendant has been convicted of an armed felony or an enumerated sex offense pursuant to CPL 720.10 (2) (a) (ii) or (iii), and the only barrier to his or her youthful offender eligibility is that conviction, the court is required to determine on the record whether the defendant is an eligible youth by considering the presence or absence of the factors set forth in CPL 720.10 (3). The court must make such a determination on the record ‘even where [the] defendant has failed to ask to be treated as a youthful offender, or has purported to waive his or her right to make such a request’ pursuant to a plea bargain … . If the court determines, in its discretion, that neither of the CPL 720.10 (3) factors exist and states the reasons for that determination on the record, no further determination by the court is required. If, however, the court determines that one or more of the CPL 720.10 (3) factors are present, and the defendant is therefore an eligible youth, the court then ‘must determine whether or not the eligible youth is a youthful offender’ (CPL 720.20 [1]).” People v Middlebrooks, 2015 NY Slip Op 04875, CtApp 6-11-15

 

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In an Action Stemming from the Purchase of Residential Mortgage-Backed Securities, the Breach of Defendant’s Representations and Warranties Concerning the Borrowers’ Incomes, Occupancy Status and Debt Obligations Occurred on the Date the Contract Was Executed (Starting the Six-Year Statute of Limitations at that Point)—Defendant’s Obligation to Cure or Repurchase Did Not Constitute a Second Contract—Defendant’s Refusal to Cure or Repurchase, Therefore, Did Not Start the Running of Another Six-Year Limitations Period

The Court of Appeals, in a full-fledged opinion by Judge Read, in an action involving residential mortgage-backed securities, determined that a cause of action based upon breach of representations and warranties accrued on the date the contract was executed. A few years after the parties executed a mortgage loan purchase agreement (MLPA) and a pooling a servicing agreement (PSA) borrowers began to default, resulting in hundreds of millions in losses.  Upon investigation it was determined that the underlying mortgage loans failed to comply with the defendant’s representations and warranties about the borrowers’ incomes, occupancy status and existing debts.  The Court of Appeals held that the breach of the representations and warranties occurred when the MLPA was executed on March 28, 2006.  The action was commenced on the last day of the limitations period (on March 28, 2012), but was untimely because the contractual conditions precedent to suit had not been complied with as of that date. Plaintiff argued that the defendant’s refusal to cure or repurchase after notification in January, 2012, breached a second contract and started the six-year statute running from that point. The Court of Appeals held that the defendant’s repurchase obligation was not a valid agreement “to undertake a separate obligation, the breach of which does not arise until some future date…”.  “[Defendant’s] cure or repurchase obligation could not reasonably be viewed as a distinct promise of future performance. It was dependent on, and indeed derivative of, [defendant’s] representations and warranties, which did not survive the closing and were breached, if at all, on that date…” . ACE Sec. Corp. v DB Structured Prods., Inc., 2015 NY Slip Op 04873, CtApp 6-11-15

 

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Florida’s Law of Restrictive Covenants Re: Non-Solicitation of Customers by a Former Employee Violates New York Public Policy by Favoring Employers at the Expense of Employees

The Court of Appeals, in a full-fledged opinion by Judge Stein, determined the Florida law on restrictive covenants re: non-solicitation of customers by a former employee violated the public policy of New York State.  Therefore the choice-of-law provision in the employee agreement was unenforceable.  The Court of Appeals went on to find that, applying New York law, questions of fact precluded a determination whether the non-solicitation agreement at issue should be enforced.  With respect to the public policy violation, the court explained:

… Florida law requires a party seeking to enforce a restrictive covenant only to make a prima facie showing that the restraint is necessary to protect a legitimate business interest, at which point the burden shifts to the other party to show that the restraint is overbroad or unnecessary (see Fla Stat § 542.335 [1] [c]). If the latter showing is made, the court is required to “modify the restraint and grant only the relief reasonably necessary to protect” the employer's legitimate business interests (Fla Stat § 542.335 [1] [c]). In contrast to this focus solely on the employer's business interests, under New York's three-prong test, “[a] restraint is reasonable only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public. A violation of any prong renders the covenant invalid” … . Whereas Florida shifts the burden of proof after the employer demonstrates its business interests (see Fla Stat § 542.335 [1] [c]), New York requires the employer to prove all three prongs of its test before the burden shifts … . Further, Florida law explicitly prohibits courts from considering the harm or hardship to the former employee (see Fla Stat § 542.335 [1] [g] [1]). This directly conflicts with New York's requirement that courts consider, as one of three mandatory factors, whether the restraint “impose[s] undue hardship on the employee” … .

Additionally, under Florida law, courts are required to construe restrictive covenants in favor of protecting the employer's interests, and may not use any rules of contract interpretation that would require the construction of a restrictive covenant narrowly or against the restraint or drafter (see Fla Stat § 542.335 [1] [h]). In contrast, New York law provides that “[c]ovenants not to compete should be strictly construed because of the 'powerful considerations of public policy which militate against sanctioning the loss of a [person's] livelihood'” … . Brown & Brown, Inc. v Johnson, 2015 NY Slip Op 04876, CtApp 6-11-15

 

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