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DISPUTE INVOLVING MALAYSIAN BANKS, INCLUDING GOLDMAN SACHS SINGAPORE, PROPERLY DISMISSED ON FORUM NON CONVENIENS GROUNDS (FIRST DEPT).

The First Department determined a dispute involving Goldman Sachs Singapore (GSS) was properly dismiss on forum non conveniens grounds:

The action was properly dismissed on forum non conveniens grounds, given the unduly burdensome inquiry involved in determining personal jurisdiction in these circumstances and the balance of the forum non conveniens considerations … . The decision whether the court had jurisdiction over GSS because GSS was a mere department of New-York-based Goldman Sachs Group, Inc. (GSG) would involve an “arduous inquiry”… into whether GSG controlled GSS’s finances, interfered with the selection and assignment of executive personnel, and failed to observe corporate formalities, and whether defendant Tim Leissner had sufficient contacts with New York.

Plaintiff’s causes of action for fraud and breach of fiduciary duty lack a substantial nexus with New York … . Furthermore, plaintiff is a Cayman Islands partnership, not a New York resident … . Finally, Malaysia has a greater interest than New York in whether one Malaysian bank (nonparty Hong Leong Bank) corruptly took over another Malaysian bank (EON) … . Primus Pac. Partners 1, LP v Goldman Sachs Group, Inc., 2019 NY Slip Op 06052, First Dept 8-6-19

 

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COMMISSIONER OF LABOR AND INDUSTRIAL BOARD OF APPEALS COULD NOT PURSUE STATE WAGE CLAIMS ON BEHALF OF CLAIMANTS WHO ARE SUBJECT TO A CLASS ACTION SETTLEMENT IN FEDERAL DISTRICT COURT IN WHICH THE STATE WAGE CLAIMS WERE RELEASED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Oing, determined that the Commissioner of Labor and the Industrial Board of Appeals (IBA) were bound by the federal district court’s release in a class action alleging failure to pay minimum wages, failure to pay overtime wages and unlawful deductions. The IBA had awarded two members of the class state wage claims together with interest and penalties:

Procedurally, IBA erred in entertaining this issue. In the final approval order, the District Court clearly and unmistakably retained exclusive and continuing subject matter jurisdiction of the Stewart class action “for the purposes of supervising the implementation, effectuation, enforcement, construction, administration and interpretation of the Settlement Agreement and this Judgment.” Undoubtedly, the District Court “has the power to enforce an ongoing order against relitigation so as to protect the integrity of a complex class settlement over which it retained jurisdiction” … . … * * *

Because we have determined that claimants have released their dual wage claims, the focus now necessarily concerns the concept of privity, and whether it exists between claimants and respondents [Commissioner of Labor, et al]. We find that the holding in Applied Card Sys., Inc. (11 NY3d at 124) is dispositive of this issue.

The Applied Card Court addressed whether the state Attorney General was precluded under the doctrine of res judicata from pursuing on the class members’ behalf their restitution claims released in an underlying class action settlement. The Court held that because the Attorney General was pursuing claims identical to the ones that had been released that fact alone established privity … . The facts herein are virtually indistinguishable from Applied Card. Here, respondents, on behalf of claimants, seek to pursue their released dual wage claims. As such, privity has been established between claimants and respondents. Matter of Silvar v Commissioner of Labor of the State of N.Y., 2019 NY Slip Op 05841, First Dept 7-30-19

 

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HANDGUN FOUND IN A COAT IN A CLOSET BY A PAROLE OFFICER WITH A PAROLE ABSCONDER WARRANT SHOULD NOT HAVE BEEN SUPPRESSED (FIRST DEPT).

The First Department, reversing the suppression court in an appeal by the People, determined the handgun found during a search of defendant’s bedroom pursuant to a parole warrant should not have been suppressed. The parole officer testified she was searching a closet to see if defendant was hiding there when she felt a handgun in the pocket of a jacket she had seen defendant wearing:

In Huntley, the Court of Appeals “relied on the dual nature of a parole officer’s duties and a parolee’s reduced expectation of privacy to hold that a parolee’s constitutional right to be secure against unreasonable searches and seizures is not violated when a parole officer conducts a warrantless search that is rationally and reasonably related to the performance of the parole officer’s duties” (… see Huntley, 43 NY2d at 179, 181 …). “It would not be enough necessarily that there was some rational connection; the particular conduct must also have been substantially related to the performance of duty in the particular circumstances” … .

Applying this standard, we find that Parole Officer Williams, whose testimony the hearing court credited, acted lawfully in retrieving the firearm from defendant’s jacket pocket. While executing a valid parole warrant, and in the course of searching for defendant pursuant to that warrant, Williams inadvertently felt an object, that both she and her supervisor believed to be a gun, in the jacket pocket. Because parolees are not permitted to possess firearms, Williams’s discovery meant that defendant was in further violation of the conditions of his supervised release. Thus, the minimally invasive step of retrieving the gun from the pocket was “rationally and reasonably related to the performance of [her] duty as [defendant’s] parole officer” … . People v Jennings, 2019 NY Slip Op 05838, First Dept 7-30-19

 

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THE NYC DEPARTMENT OF SOCIAL SERVICES DOES NOT HAVE THE AUTHORITY TO RECOVER MEDICAID OVERPAYMENTS FROM PERSONAL CARE SERVICE PROVIDERS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kahn. over a two-justice dissent, determined that The City of New York Human Resources Administration Department of Social Services (HRA) does not have the authority to audit and recover overpayments of funds provided pursuant to the Health Care Reform Act (HCRA) from personal care service providers such as petitioner People Care Incorporated d/b/a Assisted Care:

The determinative issue on this appeal is not whether the HCRA funds were denominated as “Medicaid rates of payment” or “Medicaid rate adjustments” in the statute and the MOU [memorandum of understanding]. Rather, the issue presented here is whether, under the terms of the 2001 contract, Public Health Law § 2807-v(1)(bb)(i) and the MOU superseded the provisions of that contract as to the auditing and recoupment of HCRA funds. * * *

… [N]either Public Health Law § 2807-v(1)(bb), as the governing statute, nor the MOU between DOH [NYS Department of Health] and HRA, entered into pursuant to that statute, contains any language delegating DOH’s auditing and recoupment authority to HRA or any other agency. Matter of People Care Inc. v City of New York Human Resources Admin., 2019 NY Slip Op 05756, First Dep 7-23-19

 

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ALTHOUGH THERE IS NO CAUSE OF ACTION FOR CIVIL CONSPIRACY IN NEW YORK, THE ELEMENTS OF CONSPIRACY, INCLUDING OVERT ACTS, WERE PROPERLY PLED AS PART OF THE FRAUD CAUSE OF ACTION (FIRST DEPT). ​

The First Department, modifying Supreme Court, determined that, although there is no cause of action for civil conspiracy in New York, the conspiracy alleged here was validly pled as part of the fraud cause of action. The unjust enrichment cause of action should have been dismissed because there was no close relationship between the plaintiff and defendant. The complaint did not support the punitive damages claim because it did not allege defendants’ actions were aimed at the public or showed moral turpitude. The permanent injunction cause of action was validly pled because the injury cannot be fully compensated by money damages. The action stemmed from a failed partnership to develop a cure for rare genetic blood disorders:

The complaint states a cause of action for fraud by alleging that Sloan-Kettering knowingly misrepresented or omitted a material fact for the purpose of inducing plaintiff to rely upon it, that plaintiff justifiably relied on the misrepresentation or omission, and that plaintiff sustained injury … . …

… “[C]ivil conspiracy is not recognized as an independent tort in this State” … . Rather, the “allegations in the complaint herein charging conspiracy are deemed part of the remaining causes of action to which they are relevant” … . Here, the conspiracy charge remains as part of the fraud cause of action. …

… “[L]iability for fraud may be premised on knowing participation in a scheme to defraud, even if that participation does not by itself suffice to constitute the fraud” … . Allegations of conspiracy “serve to enable a plaintiff to connect a defendant with the acts of his co-conspirators where without it he could not be implicated” … .

… [P]laintiff sufficiently alleges overt acts …. …

… [T]he liability of a defendant as a conspirator for co-conspirators’ wrongful acts “does not necessarily depend upon his active participation in the particular overt acts” … . Moreover, once a conspiracy is established, all defendants are liable for each other’s acts in furtherance of the conspiracy … . Errant Gene Therapeutics, LLC v Sloan-Kettering Inst. for Cancer Research, 2019 NY Slip Op 05754, First Dept 7-23-19

 

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THE INTERSTATE COMPACT FOR THE PLACEMENT OF CHILDREN (ICPC) APPLIES ONLY TO OUT-OF-STATE ADOPTION OR FOSTER CARE, NOT TO THE PLACEMENT OF A CHILD WITH AN OUT-OF-STATE PARENT; QUESTION CONSIDERED ON APPEAL AS AN EXCEPTION TO THE MOOTNESS DOCTRINE; REGULATION RELIED ON TO APPLY THE ICPC CONFLICTS WITH THE CONTROLLING STATUTE (FIRST DEPT).

The First Department, reversing Family Court, in a full-fledged opinion by Justice Webber, in a matter of first impression, and refusing to follow the 2nd Department, determined that the Interstate Compact for the Placement of Children (ICPC) applies only to children to be adopted or placed in foster care in another state, not, as here, to the placement of a child with the father in another state. The issue was considered on appeal as an exception to the mootness doctrine because it is likely to reoccur. The First Department held that the controlling statute, Social Services Law 374-a,  clearly states that the ICPC applies only to out of state foster care or adoption, and the regulation which states otherwise (Association of Administrators of the Interstate Compact on the Placement of Children. AAICPC, Regulation 3) improperly expands the statutory language:

There is no dispute that the ICPC was intended to provide children in need of foster and adoptive families with more possible placements across state lines. The purpose of the statute was twofold: to assure the placement would be in a child’s best interests, and to preclude the “sending State from exporting its foster care responsibilities to a receiving State” … . Thus the ICPC was enacted to provide children in need of foster and adoptive families with more options, while still paying heed to concerns about the children’s welfare.

There is also nothing in the language of the statute or the legislative history to indicate that the ICPC was ever intended to address any individual other than an out-of-state foster or adoptive parent. The language explicitly limits its applicability to out-of-state placements in foster care or as a preliminary to a possible adoption … . The limitation reflects the ICPC’s purpose which was to provide “a uniform legislative framework for the placement of children across state lines in foster and/or adoptive homes” … . Matter of Emmanuel B. (Lynette J.), 2019 NY Slip Op 05640, First Dept 7-18-19

 

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PLAINTIFF’S TESTIMONY ABOUT HOW THE TRAFFIC ACCIDENT HAPPENED FOUND INCREDIBLE AS A MATTER OF LAW AT THE SUMMARY JUDGMENT STAGE, DISSENT ARGUED THE TESTIMONY RAISED CLASSIC QUESTIONS OF FACT FOR THE JURY TO DETERMINE (FIRST DEPT). ​

The First Department, over an extensive dissent, determined the defendants’ motion for summary judgment in this traffic accident case was properly granted. The majority argued plaintiff’s testimony was incredible and therefore was properly disregarded. The dissent argued plaintiff’s testimony raised classic questions of fact about how the accident happened. The collision occurred when plaintiff was attempting to change lanes. The majority interpreted plaintiff’s testimony to mean that she was straddling two lanes and was not moving when the truck struck her SUV, which, based on photographic evidence, the majority found incredible as a matter of law:

The photographic evidence shows that plaintiff’s SUV struck the rear of defendants’ tractor-trailer as plaintiff was attempting to merge into defendants’ truck’s lane of traffic. Thus, plaintiff violated her “duty not to enter a lane of moving traffic until it was safe to do so” (… see Vehicle and Traffic Law § 1128[a] …), “and [her] failure to heed this duty constitutes negligence per se”. * * ^

… [I]n summary judgment analysis, we must discount the plaintiff’s testimony where the plaintiff has “relied solely on [her] own testimony, uncorroborated by any other witnesses or evidence,” and her testimony belied “common sense” … . As these circumstances are presented in this case, plaintiff’s testimony was properly “disregarded as being without evidentiary value” … . Thus, plaintiff’s testimony raised no triable issues of fact. Castro v Hatim, 2019 NY Slip Op 05639, First Dept 7-16-19

 

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HEIRS OF A JEWISH VIENNESE ART COLLECTOR, FRITZ GRUNDBAUM, KILLED BY THE NAZIS IN 1941, DEMONSTRATED THEY WERE ENTITLED TO POSSESSION OF CERTAIN ARTWORKS IN THE GRUNDBAUM COLLECTION WHICH WERE ALLEGEDLY LOOTED BY THE NAZIS (FIRST DEPT).

The First Department, in a comprehensive opinion by Justice Singh, determined that plaintiffs, heirs of Jewish Viennese art collector, Fritz Grunbaum, who was murdered by the Nazis in 1941, demonstrated they were entitled to certain artworks collected by Grundbaum and alleged to have been looted by the Nazis. The complex history leading to this lawsuit cannot be fairly summarized here:

” A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession'” … . “Two key elements of conversion are (1) plaintiff’s possessory right or interest in the property; and (2) defendant’s dominion over the property or interference with it, in derogation of plaintiff’s rights” … . Where a party’s interests in property have been sold, there can be no interference with their property rights and a conversion claim may not be maintained … .

To state a cause of action for replevin, a plaintiff must establish a superior possessory right to property in a defendant’s possession … .

Here, we find that plaintiffs have made a prima facie showing of superior title to the Artworks based on evidence that establishes the following: (1) Grunbaum owned the Artworks prior to World War II; and (2) Grunbaum never voluntarily relinquished the Artworks. Reif v Nagy, 2019 NY Slip Op 05504, First Dept 7-9-19

 

PASSING REFERENCE IN A CONTRACT TO A ‘TERMS AND CONDITIONS’ PAGE THAT WAS NOT PART OF THE CONTRACT REVIEWED BY PLAINTIFF DID NOT SERVE TO INCORPORATE THE PAGE INTO THE AGREEMENT (FIRST DEPT).

The First Department determined that a passing reference to a “Terms and Conditions” page which purported to require all contract disputes to be litigated in North Carolina did not incorporate that page into the document:

… [T]he Terms and Conditions section never appeared in the proposed agreement that plaintiff ultimately reviewed and signed, and it is undisputed that plaintiff never saw the Terms and Conditions page. Indeed, the final 29-page agreement, which did not include the “Terms and Conditions,” was paginated consecutively and signed on each page by both parties. Therefore, contrary to defendants’ suggestions, plaintiff had no reason to ask for any other documents.

Although documents may be incorporated by reference as part of an executed agreement … , the doctrine of incorporation by reference “is grounded on the premise that the material to be incorporated is so well known to the contracting parties that a mere reference to it is sufficient” … . The referenced material must be described in the contract such that it is identifiable beyond all reasonable doubt … . Here the agreement’s oblique reference to an otherwise unidentified Terms and Conditions page, which was never provided to plaintiff, is insufficient to meet this exacting standard … . Eshaghpour v Zepsa Indus., Inc., 2019 NY Slip Op 05490, First Dept 7-9-19

 

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DEFENDANT’S MOTION TO DISMISS THE COMPLAINT FOR LACK OF PERSONAL JURISDICTION SHOULD HAVE BEEN GRANTED, DEFENDANT’S ONLY CONNECTION TO THE CORPORATION WHICH HAD CONTACTS WITH NEW YORK WAS HIS SALARY; THEREFORE THE CORPORATION’S NEW YORK CONTACTS COULD NOT BE IMPUTED TO DEFENDANT (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s (Sprinkle’s) motion to dismiss the complaint for lack of personal jurisdiction should have been granted, noting that Sprinkle’s only connection with the corporation alleged to have breached the contract was his salary. The corporation’s contacts with New York could not, therefore, be imputed to Sprinkle:

The complaint fails to state a cause of action as against Sprinkle for tortious interference with contract, because there is no allegation that Sprinkle personally benefitted from the corporations’ alleged breach of contract; the only benefit he is alleged to have received is his salary from the corporations … .

Plaintiff failed to make a sufficient start on a showing of jurisdiction over Sprinkle to entitle it to jurisdictional discovery … . Because the conduct complained of involved the diversion of funds from outside New York to recipients outside New York, the “critical events,” and thus the situs of injury, were not in New York … . Moreover, plaintiff does not allege that Sprinkle received substantial revenue from interstate or international commerce (see CPLR 302[a][3][ii]). Because Sprinkle did not personally benefit from the breach of contract, the corporations’ contacts with New York cannot be imputed to him … .

Nor can Sprinkle be said to have “reasonably expected” his actions to have consequences in New York … as he neither did anything to avail himself of New York nor took any steps to project himself into New York. Given that Sprinkle had no contact with New York and did not purposefully avail himself of New York, the constitutional guarantee of due process bars New York courts from exercising personal jurisdiction over him. Greenbacker Residential Solar LLC v OneRoof Energy, Inc., 2019 NY Slip Op 05487, First Dept 7-9-19

 

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