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PLAINTIFF IN THIS DERIVATIVE STOCKHOLDER ACTION DID NOT SUFFICIENTLY ALLEGE THAT A DEMAND FOR RELIEF ON THE BOARD COULD BE EXCUSED, COMPLAINT PROPERLY DISMISSED (FIRST DEPT).

The First Department determined the complaint in this shareholder derivative action was properly dismissed for failure to first make a demand for relief on the board. The Rales criteria were not met:

Under Rales, “a court must determine whether . . . the particularized factual allegations of a derivative stockholder complaint create a reasonable doubt that, as of the time the complaint is filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand” … . The ” mere threat of personal liability . . . is insufficient to challenge either the independence or disinterestedness of directors'” … . However, “a substantial likelihood” of liability “disables [a director] from impartially considering a response to a demand by” a stockholder … .

“Where, as here, directors are exculpated from liability except for claims based on fraudulent, illegal or bad faith conduct, a plaintiff must . . . plead particularized facts that demonstrate that the directors acted with scienter, i.e., that they had actual or constructive knowledge that their conduct was legally improper” … .

Even though the complaint alleges that BMS’ audit committee and senior management knew about gaps in the company’s internal controls, it fails to establish bad faith or scienter … .

Plaintiff’s contention that defendants face a substantial likelihood of liability because they signed 10-K’s that contained false statements is also unavailing. It is true that “when directors communicate publicly . . . about corporate matters[,] the sine qua non of directors’ fiduciary duty to shareholders is honesty” … . However, “to establish liability for misstatements when the board is not seeking shareholder action, shareholder plaintiffs must show that the misstatement was made knowingly or in bad faith” … . Deckter v Andreotti, 2019 NY Slip Op 01717, First Dept 3-12-19

 

MERELY QUESTIONING THE CREDIBILITY OF PLAINTIFF’S EXPLANATION OF THE CAUSE OF HER STAIRWAY SLIP AND FALL DID NOT RAISE A QUESTION OF FACT, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined that defendant’s motion for summary judgment in this slip and fall case should not have been granted. Defendant did not submit evidence refuting plaintiff’s explanation of the cause of her fall (a hole in the stairs). Merely questioning the credibility of the plaintiff did not raise a question of fact:

Plaintiff was injured when, while walking down a staircase in defendant’s building, her foot struck a hole in the stairs, causing her to fall from the third floor to the second floor. Defendant failed to establish entitlement to judgment as a matter of law by submitting evidence refuting plaintiff’s testimony identifying the cause of her fall … . Defendant’s challenge to the credibility of plaintiff’s evidence is a matter for resolution by a trier of fact … . Morales v 320 E. 176th St., LLC, 2019 NY Slip Op 01711, First Dept 3-12-19

 

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QUESTION OF FACT WHETHER GROSS NEGLIGENCE MIGHT OVERCOME A CONTRACTUAL LIMITATION ON LIABILITY (FIRST DEPT).

The First Department, reversing Supreme Court, determined there was a question of fact whether gross negligence might overcome a contractual limitation on liability. Here a bid on a highway project turned out to be more than $80 million short, which resulted in the withdrawal of the bid. The project was for a toll road, the toll to be paid to the builder of the road. The bid was low because the date of the beginning of construction, rather than the end of construction, was used to calculate the income from the toll. Gross negligence factors included, the firing of key personnel overseeing the creation of the bid, failure to follow company policy in reviewing the bid, and departure from industry standards:

It is well-settled that contractual limitations on liability are generally enforceable … . However, “public policy forbids a party from attempting to avoid liability for damages caused by grossly negligent conduct” … . Thus, a gross negligence claim will be sustained where a party’s conduct “evinces a reckless disregard for the rights of others or smacks’ of intentional wrongdoing” … . S.A. De Obras y Servicios, COPASA v Bank of Nova Scotia, 2019 NY Slip Op 01706, First Dept 5-12-19

 

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DEFENDANT’S FLIGHT WHEN APPROACHED BY POLICE IN PLAINCLOTHES AND DRIVING AN UNMARKED CAR DID NOT JUSTIFY PURSUIT, MOTION TO SUPPRESS WEAPON DISCARDED BY THE DEFENDANT SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Renwick, over two separate full-fledged dissenting opinions, determined that the police did not have justification for pursuing defendant when he ran as the police (in plainclothes driving an unmarked car) approached. The police had a report of a shooting by a black man wearing a black jacket. Defendant was wearing a gray jacket and was walking out of an apartment complex with a black man wearing a black jacket. Defendant’s motion to suppress the weapon he discarded during the chase should have been granted:

“Flight alone, even if accompanied by equivocal circumstances that would justify a police request for information, does not establish reasonable suspicion of criminality and is insufficient to justify pursuit, although it may give rise to reasonable suspicion if combined with other specific circumstances indicating the suspect’s possible engagement in criminal activity” … . “Police pursuit of an individual ‘significantly impede[s]’ the person’s freedom of movement and thus must be justified by reasonable suspicion that a crime has been, is being, or is about to be committed” … . …

… [T]he radio report simply indicated a sole perpetrator with a vague description — black man in a black jacket. There was nothing at all about defendant that matched any aspect of the suspect in the radio report, except that he was black. Nor was defendant wearing a black jacket. He was wearing a gray jacket and was with a second individual, several minutes after the radio report of shots fired. The men did not appear to be fleeing the scene, but rather, were exiting an apartment complex. Thus, unlike the cases relied on by the People, defendant did not match any description, general or otherwise … . Further, there was insufficient evidence to support the conclusion that defendant knew Pengel and his colleagues were police officers… .

That defendant was with someone who matched an extremely vague, generic description of the suspect, which contained no information about the suspect’s height or weight, was not sufficiently indicative of criminal activity on defendant’s part … . People v Bilal, 2019 NY Slip Op 01673, First Dept 3-7-19

 

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DEFENDANTS DEMONSTRATED THEY DID NOT HAVE CONSTRUCTIVE NOTICE OF THE WET CONDITION ON THE STAIRS IN THIS SLIP AND FALL CASE, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendants’ motion for summary judgment in this stairway slip and fall case should have been granted. Defendants demonstrated they did not have constructive notice of a wet condition:

Defendants … relied on plaintiff’s testimony that, in the 15 minutes before his accident, he had gone up and down the stairs without incident and did not notice any liquid or water on the steps, demonstrating that the alleged dangerous condition was not visible and apparent for a sufficient time before the accident to provide constructive notice … . Although plaintiff did testify that he saw a woman with a mop coming down the stairs as he was going upstairs the first time, implying that she could have caused the wet condition, he acknowledged that the surveillance video did not show any woman with a mop. Furthermore, defendants’ witnesses stated that the daytime worker for defendant United Building Maintenance Associates, Inc. was only responsible for cleaning the area near the ATM machines on the first floor and never mopped, and that the staircase was cleaned by night personnel. Fernandez v JPMorgan Chase Bank, NA, 2019 NY Slip Op 01645, First Dept 5-7-19

 

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ARCHITECT’S MOTION FOR SUMMARY JUDGMENT PROPERLY DENIED, THE FACT THAT ANOTHER PARTY PLACED THE ANGLE IRON WHICH INJURED PLAINTIFF IN AN EFFORT TO FIX AN ALLEGED DEFECT IN THE DESIGN OF THE SUBJECT BOILER SYSTEM DID NOT CONSTITUTE A SUPERSEDING CAUSE OF PLAINTIFF’S INJURY AS A MATTER OF LAW (FIRST DEPT).

The First Department determined defendant architect’s (Cannon’s) motion for summary judgment in this personal injury case was properly denied. Plaintiff was injured when an angle iron used to support part of a boiler system struck him on the head. Cannon argued it did not have any responsibility for the use of the angle iron as a support, which was placed there by a third party. However Cannon approved the boiler system and therefore may have been responsible for the defect which resulted in the need for the angle-iron support. Therefore the placement of the angle iron may not have been a superseding cause of the injury:

… [A]ccording to Cannon, even if it was negligent in its review of the component list or in its inspections of the ongoing work, any such negligence was not a proximate cause of the accident, because the installation of angle irons, which it never approved, and the failure of DASNY [building owner] and Martin [HVAC contractor} to heed its remediation recommendation for eight months before the accident occurred were intervening superseding causes.

“When a question of proximate cause involves an intervening act, liability turns upon whether the intervening act is a normal or foreseeable consequence of the situation created by the defendant’s negligence'” … . “The mere fact that other persons share some responsibility for plaintiff’s harm does not absolve defendant from liability because there may be more than one proximate cause of an injury'” … . Here, a jury could reasonably conclude that the effort to reinforce the cleanout port covers with angle irons was a normal and foreseeable consequence of the alleged inadequacy of the covers, which Cannon either approved or failed to detect, and which Cannon’s principal acknowledged were not the proper covers. Thus, under the circumstances presented in this case, there remain triable issues of fact as to whether, inter alia, the use of the angle iron bracing, as well as DASNY and Martin’s failure to replace the covers, despite notice from Cannon, constituted superseding causes of plaintiff’s injuries  … . Demetro v Dormitory Auth. of the State of N.Y., 2019 NY Slip Op 01642, First Dept 3-7-19

 

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TENANT’S ALLEGED FAILURE TO INSURE THE PROPERTY AND ALLEGED IMPROPER ASSIGNMENT OF THE LEASE ARE NOT DEFAULTS THAT CAN BE CURED, THEREFORE THE TENANT IS NOT ENTITLED TO A YELLOWSTONE INJUNCTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the tenant was not entitled to a Yellowstone injunction because the alleged failure to insure the property and the alleged improper assignment of the lease were not curable defaults:

The purpose of a Yellowstone injunction, which tolls the period in which a tenant may cure a claimed violation of the lease, is for a tenant to avoid forfeiture after a determination against it has been made on the merits, because the tenant will still have an opportunity to cure … .

A necessary lynchpin of a Yellowstone injunction is that the claimed default is capable of cure. Where the claimed default is not capable of cure, there is no basis for a Yellowstone injunction… . Here, the claimed defaults are the tenant’s failure to procure insurance and improper assignment of the lease. The tenant provides various steps that it will take to cure if it is ultimately found to be in material violation of the insurance provisions of the lease. None of these proposed cures involve any retroactive change in coverage, which means that the alleged defaults raised by the landlord are not susceptible to cure … .  * * *

We reject the tenant’s argument, that even if no Yellowstone injunction is warranted, it is still entitled to a preliminary injunction. Yellowstone injunctions are available on a far lesser showing than preliminary injunctions … . Because the Yellowstone injunction fails, the preliminary injunction does as well. In any event, no injunction is needed to preserve the status quo because the landlord cannot evict the tenant unless and until there is a determination of the merits in the landlord’s favor. If the tenant prevails, then there will be no eviction. The right lost by the denial of a Yellowstone injunction is the right to cure any default. Bliss World LLC v 10 W. 57th St. Realty LLC, 2019 NY Slip Op 01509, First Dept 3-5-19

 

THAT THE LADDER WAS NOT DEFECTIVE DID NOT MATTER, THE LADDER WAS NOT AN ADEQUATE SAFETY DEVICE UNDER THE CIRCUMSTANCES AND THE LADDER WAS NOT ADEQUATELY SECURED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON HIS LABOR LAW 240 (1) CAUSE OF ACTION PROPERLY GRANTED (FIRST DEPT).

The First Department determined plaintiff’s motion for summary judgment on his Labor Law 240 (1) cause of action was properly granted. The ladder was deemed an inadequate safety device because plaintiff had to step off the ladder onto display cases to do his work. The fact that the ladder was not defective was not dispositive because the ladder was not secured:

Plaintiff, who fell from a ladder while installing light fixtures in [the] building, was forced to install a portion of the light by standing on display cases approximately 20 feet high, and then returning to the top of the ladder to finish that portion of the installation, which was located partially over the cases. While attempting to maneuver himself into position on the ladder, he lost his balance and fell. Whether the ladder shook prior to his fall or during that period in time when he was attempting to recover his balance is of no moment, since the ladder was an inadequate safety device for the work being performed … . The claim … that plaintiff was the sole proximate cause of his accident is unpersuasive, since plaintiff’s stance was necessary to perform the work … . It also does not avail defendants that the ladder was not defective, since it is undisputed that the ladder was unsecured, and the worker who had been holding the ladder walked away only minutes before the accident … . Nieto v CLDN NY LLC, 2019 NY Slip Op 01537, First Dept 3-5-19

 

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EVEN WHERE A CAUSE OF ACTION HAS NOT BEEN PROPERLY PLED THE COURT WILL SEARCH THE RECORD TO DETERMINE WHETHER THERE IS AN ACTIONABLE CLAIM IN RESPONSE TO A DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, HERE IN THIS SLIP AND FALL CASE THERE WAS NO EVIDENTIARY SUPPORT FOR CERTAIN CAUSES OF ACTION AGAINST THE BUILDING OWNER (FIRST DEPT).

The First Department noted that, even where a cause of action is not properly pled, on a motion for summary judgment it must search the record to determine whether there is an actionable claim. In this slip and fall case, the building owner was defendant 90 Merrick and the employer of the janitor who allegedly mopped the floor where plaintiff fell was defendant ABM. The First Department held that the 90 Merrick’s motion for summary judgment should have been granted:

The complaint’s allegations that defendants were negligent in their ownership, operation, control and maintenance of the premises by causing or allowing a dangerous condition on the floor gave no indication that plaintiff’s theories of liability would include 90 Merrick’s negligent retention of ABM or its vicarious liability for ABM’s independent contractor’s negligence in performing its duties under the contract … . Notwithstanding, a motion for summary judgment must be denied if there are issues of fact as to an actionable claim, even if the claim was not properly pleaded … , and we find that there are no factual issues as to whether ABM was an independent contractor — it was — when the accident happened. The deposition testimony elicited from nonparty CLK Commercial Management, LLC’s employee, John S. Burke, the property manager for the building at the time of the accident, and ABM’s manager, Victor Orellana, whose duties at the time of the accident included making sure the building was kept clean, shows that 90 Merrick did not direct, supervise or control ABM’s work and that an ABM employee had responsibility for supervising and inspecting the work performed by ABM’s employees, which comports with the duties and obligations as set forth in defendants’ contract … . Burgdoerfer v CLK/HP 90 Merrick LLC, 2019 NY Slip Op 01532, First Dept 3-5-19

 

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