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THE STATE ACTION ON A MULTI-MILLION DOLLAR DEBT SHOULD NOT HAVE BEEN DISMISSED ON CLAIM PRECLUSION OR RES JUDICATA GROUNDS BASED UPON THE DISMISSAL OF A FEDERAL ACTION AGAINST A DEFENDANT WHO WAS NOT A PARTY IN THE STATE ACTION, THE FACT THAT THE PLAINTIFFS IN THE STATE ACTION MAY HAVE BEEN ABLE TO INTERVENE OR ASSIGN THEIR RIGHTS TO THE DEFENDANT IN THE FEDERAL ACTION WAS NOT A PROPER GROUND FOR CLAIM PRECLUSION (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, reversing Supreme Court determined that the dismissal of action in federal court to recover on a multi-million dollar notes did not preclude the state action on claim preclusion (res judicata) grounds. The opinion is fact-specific and too complicated to be fairly summarized here:

Supreme Court dismissed the action with prejudice on claim preclusion grounds, and denied the motion to amend as moot. The court found that plaintiffs herein should have intervened in the federal action, or assigned their claims to [the defendant in the federal action,] Varshavsky. The failure to do so was a “blatant misuse of the federal forum,” which resulted in a “stunning” amount of discovery, and several motions, which Supreme Court found were wasted because plaintiffs herein failed to use the federal forum to resolve all “claims aris[ing] from a common nucleus of operative facts.” * * *

The doctrine of claim preclusion does not bar plaintiffs’ claims herein. Varshavsky, the sole defendant in the federal action, was not himself the creditor of the subject loans and had no standing to assert a counterclaim for recovery of plaintiffs’ loans in that action. Plaintiffs’ putative rights to intervene as party defendants in the federal action, or to assign their claims to Varshavsky, are far from clear. Either option, intervention or assignment, might have been rejected by the federal court as an attempt to evade the strictures of diversity jurisdiction. Apart from the efficacy of these options, even if intervention or assignment were possible, there is no legal doctrine that would compel plaintiffs herein to litigate in the federal action. In short, plaintiffs herein, as nonparties to the federal litigation, are not precluded from asserting claims that no party in the federal litigation had standing to pursue. To hold otherwise would mean that a debtor may, by suing a creditor’s principal or associate, require the creditor to participate in the action or have its claims precluded. Avilon Auto. Group v Leontiev, 2019 NY Slip Op 00058, First Dept 1-3-19

 

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THE TRIAL EVIDENCE DID NOT SUPPORT THE PLAINTIFF’S EXPERT’S TESTIMONY THAT DEFECTS IN THE HANDRAIL OR THE STAIR RISER HEIGHTS CONSTITUTED THE PROXIMATE CAUSE OF PLAINTIFF’S FALL IN THIS STAIRWAY SLIP AND FALL CASE, THE OVER $500,000 PLAINTIFF’S VERDICT WAS VACATED AND A NEW TRIAL ORDERED (FIRST DEPT).

The First Department vacated the plaintiff’s jury verdict (over $500,000) in this stairway slip and fall case and ordered a new trial, finding that plaintiff’s expert should not have been allowed to testify about defects in the handrail because the trial evidence did not allege the handrail was a proximate cause of the fall. The First Department further held, without explanation, that the riser heights should not have been charged as an independent theory of liability:

… [D]efendants’ argument that there was insufficient evidence adduced at trial to charge the jury on theories that either riser heights or the handrail were a proximate cause of plaintiff’s fall, has merit… . Although plaintiff testified that it was her usual habit to hold a handrail while descending stairs, her testimony was equivocal on whether she held the handrail that day. Further, she testified that she did not attempt to reach for a handrail at the time of her fall, because the accident happened too fast. Nor did she provide any testimony connecting the handrail to her optical illusion theory. Thus, plaintiff’s expert should not have been allowed to testify that the handrail was a contributing cause of plaintiff’s fall, and the jury should not have been charged on the question whether the handrail was too short. Moreover, while the final step’s size may have helped contribute to plaintiff’s claim of optical illusion, the riser heights in the staircase should not have been charged as an independent theory of liability.

The trial court’s response to a jury note asking whether the building was “up to code” was incorrect in light of the prior summary judgment order. Rather than responding that there was no evidence that the code was either violated or complied with, the jury should have been informed that the building code was not applicable to the staircase. Landau v Balbona Rest. Corp., 2019 NY Slip Op 00051, First Dept 1-3-19

EXPERT OPINION

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LEGAL MALPRACTICE ACTION BROUGHT BY A NEW JERSEY RESIDENT IS UNTIMELY PURSUANT TO NEW YORK’S BORROWING STATUTE, NEW YORK’S SHORTER STATUTE OF LIMITATIONS WAS APPLIED (FIRST DEPT).

The First Department determined Supreme Court properly applied New York’s borrowing statute (CPLR 202) and chose the shorter of the statutes of limitations for a legal malpractice action. New York’s statute is three years and New Jersey’s is six years. Plaintiff was a New Jersey resident:

The court correctly found the complaint time-barred under CPLR 202, New York’s “borrowing statute,” which requires a claim to be timely under both the New York limitations period and that of the jurisdiction where the claim is alleged to have arisen (Kat House Prods., LLC v Paul, Hastings, Janofsky & Walker, LLP, 71 AD3d 580[1st Dept 2010]).

Plaintiff, a New Jersey resident, alleged legal malpractice in connection with defendants’ representation of him for numerous real estate transactions, a cause of action which has a three year statute of limitations in New York (CPLR 214 [6]), and a six year limitations period in New Jersey (NJ Stat Ann § 2A:14-1). The latest that the alleged malpractice could have occurred was February 7, 2013, the date set for closing on the last of the real estate matters. Because plaintiff commenced the action on October 28, 2016, more than three years later, it was correctly dismissed as untimely. Soloway v Kane Kessler, PC, 2019 NY Slip Op 00026 [168 AD3d 407], First Dept 1-3-19

 

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON HIS LABOR LAW 240 (1) CAUSE OF ACTION SHOULD HAVE BEEN GRANTED, THE SCAFFOLD TILTED OR COLLAPSED CAUSING EVERYTHING IN IT TO CRASH ONTO HIM (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment on his Labor Law 240 (1) cause of action should have been granted:

Plaintiffs established entitlement to judgment as a matter of law in this action where plaintiff Steven Kind was injured when one end of a scaffold that he and a coworker were using to wash exterior windows on a building dropped out from under him and the scaffold came to rest at an angle, causing everything in it to crash down on him. The tilting or collapse of the scaffold was prima facie evidence of a violation of Labor Law § 240(1) … , and plaintiffs were not required to demonstrate a specific defect … .

In opposition, defendants failed to raise a triable issue of fact as to whether plaintiff’s actions were the sole proximate cause of the accident. The conclusion of the Department of Labor investigator that the scaffold tilted because plaintiff and his coworker caused a safety line to become caught in a spool for the scaffold’s suspension cables was speculation unsupported by the evidence … . Furthermore, defendant Titanium Scaffold Services, Inc., which contracted to maintain the scaffold, was an agent for purposes of the Labor Law. Kind v 1177 Ave. of the Ams. Acquisitions, LLC, 2019 NY Slip Op 00029, First Dept 1-3-19

 

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THE RELATION BACK DOCTRINE ALLOWED PLAINTIFF TO SERVE A SUPPLEMENTAL SUMMONS AND COMPLAINT ON THE DRIVER’S EMPLOYER IN THIS TRAFFIC ACCIDENT CASE PURSUANT TO THE RESPONDEAT SUPERIOR THEORY OF LIABILITY, AFTER THE ACTION WAS STARTED PLAINTIFF LEARNED THAT THE DRIVER OF THE CAR IN WHICH PLAINTIFF’S DECEDENT WAS A PASSENGER WAS PAID BY THE EMPLOYER TO TRANSPORT THE OTHER EMPLOYEES IN THE CAR TO WORK (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the relation-back doctrine (CPLR 203(f)) allowed plaintiff, Polanco, to serve a supplemental summons and complaint against the employer of Elias-Tejada, the driver of the car in which plaintiff’s decedent was a passenger. The Elias-Tejada car stalled on a bridge and was struck from behind. Plaintiff (Polanco) did not learn until after the action was started that Elias-Tejada was paid by his employer, Fairway, to transport the other occupants of his car, all Fairway employees, to work. Plaintiff (Polanco) sought to add Fairway as a defendant under a respondeat superior theory and the First Department held he could do so:

The claims that Polanco seeks to assert against Fairway arise out of the same occurrence as alleged in the complaint against Elias-Tejada [and the other two defendant drivers]. … [W]e find that Polanco also satisfied the second condition, because under the doctrine of respondeat superior, an employer will be vicariously liable for the negligence of an employee committed while the employee is acting in the scope of his or her employment … . Based on Elias-Tejada’s employer/employee relationship with Fairway, they are united in interest because a judgment against one of them will similarly affect the other … . … [T]he Fairway defendants can, therefore, be charged as having notice of Polanco’s potential claims against them, based upon the claims asserted against Elias-Tejada in the original summons and complaint … . …

… Only later, after depositions were held, including those of a key Fairway employee and Elias-Tejada, did [plaintiff] learn that Fairway compensated Elias-Tejada for hosting the car pool and that this travel arrangement was condoned, if not actually implemented and encouraged, by Fairway’s human resources department because Fairway reimbursed him for tolls and mileage. Ramirez v Elias-Tejada, 2019 NY Slip Op 00021, First Dept  1-3-19

TRAFFIC ACCIDENTS

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BREACH OF FIDUCIARY DUTY, FRAUD AND JUDICIARY LAW 487 ALLEGATIONS STEMMING FROM DEFENDANT LAW FIRM’S REPRESENTATION OF PLAINTIFF IN DIVORCE PROCEEDINGS DUPLICATED THE LEGAL MALPRACTICE ALLEGATIONS, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined that plaintiff’s legal malpractice, breach of fiduciary duty, fraud and Judiciary Law 487 causes of action against the law firm which represented her in divorce proceedings should have been dismissed. The opinion is fact-specific. The legal issues mentioned include: the breach of fiduciary duty allegations were identical to the legal malpractice allegations and therefore required the “but for” element of legal malpractice (which was missing), and the fraud and Judiciary Law 487 claims were identical and duplicated the legal malpractice allegations, requiring dismissal. Knox v Aronson, Mayefsky & Sloan, LLP,  2018 NY Slip Op 09030, First Dept 12-27-18

 

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HEARING WAS REQUIRED TO DETERMINE WHETHER A PERMANENT STAY OF EVICTION WAS A PROPER ACCOMMODATION FOR DISABLED TENANTS PURSUANT TO THE FAIR HOUSING ACT (FIRST DEPT).

The First Department, reversing (modifying) the Appellate Term, First Department, ruled that a hearing should be held to determine whether eviction proceedings should be permanently stayed. A guardian (GAL) had been appointed pursuant to Mental Hygiene Law article 81 for the disabled tenants who had not complied with stipulations for fumigation of the apartment to rid it of bed bugs. With the GAL’s help the apartment was eventually fumigated. Under the Fair Housing Act the tenants were entitled to accommodations for their disabilities. A hearing was required to determine whether a permanent stay of eviction was an appropriate accommodation:

Under the Fair Housing Act (FHA), as amended, it is unlawful to discriminate in housing practices on the basis of a “handicap” (42 USC § 3604[f][2][A]). Handicap is very broadly defined, and a person is considered handicapped and thereby protected under the FHA if he or she: 1. Has a physical or mental impairment that substantially limits one or more major life activities, or 2. Has a record of such impairment, or 3. Is regarded as having such an impairment.

No specific diagnosis is necessary for a person to be “handicapped” and protected under the statute. In fact, the determination may even be based upon the observations of a lay person … . The appointment of an article 81 guardian for tenants sufficiently establishes that these tenants are “handicapped” within the meaning of the FHA, leading us to consider whether they are entitled to a reasonable accommodation. What is “reasonable” varies from case to case, because it is necessarily fact-specific  … . The overarching guiding factor, however, is that a landlord is obligated to provide a tenant with a reasonable accommodation if necessary for the tenant to keep his or her apartment. The ” refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford [the handicapped individual] equal opportunity to use and enjoy a dwelling'” is a discriminatory practice… . A landlord does not have to provide a reasonable accommodation if it puts other tenants at risk, but should consider whether such risks can be minimized … . Matter of Prospect Union Assoc. v DeJesus, 2018 NY Slip Op 09016, First Dept 12-27-18

 

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ONCE THE CITY TAX LIENS HAD BEEN ASSIGNED PAYMENT TO THE CITY, INSTEAD OF THE LIENHOLDER, IS NOT APPLIED TO THE DEBT (FIRST DEPT).

The First Department, reversing Supreme Court, determined the tax and sewer charges paid to the city by defendant after defendant had been notified that the tax liens had been assigned could not be applied to the debt:

Plaintiffs are the lawful assignees of certain City of New York water and sewer tax liens against property owned by defendant. The City complied fully with the provisions of Administrative Code of City of NY § 11-320, which requires, inter alia, that four notices of the sale of the liens be sent to the property owner at specified intervals before the sale and that another notice be sent 30 days after the sale … . The City’s four pre-sale notices informed defendant of the debt, of the impending sale, and of defendant’s obligation to pay the City, if at all, by August 1, 2011. The notices also informed defendant that, after the sale, it should make payment arrangements with the new lienholder’s representative.

Defendant did not pay the amounts owed by August 1, 2011. On the day after the tax liens were assigned to plaintiffs, defendant made payments to the City. The payments were not credited against defendant’s debt, because, once the assignment had taken place, payments had to be made to plaintiffs … .

Contrary to defendant’s argument, there is no tension between the Administrative Code’s provisions for tax liens and tax sales and the law generally governing payments of an assigned debt. Once a debtor has notice that the debt has been assigned, or has been put “on inquiry” as to an assignment of the debt, payments to the assignor (the original creditor) are not applied to the debt … . NYCTL 1998-2 Trust v 70 Orchard LLC, 2018 NY Slip Op 09004, First Dept 12-27-18

 

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FAMILY COURT DID NOT HAVE SUFFICIENT EVIDENCE BEFORE IT TO GRANT FATHER’S PETITION FOR CUSTODY WHEN MOTHER FAILED TO APPEAR, MOTHER’S MOTION TO VACATE THE DEFAULT ORDER SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Family Court, determined the court did not have sufficient evidence before it to grant father’s petition for custody when mother did not appear:

While the decision to grant or deny a motion to vacate a default rests in the sound discretion of the court, “default orders are disfavored in cases involving the custody or support of children, and thus the rules with respect to vacating default judgments are not to be applied as rigorously” … .

Although the mother did not demonstrate a reasonable excuse for her default in the change of custody case, she had a meritorious defense. The children have resided primarily with her, and insufficient evidence was submitted to make an informed change of circumstances determination (see Family Ct Act § 467[b][ii]) that serves the best interests of the children … .

Also, the court failed to sua sponte appoint an attorney for the children, which, based upon the insufficient evidence it had to make an informed best interests determination, would have been advisable … . Matter of Abel A. v Imanda M., 2018 NY Slip Op 09000, First Dept 12-27-18

 

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DEFENDANT’S ALLEGATION THAT SHE DOES NOT LIVE AT THE ADDRESS WHERE HER BROTHER WAS SERVED IN THIS FORECLOSURE ACTION NECESSITATED A TRAVERSE HEARING (FIRST DEPT).

The First Department, reversing Supreme Court, found that a traverse hearing should have been held to determine whether defendant was properly served with the summons, complaint and Real Property Actions and Proceedings Law (RPAPL) 1303 notice:

In this foreclosure matter commenced in 2009, plaintiff’s affidavit of service indicated that service of the summons, complaint and RPAPL 1303 notice was effectuated upon defendant Nicola McCallum pursuant to CPLR 308(2) by serving an individual, who allegedly identified himself as her brother, at her “dwelling place,” and mailing the same documents to that address.

In response, defendant averred that she was never served with the summons and complaint, that she does not reside at the address where service was made, and that her primary residence has always been at the property that is the subject of this foreclosure action.

“While a proper affidavit of a process server attesting to personal delivery upon a defendant constitutes prima facie evidence of proper service, a sworn non-conclusory denial of service by a defendant is sufficient to dispute the veracity or content of the affidavit, requiring a traverse hearing”… . The competing averments concerning plaintiff’s residence at the time of service raise a factual issue concerning whether the service address was her “dwelling place or usual place of abode” at the time of service (CPLR 308[2]) warranting a traverse hearing concerning whether defendant was properly served with the summons, complaint and RPAPL 1303 notice … . Nationstar Mtge. LLC v McCallum, 2018 NY Slip Op 08755, First Dept 12-20-18

 

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