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ALTHOUGH RESPONDENT WAS NOT MARRIED TO THE TENANT OF RECORD, THEIR RELATIONSHIP EXHIBITED THE CARE AND SELF-SACRIFICE OF A FAMILY RELATIONSHIP, HOUSING COURT SHOULD HAVE FOUND THAT RESPONDENT WAS A FAMILY MEMBER ENTITLED TO SUCCESSION RIGHTS IN THE RENT-STABILIZED APARTMENT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, reversing Housing Court, determined that the relationship between the tenant of record (Montgomery) in a rent-stabilized apartment and respondent (Zenker) justified the finding that Zenker was a “family member” entitled to succession rights. Although Zenker and Montgomery were not married, their relationship exhibited the care and sacrifice sufficient to meet the definition of a “family member” in this context:

The fact that Zenker moved back into the apartment in 2003 because of her own housing problems, and the couple’s lack of sexual intimacy, does not diminish their relationship to that of roommates. The unrefuted evidence establishes that this couple shared decades of dedication, caring and self-sacrifice. Consideration of the factual record in light of the factors listed in the Rent Stabilization Code demonstrates that Zenker was family to Montgomery. Matter of 530 Second Ave. Co., LLC v Zenker, 2018 NY Slip Op 02143, First Dept 3-27-18

LANDLORD-TENANT (RENT STABILIZED APARTMENT, SUCCESSION RIGHTS, ALTHOUGH RESPONDENT WAS NOT MARRIED TO THE TENANT OF RECORD, THEIR RELATIONSHIP EXHIBITED THE CARE AND SELF-SACRIFICE OF A FAMILY RELATIONSHIP, HOUSING COURT SHOULD HAVE FOUND THAT RESPONDENT WAS A FAMILY MEMBER ENTITLED TO SUCCESSION RIGHTS IN THE RENT-STABILIZED APARTMENT (FIRST DEPT))/RENT STABILIZED APARTMENT (SUCCESSION RIGHTS, ALTHOUGH RESPONDENT WAS NOT MARRIED TO THE TENANT OF RECORD, THEIR RELATIONSHIP EXHIBITED THE CARE AND SELF-SACRIFICE OF A FAMILY RELATIONSHIP, HOUSING COURT SHOULD HAVE FOUND THAT RESPONDENT WAS A FAMILY MEMBER ENTITLED TO SUCCESSION RIGHTS IN THE RENT-STABILIZED APARTMENT (FIRST DEPT))/SUCCESSION RIGHTS (RENT STABILIZED APARTMENT, ALTHOUGH RESPONDENT WAS NOT MARRIED TO THE TENANT OF RECORD, THEIR RELATIONSHIP EXHIBITED THE CARE AND SELF-SACRIFICE OF A FAMILY RELATIONSHIP, HOUSING COURT SHOULD HAVE FOUND THAT RESPONDENT WAS A FAMILY MEMBER ENTITLED TO SUCCESSION RIGHTS IN THE RENT-STABILIZED APARTMENT (FIRST DEPT))/FAMILY MEMBER (LANDLORD-TENANT, RENT STABILIZED APARTMENT, SUCCESSION RIGHTS, ALTHOUGH RESPONDENT WAS NOT MARRIED TO THE TENANT OF RECORD, THEIR RELATIONSHIP EXHIBITED THE CARE AND SELF-SACRIFICE OF A FAMILY RELATIONSHIP, HOUSING COURT SHOULD HAVE FOUND THAT RESPONDENT WAS A FAMILY MEMBER ENTITLED TO SUCCESSION RIGHTS IN THE RENT-STABILIZED APARTMENT (FIRST DEPT))

PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT).

The First Department, reversing Supreme Court, determined coverage for a slip and fall of a security company (Protection Plus) employer was not available to the property owner (Manhattan School) as an additional insured on the security company’s policy. the security guard slipped and fell on a recently mopped floor at the school:

Plaintiff Manhattan School is an additional named insured under a policy issued by defendant to nonparty Protection Plus Security Corporation. In an additional insured endorsement, the policy provides that the Manhattan School is an additional named insured “only with respect to liability for bodily injury’. . . caused, in whole or in part, by” the acts or omissions of Protection Plus in the performance of its operations for the Manhattan School.

When “an insurance policy is restricted to liability for any bodily injury caused, in whole or in part,’ by the acts or omissions’ of the named insured, the coverage applies to injury proximately caused by the named insured” … . Such language in a policy does not equate to “but for” causation and is not the same as policies containing the phrase, “arising out of” … . Fundamentally, ” arising out of’ is not the functional equivalent of proximately caused by'”… . Thus, it is not enough to merely establish a causal link to the injury.

Notably, the language in the endorsement was “intended to provide coverage for an additional insured’s vicarious or contributory negligence, and to prevent coverage for the additional insured’s sole negligence” … .

Accordingly, when a policy limits coverage to an injury “caused, in whole or part” by the “acts or omissions” of the named insured, coverage is extended to an additional insured only when the damages are the result of the named insured’s negligence or some other act or omission … .

Here, the acts or omissions of Protection Plus were not a proximate cause of the security guard’s injury. Rather, the sole proximate cause of the injury was the additional insured, and thus coverage is not available to the Manhattan School under defendant’s policy … . Hanover Ins. Co. v Philadelphia Indem. Ins. Co., 2018 NY Slip Op 02121, First Dept 3-27-18

INSURANCE LAW (PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT))/ADDITIONAL INSURED (INSURANCE LAW, PROPERTY OWNER, AS AN ADDITIONAL INSURED UNDER THE SECURITY COMPANY’S POLICY, WAS NOT ENTITLED TO COVERAGE FOR A SECURITY GUARD’S SLIP AND FALL ON A RECENTLY MOPPED FLOOR, THE ADDITIONAL INSURED WAS THE SOLE PROXIMATE CAUSE OF THE INJURY (FIRST DEPT))

PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing defendant’s conviction, determined placing the defendant in handcuffs improperly elevated an investigatory detention to an illegal arrest and the suppression motion should have been granted. The court noted that Supreme Court explicitly found that the detective did not have probable cause to arrest at the time of the handcuffing so the appellate court could not consider the People’s argument to the contrary:

During a buy and bust operation, the police made what the suppression court found to be an investigatory stop of defendant, based on reasonable suspicion, followed by a confirmatory identification that provided probable cause to arrest defendant for selling drugs. However, during the stop, but before the identification, the police handcuffed defendant because defendant was “a little irate” and the officer wanted to “make sure nothing escalated.

“Although the use of handcuffs is not dispositive of whether an investigatory detention on reasonable suspicion has been elevated to an arrest, handcuffing is permissible in such a detention only when justified by the circumstances”… . Here, defendant was not suspected of anything more than a street-level drug sale, the police had no reason to believe that he was armed, dangerous or likely to flee, and there was no indication on the record that defendant offered any resistance before he was handcuffed. That defendant was “a little irate” does not establish dangerousness or resistance that would justify the use of handcuffs during an investigatory stop … . People v Steinbergin, 2018 NY Slip Op 02123, First Dept 3-27-18

CRIMINAL LAW (PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT))/STREET STOPS  (PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT))/INVESTIGATORY STOP (PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT))/SEARCH AND SEIZURE  (PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT))/SUPPRESS, MOTION TO  (PLACING DEFENDANT IN HANDCUFFS ELEVATED THE INVESTIGATORY STOP TO AN ILLEGAL ARREST, MOTION TO SUPPRESS SHOULD HAVE BEEN GRANTED (FIRST DEPT))

THE PROMISE TO REPAY THE LOAN WAS NOT UNCONDITIONAL BUT RATHER THE DEFENDANT’S HAVING AVAILABLE CASH TO REPAY THE LOAN WAS A CONDITION PRECEDENT, BECAUSE PLAINTIFF DID NOT DEMONSTRATE THE DEFENDANT HAD AVAILABLE CASH, ITS MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined that summary judgment should not have been awarded to the plaintiff (Related) in this breach of contract action. The agreement provided that loan payments be made to plaintiff by the defendant (Tesla) from available cash. The existence of available cash was deemed a condition precedent. Because plaintiff could not show defendant had available case, summary judgment was not an available remedy:

A condition precedent is “an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises” … . The term sheet does not contain an unconditional promise by Tesla to repay the cash advances, distinguishing the transactions from the typical loan arrangement, which involves an unconditional promise to repay the amount advanced. Rather, pursuant to the waterfall provision, Tesla was to repay the cash advances from cash that was available for distribution after the payment of taxes. Related failed to establish that this condition precedent was satisfied, and its motion for summary judgment should have therefore been denied once the court determined that Tesla presently had no “available cash” to repay Related … . Related Cos., L.P. v Tesla Wall Sys., LLC, 2018 NY Slip Op 02122, First Dept 3-27-18

CONTRACT LAW (CONDITION PRECEDENT, THE PROMISE TO REPAY THE LOAN WAS NOT UNCONDITIONAL BUT RATHER THE DEFENDANT’S HAVING AVAILABLE CASH TO REPAY THE LOAN WAS A CONDITION PRECEDENT, BECAUSE PLAINTIFF DID NOT DEMONSTRATE THE DEFENDANT HAD AVAILABLE CASH, ITS MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT))/CONDITION PRECEDENT (CONTRACT LAW, THE PROMISE TO REPAY THE LOAN WAS NOT UNCONDITIONAL BUT RATHER THE DEFENDANT’S HAVING AVAILABLE CASH TO REPAY THE LOAN WAS A CONDITION PRECEDENT, BECAUSE PLAINTIFF DID NOT DEMONSTRATE THE DEFENDANT HAD AVAILABLE CASH, ITS MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT))

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COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, reversing Supreme Court, determined the complaint stated causes of action against the city and a city police officer (DeBellis) in connection with, inter alia, warrantless home visits by the officer purportedly concerning the well-being of plaintiff’s child and allegedly false complaints by the officer to the Administration for Children’s Services (ACS):

… [A]lthough not expressly pleaded, the factual allegations in the complaint fit within a cause of action against DeBellis for intentional infliction of emotional distress based on her alleged malicious or reckless false reporting to ACS and malicious campaign of harassment. …

…[W]e cannot say, as a matter of law, that DeBellis’s actions did not rise to the requisite level of outrageous conduct. The facts alleged by plaintiff describe both (1) a deliberate and malicious campaign of harassment and intimidation and (2) an abuse of power. …

Plaintiff has also stated a claim against defendants under 42 USC § 1983 for deprivation of plaintiff’s constitutional rights, specifically, her right under the Fourth Amendment to be free from warrantless and unlawful entries into the home … . …

Despite … allegations of repeated notice to DeBellis’s superiors of her actions, there is no indication … any action was taken to restrain her. Accordingly … plaintiff has stated a claim for holding the City liable under § 1983 on account of its gross negligence or deliberate indifference to DeBellis’s unconstitutional actions … . …

…[Plaintiff] states a claim against the City for negligent supervision and retention of DeBellis … . Under this theory, an employer may be liable for the acts of an employee outside the scope of his or her employment … . Contrary to the City’s argument, the facts permit an inference that DeBellis was acting outside of the scope of her employment, and, as plaintiff argues, “had some personal axe to grind.” Scollar v City of New York, 2018 NY Slip Op 02032, First Dept 3-22-18

MUNICIPAL LAW (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/CIVIL RIGHTS LAW (42 USC 1983)  (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/NEGLIGENCE (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/INTENTIONAL TORTS (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/EMPLOYMENT LAW (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/NEGLIGENT SUPERVISION AND RETENTION COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))/INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS (COMPLAINT STATED CAUSES OF ACTION AGAINST A POLICE OFFICER AND-OR THE CITY FOR CIVIL RIGHTS VIOLATIONS, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS, AND NEGLIGENT SUPERVISION AND RETENTION, SUPREME COURT REVERSED (FIRST DEPT))

TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT).

The First Department determined the trial court properly refused to discharge a juror and declare a mistrial after the juror conducted online research about false confessions and shared the information with other jurors:

After a jury note revealed that one juror had conducted online research on false confessions and shared it with the rest of the jury, the court providently exercised its discretion in denying defendant’s request to discharge the offending juror and concomitantly declare a mistrial. Defendant did not preserve his contention that the court should have conducted one or more individual inquiries … , and we decline to review it in the interest of justice. As an alternative holding, we reject it on the merits. The court took adequate curative measures by thoroughly admonishing the jury to disregard the information obtained by a juror, not to conduct any outside research, and to decide the case solely based on the evidence presented at trial … . The jury presumably followed these instructions … . The court also granted defense counsel’s request for individual polling of the jurors as to whether they had reached the verdict based only on the evidence and the law as instructed by the court, and not based on any outside influence, to which all jurors answered in the affirmative. Under the circumstances, the juror’s misconduct in researching and telling the other jurors about false confessions did not prejudice defendant. People v Jimenez, 2018 NY Slip Op 02018, First Dept 3-22-18

CRIMINAL LAW (JURORS, TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT))/JURORS (CRIMINAL LAW, TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT))/MISTRIAL (CRIMINAL LAW, TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT))/DISCHARGE (JURORS) (CRIMINAL LAW, TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT))/ONLINE RESEARCH (JURORS, CRIMINAL LAW, TRIAL COURT PROPERLY REFUSED TO DISCHARGE A JUROR AND DECLARE A MISTRIAL AFTER JUROR CONDUCTED ONLINE RESEARCH ABOUT FALSE CONFESSIONS AND SHARED THE INFORMATION WITH OTHER JURORS (FIRST DEPT))

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NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT).

The First Department determined New York courts had jurisdiction over a New Jersey radiologist (Daulto) in this failure-to-diagnose-cancer medical malpractice action:

Plaintiff alleges that defendant Dauito, a radiologist, negligently read her sonogram, leading to a delay in the diagnosis and treatment of her breast cancer. Dr. Dauito avers that, at all relevant times, he was a New Jersey resident and worked only at an office in New Jersey. However, he acknowledges that he was licensed to practice medicine in New York and that he contracted with defendant Madison Avenue Radiology, P.C., a New York corporation, to provide radiology services to some of its New York patients. Plaintiff’s sonogram was performed in New York, Dr. Dauito relayed his diagnostic findings to Madison Avenue Radiology in New York, and Madison Avenue Radiology issued a report based on his findings that was allegedly relied upon by plaintiff and her doctors. Under these circumstances, New York courts may exercise jurisdiction over Dr. Dauito pursuant to CPLR 302(a)(1), notwithstanding his lack of physical presence in New York, because he transacted business with Madison Avenue Radiology and provided radiology services to patients in New York, including plaintiff, projecting himself into the State by electronically or telephonically transmitting his diagnostic findings … .

New York courts may also exercise jurisdiction over Dr. Dauito pursuant to CPLR 302(a)(3), because, as alleged, Dr. Dauito’s negligent misdiagnosis resulted in a delay in plaintiff’s treatment, thereby causing injury to plaintiff in New York, and Dr. Dauito should reasonably expect his out-of-state negligent misdiagnosis in plaintiff’s case to have consequences in New York … . Allen v Institute for Family Health, 2018 NY Slip Op 01998, First Dept 3-22-18

CIVIL PROCEDURE (LONG ARM JURISDICTION, NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT))/LONG ARM JURISDICTION (NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT)))/CPLR 302(a) (LONG ARM JURISDICTION, NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT))/MEDICAL MALPRACTICE (LONG ARM JURISDICTION, NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT))/NEGLIGENCE (MEDICAL MALPRACTICE, LONG ARM JURISDICTION, NEW YORK COURTS HAVE JURISDICTION OVER A NEW JERSEY RADIOLOGIST IN THIS MISDIAGNOSIS MEDICAL MALPRACTICE ACTION PURSUANT TO TWO PROVISIONS OF CPLR 302(a) (FIRST DEPT))

SUMMARY JUDGMENT PROPERLY GRANTED ON THE LABOR LAW 240 (1) CAUSE OF ACTION BASED UPON A FALL FROM AN UNSECURED LADDER, IT DID NOT MATTER WHETHER PLAINTIFF LOST HIS BALANCE BEFORE OF AFTER THE LADDER WOBBLED (FIRST DEPT).

The First Department determined plaintiff’s motion for summary judgment on the Labor Law 240 (1) cause of action was properly granted. The complaint alleged the unsecured ladder wobbled while plaintiff was attempting to install steel wall panels. The court offered a particularly clear explanation of liability stemming from the use of unsecured ladders:

…[P]laintiff … was injured when he fell from an unsecured ladder while installing steel wall panels in the lobby of a building … . “It is well settled that failure to properly secure a ladder to insure that it remains steady and erect while being used, constitutes a violation of Labor Law § 240(1)” … . It is irrelevant whether plaintiff initially lost his balance before or after the ladder wobbled because it is uncontested that the precipitating cause of both was that the suction cup that he had affixed to the panel and gripped to pull the panel into place came loose … . Under either scenario, the ladder failed to remain steady under plaintiff’s weight as he performed his work. Furthermore, even if plaintiff gripped the suction cup incorrectly, causing it to come loose, any such misuse of the suction cup was not the sole proximate cause of the accident where the unsecured ladder moved … . Plywacz v 85 Broad St. LLC, 2018 NY Slip Op 01883, First Dept 3-20-18

LABOR LAW -CONSTRUCTION LAW (SUMMARY JUDGMENT PROPERLY GRANTED ON THE LABOR LAW 240 (1) CAUSE OF ACTION BASED UPON A FALL FROM AN UNSECURED LADDER, IT DID NOT MATTER WHETHER PLAINTIFF LOST HIS BALANCE BEFORE OF AFTER THE LADDER WOBBLED (FIRST DEPT))/LADDERS (LABOR LAW-CONSTRUCTION LAW SUMMARY JUDGMENT PROPERLY GRANTED ON THE LABOR LAW 240 (1) CAUSE OF ACTION BASED UPON A FALL FROM AN UNSECURED LADDER, IT DID NOT MATTER WHETHER PLAINTIFF LOST HIS BALANCE BEFORE OF AFTER THE LADDER WOBBLED (FIRST DEPT))

UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Acosta, in a case sent back by the Court of Appeals, affirmed Supreme Court’s dismissal of the shareholder’s derivative causes of action. The derivative action was initially dismissed for failure to comply with a Cayman Islands rule. The Court of Appeals held that the rule was procedural and did not apply in New York courts. The First Department determined the derivative causes of action must be dismissed because plaintiff does not have standing pursuant to Foss v Harbottle, 67 Eng Rep 189 (1843), as interpreted under Cayman Islands law:

Under Cayman Islands law interpreting Foss, “derivative claims are owned and controlled by the company, not its shareholders” … . Thus, “a shareholder is not permitted to bring a derivative action on behalf of that company” … .

Cayman Islands law recognizes only four narrow exceptions to the Foss rule: “(1) if the conduct infringed on the shareholder’s personal rights; (2) if the conduct would require a special majority to ratify; (3) if the conduct qualifies as a fraud on the minority; or (4) if the conduct consists of ultra vires acts … . Here, the only exception at issue is the “fraud on the minority” exception. In order to invoke that exception, plaintiff must plead and prove that the alleged wrongdoers controlled a majority of the stock with voting rights and that those wrongdoers committed fraud … . Control may be sufficiently pleaded by showing that the wrongdoers own a majority of the corporation’s voting shares or have acquired de facto control of those voting shares … .

We agree with the motion court that the complaint is devoid of any allegations establishing either form of control. Davis v Scottish Re Group Ltd., 2018 NY Slip Op 01889, First Dept 3-20-18

CORPORATION LAW (SHAREHOLDER’S DERIVATIVE ACTION, UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))/SHAREHOLDER’S DERIVATIVE ACTION (UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))/CAYMAN ISLANDS (CORPORATION LAW,  UNDER CAYMAN ISLANDS LAW, THE SHAREHOLDER’S DERIVATIVE CAUSES OF ACTION WERE PROPERLY DISMISSED (FIRST DEPT))

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ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY ALLEGE THE BREACH OF A FIDUCIARY DUTY, IT DID ALLEGE A BREACH OF THE SUFFICIENT INFORMATION DUTY (FIRST DEPT).

The First Department, modifying Supreme Court, determined that, although it did not sufficiently allege the breach of a fiduciary duty, the complaint by shareholders alleged the breach of the “sufficient information duty” owed to shareholders by the directors:

The complaint … fails to allege “a special factual relationship between the directors and the shareholders … bring[ing] the directors of the company into direct and close contact with the shareholders in a manner capable of generating fiduciary obligations” with regard to either the dividend policy that is the subject of the third cause of action or the merger transaction that is the subject of the fourth cause of action … .

However, to the extent the director defendants gave shareholders an information statement providing information and recommendations about the merger transaction, they owed the shareholders a “sufficient information duty” … . This is not a duty of loyalty, which would require the directors to subordinate their interests to the shareholders’ interests, but “if [the directors] are going to invite the shareholders to a meeting, common fairness requires that they explain what the purpose of the meeting is” in a “clear and comprehensible” manner … .

The complaint alleges that the information statement failed to disclose that two directors on the special committee negotiating merger terms had ties to the investor defendants, who proposed the merger, that it failed to disclose any details about the search for alternate proposals, which was illusory, that it failed to provide a meaningful valuation of ordinary shares using industry standards for the insurance business, and that it failed to disclose the impact on the stock value of a parallel bond transaction. Moreover, the complaint alleges that, while the information statement warned that the investor defendants could wipe out the ordinary shareholders by redeeming their convertible cumulative preferred participating shares, it misrepresented the likelihood of that occurrence. Davis v Scottish Re Group Ltd., 2018 NY Slip Op 01867, First Dept 3-20-18

CORPORATION LAW (ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY ALLEGE THE BREACH OF A FIDUCIARY DUTY, IT DID ALLEGE A BREACH OF THE SUFFICIENT INFORMATION DUTY (FIRST DEPT))/SHAREHOLDERS (CORPORATION LAW, ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY ALLEGE THE BREACH OF A FIDUCIARY DUTY, IT DID ALLEGE A BREACH OF THE SUFFICIENT INFORMATION DUTY (FIRST DEPT))/DIRECTORS (CORPORATION LAW, ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY ALLEGE THE BREACH OF A FIDUCIARY DUTY, IT DID ALLEGE A BREACH OF THE SUFFICIENT INFORMATION DUTY (FIRST DEPT))/SUFFICIENT INFORMATION DUTY (CORPORATION LAW, ALTHOUGH THE COMPLAINT BY SHAREHOLDERS AGAINST DIRECTORS DID NOT SUFFICIENTLY ALLEGE THE BREACH OF A FIDUCIARY DUTY, IT DID ALLEGE A BREACH OF THE SUFFICIENT INFORMATION DUTY (FIRST DEPT))

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