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RIGHT TO TESTIFY BEFORE A GRAND JURY IS NOT A RIGHT RESERVED TO A DEFENDANT, IT IS A STRATEGIC DECISION TO BE MADE BY COUNSEL.

The First Department, in affirming defendant’s conviction, noted that defendant was not deprived of a right to testify before the grand jury when his attorney, against defendant’s wishes, withdrew the notice of intent to testify. The right to testify before the grand jury is not among the rights reserved to a defendant:

 

The court properly denied defendant’s motion to dismiss the indictment, made on the ground that he was deprived of his right to testify before the grand jury when, against defendant’s wishes, his counsel withdrew defendant’s notice of intent to testify. We decline to revisit our prior holdings … that the right to testify before the grand jury is not among the rights reserved to a defendant, but is among the rights whose exercise is a strategic decision requiring “the expert judgment of counsel” … . People v Cintron, 2016 NY Slip Op 00618, 1st Dept 2-2-16

 

CRIMINAL LAW (RIGHT TO TESTIFY BEFORE GRAND JURY IS NOT RESERVED TO A DEFENDANT)/GRAND JURIES (RIGHT TO TESTIFY BEFORE GRAND JURY IS NOT RESERVED TO A DEFENDANT)/ATTORNEYS (CRIMINAL LAW, WHETHER TO TESTIFY BEFORE GRAND JURY IS A STRATEGIC DECISION TO BE MADE BY COUNSEL, NOT DEFENDANT)

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DESPITE THE HUSBAND’S EXTRAORDINARY WEALTH, THE WIFE’S OVERREACHING CAUSE OF ACTION SEEKING TO SET ASIDE THE PRENUPTIAL AGREEMENT SHOULD NOT HAVE SURVIVED SUMMARY JUDGMENT.

The First Department, in a full-fledged opinion by Justice Richter, over a full-fledged concurring opinion and a full-fledged dissenting opinion, determined the wife’s action to set aside a prenuptial agreement, on the ground of overreaching, should have been dismissed. The fact that the husband’s net worth allegedly was $188 million in 2013, and the resulting contrast between what the husband could afford to provide and what the prenuptial agreement called for, among several other factors, raised a question of fact about “overreaching” in the eyes of the dissent. The arguments raised in the three opinions are too lengthy and detailed to fairly summarize here. On the issue of overreaching, the majority wrote:

 

Here, the wife’s motion did not challenge the prenuptial agreement on the ground that it is the product of coercion, duress or fraud. Nor did the wife argue that the agreement’s terms as a whole are unconscionable. Rather, her only claim was that the agreement is manifestly unfair due to the husband’s overreaching … . Although no actual fraud need be shown to set aside the agreement on this ground, the challenging party must show overreaching in the execution, such as the concealment of facts, misrepresentation, cunning, cheating, sharp practice, or some other form of deception … . In addition, the challenging party must show that the overreaching resulted in terms so manifestly unfair as to warrant equity’s intervention … .

Judged by these standards, the wife has failed to meet her heavy burden to set aside the prenuptial agreement. No issue of fact exists as to whether the husband engaged in overreaching during the negotiations leading up to the execution of the agreement. The agreement was the product of on-and-off discussions that took place over the course of more than a year and a half. Although initially the parties negotiated by themselves, about midway through, the wife retained the services of a partner in a prominent matrimonial firm. Negotiations continued by the parties and their attorneys, with draft agreements exchanged and terms modified. Both the fact that the wife was an active participant in the negotiations, and was the one who was pushing to get the agreement signed, are hard to reconcile with her current claim of overreaching. Gottlieb v Gottlieb, 2016 NY Slip Op 00613, 1st Dept 1-28-16

 

FAMILY LAW (PRENUPTIAL AGREEMENT, WIFE’S OVERREACHING CAUSE OF ACTION SEEKING TO SET ASIDE THE AGREEMENT SHOULD HAVE BEEN DISMISSED)/CONTRACT LAW (PRENUPTIAL AGREEMENT, WIFE’S OVERREACHING CAUSE OF ACTION SEEKING TO SET ASIDE THE AGREEMENT SHOULD HAVE BEEN DISMISSED)/PRENUPTIAL AGREEMENT (WIFE’S OVERREACHING CAUSE OF ACTION SEEKING TO SET ASIDE THE AGREEMENT SHOULD HAVE BEEN DISMISSED)

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STATEMENT SHOULD NOT HAVE BEEN ADMITTED AS A PROMPT OUTCRY, CONVICTION REVERSED.

The First Department determined a text message sent by the 15-year-old victim of an alleged sexual assault should not have been admitted under the “prompt outcry” hearsay exception. Defendant’s conviction was reversed:

 

A complaint is timely for purposes of the prompt outcry exception if made “at the first suitable opportunity,” which is a “relative concept dependent on the facts” … .

While a significant delay in reporting does not necessarily preclude outcry evidence, especially where the victim is a child … , when the complainant is a teenager (or older), “the concept of promptness necessarily suggests an immediacy not ordinarily present when months go by” … . With respect to teenagers and adults rather than young children, a reporting delay of several months may be justified if there were “legally sufficient circumstances” that would excuse the victim’s delay, such as the victim being “under the control or threats of the defendant…or being among strangers and without others in whom [the victim] could confide” … .

Here … there is an absence of circumstances to bring this lengthy delay within the prompt outcry rule. While the evidence indicated that the complainant experienced confusion, shock, embarrassment, and fear of not being believed, as well as concern about her mother and grandmother’s reactions, there is no evidence that she was threatened by defendant or was under his control. Although the outcry occurred after defendant was incarcerated on a parole violation, the complainant made the disclosure at least a month after that circumstance occurred, and she did not testify that she delayed her disclosure based on a fear of retribution. People v Ortiz, 2016 NY Slip Op 00593, 1st Dept 1-28-16

CRIMINAL LAW (STATEMENT SHOULD NOT HAVE BEEN ADMITTED AS A PROMPT OUTCRY)/EVIDENCE (STATEMENT SHOULD NOT HAVE BEEN ADMITTED AS A PROMPT OUTCRY)/HEARSAY (STATEMENT SHOULD NOT HAVE BEEN ADMITTED AS A PROMPT OUTCRY)/PROMPT OUTCRY (STATEMENT SHOULD NOT HAVE BEEN ADMITTED IN EVIDENCE)

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CONVERSION, REPLEVIN AND UNJUST ENRICHMENT CAUSES OF ACTION TIME-BARRED, CRITERIA EXPLAINED.

Plaintiff executor sued defendant, Delaine, under conversion, replevin and unjust enrichment theories for artwork which decedent, Arthur, was allegedly entitled to but which decedent never picked up from the warehouse where it was stored. The First Department determined the conversion, replevin and unjust enrichment causes of action were time-barred:

 

Under CPLR 214(3), the statutory period of limitations for conversion and replevin claims is three years from the date of accrual. The date of accrual depends on whether the current possessor is a good faith purchaser or bad faith possessor. An action against a good faith purchaser accrues once the true owner makes a demand and is refused … . This is “because a good-faith purchaser of stolen property commits no wrong, as a matter of substantive law, until he has first been advised of the plaintiff’s claim to possession and given an opportunity to return the chattel” … . By contrast, an action against a bad faith possessor begins to run immediately from the time of wrongful possession, and does not require a demand and refusal … . Thus, “[w]here replevin is sought against the party who converted the property, the action accrues on the date of conversion” … .

Here, plaintiff alleges that Delaine is a wrongful possessor of the Artwork by virtue of her retention thereof in defiance of this Court’s 1993 order. Accordingly, since Delaine was holding the Artwork in bad faith, the demand and return rule does not apply and the three-year limitations period commenced as of the date of the wrongful taking, which occurred when Delaine retained the Artwork after the issuance of our March 18, 1993 order. Thus, plaintiff’s conversion and replevin claims, filed in 2012, are untimely … . * * *

Unjust enrichment occurs when a defendant enjoys a benefit bestowed by the plaintiff without adequately compensating the plaintiff … . The statute of limitations for unjust enrichment generally accrues upon “the occurrence of the alleged wrongful act giving rise to restitution” … . Here, any alleged “enrichment” took place when Delaine retained possession of the Artworks following our 1993 decision. Accordingly, plaintiff’s unjust enrichment claim is also time-barred.  Swain v Brown, 2016 NY Slip Op 00574, 1st Dept 1-28-16

 

CRIMINAL LAW (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/JURIES (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/DISQUALIFICATION OF JUROR (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)

JUDGE PROPERLY REFUSED TO DISQUALIFY A JUROR WHO SAID SHE COULD NOT CONTINUE DELIBERATING BECAUSE SHE COULD NOT SEPARATE HER EMOTIONS FROM THE CASE.

The First Department, affirming defendant’s manslaughter conviction over an extensive dissent, determined the trial court properly refused to disqualify a juror after she stated she was not able to continue deliberating because she could not “separate [her] emotions from the case.” The First Department explained the criteria for disqualifying a juror as “grossly unqualified” and noted the juror ultimately agreed she would be able to determine what the facts were, on her own, and then apply the law:

 

After a juror is sworn in, the juror should be disqualified only “when it becomes obvious that [the] juror possesses a state of mind which would prevent the rendering of an impartial verdict” (CPL § 270.35[1]). The trial court properly concluded, based upon its observations of the juror and its interactions with her, that she was not grossly unqualified from continuing to serve (CPL § 270.35[1]…). Contrary to how the dissent characterizes the trial court’s interactions with the juror, the colloquy, consisting of some 10 transcribed pages, shows that the court patiently listened to the juror and tactfully asked her probing questions to determine whether, for some reason, she could not be impartial … . She was candid in her responses and forthright about her concerns. None of her concerns had to do with fear about her personal safety … , nor did she express any concerns about feeling coerced by her fellow jurors to vote in any particular way … . The juror never expressed an inability to deliberate fairly and render an impartial verdict, nor did she make any statements that could be taken as evidence of bias or sympathy either towards the deceased or the defendant that would have prevented her from deciding defendant’s guilt or innocence. The juror only said that she was having difficulty separating her emotions, not that she was incapable of deciding the facts or applying the law, or that she would disobey the court’s instructions. People v Spencer, 2016 NY Slip Op 00447, 1st Dept 1-26-16

 

CRIMINAL LAW (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/JURIES (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)/DISQUALIFICATION OF JUROR (COURT PROPERLY REFUSED TO DISQUALIFY A JUROR WHO STATED SHE COULD NOT DELIBERATE FURTHER BECAUSE SHE WAS EMOTIONALLY OVERWHELMED)

THE PEOPLE’S STATEMENTS OF READINESS FOR TRIAL WERE DEEMED ILLUSORY; CASE DISMISSED ON SPEEDY TRIAL GROUNDS.

The First Department, over an extensive dissent, determined the People’s two statements of readiness (for trial) were illusory. The defendant’s case should have been dismissed on speedy trial grounds:

 

First, the People provided no explanation why, after filing and serving the certificate of readiness on August 30, 2011, shortly after defendant’s arraignment on August 25, 2011, they answered not ready at the next court date on September 7, 2011 … . Nothing in the record, express or inferred, explains their change in status from ready to not ready. As the People “gave no explanation for the change in circumstances between the initial statement of readiness and the subsequent admission that the People were not ready to proceed,” and the statement of readiness thus “did not accurately reflect the People’s position,” the People should have been charged with the entire period, a total of 70 days … . The People argue that the court did not ask for any reason, but the burden rests on the People to clarify, on the record, the basis for the adjournment … .

Second, after the People answered not ready on January 31, 2012, because the prosecutor was on trial in another case, the matter was adjourned to March 20, 2012. On February 7, 2012, the People filed and served a certificate of readiness. At the next court date, March 20, 2012, however, they again answered not ready because the prosecutor was on trial in another case. The court properly deemed the entire period chargeable to the People, “notwithstanding” the February 7, 2012 certificate of readiness, but should have also charged subsequent adjournments to the People. If the prosecutor was on trial at the prior and subsequent adjournments, it is unclear why the People filed and served an off-calendar certificate of readiness, or whether the prosecutor was on trial in the same or a different case. As a result, the February 7, 2012 certificate of readiness was illusory, and the entirety of subsequent adjournment periods (not merely the number of days the People requested), until the People next announced that they were ready, should have been charged to them. Specifically, the 50 days from March 20, 2012 until May 9, 2012, 61 days from May 9, 2012 to July 9, 2012, and 52 days from July 9, 2012, until August 30, 2012, when the People validly declared their readiness, should have been charged. People v Rodriguez, 2016 NY Slip Op 00423, 1st Dept 1-21-16

 

CRIMINAL LAW (SPEEDY TRIAL, PEOPLE’S STATEMENTS OF READINESS DEEMED ILLUSORY)/SPEEDY TRIAL (PEOPLE’S STATEMENTS OF READINESS DEEMED ILLUSORY)/STATEMENT OR READINESS (SPEEDY TRIAL, STATEMENTS OF READINESS DEEMED ILLUSORY)

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JURY CONFUSION, STEMMING FROM THE WORDING OF THE SPECIAL VERDICT SHEET, MANDATED A NEW TRIAL.

The First Department, in three, two-justice concurring opinions, determined plaintiff’s motion to set aside the jury verdict should have granted on “jury confusion” grounds. Plaintiff had a kidney removed for his father’s transplant procedure. A “knot pusher device” was left inside plaintiff, and he underwent a second surgery to remove it. The jury, based on the special verdict sheet, indicated leaving the “knot pusher device” inside plaintiff was not the proximate cause of his injury, but the jury sent out a note stating the plaintiff should be awarded $50,000 for having to undergo the second procedure:

 

An examination of the record reveals that the special verdict sheet was “unclear and confusing” …, because it did not provide for an award of damages caused by the need to undergo a second surgery. The confusing and ambiguous wording of the verdict sheet caused the jurors to experience substantial confusion in reaching their verdict … . While “[t]he ambiguity had been brought to the attention of the trial Justice before the jury was discharged and could have been corrected or at least clarified at that time” …, the court did not do so and a new trial  … is required to prevent a miscarriage of justice. Srikishun v Edye, 2016 NY Slip Op 00315, 1st Dept 1-19-16

 

NEGLIGENCE (CONFUSION CAUSED BY SPECIAL VERDICT SHEET MANDATED A NEW TRIAL)/MEDICAL MALPRACTICE (CONFUSION CAUSED BY SPECIAL VERDICT SHEET MANDATED A NEW TRIAL)/CIVIL PROCEDURE (MOTION TO SET ASIDE VERDICT BECAUSE OF JURY CONFUSION STEMMING FROM THE VERDICT SHEET SHOULD HAVE BEEN GRANTED)/JURIES (NEW TRIAL SHOULD HAVE BEEN GRANTED DUE TO CONFUSION STEMMING FROM THE SPECIAL VERDICT SHEET)/VERDICT SHEET (CONFUSING SPECIAL VERDICT SHEET WARRANTED A NEW TRIAL)

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PLAINTIFF’S INABILITY TO SHOW ACTUAL OUT-OF-POCKET LOSS REQUIRED DISMISSAL OF THE FRAUDULENT-INDUCEMENT CAUSE OF ACTION.

The First Department, over a two-justice dissent, determined the complaint alleging fraudulent inducement was properly dismissed for failure to allege out-of-pocket damages. Plaintiff was hired as an at will employee to develop a ramen cuisine for defendant restaurant chain (Chipotle). Plaintiff subsequently learned defendant had entered an agreement with another chef to develop ramen cuisine, the deal had fallen apart and would probably end in litigation. Plaintiff alleged, had he known about the undisclosed agreement with another chef he would not have entered the agreement with Chipotle. Although it was anticipated at the outset plaintiff would work for defendant for three years, and thereafter be entitled to certain specified additional compensation, plaintiff was an at will employee and had been compensated for the work he completed before he was terminated. Therefore, the First Department held, plaintiff could not demonstrate the out-of-pocket loss required for a “fraudulent inducement” cause of action:

 

The facts alleged, even when viewed in a light most favorable to plaintiff, do not give rise to a reasonable inference that he sustained calculable damages based on defendants’ actions. Plaintiff’s employment was at will, and he has no claim of reasonable reliance on representations concerning continued employment … . Any claim that he was deprived of the promised Chipotle stock cannot succeed, given that is undisputed that the express terms of the parties’ agreement required him to be an employee for three years. Nor can he seek damages based on the alleged profits that would have been realized had there been no fraud. When a claim sounds in fraud, the measure of damages is governed by the “out-of-pocket” rule, which states that the measure of damages is “indemnity for the actual pecuniary loss sustained as the direct result of the wrong” … . In other words, damages are calculated to compensate plaintiffs for what they lost because of the fraud, not for what they might have gained in the absence of fraud … . Additionally, plaintiff’s claim that he would have received better remuneration had he partnered with a different entity is inherently speculative and would require any factfinder to engage in conjecture … . Connaughton v Chipotle Mexican Grill, Inc., 2016 NY Slip Op 00273, 1st Dept 1-19-16

 

FRAUD (OUT-OF-POCKET DAMAGES REQUIREMENT)/DAMAGES (FRAUDULENT INDUCEMENT CAUSE OF ACTION MUST BE SUPPORTED BY ALLEGATIONS OF OUT OF POCKET LOSS)/CONTRACT LAW (FRAUDUENT INDUCEMENT CAUSE OF ACTION MUST BE SUPPORTED BY ALLEGATIONS OF OUT OF POCKET LOSS)/EMPLOYMENT LAW (FRAUDULENT INDUCEMENT, AT WILL EMPLOYEE CANNOT RECOVER AS DAMAGES COMPENSATION EMPLOYEE WOULD HAVE RECEIVED IN THE FUTURE BUT FOR THE FRAUD)

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LONG-ARM JURISDICTION DID NOT REACH AN AUDITING FIRM IN THE UK AND CONVERSION CAUSES OF ACTION FAILED BECAUSE THE CONVERTED FUNDS WERE NOT IDENTIFIABLE AFTER THEY HAD BEEN INVESTED.

In affirming Supreme Court’s dismissal of several complaints stemming from the defendants’ alleged involvement with investments managed by Bernard Madoff, the First Department determined New York jurisdiction did not extend to a firm in the UK (KPMG UK) which allegedly negligently audited Madoff Securities, and further determined conversion causes of action failed because the funds allegedly converted were not sufficiently identifiable after they had been invested:

 

The motion court correctly found that New York lacks personal jurisdiction over KPMG UK pursuant to CPLR 302(a)(3)(ii). While plaintiffs allege that KPMG UK committed a tort outside the state (negligently auditing nonparty Madoff Securities International, Ltd. [MSIL] in the United Kingdom), and their causes of action arise out of that tort, KPMG UK’s act did not cause injury to a person or property within the state. “[T]he situs of commercial injury is where the original critical events associated with the action or dispute took place, not where any financial loss or damages occurred”… .  * * *

Where, as here, a plaintiff alleges that a defendant converted money, the money “must be specifically identifiable and be subject to an obligation to be returned or to be otherwise treated in a particular manner” … . [Plaintiff] sent her money to Beacon Associates, which sent it to Madoff, who deposited it at JPMorgan. Even if, arguendo, [plaintiff’s] money was specifically identifiable when she sent it to Beacon Associates, there is no indication that Beacon Associates segregated it when it sent investors’ money to Madoff. By the time Madoff deposited investors’ money at JPMorgan, [plaintiff’s] investments would not have been specifically identifiable. McBride v KPMG Intl., 2016 NY Slip Op 00306, 1st Dept 1-19-16

 

CIVIL PROCEDURE (NEW YORK JURISDICTION DID NOT REACH UK FIRM ALLEGED TO HAVE NEGLIGENTLY AUDITED MADOFF SECURITIES)/CONVERSION (ALLEGEDLY CONVERTED FUNDS MUST BE IDENTIFIABLE, FUNDS NO LONGER IDENTIFIABLE AFTER INVESTMENT)

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PLENARY ACTION UNDER JUDICIARY LAW 487 ALLEGING ATTORNEYS ENGAGED IN DECEITFUL AND COLLUSIVE CONDUCT DURING A PRIOR CONTRACT ACTION PROPERLY SURVIVED MOTION TO DISMISS.

The First Department determined plaintiff (Melcher) properly brought a plenary action for fraud and deceit against a law firm pursuant to Judiciary Law 487. Plaintiff alleged the attorneys engaged in deceitful and collusive conduct in a prior contract action (the Apollo action) which had been settled. Plaintiff alleged the party-defendant in the prior contract action forged an amendment to the contract and then deliberately damaged the original instrument to obfuscate the forgery. The court rejected “claim-splitting” and “collateral estoppel” arguments because the precise issues raised in the Judiciary Law 487 complaint were not addressed in the prior Apollo action:

 

… [W]e find that under the circumstances presented, it was proper for Melcher to assert a Judiciary Law § 487 claim in a separate action, rather than seeking leave to assert a claim against the attorney defendants in the Apollo action.

Judiciary Law § 487(1) provides, among other things, that an attorney who is “guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . forfeits to the party injured treble damages, to be recovered in a civil action.” A plaintiff may bring an action to recover damages for attorney deceit regardless of whether the attorney’s deceit was successful … . Further, the plaintiff in a section 487 case may recover the legal expenses incurred as a proximate result of a material misrepresentation in a prior action … . Melcher v Greenberg Traurig LLP, 2016 NY Slip Op 00274, 1st Dept. 1-19-16

ATTORNEYS (PLENARY ACTION FOR DECEITFUL AND COLLUSIVE CONDUCT UNDER JUDICIARY LAW 487 PROPERLY SURVIVED MOTION TO DISMISS)/FRAUD (PLENARY ACTION AGAINST ATTORNEYS ALLEGING DECEITFUL AND COLLUSIVE CONDUCT UNDER JUDICIARY LAW 487 PROPERLY SURVIVED MOTION TO DISMISS)/JUDICIARY LAW (PLENARY ACTION AGAINST ATTORNEYS ALLEGING DECEITFUL AND COLLUSIVE CONDUCT UNDER JUDICIARY LAW 487 PROPERLY SURVIVED MOTION TO DISMISS)

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