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TRIAL COURT SHOULD NOT HAVE SET ASIDE VERDICT IN MALICIOUS PROSECUTION ACTION.

The First Department, in a full-fledged opinion by Justice Kapnick, reversing Supreme Court, reinstated plaintiff's malicious prosecution, 42 USC 1983, punitive damages and attorneys' fees claims. The claims had been dismissed pursuant to defendants' motion to set aside the $4 million jury verdict. Plaintiff had been injured during an arrest which took place just outside plaintiff's residence after he was approached by two police officers, ostensibly for his holding an open can of beer. Plaintiff was ultimately charged only with disorderly conduct which was dismissed at trial at the close of the People's case. The opinion includes an in-depth discussion of the elements of malicious prosecution, including the distinct “lack of probable cause to arrest” and “malice” elements. The court noted that the trial court improperly substituted its own factual judgments for the jury's. The court explained:

The actual malice element “does not require a plaintiff to prove that the defendant was motivated by spite or hatred, although it will of course be satisfied by such proof” … . Since “[a]ctual malice is seldom established by direct evidence of an ulterior motive” … , it “may be proven by circumstantial evidence” … , and depends “upon inferences to be reasonably drawn from the surrounding facts and circumstances” … . Actual malice may also be inferred from a total lack of probable cause … or from defendant's intentionally providing false information to law enforcement authorities … . It is important to note that the lack of probable cause and actual malice elements are independent, and “a jury may, but is not required to, infer the existence of actual malice from the fact that there was no probable cause to initiate the proceeding” … . As a result, it is advisable to separate the questions of probable cause and malice on a verdict sheet … . Here, however, while there was only one question, the trial court did charge the jury on both the elements of probable cause and malice, and instructed the jury that only if they found that “plaintiff [] prove[d] both that the defendants did not have probable cause and that they acted maliciously” (emphasis added) should they move on to consider damages, which they did.

Based on the foregoing, and contrary to the trial court's finding, the jury's verdict on malicious prosecution was improperly set aside as insufficient as a matter of law. It cannot be said that there was no valid line of reasoning that could possibly have led rational people to the conclusion reached by the jury on the basis of the evidence at trial. Moreover, the court impermissibly usurped the jury's role and made factual determinations. The court's statement that the plaintiff “refus[ed] to submit to the authority of the police” is a clear example of the court substituting its judgment for that of the jury. When the facts give rise to conflicting inferences, as they do here, it is for the jury, not the court, to resolve those conflicts. Cardoza v City of New York, 2016 NY Slip Op 02766, 1st Dept 4-12-16


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DESTRUCTION (SPOLIATION) OF EVIDENCE WARRANTED STRIKING THE PLEADINGS.

The First Department determined defendant's pleadings were properly struck because defendant destroyed emails relevant to plaintiff's defamation action:

Defendant undertook an affirmative course of action resulting in destruction of relevant emails, though she represented otherwise during sworn testimony. As the documents received from third-party recipients confirm, the files defendant destroyed are highly relevant and tend to substantiate plaintiffs' claims. Evidence of defendant's willful and prejudicial destruction of evidence warrants the sanction of striking her pleadings … . Where a party disposes of evidence without moving for a protective order, a negative inference may be drawn that the destruction was willful … . Willfulness may also be inferred from a party's repeated failure to comply with discovery directives … . It should also be noted that this Court has upheld the striking of pleadings where the destruction of critical evidence occurs through ordinary negligence … . Chan v Cheung, 2016 NY Slip Op 02731, 1st Dept 4-12-16


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MOVING PARTY CANNOT RELY ON GAPS IN OPPOSING PARTY’S PROOF IN MOTIONS AND CROSS-MOTIONS FOR SUMMARY JUDGMENT; WITNESS-CREDIBILITY SHOULD NOT BE TAKEN INTO ACCOUNT AT THE SUMMARY JUDGMENT STAGE.

The First Department, over a partial dissent, reversing (modifying) Supreme Court, determined neither plaintiff nor defendant was entitled to summary judgment in this contract dispute. Defendant, KLT, represented a concert artist, Akon, who cancelled a performance, allegedly due to illness. The question was whether, under the terms of the contract, plaintiff was entitled to its money back. KLT moved for summary judgment, arguing that the “force majeure” clause applied and plaintiff was not entitled to relief. Plaintiff cross-moved for summary judgment alleging breach of contract. The court found that KLT's proof of Akon's illness was insufficient and summary judgment was properly denied for that reason. The court went on to find Supreme Court should not have granted plaintiff's cross-motion because plaintiff did not demonstrate illness was not the reason for the cancellation of the concert. The decision presents another example of how appellate courts analyze summary judgment motions. Plaintiff could not rely on the gaps in KLT's proof of illness. Rather plaintiff was required to affirmatively prove illness was not the reason for the cancellation. The court further noted that witness-credibility cannot be taken into account at the summary judgment stage (the dissent argued Akon's testimony about illness was not to be believed):

… [P]laintiff, in its cross motion for summary judgment, was required to establish that Akon was able to perform at the concert and was not unable to do so due to sickness. Instead, plaintiff merely pointed to gaps in KLT's evidence — the missing medical records that would have proven Akon was ill, and thus its cross motion was improperly granted … .

The dissent merely points to additional gaps in KLT's evidence, such as proof of travel arrangements to demonstrate Akon intended to travel to Brussels [to perform the concert], and notes the limited value of the affidavit of Akon's surgeon. However, these gaps do not equate to plaintiff meeting its burden to establish an absence of a genuine issue of fact as to whether Akon was ill. Plaintiff acknowledges that it lacks any documentary evidence refuting that Akon was unable to perform, and has no evidence that he was physically capable of performing. The dissent, like the Supreme Court, appears to completely dismiss the value of Akon's deposition testimony, yet it is “not the court's function on a motion for summary judgment to assess credibility” … . Belgium v Mateo Prods., Inc., 2016 NY Slip Op 02730, 1st Dept, 4-12-16


QUESTION OF FACT WHETHER EMERGENCY DEFENSE APPLIED TO A REAR-END COLLISION.

The First Department, in a full-fledged opinion by Justice Renwick, over a two-justice dissenting opinion, determined defendant had raised a question of fact whether the emergency defense applied in a rear-end collision. The defendant, in an affidavit in opposition to plaintiff’s motion for summary judgment, alleged an unidentified car suddenly turned into his path causing him to swerve and ultimately strike the back of plaintiff’s car. The dissent argued the accident could only have occurred because of defendant’s negligence:

We find that plaintiffs have met their burden of establishing a prima facie showing of their entitlement to partial summary judgment on liability. A rear-end collision with a stopped vehicle creates a prima facie showing of negligence on the part of the rear driver … . Similarly, a violation of Vehicle and Traffic Law § 1129(a), which obligates drivers to maintain safe distances between their cars and cars in front of them, and be aware of traffic conditions, including vehicle stoppages, is prima facie evidence of negligence … .

Defendants opposed, arguing that summary judgment was not warranted, because they had a valid emergency doctrine defense, which would preclude a summary finding of liability against them. The emergency doctrine recognizes that “when an actor is faced with a sudden and unexpected circumstance which leaves little or no time for thought, deliberation or consideration, or causes the actor to be reasonably so disturbed that the actor must make a speedy decision without weighing alternative courses of conduct, the actor may not be negligent if the actions taken are reasonable and prudent in the emergency context,” provided the actor had not created the emergency … . Maisonet v Roman, 2016 NY Slip Op 02725, 1st Dept 4-7-16

 

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NEW YORK CITY HOUSING AUTHORITY ACTED ARBITRARILY AND CAPRICIOUSLY WHEN IT DENIED PETITIONER SUCCESSION RIGHTS TO HIS MOTHER’S APARTMENT.

The First Department, over a two-justice dissent, determined the New York City Housing Authority (NYCHA) acted arbitrarily and capriciously when it denied petitioner succession rights to his mother's apartment. Petitioner had moved in with his mother to care for her when she became unable to care for herself. The NYCHA knew petitioner had moved in to care for his mother but repeatedly denied petitioner's applications to become an occupant of his mother's apartment on “overcrowding” grounds:

Respondent's determination denying petitioner succession rights to his mother's apartment was arbitrary and capricious. Petitioner's mother submitted multiple applications to add petitioner to the lease as required by 24 CFR 966.4(a)(1)(v). The first application was denied on the ground that adding petitioner to the household “will create overcrowding”; the second, not on that basis but allegedly because petitioner signed the application on his disabled mother's behalf. NYCHA never considered evidence of petitioner's mother's disability in denying the applications.

The ground proffered for the denial, i.e., that adding petitioner to the household would result in overcrowding, creates an unacceptable Catch-22 — a request to add an additional family member will almost always result in overcrowding unless NYCHA fails simultaneously to consider transferring the applicant to a larger apartment. NYCHA guidelines provide that an “overcrowded” apartment should not result in a summary denial of the RFM's (remaining family member's) claims; rather, the housing manager should inform the new tenant that he may submit a request to transfer to a new apartment. Matter of Aponte v Olatoye, 2016 NY Slip Op 02708, 1st Dept 4-7-16


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CHALLENGE TO THE JURY INSTRUCTION ON CAUSATION OF DEATH IS SUBJECT TO THE PRESERVATION REQUIREMENT; DEFENDANT’S FAILURE TO OBJECT PRECLUDES REVIEW; STRONG DISSENT ARGUED THE JURY INSTRUCTION IS REVIEWABLE BECAUSE IT RELIEVED THE PEOPLE OF THEIR BURDEN OF PROOF.

The First Department, over an extensive dissent, determined defendant's appellate challenge to the jury instruction on causation of death was subject to the preservation requirement. The victim was assaulted by the defendant and died later at the hospital. The defense presented an expert who testified the victim was improving until he fell in the hospital. The cause of death, according to the defense expert, was the hospital's negligence in treating the victim after the fall. The defendant did not object to the causation jury instruction. The dissent would have reversed, either finding the preservation requirement did not apply because the jury instruction relieved the People of their burden of proof, or in the interest of justice:

Defendant failed to raise any challenge to the court's charge regarding causation of death at a time when the court could have easily rephrased the instruction. The issue is therefore unpreserved for appellate review (see CPL 470.05[2]). The claimed error does not fall within the “very narrow exception” discussed in People v Thomas (50 NY2d 467, 471 [1980]), as the dissent suggests. That narrow exception is only applicable “when the procedure followed at trial was at basic variance with the mandate of law prescribed by Constitution or statute” (id.). Here, as was the case in Thomas, preservation was necessary because defendant essentially claims that “a portion of the charge could, in the particular case, be interpreted as having a contrary effect” to the burden of proof charge that was correctly stated by the court (id. at 472). Nor is the exercise of interest of justice jurisdiction warranted; defendant was not deprived of a fair trial (see CPL 470.15[6] [a]). As an alternative holding, we consider the charge, viewed as a whole, to have properly conveyed the law regarding whether the assault was a sufficiently direct cause of the victim's death … . People v Castillo, 2016 NY Slip Op 02709, 1st Dept 4-7-16


JUDICIAL DIVERSION PROGRAM AVAILABLE TO DEFENDANTS CHARGED WITH BOTH QUALIFYING OFFENSES AND OFFENSES WHICH ARE NEITHER QUALIFYING NOR DISQUALIFYING.

The First Department, in a full-fledged opinion by Justice Sweeny, determined the defendant was eligible for judicial diversion where defendant was charged with both statutorily qualifying offenses and other offenses which were nowhere defined as qualifying or disqualifying offenses:

The Legislature amended the DLRA [Drug Law Reform Act] in 2009, enacting CPL 216.00 and 216.05 to create a mechanism for judicial diversion. Under this program, eligible felony offenders whose drug or alcohol abuse contributed to their criminal conduct, may, at the discretion of the court, be afforded the opportunity to avoid a felony conviction and a prison sentence by successfully participating in a judicially supervised substance abuse program. Unlike prior drug offense programs, judicial diversion does not require the prosecutor’s consent … . * * *

… [The statute] sets forth a list of disqualifying offenses/conditions that prevent a defendant from qualifying for judicial diversion, although as noted, even some of those offenses may not prevent disqualification with the People’s consent. In applying the principle “espressio unius est exclusio alterius,” “an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded” … . The inescapable conclusion is that the Legislature’s decision not to list certain offenses as disqualifying means their mere inclusion in an indictment will not prevent an otherwise eligible defendant from making an application for judicial diversion. People v Smith, 2016 NY Slip Op 02596, 1st Dept 4-5-16

CRIMINAL LAW (JUDICIAL DIVERSION PROGRAM AVAILABLE TO DEFENDANTS CHARGED WITH BOTH QUALIFYING OFFENSES AND OFFENSES WHICH ARE NEITHER QUALIFYING NOR DISQUALIFYING)/JUDICIAL DIVERSION PROGRAM (JUDICIAL DIVERSION PROGRAM AVAILABLE TO DEFENDANTS CHARGED WITH BOTH QUALIFYING OFFENSES AND OFFENSES WHICH ARE NEITHER QUALIFYING NOR DISQUALIFYING)

12 TO 18 INCH FALL SUPPORTED SUMMARY JUDGMENT IN FAVOR OF PLAINTIFF UNDER LABOR LAW 240 (1).

The First Department determined a fall of 12 to 18 inches sufficed to award plaintiff summary judgment Labor Law 240 (1) action:

Plaintiff was injured when, while carrying wood planks, he fell through an opening in a latticework rebar deck to a plywood form that was 12 to 18 inches below. “There is no bright-line minimum height differential that determines whether an elevation hazard exists” … , and here, the record establishes that plaintiff's fall was the result of exposure to an elevation related hazard … . Brown v 44 St. Dev., LLC, 2016 NY Slip Op 02527, 1st Dept 3-31-16

LABOR LAW (12 TO 18 INCH FALL SUPPORTED SUMMARY JUDGMENT IN FAVOR OF PLAINTIFF UNDER LABOR LAW 240 (1))

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FRAUD CAUSES OF ACTION AGAINST DEUTSCHE BANK STEMMING FROM THE COLLAPSE OF MORTGAGE-BACKED SECURITIES DISMISSED AS UNTIMELY, ACCUSATIONS AGAINST DEUTSCHE BANK WERE WELL-KNOWN MORE THAN TWO YEARS BEFORE THE SUIT WAS BROUGHT.

In another lawsuit stemming from the collapse of mortgage-backed securities, the First Department determined fraud causes of action by Aozora Bank against Deutsche Bank were properly dismissed as untimely. Investigations, including a Congressional investigation, into the relevant actions of Deutsche Bank were well-known more than two years before the suit was brought:

The parties do not dispute that plaintiff's fraud causes of action were not timely under New York's six-year limitations period and, to be timely, must have been commenced within two years from the time plaintiff discovered the fraud, or with reasonable diligence could have discovered it (CPLR 213[8]). * * *

… [O]ne of the most significant sources of public information putting plaintiff on notice of its fraud claims is the Senate Report and its associated emails, which actually form the centerpiece of plaintiff's complaint. In fact, the Senate Report contains a 45-page section on Deutsche Bank entitled “Running the CDO Machine: Case Study of Deutsche Bank.” Taken with all the other information available in the public domain, the Senate Report is more than sufficient to have placed Aozora on inquiry notice of possible fraud by April 2011 at the latest … . Aozora Bank, Ltd. v Deutsche Bank Sec. Inc., 2016 NY Slip Op 02511, 1st Dept 3-31-16

FRAUD (FRAUD CAUSES OF ACTION AGAINST DEUTSCHE BANK STEMMING FROM THE COLLAPSE OF MORTGAGE-BACKED SECURITIES DISMISSED AS UNTIMELY, ACCUSATIONS AGAINST DEUTSCHE BANK WERE WELL-KNOWN MORE THAN TWO YEARS BEFORE THE SUIT WAS BROUGHT)/SECURITIES (FRAUD CAUSES OF ACTION AGAINST DEUTSCHE BANK STEMMING FROM THE COLLAPSE OF MORTGAGE-BACKED SECURITIES DISMISSED AS UNTIMELY, ACCUSATIONS AGAINST DEUTSCHE BANK WERE WELL-KNOWN MORE THAN TWO YEARS BEFORE THE SUIT WAS BROUGHT)/MORTGAGE-BACKED SECURITIES (FRAUD CAUSES OF ACTION AGAINST DEUTSCHE BANK STEMMING FROM THE COLLAPSE OF MORTGAGE-BACKED SECURITIES DISMISSED AS UNTIMELY, ACCUSATIONS AGAINST DEUTSCHE BANK WERE WELL-KNOWN MORE THAN TWO YEARS BEFORE THE SUIT WAS BROUGHT)/CIVIL PROCEDURE (FRAUD CAUSES OF ACTION AGAINST DEUTSCHE BANK STEMMING FROM THE COLLAPSE OF MORTGAGE-BACKED SECURITIES DISMISSED AS UNTIMELY, ACCUSATIONS AGAINST DEUTSCHE BANK WERE WELL-KNOWN MORE THAN TWO YEARS BEFORE THE SUIT WAS BROUGHT)

DERIVATIVE SUIT AGAINST JP MORGAN CHASE STEMMING FROM SUBPRIME MORTGAGE-BACKED SECURITIES DISMISSED.

The First Department determined a derivative suit against the board of directors of JP Morgan Chase stemming from subprime mortgage-backed securities was properly dismissed for failure to demonstrate the futility of a presuit demand upon the board. The decision includes particularly clear explanations of what must be alleged to sufficiently demonstrate futility under Delaware law pursuant to the “Aronson” and “Rales” tests. With regard to one of the two “Aronson” tests, the court wrote:

Plaintiffs contend that the board's action, including the adoption of the January 2007 resolution delegating authority to a management committee, was not a valid exercise of business judgment. However, this factual assertion examines the board's course of action in hindsight and hinges on certain warning signs that plaintiff alleges the board failed to heed, including some losses that reverted back to JPMorgan's balance sheet by September 2008. Delaware law presumes that in making a business decision the board of directors acts in good faith and in the honest belief that the action is taken in the best interests of the company … . In order to satisfy the second prong of the Aronson test, plaintiffs are required to plead particularized facts sufficient to raise a reason to doubt that [1] the action was taken honestly and in good faith or [2] the board was adequately informed in making the decision … . These facts do not rebut the presumption of regularity of the board's decision making process … . Although risky, the conduct plaintiff challenges, the board's authorization of the securitization and sale of investments, involves “legal business decisions that were firmly within management's judgment to pursue” … . The fact that investors later sued or made repurchase demands does not raise a reasonable doubt that the decision to engage in such transactions was not a valid exercise of business judgment … . Asbestos Workers Phila. Pension Fund v Bell, 2016 NY Slip Op 02510, 1st Dept 3-31-16

CORPORATION LAW (DERIVATIVE SUIT AGAINST JP MORGAN CHASE STEMMING FROM SUBPRIME MORTGAGE-BACKED SECURITIES DISMISSED)/MORTGAGE-BACKED SECURITIES (DERIVATIVE SUIT AGAINST JP MORGAN CHASE STEMMING FROM SUBPRIME MORTGAGE-BACKED SECURITIES DISMISSED)/SHAREHOLDERS' DERIVATIVE ACTION (DERIVATIVE SUIT AGAINST JP MORGAN CHASE STEMMING FROM SUBPRIME MORTGAGE-BACKED SECURITIES DISMISSED)

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