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Criteria for Liability for Acts of Independent Contractor and for Negligent Hiring of an Independent Contractor Explained (Criteria Not Met Here)

Plaintiff, who was working for the roofing contractor on a building damaged by fire, was asked by a salvager to help move a refrigerator. Plaintiff agreed and was injured while moving the refrigerator down some stairs.  The salvager was allowed to go through the building and pick out the items the salvager wanted (which included the refrigerator). Plaintiff sued the building owner (E & M). In finding the plaintiff did not have a cause of action against E & M, the First Department explained the relevant law with respect to liability for the acts of an independent contractor (the salvager) and negligent hiring of an independent contractor:

E & M established that even if it hired the salvager as an independent contractor, there is no basis to impose liability on it. “As a general rule, a principal is not liable for the acts of an independent contractor because, unlike the master-servant relationship, principals cannot control the manner in which independent contractors perform their work” … . Although “liability will attach where the employer is negligent in selecting, instructing or supervising the contractor, where the contractor is employed to do work that is inherently dangerous or where the employer bears a specific nondelegable duty'” …, these exceptions are inapplicable… . * * *

Plaintiff’s contention that issues of fact exist as to whether E & M or its principal were negligent in selecting the salvager, i.e. whether they failed to exercise reasonable care in ascertaining whether he was qualified to move a refrigerator down a flight of stairs, is also unavailing. “[A]n employer has the right to rely on the supposed qualifications and good character of the contractor, and is not bound to anticipate misconduct on the contractor’s part….” … . Thus, an employer “is not liable on the ground of his having employed an incompetent or otherwise unsuitable contractor unless it also appears that the employer either knew, or in the exercise of reasonable care might have ascertained, that the contractor was not properly qualified to undertake the work” … . “Cases finding employers liable for negligent hiring have done so only in very specific circumstances” … not present here. There is no competent proof that E & M knew or should have known of any propensity on the part of the salvager or his helper to engage in the conduct that allegedly caused the accident … . Furthermore, plaintiff has not shown that E & M had any reason to question the qualifications of the salvager, who E & M knew had been used by its plumber on a prior occasion, to move a refrigerator … . Moreover, there was no reason for E & M to suspect that the salvager would enlist an employee of the roofing contractor to assist him. Nelson v E&M 2710 Clarendon LLC, 2015 NY Slip Op 05391, 1st Dept 6-23-15

 

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Notice of Claim Timely Served by an Unauthorized Method Deemed Valid/Motion to Renew Based Upon Information Known at the Time of the Original Motion Properly Heard in Exercise of Discretion

The First Department determined the savings provision of General Municipal Law 50-e applied and a notice of claim which was timely served by an unauthorized method was valid.  The court noted that a motion court can exercise its discretion to hear a motion to renew which relies on information known but not raised at the time the original motion was made:

Although the motion was based on information that was available to plaintiff earlier, “courts have discretion to consider such evidence in the interest of justice” … .

Defendant moved for summary judgment on the ground that plaintiff’s notice of claim was not served within the 90-day period set forth in General Municipal Law § 50-e, and plaintiff had not timely moved for an extension of time to serve. Plaintiff contended that she qualified under either or both prongs of the “savings provision” under General Municipal Law § 50-e(3)(c), which provides that “[i]f the notice is served within the period specified by this section, but in a manner not in compliance with the provisions of this subdivision, the service shall be valid if the public corporation against which the claim is made demands that the claimant. . .be examined in regard to it, or if the notice is actually received by a proper person within the time specified by this section, and the public corporation fails to return the notice, specifying the defect in the manner of service, within thirty days after the notice is received.”

Moreover, “[t]he purpose of a notice of claim is to allow the municipal defendant to make a prompt investigation of the facts and preserve the relevant evidence. The applicable statute should be applies flexibly so as to balance two countervailing interests: on the hand, protecting municipal defendants from stale or frivolous claims, and on the other hand, ensuring that a meritorious case is not dismissed for a ministerial error. General Municipal Law § 50-e was not meant as a sword to cut down honest claims, but merely as a shield to protect municipalities against spurious ones” … .

Here, the record shows that plaintiff served a notice of claim on defendant on December 8, 2011 via regular mail, which did not comply with the requirement that service be completed in person or via registered or certified mail. However, defendant subsequently demanded that plaintiff appear for examinations pursuant to General Municipal Law § 50-h with regard to her claim. Under such circumstances, plaintiff’s service of the notice of claim is valid under the first prong of General Municipal Law § 50-e(3)(c). Person v New York City Hous. Auth., 2015 NY Slip Op 05417, 1st Dept 6-23-15

 

 

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Question of Fact Whether Landlord Entitled to Pass On Increased Real Estate Taxes (Pursuant to a Tax Escalation Clause)—Increase Cannot Be Tied to Improvements Which Solely Benefit the Landlord

The First Department determined the landlord should not have been granted summary judgment.  Plaintiff-tenant sought a declaration that it was not responsible for increased real estate taxes related to improvements to the building which benefitted only the landlord and not the tenant. The matter was sent back for a determination whether and to what extent the improvements benefitted only the landlord:

The Court of Appeals has made clear that “[i]t is not the aim of . . . a [tax escalation] clause . . . to impose upon the tenant responsibility for increases in real estate taxes resulting from improvements on the property redounding solely to the benefit of the landlord” … .

The motion court incorrectly found that this principle was limited to circumstances where the improvement involved a vertical or horizontal enlargement of the building. … The improvement at issue is a renovation solely of the residential aspects of the building. Plaintiff is a commercial tenant. Our declaration here simply states the well settled principle regarding tax escalation clauses.  Enchantments Inc. v 424 E. 9th LLC2015 NY Slip Op 05409, 1st Dept 6-23-15

 

Frivolous Lawsuit Warranted Sanctions and the Award of Attorney’s Fees

The First Department determined sanctions and the award of attorney’s fees were appropriate for a frivolous lawsuit brought by an attorney who had represented himself in a related divorce proceeding.  The lawsuit sought $27,000 allegedly loaned to the defendant-wife by plaintiff. However, the $27,000 claim was made in the divorce proceedings and, although the lower court did not directly rule on the loan, the claim was effectively rejected by the court in a “catch-all” provision denying all relief not specifically addressed:

A court may, in its discretion, award to any party costs in the form of reimbursement for expenses reasonably incurred and reasonable attorneys’ fees resulting from “frivolous conduct,” which includes: (1) conduct completely without merit in law, which cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) conduct undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; and (3) the assertion of material factual statements that are false (22 NYCRR 130-1.1[a], [c][3]). The court may also award financial sanctions on the same grounds (22 NYCRR 130-1.1[b]).

In determining whether conduct is frivolous, the court shall consider “the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel” (22 NYCRR 130-1.1[c]).

Here, the husband made a claim in the divorce action for repayment of the $27,000 “loan,” and Supreme Court rejected it. He then failed to challenge that finding on direct appeal. Any argument that Supreme Court did not actually decide the issue of the “loan” because it did not specifically address it is rejected, since the court included the “catch-all” language that any claims not discussed were denied. In any event, the husband could have sought clarification from the court if he felt that the claim related to the “loan” had escaped the court’s attention. Indeed, it would have behooved him to do so, as it is well settled that “res judicata bars a subsequent plenary action concerning an issue of marital property which could have been, but was not, raised in the prior matrimonial action” … . Again, we are required to consider “the circumstances under which the conduct took place” when reviewing a sanctions motion (22 NYCRR 130-1.1[c]). Here, the circumstances are that the husband, an experienced divorce lawyer, ignored a long-standing principle of matrimonial jurisprudence. Thus, his decision to commence an action that he knew, or should have known, was futile from its inception, weighs heavily in favor of a finding that his conduct was intended solely to harass the wife.  Borstein v Henneberry, 2015 NY Slip Op 05390, 1st Dept 6-23-15

 

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Defendant’s Waiver of 12-Person Jury Upheld

The First Department determined defendant had validly waived his right to be tried in front of a 12-person jury. During defendant’s trial, after the court had been closed for several days due to Hurricane Sandy, one of the jurors informed the court he was leaving town. The defendant, against the advice of his lawyer, was insistent that he wanted the trial to continue with 11 jurors:

The court noted on the record that the excused juror had informed the court that he had a flight scheduled for that day, and that the court had called the juror that morning but could not reach him. Defense counsel objected to the court’s discharge of the juror without first consulting with counsel. Counsel informed the court that, against her advice, defendant wanted deliberations to continue with the remaining 11 jurors. Defense counsel stated that she had told defendant “a number of times that I do not think we should go forward with 11,” but defendant was “extremely insistent,” was “tired of this process,” and did “not want to retry the case.” The court confirmed with defendant on the record that he wanted to continue with 11 jurors, and defendant executed a written waiver of a 12-person jury. Defense counsel also signed the written waiver.

Although the court should have given defense counsel an opportunity to be heard before it excused the juror (see CPL 270.35[2][b]), defendant entered a knowing, voluntary, and intelligent waiver of his right to a 12-person jury … . Defense counsel stated that she had discussed with defendant the possibility of a retrial, and that defendant rejected that option … . The court questioned defendant on the record and confirmed that he had discussed his decision with counsel, and that he understood but rejected counsel’s advice. As defense counsel stated, defendant was insistent that deliberations continue with an 11-person jury. Defendant “must accept the decision he knowingly, voluntarily and intelligently made” … . People v Perry, 2015 NY Slip Op 05394, 1st Dept 6-23-15

 

Liquor Authority Properly Complied with the Requirements for Issuing a Liquor License When Three or More Licensed Premises Are Located Within 500 Feet

The First Department, in a full-fledged opinion by Justice Acosta, determined a petition to annul the NYS Liquor Authority’s conditional approval of a liquor license was properly denied.  The Liquor Authority properly considered the factors associated with the “500-foot-rule” requiring good cause for the issuance of a license when there are three or more licensed premises within 500 feet:

Ordinarily, applications for licenses to sell liquor for consumption on premises “shall be issued to all applicants except for good cause shown” (ABCL § 64[1]); however, no such license shall be granted for any premises within 500 feet of three or more existing licensed and operating premises, unless the Authority “determines that granting such license would be in the public interest” (ABCL § 64[7][b], [f]). In determining whether the granting of a license will promote the public interest, the Authority may consider:

“(a) The number, classes and character of licenses in proximity to the location and in the particular municipality or subdivision thereof.

“(b) Evidence that all necessary licenses and permits have been obtained from the state and all other governing bodies.

“(c) Effect of the grant of the license on vehicular traffic and parking in proximity to the location.

“(d) The existing noise level at the location and any increase in noise level that would be generated by the proposed premises.

“(e) The history of liquor violations and reported criminal activity at the proposed premises.

“(f) Any other factors specified by law or regulation that are relevant to determine the public convenience and advantage and public interest of the community” (ABCL § 64[6-a]).

These factors are intended to guide the Authority “in assuring that appropriate factors are taken into consideration which relate to the business and the impact it has . . . [and] to assure that quality of life impacts are fully incorporated into the responsible state decision-making apparatus” … .

In cases implicating this 500-foot rule, “[b]efore it may issue any such license, the [A]uthority shall conduct a hearing, upon notice to the applicant and the municipality or community board, and shall state and file in its office its reasons therefor” (ABCL § 64[7][f]).

“A reviewing court is not entitled to interfere in the exercise of discretion by an administrative agency unless there is no rational basis for the exercise, or the action complained of is arbitrary and capricious” … . Courts look to whether the determination “is without sound basis in reason and is generally without regard to the facts” … .

Regarding the substance of the reasons stated by the Authority, this Court has held that something more than a “perfunctory recitation” is needed to comply with the requirement that the Authority state its reasons for concluding that issuance of a license would be in the public interest … .

Here, the Authority’s written statement sets forth detailed, concrete reasons for its determination, made after a hearing, that issuance of a liquor license … would be in the public interest (ABCL § 64[7][b], [f]). Matter of BarFreeBedford v New York State Liq. Auth., 2015 NY Slip Op 05428, 1st Dept 6-23-15

 

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Unambiguous Language In a Rider and an Exclusion In a Financial Institution Bond Precluded Coverage of Losses Stemming from the “Madoff” Ponzi Scheme

The First Department reversed Supreme Court and determined a rider and an exclusion of coverage in a financial institution bond applied to the “Madoff” Ponzi scheme. The losses associated with the Ponzi scheme were therefore not covered by the bond.  The rider covered loss resulting from dishonest acts of named persons (including Madoff) “solely” with respect to such persons’ duties as an “outside investment advisor.” Because the losses stemmed from Madoff’s hybrid duties as both an “outside investment advisor” and a “securities broker,” the rider did not cover the losses.  In addition, a specific exclusion from coverage included losses caused by the dishonest acts of a non-employee securities broker (i.e., Madoff). Jacobson Family Invs., Inc. v National Union Fire Ins. Co. of Pittsburgh, PA, 2015 NY Slip Op 05273, 1st Dept 6-18-15

 

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Question of Fact Whether Failure to Provide Personal Ropes to Firefighters Gave Rise to a Claim Under General Municipal Law 205-a and Labor Law 27-a

The First Department, recalling and vacating its decision and order dated March 3, 2015, determined the defendants’ motion for summary judgment dismissing the plaintiff-firefighter’s action based upon General Municipal Law 205-a and Labor Law 27-a was properly denied. The action alleged the city failed to provide firefighters with personal ropes and, as a result, firefighters were forced to jump from windows without ropes (resulting in injury and death). Labor Law 27-a requires employers to provide a place of employment free from recognized hazards. A question of fact was raised whether the failure to issue personal ropes resulted from the city’s discretionary decision-making, and therefore is not subject to government-function immunity:

The motion court properly declined to dismiss the portion of plaintiffs’ General Municipal Law (GML) § 205-a claims predicated on an alleged violation of Labor Law § 27-a(3)(a)(1). The City unavailingly contends that Labor Law § 27-a(3)(a)(1) cannot provide a valid predicate for any General Municipal Law § 205-a claim. However, the statute, known as the Public Employee Safety and Health Act (PESHA), which imposes a general duty on an employer to provide employees with “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to its employees and which will provide reasonable and adequate protection to the lives, safety or health of its employees” (Labor Law § 27-a[3][a][1]), is sufficient since it is “a requirement found in a well-developed body of law and regulation that imposes clear duties” … .

Moreover, the City failed to “show that it did not negligently violate any relevant government provision or that, if it did, the violation did not directly or indirectly cause plaintiff’s injuries” … . There is evidence, including testimony and an investigative report, that the failure to issue personal ropes to the firefighters contributed to the injuries and deaths suffered when the firefighters jumped from windows using either no safety devices or a single rope that had been independently purchased by one of the firefighters. The City is also not entitled to dismissal of these claims pursuant to governmental function immunity, since the evidence concerning the removal of existing personal ropes in 2000, and the failure to provide new ropes in the period of more than four years from then until the fire giving rise to these claims, raises issues of fact concerning whether the absence of ropes “actually resulted from discretionary decision-making — i.e., the exercise of reasoned judgment which could typically produce different acceptable results” … . Stolowski v 234 E. 178th St. LLC, 2015 NY Slip Op 05099, 1st Dept 6-16-15

 

Sworn Juror Who Was From the Same Neighborhood as Defendant Stated His Fear of Drug Dealers Would Prevent Him from Reaching an Impartial Verdict—the Juror Was Properly Discharged as “Grossly Unqualified” and “For Cause” Based Upon a Newly Discovered Ground

The First Department determined a sworn juror was properly discharged as “grossly unqualified,” as well as “for cause.” The juror lived in the neighborhood where the crime occurred and where defendant and his accomplices lived. The juror told the court that his fear of drug dealers in his neighborhood would prevent him from reaching an impartial verdict. The juror had not mentioned his fear before he was sworn:

The juror’s fear provided grounds for the court to dismiss him as “grossly unqualified to serve” pursuant to CPL 270.35(1), even if the court did not cite the statutory phrasing, because it was clear that the juror could not remain impartial. Additionally, since the juror had not mentioned that he feared for his safety when questioned by the court and the parties before being sworn, he was properly discharged for cause, on a newly discovered ground, pursuant to CPL 270.15(4). People v Ward, 2015 NY Slip Op 04928, 1st Dept 6-11-15

 

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The Three-Year Statute of Limitations in the Education Law Need Not Be Raised as a Defense—Here the Charges Against a Teacher Were Time-Barred—The Department of Education (DOE) Did Not Demonstrate the Charges Were Criminal (to Which the Three-Year Statute Would Not Have Applied)

The First Department determined the third set of charges brought against petitioner-teacher, alleging the teacher improperly obtained his daughter’s admission to NYC Department of Education (DOE) schools for which she was not zoned, was time-barred.  Although the three-year statute of limitations in the Education Law would not apply had the allegations constituted a crime, the hearing officer did not find the teacher’s conduct to be criminal. The court determined that the first two set of charges against the teacher did not justify termination (the penalty imposed) and remitted the matter for a lesser punishment. The court noted that the statute of limitations in the Education Law need not be raised as a defense:

Supreme Court did not exceed its authority in finding that the third set of charges against petitioner was time-barred. Education Law § 3020-a(1) requires that disciplinary charges against a teacher be brought within three years from the date of the alleged misconduct, unless the alleged misconduct constituted a crime when committed. Petitioner was not required to raise the statutory time limitation set forth in Education Law § 3020-a(1) as a defense in the disciplinary proceeding. Where, as here, “a statute creates a right unknown at common law, and also establishes a time period within which the right may be asserted, the time limit is . . . a condition attached to the right as distinguished from a [s]tatute of [l]imitations which must be asserted by way of defense” … . Accordingly, DOE had the burden of establishing that it met the time requirement set forth in Education Law § 3020-a(1) or that the crime exception to the time requirement applied … . DOE failed to meet its burden. Matter of Suker v New York City Board/ Dept. of Educ., 2015 NY Slip Op 04940, 1st Dept 6-11-15

 

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