You are here: / First Department

Tag Archive for: First Department

SECURITY DEPOSIT CANNOT BE USED BY THE LANDLORD AS AN OFFSET AGAINST UNPAID RENT, BUT CAN BE USED BY THE TENANT TO REDUCE AMOUNT OWED TO THE LANDLORD.

In finding the special referee exceeded the scope of the reference from Supreme Court, the First Department explained the consequences of a landlord’s failure to place a security deposit in a separate account pursuant to General Obligations Law 7-103:

Section 7-103 prohibits landlords from commingling security deposits with their own funds. Violation of the statute gives rise to an action in conversion and the right to immediate return of the funds … . A landlord who violates Section 7-103 of the General Obligations Law cannot use the security as an offset against unpaid rents. This is so because a landlord is considered to be a trustee with respect to those funds deposited as security. To allow the landlord to set off the rent against the deposit would be to treat the deposit as a debt and the landlord as a debtor, the situation the statute was enacted to change … .The same logic does not pertain where a tenant seeks to apply the security deposit to reduce amounts found owing to the landlord.  23 E. 39th St. Mgt. Corp. v 23 E. 39th St. Dev., LLC, 2015 NY Slip Op 09605, 1st Dept 12-29-15

LANDLORD-TENANT (SECURITY DEPOSIT CANNOT BE USED AS OFFSET AGAINST UNPAID RENT)/LANDLORD-TENANT (SECURITY DEPOSIT CAN BE USED TO REDUCE AMOUNT TENANT OWES LANDLORD)/SECURITY DEPOSIT (LANDLORD CANNOT USE AS OFFSET AGAINST UNPAID RENT)/SECURITY DEPOSIT (CAN BE USED TO REDUCE AMOUNT OWED LANDLORD BY TENANT)

,

PLAINTIFF STRUCK WHEN TWO WORKERS LOST CONTROL OF A HEAVY BEAM THEY WERE LOWERING TO THE GROUND ENTITLED TO SUMMARY JUDGMENT ON LABOR LAW 240 (1) CAUSE OF ACTION; EXPERT OPINION THAT NO SAFETY DEVICES WERE NECESSARY INSUFFICIENT TO DEFEAT SUMMARY JUDGMENT MOTION.

The First Department affirmed Supreme Court’s grant of summary judgment to the plaintiff in a Labor Law 240 (1) cause of action. Plaintiff was injured when a heavy beam being lowered by two other workers struck him in the chest and leg when the workers lost control of it. The court noted an expert opinion that no safety devices were needed was insufficient to establish the absence of a Labor Law 240 (1) violation:

The court properly found a “causal connection between the object’s inadequately regulated descent and plaintiff’s injury” … . By submitting an expert affidavit, plaintiff met his initial burden of showing that the beam “required securing for the purposes of the undertaking” … , and that statutorily enumerated safety devices could have prevented the accident … . It is undisputed that no enumerated safety devices were provided, and the testimony and expert opinion that such devices were neither necessary nor customary is insufficient to establish the absence of a Labor Law § 240(1) violation ”’ . The “height differential cannot be described as de minimis given the amount of force [the beam was] able to generate over [its] descent” … . Plaintiff was not the sole proximate cause of his injuries, which were caused at least in part by the lack of safety devices to check the beam’s descent as well as the manner in which the other two workers lowered the beam; comparative negligence is no defense to the Labor Law § 240(1) claim … . Bonaerge v Leighton House Condominium, 2015 NY Slip Op 09632, 1st Dept 12-29-15

LABOR LAW (PLAINTIFF STRUCK BY BEAM LOWERED BY TWO WORKERS)/EVIDENCE (EXPERT OPINION NO SAFEY EQUIPMENT NECESSARY DID NOT DEFEAT PLAINTIFF’S SUMMARY JUDGMENT MOTION IN A LABOR LAW 240 (1) ACTION)/EXPERT OPINION (OPINION THAT NO SAFETY EQUIPMENT WAS NECESSARY WAS INSUFFICIENT TO DEFEAT SUMMARY JUDGMENT IN LABOR LAW 240 (1) ACTION)

FRAUD AND FRAUDULENT CONCEALMENT CAUSES OF ACTION AGAINST MORGAN STANLEY, STEMMING FROM RESIDENTIAL MORTGAGE-BACKED SECURITIES, PROPERLY SURVIVED A MOTION TO DISMISS.

The First Department, in a full-fledged opinion by Justice Friedman, determined Morgan Stanley’s motion to dismiss fraud and fraudulent concealment causes of action was properly denied.  The action stemmed from residential mortgage backed securities (RMBS) and the collapse of subprime mortgages. In essence, Morgan Stanley argued the plaintiff, Basis Yield, a mutual fund, did not allege justifiable reliance on the ratings of the investments and did not allege it exercised due diligence in researching the quality of the investments. With respect to the “failure to allege the exercise of due diligence” argument, the court wrote:

… Morgan Stanley … argues that the fraud claims are legally insufficient because Basis Yield does not allege that it conducted, or sought to conduct, a due diligence investigation into the allegedly misrepresented matters. This argument relies on the well-established principle that a plaintiff suing for fraud (and particularly a sophisticated plaintiff, such as Basis Yield) must establish that it “has taken reasonable steps to protect itself against deception” … . * * *

If accepted, Morgan Stanley’s position would require the prospective purchaser of a credit instrument to assume that the instrument’s credit rating is fraudulent until the rating has been verified through a detailed retracing of the steps of the underwriter and credit rating agency. This would largely negate the utility of the credit ratings of negotiable bonds and notes that are published by accredited rating agencies. Morgan Stanley does not draw our attention to any New York decision holding that the due diligence obligation of even a sophisticated investor extends so far as to require it to seek to verify the accuracy of an accredited agency’s credit rating of a note or bond through an investigation of nonpublic information. Basis Yield Alpha Fund Master v Stanley, 2015 NY Slip Op 09645, 1st Dept 12-29-15

FRAUD (FRAUD AND FRAUDULENT CONCEALMENT CAUSES OF ACTION AGAINST MORGAN STANLEY, STEMMING FROM RESIDENTIAL MORTGAGE-BACKED SECURITIES)/RESIDENTIAL MORTGAGE-BACKED SECURITIES (FRAUD AND FRAUDULENT CONCEALMENT CAUSES OF ACTION AGAINST MORGAN STANLEY)/MORGAN STANLEY (FRAUD AND FRAUDULENT CONCEALMENT CAUSES OF ACTION AGAINST)

, ,

FACEBOOK’S SUIT AGAINST LAW FIRMS WHICH REPRESENTED A CLIENT IN A FRAUDULENT SUIT AGAINST FACEBOOK DISMISSED.

The First Department, reversing Supreme Court, dismissed a malicious prosecution and Judiciary Law 487 action brought by Facebook against law firms which represented a client who brought a fraudulent lawsuit against Facebook. The client apparently forged a contract with Mark Zuckerberg (the founder of Facebook) which would have given the client a 50% interest in Facebook. The client’s suit against Facebook was dismissed and the client was indicted for wire fraud. The First Department held that the “conclusory” allegations in the complaint did not sufficiently plead the “no probable cause to bring the suit” element of a malicious prosecution cause of action or the “egregious conduct” element of a Judiciary Law 487 cause of action:

With respect to the element of probable cause [re: malicious prosecution], a plaintiff must allege that the underlying action was filed with “a purpose other than the adjudication of a claim” and that there was “an entire lack of probable cause in the prior proceeding” … . Moreover, the lack of probable cause must be “patent” … . In this context, the Court of Appeals has stated as follows: “Probable cause is the knowledge of facts, actual or apparent, strong enough to justify a reasonable man in the belief that he has lawful grounds for prosecuting the defendant in the manner complained of. The want of probable cause does not mean the want of any cause, but the want of any reasonable cause, such as would persuade a man of ordinary care and prudence to believe in the truth of the charge” … . In a malicious prosecution action, the burden of proof to establish a want of probable cause is on the plaintiffs … .

Here, the … court’s granting of a TRO at the inception of the [client’s] action, prior to any of the defendants’ representation of [the client], created a presumption that [the client] had probable cause to bring the case. This presumption must be overcome by specifically pleaded facts … . Moreover, a plaintiff’s factual allegations regarding lack of probable cause and malice may be disproved by the evidentiary material submitted by defendant in support of a motion to dismiss … .

Applying these principles to this case, we find that the allegations in the instant complaint concerning defendants’ lack of probable cause are entirely conclusory, and are thus inadequate to support the lack of probable cause element of the malicious prosecution claim … . * * *

Relief under a cause of action based upon Judiciary Law § 487 “is not lightly given” … and requires a showing of “egregious conduct or a chronic and extreme pattern of behavior” on the part of the defendant attorneys that caused damages … . Allegations regarding an act of deceit or intent to deceive must be stated with particularity … ; the claim will be dismissed if the allegations as to scienter are conclusory and factually insufficient … . Facebook, Inc. v DLA Piper LLP (US), 2015 NY Slip Op 09602, 1st Dept 12-29-15

ATTORNEYS (MALICIOUS PROSECUTION ACTION AGAINST LAW FIRMS WHICH REPRESENTED A CLIENT IN A FRAUDULENT SUIT DISMISSED)/MALICIOUS PROSECUTION (ACTION AGAINST LAW FIRMS WHICH REPRESENTED A CLIENT IN A FRAUDULENT SUIT DISMISSED)/JUDICIARY LAW 487 (ACTION AGAINST LAW FIRMS WHICH REPRESENTED A CLIENT IN A FRAUDULENT SUIT DISMISSED)

,

INCONSISTENCIES IN TWO FINAL RENT-ADJUSTMENT ORDERS ALLOWED RECONSIDERATION OF THE NATURE OF THE MAJOR CAPITAL IMPROVEMENTS [MCI’S] DESCRIBED IN THE ORDERS.

In a rent-increase matter which was before the NYS Division of Housing and Community Renewal (DHCR), the First Department, over an extensive two-justice dissent, determined a discrepancy between two prior rent-adjustment orders constituted “an irregularity in a vital matter” which allowed the DHRC, on remand, to reconsider the two (final) orders. The discrepancy related to the nature of the “major capital improvement [MCI]” (purportedly justifying a rent increase) to which each order referred. The dissent argued that the two orders were final orders and collateral estoppel prohibited further reexamination of them. Matter of 60 E. 12th St. Tenants’ Assn. v New York State Div. of Hous. & Community Renewal, 2015 NY Slip Op 09599, 1st Dept 12-29-15

ADMINISTRATIVE LAW (RECONSIDERATION OF INCONSISTENT FINAL ORDERS BY NYS DIVISION OF HOUSING AND COMMUNITY RENEWAL)/DIVISION OF HOUSING AND COMMUNITY RENEWAL [DHCR] (RECONSIDERATION OF INCONSISTENT FINAL RENT-ADJUSTMENT ORDERS)

,

DESTRUCTION OF BLOOD EVIDENCE IN FLOODING CAUSED BY HURRICANE SANDY DID NOT WARRANT AN ADVERSE INFERENCE JURY INSTRUCTION.

The First Department, over an extensive dissent, determined that the destruction of blood evidence by Hurricane Sandy did not warrant an adverse inference jury instruction, despite the People’s failure to timely respond to the defense request for the evidence. The court determined that the adverse inference jury instruction is not triggered by a loss of evidence for which the People are blameless:

… [T]he Handy [20 NY3d 663] adverse inference charge is a penalty for destruction of evidence, not for mere tardiness in producing it. …  While we do not condone the People’s slowness in fulfilling their disclosure obligations in this case, the evidence in question was not lost as a foreseeable result of the passage of time, but as a consequence of a natural catastrophe that happened to occur just before this case went to trial. Moreover, the delay in production of the evidence here appears to be as much the fault of the defense as of the People. Even though the defense always knew that the case would rely on DNA evidence, defense counsel, after making a pro forma request to which the physical blood evidence would have been responsive, never took any steps before the hurricane, over a period of approximately two years, to enforce defendant’s right to production of that evidence. As previously noted, the physical evidence did not become a focus of the discussion among the court and counsel until after the hurricane had passed. …

We see no support in the record for the dissent’s position that the physical blood evidence from the crime scene was somehow material to the defense. As previously discussed, while the dissent correctly notes that the match of defendant’s DNA with the DNA in the crime scene evidence was “the lynchpin of the People’s case against defendant,” placing before the jury the physical blood evidence from the crime scene would not have told them anything about the accuracy of the DNA match. Indeed, this appears to have been the original conclusion of defense counsel, who, without ever having had an opportunity to examine the physical evidence, announced that he was “ready to go” to trial before he learned that such evidence was no longer [*4]available. Nothing but speculation supports the dissent’s unlikely supposition that the appearance of the physical blood evidence at trial might have told the jury anything about “the manner of its collection, storage or handling” at the time the State analyzed its DNA, three years before trial. The condition of the physical evidence after the State conducted its analysis is irrelevant, since defendant has never expressed any interest in conducting an independent DNA analysis. People v Austin, 2015 NY Slip Op 09372, 1st Dept 12-22-15

CRIMINAL LAW (DESTRUCTION OF EVIDENCE CAUSED BY HURRICANE SANDY, ADVERSE INFERENCE CHARGE NOT WARRANTED)/JURY INSTRUCTION (ADVERSE INFERENCE CHARGE NOT WARRANTED, EVIDENCE DESTROYED BY HURRICANE SANDY)/EVIDENCE (DESTRUCTION BY HURRICANE SANDY, ADVERSE INFERENCE CHARGE NOT WARRANTED)/ADVERSE INFERENCE JURY INSTRUCTION (NOT WARRANTED WHERE EVIDENCE DESTROYED BY HURRICANE SANDY)

,

EVIDENCE OF HOW THE MURDER VICTIM FELT ABOUT DEFENDANT AND EVIDENCE OF STRIFE IN THE COUPLE’S RELATIONSHIP ADMISSIBLE TO SHOW MOTIVE AND IDENTITY.

The First Department determined evidence of how the murder victim felt toward the defendant and evidence of the couple’s “strife and unhappiness” was properly admitted to show the defendant’s motive and was inextricably interwoven with the issue of the identity of the killer:

The court properly admitted testimony from friends of the victim reflecting the victim’s unfavorable perception of defendant’s character, in order to show the victim’s beliefs as part of a showing that the couple had been arguing and that the victim had been attempting to break up with defendant. Proof of the “murder victim’s espoused intention to terminate her relationship with, and stay away from, defendant” was admissible to show the “victim’s state of mind” and was “relevant to the issue of the motive of defendant, who was aware of the victim’s attitude, to kill the victim” … . Hence, the background information about the couple’s “strife and unhappiness” was admissible as “highly probative of the defendant’s motive and [was] either directly related to or inextricably interwoven with the issue of his identity as the killer” … . The friends’ testimony about disputes between defendant and the victim was similarly admissible … . People v Brooks, 2015 NY Slip Op 09379, 1st Dept 12-22-15

CRIMINAL LAW (EVIDENCE OF MURDER VICTIM’S STATE OF MIND AND STRIFE BETWEEN DEFENDANT AND VICTIM ADMISSIBLE TO SHOW MOTIVE AND IDENTITY)/EVIDENCE (MURDER VICTIM’S STATE OF MIND AND STRIFE BETWEEN DEFENDANT AND VICTIM ADMISSIBLE TO SHOW MOTIVE AND IDENTITY); PRIOR BAD ACTS (STRIFE IN RELATIONSHIP BETWEEN DEFENDANT AND MURDER VICTIM ADMISSIBLE TO SHOW DEFENDANT’S MOTIVE AND IDENTITY)

,

MASSIVE 750-FOOT TOWER CRANE DESTROYED BY HURRICANE SANDY NOT COVERED UNDER “TEMPORARY WORKS” CLAUSE IN INSURANCE POLICY.

The First Department, in a full-fledged opinion by Justice Andrias, over a two-justice dissent (opinion by Justice Mazzarelli), determined that a massive 750-foot tower crane destroyed during Hurricane Sandy was not included in the policy-definition of “Temporary Works” and was included in a policy-exclusion for “contractor’s tools, machinery, plant and equipment.” Damage to the crane, therefore, was not covered:

The policy defines a temporary structure as something that is “incidental to the project.” Although the term incidental is not defined, “it is common practice for the courts of this State to refer to the dictionary to determine the plain and ordinary meaning of words to a contract” … .

Black’s Law Dictionary defines the term “incidental” as”[s]ubordinate to something of greater importance; having a minor role” (10th ed 2014]). The American Heritage Dictionary, defines incidental as “[o]f a minor, casual, or subordinate nature” (5th ed 2011]). The Merriam-Webster Online Dictionary defines the term “incidental” as “being likely to ensue as a chance or minor consequence” (11th ed 2003).

Applying these definitions, the 750-foot tower crane is not a structure that is “incidental” to the project. Indeed, rather than ensuing by chance or minor consequence … the “[b]uilding was specifically designed to incorporate the Tower Crane during construction” and the crane’s design and erection involved an “in-depth process” that had to be approved by a structural engineer. Moreover, once it was integrated into the structure of the building, the custom designed tower crane, rather than serving a minor or subordinate role, was used to lift items such as concrete slabs, structural steel and equipment, was integral and indispensable, not incidental, to the construction of the 74-story high-rise, which could not have been built without it. Accordingly, the tower crane does not fall within the policy’s definition of Temporary Works. Lend Lease (US) Constr. LMB Inc. v Zurich Am. Ins. Co., 2015 NY Slip Op 09389, 1st Dept 12-22-15

INSURANCE LAW (DAMAGE TO MASSIVE CONSTRUCTION CRANE NOT COVERED BY TEMPORARY WORKS CLAUSE)/CONTRACT LAW (DAMAGE TO MASSIVE CONSTRUCTION CRANE NOT COVERED BY TEMPORARY WORKS CLAUSE IN POLICY)

PLAINTIFF IN PERSONAL INJURY ACTION NOT REQUIRED TO DISCLOSE (1) FACEBOOK PHOTOGRAPHS SHE DID NOT INTEND TO INTRODUCE AT TRIAL AND (2) INFORMATION ABOUT POST-ACCIDENT MESSAGES.

The First Department, over an extensive dissenting memorandum by Justice Saxe, reversing Supreme Court, determined plaintiff in a personal injury action was not required to turn over to the defendant post-accident photographs of herself posted on Facebook which she does not intend to introduce at trial, and, further, plaintiff was not required to provide defendant with authorizations allowing Facebook to disclose when private messages were posted by the plaintiff after the accident and how long those messages were:

CPLR 3101(a) provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action.” In determining whether the information sought is subject to discovery, “[t]he test is one of usefulness and reason” … . ” It is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims'” … . Discovery demands are improper if they are based upon ” hypothetical speculations calculated to justify a fishing expedition'” … .

This Court has consistently applied these settled principles in the context of discovery requests seeking a party’s social media information.  Forman v Henkin, 2015 NY Slip Op 09350, 1st Dept 12-17-15

MONTHLY COMPILATION INDEX ENTRIES:

CIVIL PROCEDURE (DISCLOSURE OF FACEBOOK PHOTOGRAPHS AND INFORMATION ABOUT POST-ACCIDENT MESSAGES)/DISCLOSURE (FACEBOOK PHOTOGRAPHS AND INFORMATION ABOUT POST-ACCIDENT MESSAGES)/FACEBOOK (DISCLOSURE OF PHOTOGRAPHS AND INFORMATION ABOUT POST-ACCIDENT MESSAGES)

MISSING WITNESS CHARGE SHOULD NOT HAVE BEEN GIVEN, NO SHOWING REQUEST FOR THE CHARGE WAS TIMELY; ADVERSE INFERENCE CHARGE RE: EXPERT WHO DID NOT BRING SUBPOENAED NOTES SHOULD HAVE BEEN GIVEN.

The First Department, in ordering a new trial, determined the trial judge should not have given a missing witness charge with respect to one of plaintiff’s doctors and should have given an adverse inference charge based upon a defense expert’s failure to bring her notes, which were subpoenaed:

The party seeking a missing witness charge has the burden of promptly notifying the court when the need for such a charge arises … . The purpose of imposing such a burden is, in part, to permit the parties “to tailor their trial strategy to avoid substantial possibilities of surprise” … . Once the party requesting the charge meets its initial burden, the party opposing the request can defeat it by demonstrating that, among other things, the witness was not available, was outside of its control, or the issue about which the witness would have been called to testify is immaterial … .

Here, the record does not reflect when defendants asked for a missing witness charge for Dr. Rose. This presents the possibility that they did not do so until after plaintiff presented her case. Had that been so, plaintiff would have lost any opportunity to account for Dr. Rose’s absence, argue that plaintiff did not have the requisite control over him, or attempt to procure his appearance. Accordingly, since there is no indication that defendants met their burden, we find that the missing witness charge was improperly given. * * *

…[W]hile Dr. Elkin [a defense expert] did not, as plaintiff suggests, testify that she “destroyed” her notes, she did concede that she did not comply with the subpoena, which required her to bring with her to court the notes that she used in generating her report on behalf of defendants. The failure to produce those notes affected plaintiff’s ability to cross-examine defendants’ expert and was fundamentally unfair to plaintiff. At the least, it would have been appropriate for the court to issue an adverse inference charge … . That Dr. Elkin testified that the notes were subsumed in the report is of no moment. Plaintiff was entitled to independently investigate that claim without having to rely on Dr. Elkin’s own assurances that the notes were themselves of no probative value. Herman v Moore, 2015 NY Slip Op 09352, 1st Dept 12-17-15

MONTHLY COMPILATION INDEX ENTRIES:

EVIDENCE (MISSING WITNESS CHARGE SHOULD NOT HAVE BEEN GIVEN, NO SHOWING REQUEST WAS TIMELY)/MISSING WITNESS CHARGE (SHOULD NOT HAVE BEEN GIVEN, NO SHOWING REQUEST WAS TIMELY)/EVIDENCE (ADVERSE INFERENCE CHARGE SHOULD HABE BEEN GIVEN, EXPERT DID NOT BRING SUBPOENAED NOTES)/ADVERSE INFERENCE CHARGE (SHOULD HAVE BEEN GIVEN, EXPERT DID NOT BRING SUBPOENAED NOTES)/JURY INSTRUCTIONS (MISSING WITNESS CHARGE SHOULD NOT HAVE BEEN GIVEN, NO SHOWING OF TIMELY REQUEST)/JURY INSTRUCTIONS (ADVERSE INFERENCE CHARGE SHOULD HAVE BEEN GIVEN, EXPERT DID NOT BRING SUBPOENAED NOTES)

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy