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CIVIL PROCEDURE A Stay Which Was to Last “45 Days from the Service” of an Order Never Expired Because the Order Was Never Served/Argument that the Stay Never Started Because the Order Was Not Served Rejected

While defendant’s motion for summary judgment was pending, plaintiff’s counsel moved to withdraw. The motion was granted and the court ordered the case stayed “for 45 days from the service…” of the order dismissing plaintiff’s attorney.  Plaintiff was not served with the order and defendant’s summary judgment motion was subsequently granted in plaintiff’s absence.  The First Department determined that the orders issued pursuant to the summary judgment motion were a nullity.  The 45 day stay never expired because the order granting the stay was never served on the plaintiff.  The defendant’s argument that the stay never started because the order was not served was rejected:

After his former counsel was granted leave to withdraw, the action was stayed by court order and operation of CPLR 321(c). Because Plaintiff was never served with the order dismissing his attorney, the 45 day stay never expired. Defendant cannot avoid the stay by arguing that it did not go into effect until served on plaintiff, since the failure to serve the order cannot accrue to defendant’s benefit.  Matos v City of New York, 2015 NY Slip Op 03074, 1st Dept 4-14-15

 

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A Party Alleging Fraudulent Inducement to Enter a Contract May Both Seek to Avoid Terms of the Contract (Here a Jury-Waiver Clause) and Rely on the Contract in Defense of Breach of Contract Allegations/Criteria for Negligent Misrepresentation Cause of Action Explained in Some Depth (Criteria Not Met Here)

The First Department, over a dissent, determined a party claiming it was fraudulently induced to enter a contract is entitled to a jury trial despite the jury-trial waiver in the contract. Because a party alleging fraudulent inducement can either seek rescission or stand on the contract and seek damages, the party may both seek to avoid terms in the contract (here the jury-waiver clause) and rely on the contract as a defense to breach of contract allegations. The court also found that the counterclaim for negligent misrepresentation was properly dismissed because the existence of a confidential or fiduciary or other special relationship (approaching privity), which would justify reliance on representations, was not demonstrated.  The criteria for negligent misrepresentation was described in some depth:

…[A]contractual jury waiver provision is inapplicable to a fraudulent inducement cause of action that challenges the validity of the underlying agreement … . …  In cases where the fraudulent inducement allegations, if proved, would void the agreement, including the jury waiver clause, the party is entitled to a jury trial on the claim … .

…”[A] defrauded party to a contract may elect to either disaffirm the contract by a prompt rescission or stand on the contract and thereafter maintain an action at law for damages attributable to the fraud” … . As a result, a party alleging fraudulent inducement that elects to bring an action for damages, as opposed to opting for rescission may, under certain circumstances, still challenge the validity of the agreement … .

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“A claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information” … . In commercial cases “a duty to speak with care exists when the relationship of the parties, arising out of contract or otherwise, [is] such than in morals and good conscience the one has the right to rely upon the other for information” … . Reliance on the statements must be justifiable, and “not all representations made by a seller of goods or a provider of services will give rise to a duty to speak with care” (id.). “Rather, liability for negligent misrepresentation has been imposed only on those persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified” (id.). In order to impose tort liability in a commercial case, “there must be some identifiable source of a special duty of care” … . …[A] special duty will be found “if the record supports a relationship so close as to approach that of privity” … . Generally, however, an arm’s-length business relationship between sophisticated parties will not give rise to a confidential or fiduciary relationship that would support a cause of action for negligent misrepresentation … . J.P. Morgan Sec. Inc. v Ader, 2015 NY Slip Op 03071, 1st Dept 4-14-15

 

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Acclaimed Photographer’s Surreptitious Taking of Photographs of Plaintiffs Through Apartment Windows Did Not Violate Plaintiffs’ Right to Privacy as Codified in Civil Rights Law 50 and 51–Art Is Exempt from the Reach of Those Statutes

The First Department, in a full-fledged opinion by Justice Renwick, determined that defendant’s surreptitious taking of photographs of plaintiffs through the windows of plaintiffs’ apartment did not violate the plaintiffs’ right to privacy codified in Civil Rights Law sections 50 and 51.  The critically acclaimed photographer assembled the photographs, which were for sale, in an exhibition called “Neighbors” and put them up on his website. The court explained that the “newsworthy and public interest” exemption from the prohibitions of Civil Rights Law 50 and 51 has been extended to works of art by some courts, although the New York Court of Appeals has yet to consider the issue.  The court wrote:  “[We are constrained to conclude] works of art fall outside the prohibitions of the privacy statute under the newsworthy and public concerns exemption. … [U]nder this exemption, the press is given broad leeway. This is because the informational value of the ideas conveyed by the art work is seen as a matter of public interest. We recognize that the public, as a whole, has an equally strong interest in the dissemination of images, aesthetic values and symbols contained in the art work. In our view, artistic expression in the form of art work must therefore be given the same leeway extended to the press under the newsworthy and public concern exemption to the statutory tort of invasion of privacy:”

Applying the newsworthy and public concern exemption to the complaint herein, we conclude that the allegations do not sufficiently plead a cause of action under the statutory tort of invasion of privacy. As detailed above, plaintiffs essentially allege that defendant used their images in local and national media to promote “The Neighbors,” an exhibition that included photographs of individuals taken under the same circumstances as those featuring plaintiffs. Plaintiffs further allege that the photographs were for sale at the exhibit and on a commercial website.

Accepting, as we must, plaintiffs’ allegations as true …, they do not sufficiently allege that defendant used the photographs in question for the purpose of advertising or for purpose of trade within the meaning of the privacy statute. Defendant’s use of the photos falls within the ambit of constitutionally protected conduct in the form of a work of art. Foster v Svenson, 2015 NY Slip Op 03068, 1st Dept 4-9-15

 

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Application to File Late Notice of Claim Should Have Been Granted—Plaintiff Was Incapacitated for Months and the City Contributed to the Delay by Failing to Respond to Freedom of Information Requests

Reversing Supreme Court, the First Department determined plaintiff’s application for leave to file a late notice of claim in a slip and fall case should have been granted.  Plaintiff was incapacitated by her injuries for months and did not unreasonably delay in making the application after she retained counsel.  Counsel had difficulty determining the owners of the construction site in issue, of which the city was one, and the city contributed to the delay by failing to respond to plaintiff’s freedom of information requests:

Under these circumstances, where the City contributed to the delay, and the motion was made within the one-year and ninety-day statute of limitations (see CPLR 217-a; see also General Municipal Law § 50-e[5]), the City cannot argue that petitioner unduly delayed in making the motion, or that it did not acquire essential knowledge of the facts underlying petitioner’s claim within a reasonable time after the expiration of the 90-day period for filing a timely notice of claim … . Matter of Rivera v City of New York, 2015 NY Slip Op 03029, 1st Dept 4-9-15

 

Disabled-Veteran Food Vendors Subject to the General Business Law—“Food” Is Encompassed by the Statutory Terms “Goods” and “Merchandise”

The First Department determined that the terms “goods” and “merchandise” in General Business Law 35-a encompass “food.”  Therefore the General Business Law regulates New York City’s disabled-veteran food vendors .   Most of the violations at issue in the case related to the number of vendors permitted within a block and the related refusal to move when requested. What constituted a “block face” within the meaning of the related regulations was addressed in depth.  Matter of Rossi v New York City Dept. of Parks & Recreation, 2015 NY Slip Op 03047, 1st Dept 4-9-15

 

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Where a Client’s Claims Against an Attorney Arise from the Attorney’s Providing Legal Services Which Are Related In Part to the Attorney’s Business Enterprise, the “Business Enterprise” Coverage Exclusions In the Legal Malpractice Insurance Policy Are Triggered

The First Department, in a full-fledged opinion by Justice Gische, determined the “business enterprise” exclusions in a legal malpractice insurance policy applied. Excluded from coverage were claims arising from the operation of a business enterprise in which the insured attorney was a principal.  The client, who sued for breach of contract and legal malpractice, had loaned money to the attorney’s real estate business and the attorney had drawn up the relevant documents and personally guaranteed payment. The fact that the client’s claims arose in part from the attorney’s involvement in his business enterprise triggered the policy exclusions.  The First Department, in this declaratory judgment action, held that the legal malpractice insurer had no duty to defend:

[The attorney] was simultaneously serving two masters, … his client, and a company of which he was a principal. This is precisely the situation that the policy’s Insured Status and Business Enterprise Exclusions exclude from coverage. Since [the client’s] claims partly arise from the legal services the attorneys provided her with, but also from [the attorney’s] status or activity for his company…, they are of a hybrid nature, and are not covered, meaning that [the insurer] has no duty to defend … .Lee & Amtzis, LLP v American Guar. & Liab. Ins. Co., 2015 NY Slip Op 02919, 1st Dept 4-7-15

 

Pre-Discovery Motion for Summary Judgment Should Have Been Granted—Defendant Bus Driver’s Affidavit Explained the Collision Was the Result of His Reaction to an Emergency and Plaintiff Submitted No Alternate Factual Account

The First Department, over a dissent, determined that pre-discovery summary judgment dismissing the complaint against the Metropolitan Transportation Authority (MTA) (stemming from a bus-car collision) should have been granted.  The bus driver’s affidavit stated that when a van suddenly jumped a guard rail and entered his lane of travel, he veered to the left to avoid the van and collided with the vehicle in which plaintiff, who was asleep, was riding. Even though the MTA’s motion was made before the bus driver had been deposed, summary judgment, applying the emergency doctrine, was deemed appropriate because plaintiff submitted no alternate factual account:

The emergency doctrine applies in situations where an actor is confronted with a sudden or unexpected circumstance, not of the actor’s own making, that leaves little or no time for thought, deliberation, or consideration to weigh alternative courses of conduct … . The existence of an emergency and the reasonableness of a party’s response to it ordinarily present questions of fact warranting the denial of summary judgment … . Where, however, a driver presents sufficient evidence that he or she did not contribute to the creation of the emergency situation, that his or her actions were reasonable under the circumstances, and that there is otherwise no opposing evidentiary showing sufficient to raise a legitimate question of fact, summary judgment may be granted … . Speculation concerning the possible accident-avoidance measures of a defendant faced with an emergency is not sufficient to defeat summary judgment … . Green v Metropolitan Transp. Auth. Bus Co., 2015 NY Slip Op 02897, 1st Dept 4-7-15

 

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Increasing Defendant’s Risk Level Based Upon His Mental Retardation Was an Abuse of Discretion

In a risk assessment proceeding pursuant to the Sex Offender Registration Act (SORA), the First Department determined Supreme Court should not have increased defendant’s risk level from a presumptive level two to level three based upon his mental retardation. The court explained that there had been no “clinical assessment that the offender has a psychological, physical, or organic abnormality that decreases his ability to control impulsive sexual behavior: “

The court erred in finding that defendant’s mental retardation warranted an upward departure to level three. The essence of the court’s reasoning was that defendant lacked the ability to appreciate the inappropriateness of his actions, or could not control his impulsive behavior. A departure from the presumptive risk level is warranted “where there exists an aggravating or mitigating factor of a kind, or to a degree, that is otherwise not adequately taken into account by the guidelines” … . The guidelines clearly provide for an automatic override to a presumptive level three designation where there has been a clinical assessment that the offender has a psychological, physical, or organic abnormality that decreases his ability to control impulsive sexual behavior. Here, no such clinical assessment has been made, and thus an upward departure on this basis was improper… . People v McKelvin, 2015 NY Slip Op 02914, 1st Dept 4-7-15

 

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Emails Can Suffice as “Documentary Evidence” to Support a Motion to Dismiss—Here the Documentary Evidence About Aspects of an Employment Agreement that Were In Contention Did Not Utterly Refute the Allegation that an Employment Contract Had Already Been Entered

The First Department, in a full-fledged opinion by Justice Renwick, over a dissent, determined the documentary evidence submitted by the defendant, which dealt with several aspects of an employment agreement that were in contention, did not utterly refute plaintiff’s allegation that an employment contract had already been entered.  Therefore defendant’s motion to dismiss the breach of contract cause of action was properly denied.  The opinion is long and detailed, as is the dissent, and cannot fairly be summarized here.  With respect to what constitutes documentary evidence in this context, the court wrote:

On a motion to dismiss pursuant to CPLR 3211(a)(1), a court is obliged “to accept the complaint’s factual allegations as true, according to plaintiff the benefit of every possible favorable inference, and determining only whether the facts as alleged fit within any cognizable legal theory” … . Moreover, dismissal pursuant to CPLR 3211(a)(1) is warranted only if the documentary evidence submitted “utterly refutes plaintiff’s factual allegations” … . If the documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR 3211(a)(1) is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action … . * * *

Preliminarily, we reject Supreme Court’s conclusion that correspondence such as the emails here do not suffice as documentary evidence for purposes of CPLR 3211(a)(1). This Court has consistently held otherwise. For example, in Schutty v Speiser Krause P.C. (86 AD3d 484, 484-485 [1st Dept 2011]), this Court found drafts of an agreement and correspondence sufficient for purposes of establishing a defense under the statute. Similarly, in Langer v Dadabhoy (44 AD3d 425, 426 [1st Dept 2007], lv denied 10 NY3d 712 [2008]), this Court found “documentary evidence in the form of emails” to be sufficient to carry the day for a defendant on a CPLR 3211(a)(1) motion. Likewise, in WFB Telecom. v NYNEX Corp. (188 AD2d 257, 259 [1st Dept 1992], lv denied 81 NY2d 709 [1993]), this Court granted a CPLR 3211(a)(1) motion on the basis of a letter from the plaintiff’s counsel that contradicted the complaint. Therefore, there is no blanket rule by which email is to be excluded from consideration as documentary evidence under the statute. Kolchins v Evolution Mkts., Inc., 2015 NY Slip Op 02863, 1st Dept 4-2-15

 

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Denial of Application for Renewal of General Contractor’s Registration Based Upon a Conviction Which Preceded a Prior Renewal Was Arbitrary and Capricious

The First Department determined the denial of petitioner’s application for renewal of his general contractor’s registration, based upon a conviction which preceded a prior renewal, was arbitrary and capricious.  The court noted that the presumption derived from petitioner’s certificate of relief from disabilities was not rebutted:

Respondent’s determination lacked a rational basis (see CPLR 7803[3]…). Respondent arbitrarily concluded that petitioner’s prior conviction for filing false documents bore a direct relationship to the duties and responsibilities attendant to the general contractor registration, the license for which he sought renewal (see Correction Law §§ 752[1], 750[3]…). * * *

Respondent’s failure to rebut the presumption of rehabilitation deriving from petitioner’s certificate of relief from disabilities also renders its determination arbitrary and capricious … . Matter of Jakubiak v New York City Dept. of Bldgs., 2015 NY Slip Op 02858, 1st Dept 4-2-15

 

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