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Questions of Fact Raised Whether Plaintiff’s Infant-Daughter’s Physical and Mental Deficiencies Were Caused by Inadequate Medical Treatment Prior to and During Birth, Despite Indications Plaintiff’s Daughter Was Born Healthy

The First Department, in a full-fledged opinion by Justice Acosta, reversed Supreme Court and denied defendant’s motion for summary judgment in a medical malpractice case.  The First Department laid out in great detail the plaintiff-mother’s experts’ opinions about the causes of the her infant-daughter’s (Kailen’s) mental and physical deficiencies and determined questions of fact had been raised about the adequacy of medical treatment prior to and during Kailen’s birth, in spite of indications of Kailen’s good health at the time of birth:

A defendant in a medical malpractice action establishes prima facie entitlement to summary judgment by showing that in treating the plaintiff, he or she did not depart from good and accepted medical practice, or that any such departure was not a proximate cause of the plaintiff’s alleged injuries … . Once a defendant meets that burden, the plaintiff must rebut the prima facie showing via medical evidence attesting that the defendant departed from accepted medical practice and that such departure was a proximate cause of the injuries alleged … .

Generally, “the opinion of a qualified expert that a plaintiff’s injuries were caused by a deviation from relevant industry standards would preclude a grant of summary judgment in favor of the defendants” … . To defeat summary judgment, the expert’s opinion “must demonstrate the requisite nexus between the malpractice allegedly committed’ and the harm suffered” … .

Here, in opposition to defendant’s motion for summary judgment, plaintiff raised triable issues of fact as to both departure from good and accepted medical practice and causation. * * *

Contrary to defendant’s assertion, plaintiff’s medical evidence was sufficient to defeat summary dismissal of the complaint. Defendant’s argument that plaintiff’s experts failed to rebut its contention that, in the absence of any signs or symptoms of permanent neurological injury at or near the time of Kailen’s birth, there is no medical basis for connecting her current condition with the “circumstances of the labor and delivery,” is unavailing. Dr. Adler’s assertions that brain injuries at the time of birth can be diagnosed based on observations over time contradict defendant’s contention. In addition, a report prepared by Dr. Joseph Carfi, dated March 21, 2012, based on his physical examination of Kailen, and medical records, including those from defendant and the Center for Congenital Disorders, notes that Kailen was diagnosed at the Center for Congenital Disorders on May 23, 1996, when she was five months old, with microcephaly, and mild developmental delay. By 2012, she suffered significant mental retardation with developmental delays and lack of age appropriate personal independence. Her impairments are permanent and preclude her from living alone as an adult. Thus, although Kailen had excellent Apgar scores and otherwise appeared normal at birth, plaintiff nonetheless raised triable issues of fact as to causation … . Anyie B. v Bronx Lebanon Hosp., 2015 NY Slip Op 02576. 1st Dept 3-26-15

 

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Nervous and Uncooperative Actions by Defendant Justified Search of Area Inside Defendant’s Car After Defendant Was Out of the Car and Had Been Frisked

The First Department, over a dissent, determined the nervous and uncooperative actions of the defendant justified the warrantless search of a bag inside the car defendant was driving, after defendant was outside the car and had been frisked:

The testimony supports the trial court’s finding that the facts available to the officers, including defendant’s furtive behavior, suspicious actions in looking into the back seat on multiple occasions and refusal to follow the officers’ legitimate directions, went beyond mere nervousness. Rather, defendant’s actions both inside and outside of the vehicle created a “perceptible risk” and supported a reasonable conclusion that a weapon that posed an actual and specific danger to their safety was secreted in the area behind the front passenger seat, which justified the limited search of that area, even after defendant had been removed from the car and frisked … . People v Hardee, 2015 NY Slip Op 02573, 1st Dept 3-26-15

 

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Recorded Conversation In Which Defendant Did Not Respond to Statements by Victim that He Had Broken Her Ribs Was Admissible

The First Department determined portions of a recorded phone call in which defendant did not respond to the victim’s statements that he had broker her ribs were admissible because a person in defendant’s position would have been expected to answer:

The court properly exercised its discretion in admitting a phone call placed by defendant to the victim while defendant was incarcerated, in which the victim repeatedly stated that defendant had broken her ribs. The record supports the court’s findings that defendant heard and understood the victim’s accusation, and that a person in defendant’s position would have been expected to answer … . Rather than directly addressing the victim’s statement, defendant repeatedly attempted to change the subject, such as by asking the victim whether she meant that he posed a “threat” to her. It is not dispositive that defendant asked the victim to repeat herself after the fourth out of five times she stated that he had broken her ribs, since defendant did not otherwise indicate that he was unable to hear or understood her. Although the phone call was recorded by the Department of Correction pursuant to a standard policy made known to all inmates, the rule excluding “silence in the face of police interrogation” … was not implicated, since defendant’s admissions by silence were made to a civilian. Moreover, the court’s thorough limiting instructions also minimized any potential unfair prejudice. People v Vining, 2015 NY Slip Op 02570, 1st Dept 3-26-15

 

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Summary Judgment May Be Based Upon an Unpled Affirmative Defense/Oral Waiver May Be Effective in the Face of a “Written Waiver” Requirement in the Contract

The First Department noted that a motion for summary judgment can be based upon an unpleaded affirmative defense in the absence of surprise and determined there was a question of fact whether an oral waiver was effective in the face of a contract provision requiring any waiver to be in writing:

Defendants’ failure to plead the affirmative defense of waiver in their answer did not preclude them from asserting such defense for the first time on summary judgment, since “[t]here is no prohibition against moving for summary judgment based on an unpleaded defense where the opposing party is not taken by surprise and does not suffer prejudice as a result” … . * * *

Although the management agreement contained a provision that any waivers must be in writing, “a contracting party may orally waive enforcement of a contract term notwithstanding a provision to the contrary in the agreement. Such waiver may be evinced by words or conduct, including partial performance”… . Matthew Adam Props., Inc. v The United House of Prayer for All People of the Church on the Rock of the Apostolic Faith, 2015 NY Slip Op 02419, 1st Dept 3-24-15

 

Heavy Shelves Bolted to the Wall Constituted a “Structure” and Dismantling the Shelves Constituted “Demolition” within the Meaning of the Labor Law

The First Department, reversing Supreme Court, granted summary judgment to the plaintiff on liability re: his Labor Law 240(1)  and 241(6) claims.  The court determined the dismantling of heavy shelves which were bolted to the wall constituted demolition of a structure within the meaning of the Labor Law:

Plaintiff was injured in a fall from an unsecured ladder while working in a warehouse, where his job was to “clean out, remove machines, break down structures . . . and ship them out.” The work included removal of heavy machinery and shelves that ran from floor to ceiling across three second-floor walls, each 50 feet long and 8 feet high, and were bolted to the floors and walls. The breaking down and removing of the shelves required the use of impact wrenches and sawzalls to cut the bolts. Removed materials, including shelving, were heavy, and had to be loaded in cages, which were then lifted by a pallet jack, moved to the edge of the second floor, and lowered to the first floor with a forklift. The dismantling of the shelves was a sufficiently complex and difficult task to render the shelving a “structure” within the meaning of Labor Law §§ 240(1) and 241(6) … . Moreover, in dismantling the shelving, plaintiff was engaged in “demolition” for purposes of §§ 240(1) and 241(6) … . Phillips v Powercrat Corp., 2015 NY Slip Op 02407, 1st Dept 3-24-15

 

The “Following the Settlements” Doctrine and “Following Form” Clauses as They Apply to Reinsurers Discussed in Some Depth

The First Department, in a full-fledged opinion by Justice Friedman, determined questions of fact precluded summary judgment in an action by an insurance company, New Hampshire, against a reinsurer, Clearwater.  The underlying actions were against the manufacturer Kaiser and consisted primarily, but not entirely, of asbestos-related products liability claims.  AIG, an insurer-participant in the Kaiser/AIG settlement of the claims, had allocated 100% of Kaiser’s settlement to asbestos liability claims. Clearwater challenged that allocation.  A summary of the nature of the primary action is quoted below, followed by descriptions of the “follow the settlements” doctrine and “following form” clauses:

New Hampshire has brought this action against defendant Clearwater Insurance Company (Clearwater), a reinsurer of the excess policy New Hampshire issued to Kaiser, seeking to require Clearwater to indemnify New Hampshire for the share prescribed by its reinsurance certificate of the portion of the Kaiser settlement payments (which are being made over a 10-year period) that AIG has allocated to the New Hampshire policy. In its defense, Clearwater challenges AIG’s allocation of 100% of the settled losses to asbestos products liability claims, contending that this allocation unreasonably results in the reinsured New Hampshire policy bearing part of the cost of settling the premises, bad faith and defense cost claims that Kaiser had not asserted against New Hampshire or that were not covered by the New Hampshire policy. … * * *

…[T]he “follow the settlements” doctrine “ordinarily bars challenge by a reinsurer to the decision of [the cedent] to settle a case for a particular amount” … . Specifically, under this doctrine,

“a reinsurer is required to indemnify for payments reasonably within the terms of the original policy, even if technically not covered by it. A reinsurer cannot second guess the good faith liability determinations made by its reinsured . . . . The rationale behind this doctrine is two-fold: first, it meets the goal of maximizing coverage and settlement and second, it streamlines the reimbursement process and reduces litigation . . .” … .

Stated otherwise, as “an exception to the general rule that contract interpretation is subject to de novo review” …, the “follow the settlements” doctrine “insulates a reinsured’s liability determinations from challenge by a reinsurer unless they are fraudulent, in bad faith, or the payments are clearly beyond the scope of the original policy or in excess of the reinsurer’s agreed-to exposure” … . * * *

The purpose of a “following form” clause is “to achieve concurrency between the reinsured contract and the policy of reinsurance, thereby assuring the ceding company, that by purchasing reinsurance, it has covered the same risks by reinsurance that it has undertaken on behalf of the original insured under its own policy” … . Accordingly, “[a] following form’ clause in a policy of reinsurance incorporates by reference all the terms and conditions of the reinsured policy, except to the extent that the reinsurance contract by its own terms specifically defines the scope of coverage differently” … .  * * * The authors of one treatise on reinsurance law caution that “a follow the form’ clause should not be confused with a follow the fortunes’ clause or a follow the settlements’ clause” (Ostrager § 2:03[a] at 73).  New Hampshire Ins. Co. v Clearwater Ins. Co., 2015 NY Slip Op 02438, 1st Dept 3-24-15

 

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The “Strict Compliance” Rule Re: Documents Required for a Drawdown from a Letter of Credit Explained

The First Department, in a full-fledged opinion by Justice Saxe, determined that minor discrepancies in the documents required by a letter of credit as a prerequisite for a drawdown did not violate the “strict compliance” rule.  Here a true copy of a document, rather than the original, was submitted.  The true copy was deemed to satisfy the “strict compliance” rule:

…[A]pplying the standard of strict compliance, plaintiff’s drawdown request should have been honored because, under these circumstances, the production of a true copy of amendment 2, instead of an original, was sufficient even to satisfy the strict compliance standard.

Strict compliance has been said to require that “the papers, documents and shipping directions . . . be followed as stated in the letter [of credit],” that “[n]o substitution and no equivalent, through interpretation or logic, will serve,” and that “[t]here is no room for documents which are almost the same, or which will do just as well” … . Even slight discrepancies in compliance with the terms of a letter of credit have been held to justify refusal to pay … .

“The [strict compliance] rule finds justification in the bank’s role in the transaction being ministerial . . . and to require it to determine the substantiality of discrepancies would be inconsistent with its function” … . The “reason for the strict [compliance] rule is to protect the issuer from having to know the commercial impact of a discrepancy in the documents” … .

However, as this Court has recently observed, “According to the official UCC commentary, the strict compliance standard does not require that the documents presented by the beneficiary be exact in every detail” (BasicNet S.P.A v CFP Servs., Ltd., __ AD3d __, __, 2015 NY Slip Op 02080, [1st Dept 2015]) [summarized directly below]. The doctrine of strict compliance “does not mean slavish conformity to the terms of the letter of credit . . . [and] does not demand oppressive perfectionism” (id., quoting Official Comment 1, reprinted in McKinney’s Cons Laws of NY, Book 62½, UCC 5-108 at 367). Ladenburg Thalmann & Co, Inc. v Signature Bank, 2015 NY Slip Op 02224, 1st Dept 3-19-15

 

Safety Device Requirement in Industrial Code Was Specific Enough to Support Labor Law 241(6) Action Based Upon the Absence of a Safety Guard on a Tile Grinder

The First Department, over a dissent, determined that a rule (Industrial Code) requiring that all safety devices be kept sound and operable was specific enough to support a Labor Law 241(6) action based upon the absence of safety guard from a tile grinder:

The motion court erred in finding that section 23-1.5(c)(3) was too general to support plaintiff’s Labor Law § 241(6) claim. Industrial Code (12 NYCRR) § 23-1.5(c)(3) provides, “All safety devices, safeguards and equipment in use shall be kept sound and operable, and shall be immediately repaired or restored or immediately removed from the job site if damaged.” In Misicki v Caradonna (12 NY3d 511, 520-521 [2009]), the Court of Appeals held that the third sentence of 12 NYCRR 23-9.2(a), which says, “Upon discovery, any structural defect or unsafe condition in such equipment shall be corrected by necessary repairs or replacement,” imposed an affirmative duty, rather than merely reciting common-law principles, and that therefore its violation was sufficiently specific to support a Labor Law § 241(6) claim. The regulation plaintiff relies on here, 12 NYCRR 23-1.5(c), has a structure similar to 12 NYCRR 23-9.2(a): the first two sentences of section 23-9.2(a) and the first two paragraphs of section 23-1.5(c) employ general phrases (e.g., “good repair, “proper operating condition,” “sufficient inspections,” “adequate frequency”) while the third sentence and paragraph “mandate[] a distinct standard of conduct, rather than a general reiteration of common-law principles, and [are] precisely the type of concrete specification’ that Ross [v Curtis-Palmer Hydro-Elec. Co. (81 NY2d 494 [1993])] requires” (Misicki, 12 NY3d at 521). Since the final paragraph of section 23-1.5(c) is functionally indistinguishable from the third sentence of section 23-9.2(a), in that both mandate a distinct standard of conduct, we find that the Court of Appeals’ reasoning in Misicki applies here, and reject the dissent’s suggestion that the preamble of section 23-1.5 precludes any reliance on the section for purposes of Labor Law § 241(6). Becerra v Promenade Apts. Inc., 2015 NY Slip Op 02191, 1st Dept 3-19-15

 

“Wheel Stop” Is Open and Obvious

The First Department determined a “wheel stop” in a parking lot, over which plaintiff tripped, was open and obvious:

Defendants established their entitlement to judgment as a matter of law in this action where plaintiff was injured when she tripped and fell over a wheel stop in defendants’ parking lot in the early evening. Defendants submitted evidence showing that the wheel stop was an open and obvious condition and not inherently dangerous … . The evidence demonstrated that the wheel stop’s placement had been approved by the local zoning board, the parking lot lights had been set to turn on at 4:00 p.m., the lights were inspected daily and found to be in good condition on the following day, and there had been no prior complaints about the wheel stop or inadequate lighting.

In opposition, plaintiff failed to raise a triable issue of fact. Her claim that an optical illusion created by inadequate lighting made the wheel stop less visible is insufficient to raise a triable issue of fact, as her testimony established that she was looking toward her car at the time of the accident … . Moreover, a photograph marked at her deposition reveals that the portion of the curb on which plaintiff allegedly tripped was near a light post … . Plaintiff’s affidavit in which she claimed to have been unable to see the surface of the parking lot and wheel stop directly contradicts her earlier testimony and raises only a feigned issue of fact … . Abraido v 2001 Marcus Ave., LLC, 2015 NY Slip Op 02204, 1st Dept 3-19-15

 

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(1) The Effect of Minor Discrepancies Re: the Submissions Required by a Standby Letter of Credit (SLC) (2) The Criteria for Interpreting an SLC (3) the Nature of an SLC and (4) the “Independence Principle” as Applied to an SLC Discussed in Some Depth

The First Department, in a full-fledged opinion by Justice Andrias, reversed Supreme Court and determined the issuer of standby letters of credit (SLC) was required to honor them.  The opinion is detailed and fact-based.  Among the legal issues discussed are: (1) minor discrepancies re: the documents required to be submitted (for a drawdown) by the terms of an SLC do not violate the “strict compliance” rule; (2) how to interpret an SLC; (3) the nature of an SLC  (versus a guaranty); and (4) the “Independence Principle” which requires that an SLC be deemed separate and distinct from the other contractual agreements underlying the transaction:

Under New York law, in order to recover on its claim that the issuer wrongfully refused to honor its request to draw down on a letter of credit, the beneficiary must prove that it strictly complied with the terms of the letter of credit … . “The corollary to the rule of strict compliance is that the requirements in letters of credit must be explicit, and that all ambiguities are construed against the [issuer]” … . The reasoning is that “[s]ince the beneficiary must comply strictly with the requirements of the letter, it must know precisely and unequivocally what those requirements are” … . “Where a letter of credit is fairly susceptible of two constructions, one of which makes fair, customary and one which prudent men would naturally enter into, while the other makes it inequitable, the former interpretation must be preferred to the latter, and a construction rendering the contract possible of performance will be preferred to one which renders its performance impossible or meaningless” … . * * *

There are three parties to an SLC: the applicant who requests the SLC; the beneficiary to whom payment is due upon the presentation of the documents required by the SLC; and the issuer which obligates itself to honor the SLC and make payment when presented with the documents the SLC requires. In turn, there are three corresponding agreements: the agreement between the applicant and the beneficiary, which creates the basis for the SLC; the agreement between the issuer and the applicant; and the SLC itself … .

“[A] fundamental principle governing these transactions is the doctrine of independent contracts, [which] provides that the issuing bank’s obligation to honor drafts drawn on a letter of credit by the beneficiary is separate and independent from any obligation of its customer to the beneficiary under the … contract and separate as well from any obligation of the issuer to its customer under their agreement” … .

From the beneficiary’s perspective, the independence principle makes a letter of credit superior to a normal surety bond or guaranty because the issuer is primarily liable and is precluded from asserting defenses that an ordinary guarantor could assert. Indeed, “a letter of credit would lose its commercial vitality if before honoring drafts the issuer could look beyond the terms of the credit to the underlying contractual controversy or performance between its customer and the beneficiary”… . BasicNet S.P.A. v CFP Servs. Ltd., 2015 NY Slip Op 02080, 1st Dept 3-17-15

 

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