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When a Party Does Not Object to Errors in a Verdict Sheet, the Jury Charge Becomes the Law Applicable to the Case—Only “Fundamental” Errors Will Be Reviewed on Appeal (No Fundamental Error Here)—“Fundamental Error” In this Context Briefly Defined

The First Department explained its review powers with respect to errors in a verdict sheet that were not preserved by objection:

The record reflects that the jury charge correctly advised that loss of enjoyment of life was a component of pain and suffering … . Defendant argues that the verdict sheet was inconsistent with this instruction. However, defendant concedes that it failed to object to the verdict sheet. Thus, defendant failed to preserve the issue of the error in the verdict sheet for review by this Court … .

Where a party fails to object to errors in a verdict sheet, the charge becomes the law applicable to the determination of the case, and on appeal, this Court will review only if the error was “fundamental” … . We find that the alleged conflict between the jury charge and the verdict sheet was not fundamental since it did not confuse or create doubt as to the principle of law to be applied, or improperly shift fault, such that the “jury was prevented from fairly considering the issues at trial” … . Grace v NYC Tr Auth, 2014 NY Slip Op 08362, 1st Dept 12-2-14

 

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Failure to Timely Raise a Late-Notice Defense to Coverage May Constitute a Waiver of the Defense

The First Department determined there existed a triable issue of fact whether the insurer of a gas plant operated by Long Island Light Company (LILCO) waived a late-notice-based disclaimer of coverage.  Under the common law, the failure to assert a known policy defense may constitute a waiver:

Waiver is the voluntary relinquishment of a known right and must be predicated upon knowledge of the facts upon which the existence of the right depends … . The failure to assert a known policy defense may constitute a waiver … . “Whether an insurer has waived the defense of late notice is ordinarily a question of fact, which is proved by evidence that the insurer intended to abandon that defense” … .

The evidence supports an inference that defendants knew of facts supporting a late notice defense long before disclaiming coverage in their answers. Long Is Light Co v American Re-Insurance Co, 2014 NY Slip Op 08363, 1st Dept 12-2-14


 

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Pleading Requirements for Piercing the Corporate Veil Described in Some Detail

The First Department determined questions of fact concerning whether the corporate veil should be pierced (alter-ego theory) had been raised.  The court explained the analytical criteria:

In order to state a claim for alter-ego liability plaintiff is generally required to allege “complete domination of the corporation [here PFLLC] in respect to the transaction attacked” and “that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury” … . Because a decision to pierce the corporate veil in any given instance will necessarily depend on the attendant facts and equities, there are no definitive rules governing the varying circumstances when this power may be exercised … .

If plaintiff prevails in proving that PFLLC owes it a debt …, the further allegations in the complaint are sufficiently pleaded to support plaintiff's claim that defendant is an alter-ego of PFLLC. The complaint asserts that with respect to the transaction at issue, defendant dominated and controlled the negotiations on behalf of PFLLC and actually provided the erroneous information which persuaded plaintiff to enter into the agreement. The allegations … sufficiently frame factual issues about whether defendant, as the parent company of PFLLC, commingled funds and disregarded corporate formalities … .

In addition, the allegations that defendant, through its domination of PFLLC, misrepresented the value of the assets sold and then caused PFLLC to become judgment proof, are also sufficient to support claims that defendant perpetrated a wrong or injustice against plaintiff, thus warranting intervention by a court of equity … . Wrongdoing in this context does not necessarily require allegations of actual fraud. While fraud certainly satisfies the wrongdoing requirement, other claims of inequity or malfeasance will also suffice … . Allegations that corporate funds were purposefully diverted to make it judgment proof or that a corporation was dissolved without making appropriate reserves for contingent liabilities are sufficient to satisfy the pleading requirement of wrongdoing which is necessary to pierce the corporate veil on an alter-ego theory … . Baby Phat Holding Co LLC v Kellwood Co, 2014 NY Slip Op 08364, 1st Dept 12-2-14

 

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Release Did Not Exclude Liability for Personal Trainer’s Negligence

The First Department determined that the wording of a release for a personal training program did not express an unequivocal intent to limit liability for negligence.  The plaintiff alleged that the trainer negligently instructed him to lift an excessive amount of weight:

Prior to beginning training at defendant’s facility, plaintiff executed a release wherein he acknowledged that there were “inherent risks in participating in a program of strenuous exercise” and released defendant from “all claims . . . which

I . . . . may have against [defendant] . . . for all injuries . . . which may occur in connection with my participation in the program.” It is undisputed that General Obligations Law § 5-326 does not bar enforcement of this release as defendant’s facility is an instructional, and not a recreational, one. However, the language of the release does not reflect a clear and unequivocal intent to limit liability for negligence … . While the release warned of the risks inherent in undergoing a strenuous exercise program, it does not “express[] any intention to exempt . . . defendant from liability for injury . . . which may result from [its] failure to use due care . . . in [its] training methods” … . …[T]he release does not purport to release defendant from all personal injury claims, “whether or not based on the acts or omissions of [defendant],” or contain other language conveying a similar import … .  Kim v Harry Hanson Inc, 2014 NY Slip Op 08229, 1st Dept 11-25-14

 

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SORA Court Must Designate a “Sexually Violent Offender” a Level One Sex Offender

The First Department, in a full-fledged opinion by Justice Andrias, over a dissent, determined that the SORA court does not have the discretion to designate a “sexually violent offender” as anything other than a Level One sex offender.  Here the defendant was convicted of sexual battery in North Carolina.  The North Carolina offense was found to be the equivalent of New York’s Sexual Abuse in the First Degree, a “sexually violent offense” under Correction Law 168-a (3) (a):

“While [the] Court is directed to apply SORA’s Risk Assessment Guidelines . . ., the statutory definition of sexually violent offender, namely, a sex offender convicted of one of several enumerated sexually violent offenses, does not allow for a discretionary determination” … . Thus, although the “level suggested by the RAI [risk assessment instrument] is merely presumptive and a SORA court possesses the discretion to impose a lower or higher risk level if it concludes that the factors in the RAI do not result in an appropriate designation” …, the Court of Appeals has observed that “since 2002, SORA has compelled a defendant convicted of a sexually violent offense’ to register at least annually for life (Correction Law § 168-h [2]; see Correction Law § 168-a [3][a][7]; [b]; L 2002, ch 11, § 13). People v Bullock, 2014 NY Slip Op 08265, 1st Dept 11-25-14

 

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Heightened Pleading Requirements for Fraud Not Met

The First Department determined that plaintiff’s fraud cause of action was properly dismissed for failure to meet the heightened pleading requirements:

Plaintiff has not satisfied the heightened pleading standard for a fraud claim under CPLR § 3016(b) because it failed to identify any of the allegedly, false representations that [defendant] made with the then present intent to induce plaintiff’s investment in the project. Moreover, the fraudulent inducement claim duplicates the breach of contract claim because plaintiff has not alleged any representation that is collateral to the contract … . “A fraud-based claim is duplicative of breach of a contract claim when the only fraud alleged is that the defendant was not sincere when it promised to perform under the contract.” MMCT LLC v JTR Coll Point LLC, 2014 NY Slip Op 08103, 1st Dept 11-20-14

 

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Cross-Examination of People’s Witness About Her Past Status as a Confidential Informant Properly Precluded—Status Ended a Year Before and Witness Had Legitimate Safety Concerns

The First Department determined the defense was properly precluded from cross-examination of one of the People’s witnesses about her past status as a confidential informant:

The witness’s service as an informant had concluded a year before the instant crime and did not involve defendant, the People demonstrated that the witness had legitimate safety concerns regarding disclosure of her status, and there was nothing in the circumstances of the case to raise a suspicion that her past informant status contributed to her becoming a prosecution witness in this case. People v Lopez, 2014 NY Slip Op 08117, 1st Dept 11-20-14

 

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Defendants Unable to Demonstrate that Plaintiff’s Alleged Breach of a Related Contract Relieved Defendants of the Obligation to Pay a Promissory Note—No Showing the Promissory Note and Oral Agreement Were “Intertwined”

The First Department determined the allegations that plaintiff’s breach of a related oral agreement relieved defendants of the obligation to pay a promissory note were insufficient to defeat summary judgment on the note:

” [T]he general rule is that the breach of a related contract cannot defeat a motion for summary judgment on an instrument for money only unless it can be shown that the contract and the instrument are “intertwined” and that the defenses alleged to exist create material issues of triable fact'” … . Here, the defendants failed to demonstrate that the alleged oral construction management agreement was “inextricably intertwined” with the promissory note … . Castle Restoration & Constr Inc v Castle Restoration LLC, 2014 NY Slip Op 07972, 2nd Dept 11-19-14

 

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Cause of Action Against Landlord for Nuisance, Based Upon a Noisy Tenant, Does Not Lie Where the Landlord Did Not Create the Nuisance and the Landlord Has Surrendered Control of the Premises to the Tenant

In affirming the denial of summary judgment to the landlord in an action alleging a tenant’s noise constituted a nuisance (because the papers submitted were inadequate), the First Department noted that a cause of action for nuisance does not lie against a landlord who did not create the nuisance and who has surrendered control of the premises to a tenant.  Clarke v 6485 & 6495 Broadway Apt Inc, 2014 NY Slip Op 07961, 1st Dept 11-18-14

 

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Waiver of Appeal Invalid/The Way Defendant Was Holding a Cigarette Justified the Vehicle Stop/No Probable Cause for Warrantless Search of Trunk of Defendant’s Car

The First Department determined (1) the waiver of appeal, which included a signed written waiver, was not valid; (2) the stop of defendant’s vehicle, the removal of the occupants, and the search of the interior of the car was justified by the police officer’s belief defendant was smoking a marijuana cigarette held between his thumb and index finger and the observation of an empty glassine envelope; and (3) the warrantless search of the trunk where ecstasy was found was not justified by probable cause:

A waiver of the right to appeal is not effective unless it is apparent from the record that it was made knowingly, intelligently and voluntarily … . For a waiver to be effective, the record must demonstrate that the defendant has a full appreciation of the consequences of the waiver …, including an understanding “that the right to appeal is separate and distinct from those rights automatically forfeited upon a plea of guilty … .

Here, the court never adequately explained the nature of the waiver, the rights the defendant would be waiving or that the right to appeal was separate and distinct from the rights automatically forfeited upon a plea of guilty. Accordingly, the waiver was invalid and unenforceable … . The written waiver signed by defendant was no substitute for an on-the-record explanation of the nature of the right to appeal … . In addition, the court’s statement that defendant was “going to be required” to waive his right to appeal could have misled him into believing that he had no choice but to do so … . * * *

…Officer Rivera, an experienced policeman who had participated in approximately 30 arrests involving marijuana, testified to the court’s satisfaction that, in his opinion and experience, the manner in which defendant was handling the cigarette indicated that it was a marijuana cigarette. “[M]uch weight must be accorded the determination of the suppression court with its peculiar advantages of having seen and heard the witnesses” … . That Rivera was not “certain” that defendant was smoking marijuana is of no moment, since “[t]he standard for [a forcible stop is] merely reasonable suspicion, not absolute certainty or even probable cause” … .

Defendant effectively concedes that the police were entitled to search in the area of the car where Officer Rivera claims to have smelled marijuana, but not anywhere else, and certainly not in the trunk. This, he argues, is because any grounds the police may have had to believe that the trunk contained drugs were belied by the lack of evidence that they existed anywhere else in the car.

Indeed, there was scant evidence of drugs in the car. After approaching the car, Rivera never saw the marijuana cigarette that he claimed he saw when he drove past defendant’s car, and he was equivocal about whether he smelled burning or unburnt marijuana. Further, the glassine envelope that Officer Ali uncovered was empty, and it was not until later that day, after defendant and his companions were arrested, that Rivera concluded that it contained marijuana. Rivera also conceded that defendant did not appear to be under the influence.  * * * Accordingly, we find that the police lacked probable cause to search the trunk, and that the Ecstasy found there should have been suppressed.  People v Ramos, 2014 NY Slip Op 07931, 1st Dept 11-18-14

 

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