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Re: Breach of Fiduciary Duty Claims Against the Directors of a Corporation, the Plaintiffs Failed to Rebut the Presumptions of Loyalty, Prudence and Good Faith Under the Business Judgment Rule

In finding that the breach of fiduciary duty claims against the directors of a corporation were properly dismissed, the First Department explained the relevant analysis:

The court, after citing and applying the correct standard of review …, properly dismissed the breach of fiduciary duty claims against [defendant-directors of the corporation] …, due to plaintiffs’ failure to rebut the presumptions of loyalty, prudence and good faith under the business judgment rule … . In particular, plaintiffs failed to allege facts that support a finding of interest or lack of independence by a majority of the board members … . Giuliano v Gawrylewski, 2014 NY Slip Op 07941, 1st Dept 11-18-14

 

Plaintiff’s Double-Parked Vehicle Furnished a Condition for the Accident But Was Not a Proximate Cause of the Acciden

The First Department reversed Supreme Court finding the fact that plaintiff was double-parked furnished the condition for the event but was not one of the causes of the accident.  The defendant driver had pulled around in front of plaintiff’s vehicle and then backed into it:

The fact that a vehicle is double parked “does not automatically establish that such double parking was the proximate cause of the accident” … . Here, plaintiff established her prima facie entitlement to summary judgment by demonstrating that the location of her vehicle merely furnished the condition or occasion for the occurrence of the event but was not one of its causes … .

The record demonstrates that plaintiff’s vehicle was double parked on a one way street. Defendants’ vehicle, moving in the same direction, successfully passed plaintiff’s vehicle on the left and pulled approximately three to four car lengths in front of it before stopping. One to two seconds later, defendants’ vehicle drove in reverse in an erratic manner and struck the front of plaintiff’s car, which was stationary at all times. Cervera v Moran, 2014 NY Slip Op 07945, 1st Dept 11-18-14

 

Duty to Defend

The First Department determined that the insurer was obligated to defend the defendants even though subsequently it may be able to demonstrate the insured did not cause the injuries.  The duty to defend is determined by comparing the policy to the complaint.  If the pleaded claims are potentially within the scope of coverage, the insurer’s duty to defend is triggered:

An insurer may obtain a declaration absolving it of its duty to defend only when a comparison of the policy and the underlying complaint on its face shows that, as a matter of law, “there is no possible factual or legal basis on which the insurer might eventually be held to be obligated to indemnify the insured under any provision of the insurance policy” … . As this Court has observed, “[T]he primary obligation of an insurer is to provide its insured with a defense” …, an obligation that is incurred “if facts alleged in the complaint fall within the scope of coverage intended by the parties at the time the contract was made” … . “By contrast, the duty to indemnify requires a determination of liability” … .

Because the underlying complaints pleaded claims that were potentially within the scope of coverage, plaintiff is obligated to defend the underlying actions. Whether plaintiff might ultimately be able to establish that its insured did not cause the injuries alleged in the underlying actions involves questions of fact yet to be resolved; it is not an issue that can be determined as a matter of law by examination of the insurance contract. Thus, it does not afford a basis to relieve plaintiff of its duty to provide a defense… . Greewich Ins Co v City of New York, 2014 NY Slip Op 07933, 1st Dept 11-18-14

 

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Infant’s Injury Not Apparent for Several Months—Application to File Late Notice of Claim Properly Granted

The First Department affirmed Supreme Court’s grant of an application to file a late notice of claim.  The injury did not become apparent until several months after the infant plaintiff was born, and all the other criteria for allowing a late notice of claim were met:

…[T]he mother’s assertion that she waited to file a notice of claim because she did not know until several months after the child was born that he was injured is a reasonable excuse for the delay in moving to file a late notice of claim … . Moreover, respondent’s experts have not disputed the assertion made by claimant’s experts that periventricular leukomalacia (PVL), the injury alleged here, does not generally manifest itself until the infant fails to meet his developmental milestones, which in this case was approximately six months after the injury was inflicted, and that a layperson, such as the child’s mother, would be unable to tell that he was injured … .

Claimant has demonstrated that respondent acquired actual knowledge of the facts surrounding the instant claim within 90 days or a reasonable time thereafter, because the expert affidavits of Dr. Richman and Dr. Singh establish that the records, on their face, evinced respondent’s failure to provide the mother with proper labor and delivery care … . * * *

Respondent will not be unduly prejudiced by being compelled to defend this case, because it had actual notice of the underlying facts of the infant plaintiff’s claim within a reasonable time after his birth, and the hospital has been in possession of the records since the alleged malpractice. Matter of Kellel B v New York City Health & Hosps Corp, 2014 NY Slip Op 07963, 1st Dept 11-18-14

 

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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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Defendant’s Unsigned Deposition Transcript Admissible In Support of Defendant’s Summary Judgment Motion/Okay to Submit Deposition Excerpts As Long As They Are Not Misleading

The First Department noted that the fact that a deposition transcript submitted in support of a summary judgment motion was not signed did not render the transcript inadmissible and further noted that it is proper to submit excerpts from depositions provided they are not misleading.  The lawsuit alleged the defendant driver of a sanitation truck, Wygand, was negligent. Summary judgment was granted to the defendants:

There was no requirement that Wygand’s deposition transcript be signed by him in order to be admissible in support of the City defendants’ motion because Wygand accepted its accuracy by submitting it in support of his motion for summary judgment dismissing the complaint … . There was also nothing improper about submitting only excerpts of deposition transcripts in support of the motion, as long as they were not misleading. Castano v Wygand, 2014 NY Slip Op 07940, 1st Dept 11-18-14

 

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Matter First Raised In a Reply Affirmation Is Not Properly Before an Appellate Court

The First Department affirmed the denial of defendants’ motion for summary judgment noting that a matter raised for the first time in defendants’ reply affirmation is not properly before an appellate court.  Anderson v Pena, 2014 NY Slip Op 07948, 1st Dept 11-18-14

 

Wooden Flooring With Gaps Between the Planks Constituted an Elevation-Related Hazard

The First Department noted that wooden planks with gaps between them high above the bottom of a shaft constituted and elevation-related hazard to which Labor Law 240 (1) applied “regardless of whether the flooring was permanent.”  Kircher v City of New York, 2014 NY Slip Op 07951, 1st Dept 11-18-14

 

Owners’ Intent, at the Time Plaintiff Was Injured, to Use the Property As a Second Home Triggered the Homeowners’ Exemption to Labor Law Liability Notwithstanding that the Owners Never Occupied the Property and Started Leasing It Two Years After the Accident

The First Department, over a dissent, determined that plaintiff was unable to raise a question of fact about whether defendant-homeowners intended to use the renovated house as income property,  Therefore the homeowners’ exemption under Labor Law 240(1) and 241(6) precluded recovery for injuries suffered by the plaintiff during the renovation.  The homeowners did not direct or control plaintiff’s work. The accident occurred in 2005.  One of the owners, Parry, testified that they intended to use the place as a second home.  In 2007, having never occupied the house, the owners decided to lease the house and did so.  The court determined the owners’ intent at the time of the accident in 2005 controlled:

The owners made a prima facie showing of their entitlement to the homeowner’s exemption by demonstrating that their premises consist of a one-family dwelling and that they did not direct or control plaintiff’s work … . Therefore, the burden shifted to plaintiff to “produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action” … . Plaintiff has failed to meet this burden as his arguments before this Court and the motion court are based on unfounded speculation that the owners intended to use the house solely for commercial purposes.

The availability of the homeowner’s exemption hinges upon “the site and the purpose of the work, a test which must be employed on the basis of the homeowners’ intentions at the time of the injury” … . Accordingly, plaintiff and the dissent misplace their reliance on the lease, which the owners entered into almost two years after plaintiff’s injury. Farias v Simon, 2014 NY Slip Op 07932, 1st Dept 11-18-14

 

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