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No Justification for Handcuffing Defendant/Handcuffing Constituted an Arrest Before Officer Had Probable Cause to Arrest

The First Department determined probable cause for defendant’s arrest did not exist when defendant was handcuffed and the act of handcuffing constituted an arrest, not a detention pending information providing probable cause:

During a buy and bust operation, a ghost undercover detective issued a radio transmission identifying defendant as a participant in a drug sale, made to another undercover officer. Based on that radio transmission describing defendant and his location, a third officer approached defendant on the sidewalk, identified himself, and asked defendant to put his hands up. When defendant acted “a little resistant,” the officer attempted to handcuff him. Defendant then resisted, and the police forcibly handcuffed him.

The suppression court [ruled] that although when the officer stopped the defendant, he did not have probable cause to arrest him based on the information that he had received from the radio transmission, the officer obtained probable cause to arrest defendant after the purchasing undercover officer subsequently radioed his confirmatory identification. …[By] finding that there was no probable cause to arrest defendant until the confirmatory identification, the court implicitly found that the initial apprehension, which preceded that identification, was a proper temporary detention based on reasonable suspicion and that the application of handcuffs on defendant did not transform the detention into a full-scale arrest.

…[W]e reject the People’s argument that defendant was not under arrest at the point when he was handcuffed. Although the use of handcuffs is not dispositive of whether an investigatory detention on reasonable suspicion has been elevated to an arrest, handcuffing is permissible in such a detention only when justified by the circumstances … . In this case, the police had no reason to believe that defendant was either armed or dangerous. Nor was there any indication on the record that defendant offered any resistance prior to the handcuffing, or gave the police any reason to believe that he might flee. People v Blanding, 2014 NY Slip Op 02508, 1st Dept 4-10-14

 

Unauthorized Use of Another’s Credit Card Number Is Not Identity Theft Where the Card Owner’s Identity Is Not Otherwise Assumed/Unauthorized Use of Another’s Credit Card Number Can Constitute Possession of Stolen Property

The First Department, in a full-fledged opinion by Justice Acosta, determined: (1) the use of another’s credit card number does not constitute identity theft unless the person using the number assumes the other’s identity; and (3) the use of another’s credit card number constitutes possession of stolen property: THIS CASE HAS BEEN REVERSED

This appeal raises questions about the elements of identity theft and whether intangible property can be criminally possessed, where a defendant used his associate’s credit card number to pay for hotel expenses without authorization. Specifically, we are called upon to determine, first, whether assumption of identity is a discrete element of identity theft or whether it occurs automatically when a person uses another’s personal identifying information, and second, whether criminal possession of stolen property includes intangible property, namely a credit card number. Regarding the first issue, we find that to secure a conviction for identity theft the People must prove not only that a defendant used another’s personal identifying information, but that he or she consequently assumed the identity of that person. Because the hotel was aware of defendant’s identity, he did not assume the identity of his associate by charging the credit card and, accordingly, the evidence was legally insufficient to support his conviction of identity theft. As to the second issue, we have determined that the legislature intended intangibles, including credit card numbers, to fall within the ambit of criminal possession of stolen property. Defendant constructively possessed his associate’s stolen credit card number, and thus he was properly convicted of the latter offense. People v Barden, 2014 NY Slip Op 02527, 1st Dept 4-10-14

 

Courtroom Properly Closed During Testimony of Undercover Office

The First Department determined the trial court properly closed the courtroom and excluded defendant’s sister from the courtroom during the testimony of  the undercover officer:

…[T]he evidence established the type of overriding interest warranting the limited closure of the courtroom that has been upheld … . The undercover officer’s testimony at the hearing supported the court’s finding that testifying at trial in an open courtroom would compromise his undercover work and jeopardize his and his family’s safety … . The officer testified that he had been working undercover for four years, that he was on active duty and bought drugs for buy and bust arrests three or four times per week, and that he had made about 10 purchases near where he bought the drugs from defendant. The officer further testified that several of his investigations were ongoing, that certain targets remained at large, that he had been verbally threatened while working undercover, and that he took numerous precautions to conceal his identity when he had to testify in court. The court’s decision to exclude defendant’s sister, who lived within two blocks of the location where the officer bought drugs from defendant and where he continued to work undercover, is consistent with our prior holdings … . The officer testified that he was concerned that defendant’s sister might expose his identity. * * *

…[A]s the Court of Appeals has held, where the record in a buy-and-bust case “makes no mention of alternatives but is otherwise sufficient to establish the need to close the particular proceeding . . . it can be implied that the trial court, in ordering closure, determined that no lesser alternative would protect the articulated interest” … . People v Johnson, 2014 NY Slip Op 02510, 1st Dept 4-10-14

 

Although “Imprudent” in Hindsight, ​Insurer Did Not Breach Duty of Good Faith by Refusing to Offer a Settlement at the Policy Limit

The First Department determined the insurer’s failure to make a settlement offer at the policy limit was “imprudent” in hindsight, but did not constitute a breach of its duty of good faith:

We reject plaintiffs’ argument that defendant avoided acknowledging the underlying plaintiff’s potential damages such that a refusal to offer the policy limit constituted a reckless or conscious disregard of the excess insurer’s rights. While there was some indication that damages could be significant if the medical records substantiated the underlying plaintiff’s claim of a loss of smell from a severe blow to the head, the record established that defendant’s investigation presented a great deal of medical evidence tending to show that the underlying plaintiff’s injuries were primarily preexisting soft tissue injuries unrelated to the automobile accident on April 24, 1994. Defendant’s investigation included the medical opinion of four physicians that conducted independent medical examinations; one psychologist who conducted a review of the extensive medical records; experienced defense counsel; and separate monitoring counsel for the damages trial. The review of the numerous medical records, which included contradicting evaluations of the underlying plaintiff’s treating physicians, provided a justifiable basis to fairly evaluate potential damages and assess the relative risks of declining to offer a settlement of the policy limit.

Given this evaluation, defendant’s actions do not amount to bad faith. In hindsight, it is evident that defendant’s failure to make a settlement offer of the policy limit was not prudent. However, “[a]n insurer does not breach its duty of good faith when it makes a mistake in judgment or behaves negligently” … . Here, the assessment of the insured’s exposure and the failure to make a settlement offer of the policy limit was a mistake in judgment. It does not demonstrate that defendant acted in bad faith by failing to heed contrary evidence. Instead, the record shows defendant’s reasonable belief that, under the No Fault Law, the underlying plaintiff did not sustain a serious injury causally related to the accident. Thus, we find that the record does not demonstrate any pattern of reckless or conscious disregard for plaintiffs’ rights.  General Motors Acceptance Corp v New York Cent Mut Fire Ins Co, 2014 NY Slip Op 02384, 1st Dept 4-8-14

 

Aeration Tank Constituted an Unventilated Confined Area Requiring Air Quality Monitoring

The First Department determined plaintiff had stated a cause of action under Labor Law 241(6) based upon his inhalation of toxic fumes inside an aeration tank, finding the tank constituted an unventilated confined area requiring air quality monitoring:

The court properly denied the portion of defendants’ motion seeking dismissal of plaintiffs’ Labor Law § 241(6) claim as predicated on 12 NYCRR 23-1.7(g). We find that, as a matter of law, the aeration tank is an unventilated confined area requiring air quality monitoring … . Pursuant to 12 NYCRR 23-1.7(g), the atmosphere of an unventilated confined area must be monitored “where dangerous air contaminants may be present or where there may not be sufficient oxygen to support life.” Here, the cement tank is a large container used to aerate and clean sewage. Entering the tank poses a potential hazard since, as admitted by a deputy superintendent for the DEP in his deposition, a person could experience oxygen depletion as gases “displace the oxygen.” Defendants contend that in order for an area to be a confined space, as defined by 12 NYCRR 12-1.3(f), it must have a restricted means of access, such as a trap door or a manhole. We reject this argument. An area does not need to be accessible only by a narrow opening in order to have a “restricted means of egress” (12 NYCRR 12-1.3[f]). Although the top of the tank was open to the air, access was still restricted as [plaintiff] needed to use a 20-foot ladder to enter and exit the tank. Therefore, given the tank’s use in the process of filtering sewage and its restricted means of access, 12 NYCRR 23-1.7(g) is applicable.  Cerverizzo v City of New York, 2014 NY Slip Op 02385, 1st Dept 4-8-14

 

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Penalty Which Effectively Made It Impossible for an Architect to Practice His Profession Too Severe

The First Department found the punishment imposed by the Department of Buildings (DOB) on an architect for falsely representing he was licensed during a six-month suspension from practice was too severe:

…[W]e find that the penalty imposed is excessive upon considering the following factors: DOB did not place any temporal limitation on the prohibition of petitioner filing documents, nor did it explain why such a permanent penalty was imposed; petitioner is a solo practitioner for whom over ninety percent of his business is in New York City; the prohibition applies to the entire city, and would essentially end petitioner’s independent architectural business, thus depriving him of his livelihood; and respondent has never alleged, much less made any showing, that the falsehood at issue pertained to the substance or content of the building plans and thus presented potential safety risks which Administrative Code of City of NY § 28-211.1.2 was designed to address… . Matter of Benlevi v New York City Dept of Bldgs, 2014 NY Slip Op 02396, 1st Dept 4-8-14

 

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Alleged Discriminatory Acts Did Not Have an “Impact” in New York—Therefore the Lawsuit Could Not Be Maintained Under the New York City and New York State Human Rights Law

The First Department determined a lawsuit based on alleged violations of  New York State and New York City Human Rights Law could not be maintained because the defendants were out-of-state residents and because the discriminatory actions complained of took place outside the United States, despite plaintiff’s being employed in New York:

The State and City Human Rights Laws do not apply to acts of discrimination against New York residents committed outside their respective boundaries by foreign defendants … . In analyzing where the discrimination occurred, “courts look to the location of the impact of the offensive conduct” … . A non-New York City resident cannot avail him or herself of the protections of the City Human Rights Law unless he or she can demonstrate that the alleged discriminatory act had an impact within the City’s boundaries … . Although plaintiff does not reside in New York City, she resides within the state and is employed by the NBA which is based in New York City. However, the order on appeal addresses plaintiff’s claims against [defendants], none of which are residents of this state. Thus, the focus is on whether the actions these defendants are alleged to have committed had an impact within the respective boundaries of the City and State of New York, in order for the court to exercise jurisdiction over them. Plaintiff contends that the decision to reassign her and later reduce her responsibilities took place within the City boundaries and, therefore, her place of employment is where the impact of the alleged discriminatory acts occurred. However, it is the place where the impact of the alleged discriminatory conduct is felt that controls whether the Human Rights Laws apply, not where the decision is made … . This standard applies whether the claim is made under the City or State Human Rights Laws … . Without more, plaintiff’s mere employment in New York does not satisfy the “impact” requirement. Hardwick v Auriemma, 2014 NY Slip Op 02383, 1st Dept 4-8-14

 

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Tax Law Amendment Allowing New York to Collect Capital Gains Tax from a Nonresident Shareholder in an S Corporation Should Not Have Been Applied Retroactively to a Transaction Which Took Place Three and a Half Years Before the Amendment

In a full-fledged opinion by Justice Richter, over a dissenting opinion, the First Department determined an amendment to the tax law should not be applied retroactively.  The amendment allowed New York to collect capital gains tax from a nonresident shareholder in an S corporation which has distributed an installment obligation under section 453 (h)(1)(A) of the Internal Revenue Code:

Determining whether the retroactive application of a tax statute violates a taxpayer’s due process rights “is a question of degree” and “requir[es] a balancing of [the] equities”… . In James Sq. [21 NY3d 233], the Court of Appeals recently reaffirmed a three-prong test to determine whether the retroactive application of a tax statute passes constitutional muster. “The important factors in determining whether a retroactive tax transgresses the constitutional limitation are (1) the taxpayer’s forewarning of a change in the legislation and the reasonableness of . . . reliance on the old law,’ (2) the length of the retroactive period,’ and 3) the public purpose for retroactive application'”… .

…[P]laintiffs had “no warning and no opportunity [in 2007] to alter their behavior in anticipation of the impact of the [2010 amendment]”…. . * * *

In James Sq., the Court concluded that a retroactive period of 16 months “should be considered excessive and weighs against the State” (21 NY3d at 249). Here, the period of retroactivity was 3 1/2 years — nearly three times longer than the period found excessive in James Sq. As in James Sq., we conclude that this excessive period was “long enough . . . so that plaintiffs gained a reasonable expectation that they would secure repose in the existing tax scheme” … . * * *

The legislative history indicates that enactment of the legislation was necessary to implement the 2010-2011 executive budget by raising tax revenues by $30 million in that fiscal year. Indeed, defendants expressly state in their brief that the legislature made the law retroactive to prevent revenue loss. But “raising money for the state budget is not a particularly compelling justification” and “is insufficient to warrant retroactivity in a case [as here] where the other factors militate against it” (James Sq., 21 NY3d at 250). Caprio v New York State Dept of Taxation & Finance, 2014 NY Slip Op 02399l 1st Dept 4-8-14

 

Lost Profits Not Recoverable—Too Speculative and Not Contemplated in the Agreement

The First Department determined the agreement between the parties did not contemplate lost profits and, therefore, lost profits could not be awarded as damages for the breach:

Nevertheless, the court properly concluded that [plaintiff] was not entitled to recover lost profits. To the extent [plaintiff] seeks lost profits for a five-year period, such damages are speculative, as its assumption that it would have remained in contract with [defendant] for five years could not be established with reasonable certainty. To the extent it seeks lost profits in the amount of $1 million for 2010 (i.e., $500,000 for two seasons), such lost profits were not within the contemplation of the parties as a probable result of a breach at the time they entered into the agreement and could not be established with reasonable certainty … . The evidence surrounding the negotiation and execution of the contract does not show that the parties expected [defendant] to bear the responsibility for any lost profits sustained by [plaintiff]. Indeed, all the witnesses acknowledged that sales revenue of $500,000 per season was mere expectation, and [defendant’s] principal testified that he would not guarantee minimum sales in his sales agreements, especially with emerging designers, as there were “too many variables involved in procuring success in sales in our very competitive and fickle industry.” Such evidence undermines the conclusion that the parties contemplated that [defendant] would assume liability for [plaintiff’s] loss of anticipated revenue … . Olsenhaus Pure Vegan LLC v Electric Wonderland Inc, 2014 NY Slip Op 02343, 1st Dept 4-3-14

 

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Failure to Challenge Conviction Rendered Invalid by Not Advising Defendant of the Period of Post Release Supervision [PRS] Constitutes Ineffective Assistance of Counsel

The First Department determined the defendant did not receive effective assistance of counsel when he was sentenced as a predicate felony offender.  Counsel failed to challenge a 2000 conviction upon a guilty plea which was invalid because defendant was not apprised of the period of post release supervision (PRS) which was subsequently imposed. The fact that the PRS was later removed from the sentence did not cure the error because the defendant had already served four years of PRS and had spent time in jail for a violation of supervision:

In connection with the 2000 conviction, Supreme Court, New York County added postrelease supervision to the sentence in 2009 to cure an unlawful administrative imposition of PRS … . In May, 2010 that court removed PRS from the sentence in accordance with People v Williams (14 NY3d 198 [2010]). Contrary to the People’s sole argument on appeal addressing the Catu issue [the initial failure to advise defendant of the period of post release supervision], the vacatur of defendant’s PRS could not cure the Catu error, or give defendant the benefit of his plea, since at the time of the vacatur he had already served four years of PRS, and had also spent time in jail in violation of that supervision. …

In connection with the instant CPL 440.20 motion [motion to vacate the sentence], the attorney who represented defendant at his 2010 persistent violent felony offender adjudication and sentencing acknowledged that he had no strategic reason for failing to challenge the 2000 conviction, and that he never inquired into whether defendant had been advised about PRS at his 2000 plea proceeding. He further affirmed that had he been aware that the conviction was obtained in violation of Catu, he would have in fact challenged its use to enhance defendant’s sentence in this case. Thus, this was not a case where an attorney may have reasonably believed that it would have been futile to raise a Catu issue regarding the constitutionality, for predicate felony purposes, of defendant’s 2000 conviction, or that the law was unclear on this issue… .  People v Fagan, 2014 NY Slip Op 02344, 1st Dept 4-3-14

 

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