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Language in the Arbitration Agreement Supported the Applicability of the New York Law Reserving the Determination of a Statute of Limitations Defense to the Court, Even Though the Controlling Federal Arbitration Act Presumptively Reserves the Determination of a Statute of Limitations Defense to the Arbitrator

The First Department determined that an arbitration agreement which specifically incorporates “the arbitration laws of New York State” incorporates the New York rule that the resolution of a statute of limitations defense is for the court, not the arbitrator, even where the matter is controlled by the Federal Arbitration Act [FAA] (which presumptively reserves resolution of a statute of limitations defense to the arbitrator):

Under the FAA, the “resolution of a statute of limitations defense is presumptively reserved to the arbitrator, not a court” … . “[A]n exception to this rule exists where parties explicitly agree to leave timeliness issues to the court” (Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 253 [2005]). This is in keeping with the FAA policy by which private arbitration agreements are to be enforced according to their terms (id. at 252). Unlike the FAA, New York law “allows a threshold issue of timeliness to be asserted in court” even absent an agreement to do so (…CPLR 7502 [b]; 7503 [a]).

The arbitration clause of the agreement before us provides that “the arbitration laws of New York State” shall govern the parties’ arbitration. In Matter of Smith Barney, Harris Upham & Co. v Luckie (85 NY2d 193 [1995]…), the Court held that a choice of law provision which states that New York law shall govern both “the agreement and its enforcement” incorporated New York’s rule that threshold statute of limitations questions are for the courts (id. at 202). In Diamond Waterproofing, the Court held that an agreement that merely provided that it “shall be governed by the law of [New York]” did not express an intent to have New York law govern enforcement (4 NY3d at 253). The Court reasoned that “[i]n the absence of more critical Language concerning enforcement . . . all controversies, including issues of timeliness, are subjects for arbitration” (id.).

The question arises as to whether the specific incorporation of “the arbitration laws of New York State” in the instant arbitration clause itself constitutes the needed “more critical language concerning enforcement” within the contemplation of Diamond Waterproofing. We hold that it does and, under the agreement, the arbitration laws of New York State include article 75 of the CPLR.  Matter of ROM Reins Mgt Co Inc v Continental Ins Co Inc, 2014 NY Slip Op 01546, 1st Dept 3-11-14

 

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Question of Fact About Whether Managing Member Breached Fiduciary Duty Owed to Nonmanaging Member with Respect to Managing Member’s Alleged Reliance Upon an Outside Professional

The First Department determined the defendant (Gary) was not entitled to summary judgment.  Gary was the managing member of a Limited Liability Company (LLC) and was sued by a nonmanaging member. Gary argued that, under the Limited Liability Company Law (section 409), he was entitled to rely on the advice of an accountant, and that the cause of action based upon Gary’s acting in accordance with the accountant’s advice should be dismissed. The court described the fiduciary duty owed by Gary to the plaintiff and the criteria for the managing member’s reliance on an outside professional:

As the managing member of the LLCs, Gary owed plaintiff — a nonmanaging member — a fiduciary duty … . “[I]t is elemental that a fiduciary owes a duty of undivided and undiluted loyalty to those whose interests the fiduciary is to protect. This is a sensitive and inflexible rule of fidelity, barring not only blatant self-dealing, but also requiring avoidance of situations in which a fiduciary’s personal interest possibly conflicts with the interest of those owed a fiduciary duty” … .Reliance on outside professionals under Limited Liability Company Law § 409(b)(2) must be in good faith (see Limited Liability Company Law § 409[a]…).  As described here, Gary does not meet his initial burden of showing that he acted in good faith and undivided loyalty to plaintiff so as to rely on Limited Liability Company Law § 409 or the business judgment rule. Pokoik v Pokoik, 2014 NY Slip Op 01502,, 1st Dept 5-6-14

 

Excessive Absences Do Not Establish a Parent’s “Educational Neglect”

The First Department, over a dissent, reversed Family Court’s finding that mother neglected the child by failing to provide for the child’s educational needs.  The record demonstrated that the child was defiant, violent and difficult to control, and mother had made substantial efforts to provide for her education:

Although the child had an excessive amount of absences from school, such absences “do[] not, ipso facto, establish either the parental misconduct or the harm or potential harm to the child necessary to a finding of [educational] neglect under Family Ct Act 1012(f)(i)(A)” … . Here, the record shows that the mother faced obstacles in getting the child to attend school on a regular basis. The mother took the child to school for a period of time, but she was financially unable to escort the child to school on an ongoing basis … . Moreover, even when the child was present, she had a history of truancy, tardiness, leaving school early and loitering in the hallways. The record further demonstrates that the child was defiant, violent, and had a history of lying and threatening to harm herself when the mother did not allow her to do what she wanted. The child also suffered from mood disorder, and had continuous hallucinations that made sleep difficult. The child was eventually hospitalized, and was given a number of psychiatric diagnoses. As a result, she was prescribed medication that caused her to be drowsy and disoriented, which further exacerbated her unwillingness and inability to attend school.Under the circumstances, the mother was unable to control the child and, despite her best efforts, struggled to get the child to attend school regularly, as well as to her therapy and drug treatment appointments… .  Matter of Brianna R, 2014 NY Slip Op 01410, 1st Dept 5-4-14

 

Plaintiff Estopped from Bringing State Retaliation Claim/Issue Decided by District Court Which Dismissed Plaintiff’s Federal Title VII Constructive Discharge Claim

In a full-fledged opinion by Justice Acosta, the First Department determined plaintiff was estopped from bringing her retaliation action in state court because the issue raised had necessarily been determined when the District Court dismissed her federal complaint. The plaintiff alleged she was retaliated against after she told management about allegedly discriminatory practices. The retaliation was alleged to have been the failure to act quickly to address a dispute with a coworker:

The doctrine of collateral estoppel applies where “[f]irst, the identical issue necessarily must have been decided in the prior action and be decisive of the present action, and second, the party to be precluded from relitigating the issue . . . had a full and fair opportunity to contest the prior determination” … . “The party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action” (id. at 456).In considering plaintiff’s Title VII constructive discharge claim, the District Court examined, as it was obliged to do, the question of whether defendant “intentionally subjected her to an intolerable work environment”… . An integral part …of the court’s determination that defendant had not done so was its explicit finding that defendant “responded promptly after [p]laintiff’s complaint” and “the next day … attempted to address [p]laintiff’s concerns within the constraints of [defendant’s] staffing situation”… . Simmons-Grant v Quinn Emanuel Urquhart & Sullivan LLP, 2014 NY Slip Op 01407, 1st Dept 2-27-14

 

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Post-Conviction DNA Test Results Warranted New Trial Under 2012 Amendment to CPL 440.10

The First Department determined defendant was entitled to a new trial based on DNA evidence which was not analyzed until after the defendant was convicted. The DNA collected from under the victim’s fingernails did not match the defendant’s. The defendant’s conviction was based solely on the victim’s identification of the defendant made three weeks after she was attacked. The defendant had produced an alibi witness at his trial. The court explained the application of the recent amendment of Criminal Procedure Law 440.10:

Pursuant to CPL 440.10(1)(g-1), which became effective October 1, 2012, the court may grant a defendant’s motion to set aside the judgment when forensic DNA testing is performed after the entry of judgment upon a conviction and “the court has determined that there exists a reasonable probability that the verdict would have been more favorable to the defendant.” Unlike a motion under CPL 440.10(1)(g), a defendant relying on the results of DNA testing no longer has to show that the results of such testing is newly discovered evidence in order to seek vacatur of a judgment of conviction. The defendant only has to show that there is a reasonable probability that he would have obtained a more favorable verdict. The newly amended statute, permitting relief at any time after the entry of judgment, applies to this case… . People v Hicks, 2014 NY Slip Op 01376, 1st Dept 2-27-14

 

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Termination of Petitioner’s Tenancy Based Upon An Isolated Angry Outburst Targeting a Housing Authority Employee Is “Shocking to the Conscience”

The First Department, after finding substantial evidence to substantiate the charges made by the housing authority (NYCHA) against the tenant-petitioner, determined the termination of the tenancy was “shocking to the conscience.” Petitioner had acted out angrily in a confrontation with a housing authority employee:

…[W]e find that termination of petitioner’s tenancy, is, based on the reviewable facts in this record, a penalty that is shocking to the conscience and that must be vacated. We have found this to be so in similar cases of tenants engaging in fits of rage targeted at NYCHA employees, where the conduct was isolated or specifically related to circumstances that gave some explanation for the behavior. For example, in Matter of Winn v Brown …, this Court found that, while NYCHA’s determination of nondesirability was supported by substantial evidence of the petitioner’s actions, which “[included] screaming profanities, racial epithets and making threats to respondent’s employees,” the termination of the petitioner’s tenancy was shocking to the conscience given that the incidents in question occurred when the tenant was having difficulty securing a transfer despite threats being made against the life of her son. In Matter of Spand v Franco …, this Court remanded to NYCHA for imposition of a lesser penalty where the tenant engaged in conduct that was “serious” and “appropriately condemned,” but eviction was disproportionate because the incident was isolated, the tenant was the mother of three small children and there was no evidence of other problems which posed a risk to other people or property. Even where a tenant “accosted” a NYCHA representative, termination was considered too harsh because the incident was isolated and because, like here, the target of the tenant’s wrath was not seriously injured … . Matter of Rock v Rhea, 2014 NY Slip Op 01268, 1st Dept 2-25-14

 

Operating a Scaffold for the Benefit of an Enumerated Activity Done by Others (Caulking) Entitles Scaffold Operator to Coverage Under Labor Law 240 (1)

The First Department determined a scaffold operator was entitled to summary judgment on his Labor Law 240 (1) claim. The scaffold was being operated for the benefit of caulkers who could not do their work without the scaffold operator:

Although plaintiff …. was not operating the scaffold in his capacity as a window washer at the time of the accident, he was operating it for the caulkers who could not have safely discharged their duties without him. Since caulking is an activity of the sort enumerated in Labor Law § 240(1) …, plaintiff is entitled to the same statutory protection as the caulkers, and his Labor Law § 240(1) claim against 888 Seventh Avenue should not be dismissed. Further, given the evidence that the lanyard and harness provided to plaintiff proved inadequate to shield him from falling through the rail track, plaintiff is entitled to summary judgment on the issue of liability on that claim … . DeJesus v 888 Seventh Ave LLC, 2014 NY Slip Op 01273, 1st Dept 2-25-14

 

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Despite the Contractual Agreement to Apply Delaware Law, Because There Was No Conflict Between Delaware and New York Law, and Because the Parties Disagreed About Which Law to Apply, the Court Applied New York Law

The First Department determined there was no conflict between Delaware and New York law concerning non-solicitation agreements. Therefore, because the parties disagreed about which law should be applied (despite the contractual agreement to apply Delaware law), the court applied New York law, the law of the forum state:

By their own terms, all of the nonsolicitation agreements were to be governed by and construed in accordance with Delaware law. Nonetheless, the parties differ as to whether New York law or Delaware law should be applied.In light of the parties’ disagreement as to which state’s law should apply, our first step is to determine whether there is an actual conflict between the laws of the jurisdictions involved … . For an actual conflict to exist, “the laws in question must provide different substantive rules in each jurisdiction that are relevant’ to the issue at hand and have a significant possible effect on the outcome of the trial'” … . Under New York law, an employee’s noncompetition agreement is reasonable and, therefore, enforceable “only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public” … . The parties’ briefs disclose no conflict of laws that would have a ” significant possible effect on the outcome of the trial'” … . To be sure, the moving defendants argued before the motion court that “Delaware law does not differ significantly from New York law as to the test for enforceability” and that applying New York law “should not make a material difference to the outcome” of the case. Thus, we apply the law of New York, the forum state… . TBA Global LLC v Proscenium Events LLC 2014 NY Slip Op 01266, 1st Dept 2-25-14

 

Attempted Kidnapping Charge Supported by Sufficient Evidence/Defendant Tried to Convince the 10-Year-Old Victim to Take His Keys and Go to His Apartment

The First Department, over a dissent, determined there was sufficient evidence to support the attempted kidnapping charge, in spite of the absence of force. The defendant tried to convince the 10-year-old victim to take his keys and go to his apartment:

The crime of attempted kidnapping in the second degree was established by evidence that defendant intended to secrete or hold the 10-year-old victim in his apartment, a place where she was not likely to be found; that he made efforts to move or confine the victim without consent (see Penal Law §§ 135.00; 135.20); and that defendant came dangerously near to achieving his objective.The evidence left no doubt that the victim was unlikely to be found had she succumbed to defendant’s pressure to take his keys and go to the apartment. Similarly, the evidence left no doubt that defendant, a “highly-fixated” pedophile, attempted to restrain the victim, i.e. to move her to a different location without the permission of her mother.The dissent, in arguing that the crime was not established because defendant did not grab or unsuccessfully attempt to grab the victim, misconstrues the statutory requirement of restraint. While, with respect to an adult, it is necessary to establish that the movement or confinement was accomplished by “force, intimidation or deception,” the definition of restraint, with respect to a child less than 16 years of age, encompasses movement or confinement by “any means whatever,” including the acquiescence of the child (Penal Law § 135.00[1][b]). In relaxing the requirement with respect to minors, the Legislature recognized that a child is not possessed of the same faculties as an adult and is incapable of consenting to any type of confinement. People v Denson, 2014 NY Slip Op 01141, 1st Dept 2-18-14

 

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Questions of Fact Raised About Whether Insufficient Warnings On Flammable Floor Refinishing Materials Constituted the Proximate Cause of the Injuries

In a full-fledged opinion by Justice Gische, the First Department determined a lawsuit based upon failure to warn survived summary judgment. While plaintiff’s decedent [Carino] was using highly flammable floor refinishing materials, the materials caught fire and plaintiff’s decedent was burned. There were warnings about fire on the containers and plaintiff’s decedent had worked with the materials before. But questions of fact were raised about exactly what dangers plaintiff’s decedent was aware of and, therefore, whether defendants were relieved (by the level of his knowledge) of the duty to warn of the dangers not addressed on the labels:

A product may be defective due to inadequate warnings of the risks and dangers involved in its foreseeable use … . The duty also extends to forseeable product misuse … . To be actionable, however, the absence of warnings must be a proximate cause of the claimed injuries … . Even if a duty to warn otherwise exists, recovery may be denied to a knowledgeable user, i.e. one who was fully aware of the specific hazard without receiving the warning … . While in a proper case the court can decide as a matter of law that there is no duty to warn …, in most cases whether a party is a knowledgeable user is a factual question … . Even if a user has some degree of knowledge of the potential hazards in the use of a product, summary judgment will not lie where reasonable minds might disagree as to the extent of the knowledge ….While there is evidence that Carino had some knowledge about general hazards associated with using floor refinishing products, it cannot be said, as a matter of law, that his knowledge base was sufficient to relieve defendants of any duty they may have had to provide adequate warnings. There is evidence that Carino had used floor refinishing products before and that he had been told by his employer that they were flammable and required certain safety precautions, such as shutting off the gas and electricity. There is no evidence, however, that he knew about the particular properties of each product he was using, including their flashpoints, the fact that one product was much more volatile than the other and the specifications for proper ventilation when using these products, or that he knew one product was prohibited for indoor use in the City of New York. Thus, it is for a jury to determine whether Carino had sufficient knowledge of the specific hazards attendant to the use of the floor finishing products to relieve defendants of any duty to warn of those hazards. Public Adm’r of Bronx County v 485 E 188th St Realty Corp, 2014 NY Slip Op 01142, 1st Dept 2-18-14

 

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