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Failure to Mention the Rate of Compensation Required Dismissal of the Contract Cause of Action Under the Statute of Frauds/However the Allegation Defendant Employed Plaintiff Was Sufficient to Allow the Quantum Meruit Cause of Action to Go Forward

The First Department determined the contract cause of action must be dismissed under General Obligations Law 5-701(a)(10) because there was no mention of the rate of compensation,  but that there were sufficient allegations to allow the quantum meruit cause of action to go forward:

In Davis & Mamber, this Court held that for a writing evidencing a contract “[t]o satisfy the Statute of Frauds . . . a memorandum must contain expressly or by reasonable implication all the material terms of the agreement, including the rate of compensation if there has been agreement on that matter” … . … Davis & Mamber precluded a contract claim for failure to satisfy the applicable provision of the statute of frauds, because the relied-on writings lacked any reference to the agreed-on compensation; however, it permitted a quantum meruit claim, because the rule for a writing establishing quantum meruit claims is less exacting, requiring only that the writing “evidenced the fact of plaintiff’s employment [by defendant] to render the alleged services” …. Here, as in Davis & Mamber, the emails … fail to make any reference to payment terms, and accordingly fail to satisfy the statute of frauds as to the contract claim … . However, they suffice to show that [defendant] employed plaintiff, and are therefore enough to satisfy the statute for purposes of plaintiff’s quantum meruit claim.  Chapman, Spira & Carson LLC v Helix BioPharma Corp, 2014 NY Slip Op 01685, 1st Dept 3-18-14

 

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Concise Example of a Weight of the Evidence Review

The First Department reversed defendant’s conviction and dismissed the indictment after a weight of the evidence review. The court found too many inconsistencies in the evidence, especially with respect to the identification of the defendant as the attacker.  The decision is a concise example of the kinds of proof problems which are considered significant under a weight of the evidence analysis:

Here, there were troubling discrepancies in the evidence presented to the jury. Most significantly, the complainant testified that the club was sufficiently well-lit for him to see his assailant’s face while the encounter was ongoing. However, the detective who investigated the incident and interviewed the complainant testified, after having had his recollection refreshed with the DD-5 report he prepared in connection with the investigation, that the complainant told him he “did not have a clear recollection of the suspect because it was somewhat dark” in the Maribella. While the complainant denies he told the detective that, the People do not offer, nor can we perceive of, any reason why the detective would have been untruthful not only on the witness stand, but also in a contemporaneous internal report documenting the investigation.

Further clouding the accuracy of the complainant’s identification of defendant was the photograph he picked out of an array. We acknowledge that the complainant did not represent that the person in the photo he chose was his assailant, but rather that he looked like him. Nevertheless, there is a significant difference in the appearances, especially the complexions, of the people depicted in the two photographs, which calls into question the confidence the complainant had in recalling what his attacker looked like.  People v Diaz, 2014 NY Slip Op 01661, 1st Dept 3-13-14

 

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Conclusory and Unsupported Affidavit from Plaintiff’s Expert Did Not Raise a Question of Fact/Standard of Care for Doctors and Mental Health Professionals In the Context of a Patient’s Post-Treatment Suicide Described

The First Department, in a full-fledged opinion by Justice Sweeny, reversed Supreme Court and granted the defendants’ motion for summary judgment dismissing the action.  The complaint alleged that plaintiff’s husband’s suicide was the result of negligence on the part of the treating doctors, psychiatrists and other health professionals.  The court noted that in most instances the affidavit from an expert asserting a deviation from the appropriate standard of care will be sufficient to defeat summary judgment.  But here the affidavit from plaintiff’s expert was conclusory and unsupported:

It is well settled that “a doctor is not liable in negligence merely because a treatment, which the doctor as a matter of professional judgment elected to pursue, proves ineffective. . .” … . Liability is imposed “only if the doctor’s treatment decisions do not reflect his or her own best judgment, or fall short of the generally accepted standard of care” … . Although a plaintiff’s expert may have chosen a different course of treatment, “this, without more, represents, at most, a difference of opinion among [medical providers], which is not sufficient to sustain a prima facie case of malpractice'” … . In the context of mental health providers, we have held that “[w]hen a psychiatrist chooses a course of treatment, within a range of medically accepted choices for a patient after a proper examination and evaluation, the doctrine of professional medical judgment will insulate such psychiatrist from liability” … . Where a psychiatrist fails to predict that a …patient will harm his or herself if released, liability will likewise not attach for a mere error in professional judgment … . While it is true that “the line between medical judgment and deviation from good medical practice is not easy to draw” … , the “prediction of the future course of a mental illness is a professional judgment of high responsibility and in some instance it involves a measure of calculated risk. If liability were imposed on the physician or the State each time the prediction of future course of mental disease was wrong, few releases would ever be made and the hope of recovery and rehabilitations of a vast number of patients would be impeded and frustrated” … . However, if a decision to release a patient was less than a professional medical determination, liability may attach … . A decision will not be insulated by the medical judgment rule if it is not based upon a careful examination … .

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 suffice, the expert’s opinion “must demonstrate the requisite nexus between the malpractice allegedly committed’ and the harm suffered” … . However, where “the expert’s ultimate assertions are speculative or unsupported by any evidentiary foundation . . . the opinion should be given no probative force and is insufficient to withstand summary judgment” … . Park v Kovachevich, 2014 NY Slip Op 01679, 1st Dept 5-13-14

 

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Stray Remarks Doctrine Applied in Action Under New York City Human Rights Law

The First Department determined that the “stray remarks doctrine” applied to actions brought brought under the New York City Human Rights Law.  The court rejected the argument that a statement in an email written weeks after plaintiff’s termination was actionable, asserting the so-called “stray remarks doctrine:”

Plaintiff relies on one remark made in an email exchange that took place weeks after the decision to terminate him was made and that concerned the resolution of his union’s grievance following the termination. In the email, one of defendant’s employees responsible for making the decision to terminate plaintiff declined to reconsider the penalty because of the nature of plaintiff’s convictions and his concern about the liability that defendant would assume if plaintiff committed a similar crime while on company time. However, “[s]tray remarks such as [this], even if made by a decision maker, do not, without more, constitute evidence of discrimination” … .  Indeed, plaintiff did not demonstrate a nexus between the employee’s remark and the decision to terminate him… .

We decline to hold, as urged by plaintiff and amici, that the stray remarks doctrine may not be relied on in determining claims brought pursuant to the City Human Rights Law, even as we recognize the law’s “uniquely broad and remedial purposes” (Bennett, 92 AD3d at 34 [internal quotation marks omitted]). The doctrine is not inconsistent with the intentions of the law, since statements “constitute evidence of discriminatory motivation when a plaintiff demonstrates that a nexus exists between the allegedly discriminatory statements and a defendant’s decision to discharge the plaintiff” … . Godbolt v Verizon NY Inc, 2014 NY Slip Op 01561, 1st Dept 3-11-14

 

“In Transit” Means Between Destinations, Even If “At Rest”

The First Department, in a full-fledged opinion by Justice Saxe, determined that the “in transit” clause of a bond covered the loss which occurred when the stolen cash was in a vault owned by the armored car company.  Under New York law, the term “in transit” covers a larceny which occurs when the stolen item is between destinations, even if it is not being moved at the time:

An “In Transit” provision was discussed and interpreted in the controlling case of Underwood v Globe Indem. Co. (245 NY 111 [1927]). In Underwood, a bond salesman who was attempting to arrange a bond sale to a potential buyer brought the bonds from Pine Street, in lower Manhattan, to West End Avenue near 88th Street, where the buyer gave him a worthless check that had been forged to appear certified, in exchange for the bonds. When the buyer absconded with the bonds, the seller made a claim under a policy for the theft of the bonds while “in transit.” The Court concluded that the transit of the bonds was never completed, because the completion of transit would have involved a lawful transfer of title, whereas the bonds had been taken “by a trick and false device,” without a valid transfer of title (id. at 115). The Court reasoned that “[t]o hold that transit means actual movement, and not a period of rest, is too narrow a construction to give to this undertaking, and is contrary to its full meaning and scope” (id.).

The Underwood analysis was at the heart of the determination in Franklin v Washington Gen. Ins. Corp. (62 Misc 2d 965 [Sup Ct, NY County 1970], affd 36 AD2d 688 [1st Dept 1971]), a determination affirmed by this Court, holding that the test for whether something is “in transit” is “whether the goods, even though temporarily at rest, were still on their way, with the stoppage being merely incidental to the main purpose of delivery” (at 966-967).  CashZone Check Cashing Corp v Vigilant Ins Co, 2014 NY Slip Op 01565, 1st Dept 3-11-14

 

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Inexperience or Lack of Sophistication Does Not Toll the Statute of Limitations Re: the Discovery of Fraud/The Test for When the Fraud Should Have Been Discovered in an Objective One

The First Department determined the action alleging the fraudulent churning of trades by an employee of Morgan Stanley was untimely.  The plaintiff argued that plaintiff’s inexperience and lack of sophistication should toll the statute of limitations re: the discovery of the fraud.  The court explained that when the fraud should have been noticed is determined by an objective test:

“The test as to when fraud should with reasonable diligence have been discovered is an objective one,” and the duty of inquiry arises “where the circumstances are such as to suggest to a person of ordinary intelligence the probability that he [or she] has been defrauded” … . Apt v Morgan Stanley DW Inc, 2014 NY Slip Op 01541, 1st Dept 3-11-14

 

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Landlord Cannot Recover Lost Rent In Action Based Upon Breach of Covenant to Keep the Premises in Good Repair

Over the dissents of two justices, the First Department determined that lost rent was not recoverable for breach of a lease provision requiring a tenant to keep the premises in good repair:

It is well settled that lost rent is not recoverable as damages for breach of a lease covenant requiring a tenant to keep the premises in good repair. An action alleging breach of such a covenant can be brought either before or after the expiration of the lease term … . In Appleton v Marx (191 NY 81 [1908]), the Court of Appeals identified two different measures of damages, depending on when the action is commenced. If the action is brought before the lease expires, a landlord can recover “the injury done to the reversion” (id. at 83), i.e. “the difference between the value of the premises with the improvement and absent the improvement” … . On the other hand, if the action is brought after the expiration of the lease term, “the measure of the damages is the cost of putting the premises into repair” … . In neither circumstance, however, did the Court of Appeals provide that lost rent is included in the measure of damages.  Building Serv Local 32B-J Pension Fund v 101 Ltd Partnership, 2014 NY Slip Op 01544, 1st Dept 3-11-14

 

Being Thrown from the Forks of a Forklift Is a Gravity Related Event Under Labor Law 240 (1)

The First Department determined that being thrown from the front forks of a forklift (Bobcat) is a gravity related event covered by the Labor Law:

…[W]e find that falling from the Bobcat is the type of gravity related event contemplated by the Court of Appeals in Runner v New York Stock Exch., Inc. (13 NY3d 599 [2009]). In Potter v Jay E. Potter Lumber Co., Inc. (71 AD3d 1565 [4th Dept 2010]), the [4th] Department, relying on Runner, similarly found that a worker, who like plaintiff here, was positioned as a counterweight for a load on a forklift and was catapulted forward when the forklift became unstable, was entitled to the protection of Labor Law § 240(1). Penaranda v 4933 Realty, LLC, 2014 NY Slip Op 01547, 1st Dept 3-11-14

 

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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

 

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