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PETITIONER OBTAINED JUDGMENTS EXCEEDING $1 BILLION AGAINST RESPONDENTS STEMMING FROM THE 2008 FINANCIAL CRISES WHICH HAVE YET TO BE SATISFIED; PETITIONER BROUGHT THIS TURNOVER PROCEEDING IN 2023; THE CORPORATE VEIL-PIERCING CLAIM AND THE FRAUDULENT CONVEYANCE AND VOIDABLE TRANSACTIONS CAUSES OF ACTION PROPERLY SURVIVED THE MOTION TO DISMISS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, affirmed the denial of the motion to dismiss the corporate veil-piercing claim and the fraudulent conveyance and voidable transactions causes of action: The respondents have not satisfied a pair of judgments totaling more than $1 billion stemming from the 2008 financial crisis. The petitioner, UBS, commenced this turnover proceeding pursuant to CPLR 5225 in 2023:

… UBS alleged that, after it secured the first judgment, it discovered that [respodents] had conspired to frustrate UBS’s ability to recover against the judgment debtors. UBS alleged that [respondents], exercising complete domination over the judgment debtors and other related entities, transferred the debtors’ assets to themselves or other entities that they controlled in an effort to avoid paying UBS any of the obligations stemming from … the judgments. * * *

For pleading purposes, a party seeking to pierce the corporate veil does not have to satisfy the heightened pleading requirement imposed on one interposing a cause of action for fraud (see CPLR 3016); rather, the party must plead facts that would establish that the individual defendant’s domination of the corporation was used to perpetrate a wrong or injustice against the party, and the allegations of domination must be adorned with particularized allegations of consequent wrongs … .  Matter of UBS Sec. LLC v Dondero, 2026 NY Slip Op 05460, First Dept 9-24-26

Practice Point: Consult this opinion for insight into the pleading requirements for piercing the corporate veil and fraudulent conveyance and voidable transactions causes of action in the context of a (post-judgment) turnover proceeding pursuant to CPLR 5225.

 

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WHERE A COURT’S DETERMINATION TO ENHANCE A DEFENDANT’S SENTENCE IS BASED SOLELY ON CALCULATIONS DRAWN FROM CERTIFIED PUBLIC RECORDS OF DEFENDANT’S PRIOR INCARCERATION, SENTENCE ENHANCEMENT CAN BE IMPOSED BY A JUDGE (AS OPPOSED TO A JURY) (FIRST DEPT).

The First Department, reversing Supreme Court, determined the question whether periods of incarceration which tolled the look-back period for enhancement of defendant’s sentence can be determined by a judge, as opposed to a jury:

The court granted defendant’s CPL 440.20 motion and concluded that the initial predicate statement was facially insufficient and that, pursuant to Erlinger [602 US 821], tolling determinations must be made by a jury. The court held that it could “neither determine, nor convene a jury to determine[,] that defendant was previously incarcerated at a particular time and place in an effort to enhance his sentencing.” * * *

​Defendant moved under CPL 440.20 to set aside the persistent violent felony offender sentence, arguing that the predicate felony statement was facially insufficient because it omitted periods of incarceration necessary to toll the statutory ten-year lookback period. Defendant contended that, under Erlinger, a jury was required to make the factual determination of whether any tolling finding would bring his prior conviction within the lookback window. * * *

As this Court found in People v Young (…2026 NY Slip Op 02883 […2026]), Erlinger does not apply to the tolling protocol contained in New York’s predicate felony sentencing statutes. These involve a “rote arithmetic calculation to be made based on certified public records” … . Such objective determinations fall within the narrow Almendarez-Torres exception permitting judicial determination of “the fact of a prior conviction” and associated ministerial facts such as dates.

… [T]he sentencing court erred in holding that tolling findings must be made by a jury and that it therefore could not sentence defendant as a persistent violent felony offender. As in Young, the tolling determination at issue required the court to review official admission and release records as well as calculate the periods during which defendant was confined. This administrative determination does not implicate the Sixth Amendment under Erlinger but rather falls within the Almendarez-Torres exception. People v Sabater, 2026 NY Slip Op 05459, First Dept 9-24-26

Practice Point: Where sentence enhancement is based solely on certified public records of prior incarceration, there is no requirement that a jury, as opposed to the judge, make the enhancement determination.

 

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ALTHOUGH THE POLICE HAD PROBABLE CAUSE TO ARREST AFTER WITNESSING HAND-TO-HAND EXCHANGES, THEY DID NOT INTEND TO ARREST DEFENDANT BECAUSE THE BUYERS WERE NOT APPREHENDED; THEREFORE THE SEARCHES OF DEFENDANT’S PERSON WERE NOT VALID SEARCHES INCIDENT TO ARREST; SUPPRESSION SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s motion to suppress the firearm, knife and phone found in a search of defendant’s person should have been granted. The police witnessed defendant make “hand-to-hand” exchanges of a small object for money. At the street stop, the officers did not intend to arrest the defendant because the buyers were not apprehended. The officers intended to issue a disorderly conduct summons. But when defendant said he had no identification, the officers decided to take him to the precinct. The searches of defendant’s person took place before and after transport to the precinct:

… [T]he officers had an established intention not to arrest for potential drug charges. With this intention not to arrest for potential drug charges established, such a basis for the arrest is properly considered in the manner of the potential driving while intoxicated charge in People v Reid (24 NY3d 615, 618-619 [2014])—that is, a charge for which facts known to the arresting officers would have supported a lawful arrest and search incident thereto but for record-demonstrated affirmative lack of intent to arrest on such a basis at the time of the search … . * * * [I]n the absence of the alleged disorderly conduct violation, the officers’ search would have been unlawful for reasoning identical to that in Reid … .

… [T]he motion court denied defendant’s suppression motion on the ground that defendant was properly arrested for disorderly conduct (Penal Law § 240.20) based on evidence that he was making “unreasonable noise” with the portable speaker he wore around his neck. On appeal, the People do not contend that the arrest was lawful on this basis, nor do they argue that defendant’s arrest was permitted based on any failure of defendant to identify himself under CPL 150.20(1)(b)(iii). People v Fulladosa, 2026 NY Slip Op 05458, First Dept 9-24-26

Practice Point: If the police do not intend to arrest a defendant despite the existence of probable cause, any search of the defendant’s person cannot be justified as a search incident to arrest.

 

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PLAINTIFF WAS IN A TRENCH AND WAS STRUCK BY CONCRETE WHICH SLID INTO THE TRENCH; THE MAJORITY CONCLUDED CONFLICTING ACCOUNTS OF THE ACCIDENT AND PLAINTIFF’S FAILURE TO USE AVAILABLE LUMBER TO BRACE THE SIDES OF THE TRENCH RAISED QUESTIONS OF FACT; THE DISSENT ARGUED THAT NO MATTER HOW THE ACCIDENT HAPPENED LABOR LAW 240(1) LIABILITY WAS DEMONSTRATED (FALLING OBJECT; ABSENT SAFETY DEVICE) (FIRST DEPT).

The First Department, reversing Supreme Court, over a comprehensive dissent, determined questions of fact precluded summary judgment on plaintiff’s Labor Law 240(1) cause of action. Apparently plaintiff was in a trench when he was struck by a piece of cement. Plaintiff alleged the concrete slid off a backhoe. An eyewitness stated the concrete was dislodged during excavation. The majority concluded there was also a question of fact about whether plaintiff was the sole proximate cause of the accident because lumber to brace the sides of the trench were available and plaintiff was instructed to use it. The dissenter argued that, no matter how the accident happened, plaintiff was injured by a falling object for which Labor Law 240(1) liability attached:

The conflicting accounts raise a credibility determination which is the province of the factfinder … . …

… [T]here are also issues of fact as to whether plaintiff was the sole proximate cause of the accident because he knew or should have known to use an available safety device — namely, lumber braces to brace the sides of the trench … .

From the dissent:

The conflicting accounts of the accident from plaintiff and defendant do not present a triable issue of fact because both versions include a violation of Labor Law § 240(1) as a proximate cause of plaintiff’s injuries … . Plaintiff’s account, for its part, is a basic statutory violation resulting from failure to properly secure a hoisted object … .

Likewise, [the eyewitness’] version involves a statutory violation as a proximate cause. … Labor Law § 240(1) may apply to a falling object due to a trench collapse caused by absent or improper bracing … . Veliu v Verizon N.Y. Inc., 2026 NY Slip Op 05374, First Dept 9-22-26

 

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THIS OPINION DEMONSTRATES HOW COURTS DEAL WITH INTERPRETING THE LANGUAGE OF A CONTRACT WHERE DICTIONARY DEFINITIONS OF A KEY WORD, HERE THE WORD “COMMIT,” SUPPORT THE OPPOSING POSITIONS OF THE PARTIES (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Renwick, over a detailed dissent, affirmed the lower court’s interpretation of the contract language and the related denial of plaintiff’s demand for prevailing-party attorney’s fees. The opinion turned on the definition of “commit” and is too detailed to fairly summarize here. The opinion should be consulted for insight into the interpretation of contract language where dictionary definitions support the opposing positions of the parties. Aurelius Capital Master Ltd. v Hertz Intl. Ltd., 2026 NY Slip Op 05369, First Dept 9-22-26

 

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NEW YORK STATE OFFICE OF MENTAL HEALTH (OMH) WAS PROPERLY HELD IN CONTEMPT AND FINED $100-A-DAY FOR THE DELAY IN TRANSFERRING THE MENTALLY ILL DEFENDANT FROM RIKERS ISLAND TO A SECURE PSYCHIATRIC FACILITY (FIRST DEPT).

The First Department determined the New York State Office of Mental Health (OMH) was properly held in contempt based on a delay in transferring the mentally ill defendant from Rikers Island to a secure psychiatric facility. $100-a-day damages were assessed:

Defendant was charged with assault in the second degree based on the complaint that he pushed his mother to the ground causing her to twist and injure her toe. He was remanded to the custody of the Department of Corrections and held at Rikers Island. The charge was later elevated from a misdemeanor to a felony based on his mother’s age. After defendant was evaluated for competency a second time in January 2025, both evaluators concluded that defendant was unfit to proceed. Supreme Court agreed, and on February 24, 2025, it ordered defendant remanded to the custody of OMH for restorative treatment. The order of commitment required that the defendant “be transferred into the custody of the Office of Mental Health no later than March 24, 2025” and warned that a failure to do so would result in a finding of contempt. It is uncontested that the transfer was delayed until July 25, 2025. * * *

OMH argues that defendant failed to prove that OMH’s delay caused his mental health to deteriorate. However, the relevant issue is not whether defendant deteriorated while he was in custody but whether OMH provided the requisite restorative care. In any event, Supreme Court was entitled to credit Dr. Goldsmith’s testimony that defendant’s condition did deteriorate at Rikers. OMH’s attempt to blame defendant for his loss because he is mentally ill and refuses treatment is risible. The purpose of a transfer to a secure psychiatric facility is so that a mentally ill defendant can receive statutorily mandated restorative care and treatment. To attribute defendant’s loss or injury to defendant’s preexisting mental illness, which causes defendant to refuse treatment, turns Criminal Procedure Law article 730 on its head. People v G.O., 2026 NY Slip Op 05242, First Dept 9-10-26

 

HERE THE PERMANENT STAIRWAY WHERE PLAINTIFF WAS INJURED, THE SOLE VIABLE MEANS OF ACCESS TO THE WORK SITE, CONSTITUTED A “SAFETY DEVICE” WITHIN THE MEANING OF LABOR LAW 240(1); PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the permanent stairway where plaintiff was injured, which had worn or missing treads, was the sole viable means of access to the floors where plaintiff was working. Although another stairway was available, plaintiff was told not to use it because it was used by COVID patients. Therefore plaintiff was entitled to summary judgment on the Labor Law 240(1) cause of action. The First Department rejected the argument that Labor Law liability was not available because plaintiff was not working on the stairway itself. The First Department also rejected the argument that a permanent stairway is not a statutory safety device:

The statute protects a worker from gravity-related hazards posed by a permanent stairway that “provided the sole means of access to the floors of the building” where the worker was working … . However, the issue of whether a stairway is the sole means of access should not be construed so strictly as to “preclude recovery merely because plaintiff had an alternative means to descend from his work area, especially when that alternative route may have seemed more dangerous than the stairs plaintiff did utilize” … . Here, the only other staircase available to plaintiff at the worksite would have required him to access a stairway used by hospital patients during the height of the COVID-19 pandemic, which he was instructed not to use. As a result, under these facts, the purported alternative staircase did not present a viable means of egress for plaintiff, and the staircase plaintiff used was his sole means of access to his work area … . Moreover, the stairs were defective in that the treads were worn out or missing.

We have considered and rejected … the argument that the statute does not cover permanent staircases … . As we recently explained, “permanent staircases are not categorically excluded from Labor Law 240(1) coverage,” and will qualify as a safety device under the Labor Law where the staircase is the sole means accessing the plaintiff’s work area … .

… Supreme Court improperly concluded that this principle applies only in situations where the plaintiff was required to work on the staircase upon which he fell … .

Supreme Court’s … conclusion that a plaintiff using a permanent staircase as a “passageway” will not give rise to Labor Law 240(1) liability is also misplaced … .  Riley v Memorial Sloan-Kettering Cancer Ctr., 2026 NY Slip Op 05241, First Dept 9-10-26

Practice Point: A permanent stairway which is the sole viable means of access to a work site is a “safety device” within the meaning of Labor Law 240(1).

 

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THE DEFENSE MOTION TO SET ASIDE THE JURY VERDICT AND REINSTATE COUNTERCLAIMS SHOULD NOT HAVE BEEN GRANTED, CRITERIA EXPLAINED (FIRST DEPT).

The First Department, reversing Supreme Court, determined Supreme Court should not have reinstated defendants’ counterclaims which were rejected by the jury after a lengthy trial. The First Department explained the criteria for setting aside a jury verdict pursuant to CPLR 4404(a):

Defendants are not entitled to reinstatement of their counterclaims, which were each unequivocally rejected by the jury after a lengthy trial. Pursuant to CPLR 4404(a), a court may set aside a jury verdict, or order a new trial, where “the verdict is contrary to the weight of the evidence,” or “in the interest of justice.” In making this determination, the court must proceed with caution, because “in the absence of indications that substantial justice has not been done, a successful litigant is entitled to the benefits of a favorable jury verdict” … . Thus, a verdict should only be set aside if the evidence is so in favor of the moving party that the verdict “could not have been reached on any fair interpretation of the evidence” … , or in the interests of justice due to “errors in the trial court’s rulings on the admissibility of evidence, mistakes in the charge, misconduct, newly discovered evidence, and surprise” … . Beach v Touradji Capital Mgt., LP, 2026 NY Slip Op 05231, First Dept 9-3-26

Practice Point: Consult this decision for insight into the criteria for setting aside a jury verdict. Here the jury’s rejection of defendants’ counterclaims should not have been disturbed.​

 

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IN THIS RENT RESET ARBITRATION, THE UMPIRE COMMUNICATED DIRECTLY WITH LANDLORD’S COUNSEL, CREATING THE APPEARANCE OF IMPROPRIETY; THE AWARD WAS THEREFORE VACATED (FIRST DEPT).

The First Department, reversing Supreme Court, determined communications between an umpire and the landlord’s counsel created the appearance of impropriety requiring the vacation of the arbitration award in the rent reset proceeding:

… [T]he tenants exercised their second extension option under the lease … . The parties attempted to negotiate a new annual net rent, but upon reaching an impasse, they proceeded to arbitration before the American Arbitration Association (the AAA). That arbitration concluded with a one-week hearing that resulted in a final award largely in the landlord’s favor. * * *

… [T]he umpire created an appearance of impropriety when he directly communicated with the landlord’s counsel about a paid offer to serve as a neutral umpire in the [another arbitration] and did so without including the tenants in the conversation. Further, the umpire’s subsequent attempt to remedy this issue with a disclosure to the tenants failed to cure his misconduct. Indeed, the disclosure was incomplete as it was the landlord’s counsel, not the umpire, who informed the tenants of the direct communication with the landlord’s counsel. To compound matters, the umpire then attempted to bargain with the tenants — offering to trade his rejection of the offer in exchange for the cooperative withdrawing its recusal application. Ultimately, although he did eventually decline the offer, the umpire’s actions irreversibly and improperly implicated the “integrity of the process” … . Matter of 57th & 6th Ground LLC v Carnegie House Tenants Corp., 2026 NY Slip Op 05230, First Dept 9-3-26

Practice Point: In this arbitration of a rent reset, the umpire communicated directly with landlord’s counsel, creating the appearance of impropriety. The award was therefore vacated.

 

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ALTHOUGH SUPREME COURT DID NOT ABUSE ITS DISCRETION WHEN IT GRANTED THE PEOPLE’S MOTION TO PREVENT THE TRANSFER OF THE ADOLESCENT OFFENDER’S CASE TO FAMILY COURT, MITIGATING FACTS AND THE LEGISLATIVE PURPOSE UNDERLYING THE “RAISE THE AGE” LEGISLATION WARRANTED INVOCATION OF THE COURT’S “INTEREST OF JUSTICE” JURISDICTION AND DENIAL OF THE PEOPLE’S MOTION (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Chan, reversing Supreme Court, over a two-justice dissent, held that Supreme Court did not abuse its discretion when it granted the People’s motion to prevent the transfer of the adolescent offender’s case to Family Court. On the “no abuse of discretion” question, the majority and the dissenters agreed. The majority, however, went on to invoke its “interest of justice” jurisdiction, based on mitigating facts and the underlying purpose of the “Raise the Age (RTA)” legislation, to deny the People’s motion and allow the transfer to Family Court:

… [D]efendant, then 17 years old, chased a young woman across a basketball court, grabbed her from the back while placing his arm around her neck, and eventually brought her to the ground….  As a result, the young woman suffered minor injuries. At no point, including at the time of his arrest, did defendant take out, display, use, or fire [the] gun [found in his fanny pack]. Nor did he otherwise threaten to do so. * * *

Under the RTA, prosecutions of adolescent offenders — defined as 16 or 17 year olds charged with a felony — are presumptively removable from the Youth Part of Supreme Court to Family Court (see CPL 722.10[1]; CPL 722.23[1], [2] …). The People can rebut that presumption if a defendant is charged with a class A nondrug felony or a violent felony, and the People prove, “by a preponderance of the evidence,” that defendant (1) “caused significant physical injury” during the commission of the offense, (2) “displayed a firearm, shotgun, rifle or deadly weapon” in “furtherance of” the offense, or (3) committed a sex offense (see CPL 722.23[2][c] …). “Otherwise, the case is removed to Family Court unless, upon a motion by the People, the [Y]outh [P]art determines that ‘extraordinary circumstances exist that should prevent the transfer of the action to’ Family Court” … . * * *

… [D]efendant shouldered caretaker responsibilities for his family, including assisting his mother during a difficult pregnancy and being a source of mentorship and support for his younger siblings. He participated avidly in sports teams and lessons. His maturity was importantly manifested by his demonstrated amenability to Family Court’s services. For example, defendant highlighted his improved school performance during the COVID-19 pandemic, his interest in pursuing vocational studies, and his successful graduation from the Exalt Youth program with perfect attendance and outstanding participation. …

In our view, these are precisely the types of facts that the legislators contemplated would support removal to Family Court … . People v Key, 2026 NY Slip Op 05234, First Dept 9-3-26

Practice Point: Consult this opinion for an in depth discussion of the purpose and implementation of the “Raise the Age” legislation which allows the transfer of adolescent offenders’ felony prosecutions to Family Court.

Practice Point: Here the majority and the dissenters agreed Supreme Court did not abuse its discretion when it granted the People’s motion to deny the transfer of the adolescent’s case to Family Court, but the majority went on to invoke its “interest of justice” jurisdiction to reverse, something the Court of Appeals would not have the power to do.

 

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