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From the Point When a Director’s Position Becomes Adverse to the Corporation, the Director Is Not Entitled to Discovery of the Corporation’s Attorney-Client Communications

Plaintiff was both a shareholder in and a director of defendant corporation. In her role as a shareholder, plaintiff brought a special proceeding to compel the corporation to pay the fair market value of her shares pursuant to Business Corporation Law section 623.  The special proceeding was prompted by the corporation’s sale of a 65% interest in the business to a third-party investor—a sale to which plaintiff objected.  During the course of discovery, the defendant corporation’s lawyers turned over thousands of documents to the plaintiff.  Included in those documents were attorney-client communications which took place after plaintiff had voiced her strong objection to the sale of the 65% interest in the business. The motion court determined that the plaintiff, as a director, was a corporate insider by definition, and was therefore entitled to all the corporation’s attorney-client communications, even those communications which took place after she voiced her opposition to the sale.  The First Department reversed.  The Court determined that, once plaintiff objected to the sale and hired her own attorney, her interests became “adverse” to those of the corporation, and she was not entitled to the attorney-client communications made after that point. [There is a long dissent arguing that, pursuant to CPLR 5511, the appellants were not aggrieved by the ruling appealed from and, therefore, the First Department did not have jurisdiction to entertain the appeal.] Barasch v Williams Real Estate Co. 2013 NY Slip Op 01613, 7405, 500054/09, 1st Dept. 3-14-13

 

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Records Sealed Pursuant to Criminal Procedure Law 160.50 Can Be Unsealed in “Dangerous Sex Offender” Proceeding Pursuant to Mental Health Law

In a proceeding which determined respondent was a dangerous sex offender requiring confinement, the court ordered the unsealing of records related to three rapes and two robberies for which respondent was indicted in 1968.  The convictions of one count of rape and one count of robbery had been overturned because respondent was found to have been incompetent at the time he pled guilty. In finding the records of the overturned convictions were properly unsealed, the First Department determined that Mental Health Law 10.08 (c), which provides that the State is entitled to all records relating to the respondent’s commission or alleged commission of a sex offense, supersedes Criminal Procedure Law 160.50, which requires that the record of a criminal proceeding that is terminated in favor of the accused be sealed.  State v John S., 2013 NY Slip Op 01622, 9530, 30051/09m 1st Dept. 3-14-13

 

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Failure to Instruct Jury that Medical Practice Guidelines Did Not Set Forth the Applicable Standard of Care Required Reversal

The case turned on whether the defendant failed to recommend and perform a timely colonoscopy (the plaintiff, who had a history of colon polyps, contracted colon cancer).  At trial the defendant doctor was allowed to introduce in evidence guidelines published by the American Gastroenterological Association which included the recommended frequency of colonoscopies.  The plaintiff objected and requested a limiting instruction informing the jury that the guidelines “did not set forth the standards of care with regard to the diagnosis and treatment of plaintiff’s colon cancer.” The trial court gave a cursory limiting instruction at the time the guidelines were admitted, and told the jury another instruction would be forthcoming.  The trial court subsequently declined to give any further instructions on the issue.  In reversing the judgment for the defendant and ordering a new trial, the First Department wrote:

The court erred in failing to give the instruction that plaintiff requested. Although the trial court’s instruction informed the jury that it was to make its determination based on “all the evidence,” this instruction was not sufficient to guide the jury on how to apply the Guidelines to the facts before it. The court’s instruction as rendered failed to make clear to the jury that the Guidelines were simply recommendations regarding treatment, and thus, that compliance with the Guidelines did not, in and of itself, constitute good and accepted medical practice … . The trial court should have given the jury an instruction specifically stating that the Guidelines were not the same as standards of care and that the jury was to make its determination based on the particular circumstances of the case, not on the Guidelines alone. Introducing the Guidelines into evidence without the appropriate limiting instruction allowed the jury to infer that a physician need not exercise professional judgment with regard to individual patients, but could simply abide by the recommendations promulgated in the Guidelines.  Hall v Kiyici, 2013 NY Slip Op 01616, 9067, 23531/05, 1st Dept. 3-14-13

 

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Insufficient Proof to Support “Medical Neglect” Finding

The First Department reversed Family Court’s finding of medical neglect related to a five-month-old’s fractured femur.  Family Court accepted the proof that the baby, for the first time in his life, rolled over and fell off a couch when the father left him briefly to throw away a soiled diaper.  Family Court’s medical-neglect determination was based on testimony that the fracture “would cause the child evident pain…” and the length of time between the accident and when medical attention was sought.  The First Department noted the proof that swelling would not be immediately apparent and that a hairline fracture would not cause much pain until it progressed into a full fracture, as well as a video of the child showing no movement problems or signs of pain. In light of proof the child may not have exhibited symptoms of pain, the First Department determined the finding of neglect was not supported by a preponderance of the evidence. In re Amir L., 2013 NY Slip Op 01617, 9277-9278-9279, 1st Dept. 3-14-13

 

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Punitive Damages Award Not Recoverable in Subsequent “Bad Faith Failure to Settle” Case Against Insurer

A judgment which included punitive damages was assessed against an insured.  The insured sued the insurance company for a bad-faith failure to settle the libel and slander claims within policy limits.  The First Department determined the insurance company was entitled to summary judgment because public policy precludes the insured from recovering the punitive damages portion of any judgment resulting from the insurer’s bad faith.  The Court also noted that the public policy argument could be raised for the first time on appeal because no new facts were alleged and only purely legal arguments were made.  Seldon v Allstate Ins. Co., 2013 NY Slip Op 01628, 9542, 116217/08, 1st Dept. 3-14-13

 

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Medical Malpractice—Expert Opinion Can Be Based Entirely on Experience.

In affirming the denial of defendants’ motion for summary judgment, the First Department noted that an expert’s affidavit can be sufficient to raise a triable issue of fact even where the opinion is based entirely on the expert’s professional experience: “While an expert affidavit cannot be speculative, there is no threshold requirement in an ordinary case, not involving a novel scientific theory, that a medical opinion regarding deviation be based upon medical literature, studies, or professional group rules in order for it to be considered. It can be based upon personal knowledge acquired through professional experience …”.  Mitrovic v Silverman, 9282, 304369/09, First Dept. 3-7-13

 

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Spoliation of Evidence.

Plaintiff was injured in a fall from a chair.  Plaintiff’s notice of claim specifically requested preservation of the chair.  The defendant failed to preserve it.  Plaintiff testified the chair was not broken. In reversing summary judgment granted to the defendant, the First Department determined that an expert could have found a latent defect in the chair if it had been preserved.  Therefore the defendant was sanctioned by the preclusion of any testimony about the condition of the chair and an adverse inference charge to the jury at trial.  Gilchrist v City of New York, 8804, 103400/08, First Dept. 3-7-13

 

Res Ipsa Loquitur Need Not Be Pled and Should Have Been Applied.

Plaintiff received an electric shock when he stepped on a metal manhole cover while crossing a street.  Defendant was under contract with the city and was doing electrical work in the vicinity of the manhole.  In reversing the trial court’s grant of summary judgment to the defendant, the First Department discussed the concept of res ipsa loquitur:

“Res ipsa loquitur is not a separate theory of liability but merely ‘a common-sense application of the probative value of circumstantial evidence’ … . A plaintiff’s failure to specifically plead res ipsa loquitur does not constitute a bar to the invocation of res ipsa loquitur where the facts warrant its application … . The plaintiff’s failure here to plead the doctrine in his complaint does not render it unavailable to him … . …  To apply res ipsa loquitur, a plaintiff must establish that (1) the accident [is] of a kind that ordinarily does not occur in the absence of negligence; (2) the instrumentality or agency causing the accident [is] in the exclusive control of the defendants; and (3) the accident must not be due to any voluntary action or contribution by plaintiff ….’ .”  Smith v Consolidated Edison …, 9201, 110504/06, First Dept. 3-7-13

 

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“Plain View” Doctrine Does Not Require Certainty Seized Item Is Contraband

In affirming the denial of a suppression motion, the First Department determined that the chain of events observed by the arresting officer before the stop of defendant’s vehicle led to the proper application of the “plain view” doctrine for the seizure of contraband.  Defendant was seen going into a store (which was a frequent target of thieves) with a large empty bag and coming out of the store with the bag visibly heavier and fuller.  After a vehicle stop (the stop was not contested or discussed in the decision), the defendant gave answers to questions that contradicted what the officer had observed and the officer saw a large amount of over-the-counter medications in the bag.  In finding the seizure of the bag justified under the “plain view” doctrine, the Court said:  “The plain view doctrine does not require certainty or near certainty as to the incriminating nature of the items.  Instead, it ‘merely requires that the facts available to the officer would warrant a man of reasonable caution in the belief …that certain items may be contraband or stolen property or useful as evidence of a crime; it does not demand any showing that such a belief be correct or more likely true than false.  A practical, nontechnical probability that incriminating evidence is involved is all that is required’ …”.  People v Taylor, 9439, 6265/10, 1st Dept. 3-7-13​

STREET STOPS, SUPPRESS, SEARCH

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Condominium Unit Owner Has Common Law Right to Examine Books

Although a condominium unit owner is not entitled under the Business Corporation Law to examine the books and records of a condominium, an unincorporated association governed by the Real Property Law, there is a common law right of a stockholder to examine the books and records of a corporation. Because the unit owners of a condominium own the common elements of the condominium and are responsible for common expenses, the common law right of a stockholder to examine the books applies to a unit owner of a condominium.  Pomerance v McGrath, 650129/11, 9454, 1st Dept. 3-7-13

 

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