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IN THIS SUIT BY A NEW JERSEY CASINO TO RECOVER DEFENDANT’S GAMBLING DEBT, DEFENDANT RAISED AFFIRMATIVE DEFENSES ALLEGING PLAINTIFF CASINO VIOLATED PROVISIONS OF NEW JERSEY’S CASINO CONTROL ACT (CCA); THE CONTROLLING AGENCY, THE CASINO CONTROL COMMISSION (CCC), HAS PRIMARY JURISDICTION OVER THOSE COMPLAINTS; THE COMPLAINTS MUST BE RULED ON BEFORE THE COURT CAN CONSIDER PLAINTIFF’S SUMMARY JUDGMENT MOTION (FIRST DEPT).

​The First Department, in a full-fledged opinion by Justice Kapnick, determined the plaintiff, a New Jersey casino (Golden Nugget), was not entitled to summary judgment this action seeking to recover defendant’s (Chan’s) $200,000 gambling debt. Defendant had raised affirmative defenses based upon complaints alleging the dice used by the casino violated the Casino Control Act (CCA) which defendant filed with the New Jersey Division of Gaming Enforcement (DGE). The Casino Control Commission has primary jurisdiction over those complaints. Therefore the complaints must be ruled upon before summary judgment can be considered by the court:

Supreme Court’s granting of summary judgment to plaintiff was premature. The motion court should instead have deferred any decision until receipt of DGE’s ruling on Chan’s “patron complaint” based on the same violations, since that grievance was filed prior to the commencement of plaintiff’s litigation and remained pending at the time of its decision. While DGE has ruled that the same scribing violations against another casino do not violate the CCA, there has been no ruling by DGE in any matter concerning defendant’s allegations of “non-transparent dice.” Accordingly, the motion for summary judgment is denied, with leave to renew upon a ruling by DGE on the “patron complaint,” or after six months if DGE has failed to resolve this issue despite sufficient notice to DGE by the parties … . Golden Nugget Atl. City LLC v Chan, 2023 NY Slip Op 02176, First Dept 4-27-23

Practice Point: Here a New Jersey sued defendant to recover a $200,000 gambling debt. Defendant raised violations of New Jersey’s Casino Control Act as affirmative defenses. Because New Jersey’s Casino Control Commission has primary jurisdiction over those complaints, they must be ruled on before the court can consider the casino’s summary judgment motion.

 

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PLAINTIFF’S COUNSEL SHOULD NOT HAVE BEEN DISQUALIFIED; HER TESTIMONY ABOUT HER ALLEGED CONDUCT AT THE INDEPENDENT MEDICAL EXAMINATION (IME) WOULD HAVE BEEN CUMULATIVE AND DEFENDANTS COULD NOT SHOW THE IME WAS COMPROMISED IN ANY WAY (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s counsel should not have been disqualification based upon her alleged interference with the independent medical examination (IME). Defendants did not demonstrate counsel’s testimony concerning the IME was necessary, given the plaintiff’s and physician’s ability to testify:

… [D]isqualification is required “only where the testimony by the attorney is considered necessary and prejudicial to plaintiffs’ interests” … .

… Although defendants maintain that they have a right to call plaintiff’s counsel as a witness based on the knowledge she obtained at the IME, and therefore her disqualification under Rules of Professional Conduct (22 NYCRR 1200.0) rule 3.7 is required, defendants have not established that counsel’s testimony would be necessary to their defense and not cumulative of the testimony that could be provided by the examining physician and plaintiff herself … .

The examining physician completed a “meaningful examination” of plaintiff at the IME, reflected by the IME report in which he was able to opine with a reasonable degree of medical certainty as to the genesis of plaintiff’s symptoms, and defendants have not established that they were prejudiced by the contents of the report based on counsel’s alleged intrusions … . To the extent that further information is required to prepare a defense, the remedy is not disqualification of opposing counsel but rather to permit defendants to seek further discovery to obtain that information … . Domingo v 541 Operating Corp., 2023 NY Slip Op 02175, First Dept 4-27-23

Practice Point: Defendants alleged plaintiff’s counsel’s behavior during the independent medical examination (IME) required her disqualification because defendants needed to call her as a witness to IME proceedings. The First Department held that counsel’s testimony about the IME was not necessary (cumulative to plaintiff’s and the physician’s testimony) and defendants did not show any prejudice stemming from counsel’s alleged conduct. Therefore plaintiff’s counsel and her firm should not have been disqualified.

 

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HERE THE LEASE MADE THE OUT-OF-POSSESSION LANDLORD RESPONSIBLE FOR STRUCTURAL REPAIRS AND MADE THE THE TENANT RESPONSIBLE FOR ALL NON-STRUCTURAL REPAIRS; THE CRACKED STEP WAS NOT A STRUCTURAL DEFECT; THE FACT THAT THE LANDLORD WAS AWARE OF THE DEFECT WAS IRRELEVANT (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant out-of-possession landlord’s motion for summary judgment in this slip and fall case should have been granted. The court noted that if, due to the provisions of the lease, an out-of-possession landlord is not responsible for the repair of a defect, the fact that the landlord had notice of the defect is irrelevant:

“An out-of-possession landlord is generally not liable for negligence with respect to the condition of the demised premises unless it ‘(1) is contractually obligated to make repairs or maintain the premises or (2) has a contractual right to reenter, inspect and make needed repairs and liability is based on a significant structural or design defect that is contrary to a specific statutory safety provision'” … .Here, defendant established that it was an out of possession landlord with no contractual obligation to make repairs or maintain the restaurant premises. Pursuant to Paragraph 4 of the lease agreement, all non-structural repairs to the premises were to be made by the tenant restaurant at its sole cost and expense. Moreover, the cracked step at issue was not a significant structural or design defect that is contrary to a specific statutory safety provision … .

In response, plaintiff failed to raise a triable issue of fact sufficient to defeat defendant’s motion. Plaintiff’s assertion that there is an issue of fact as to whether defendant had actual notice of the cracked step on which plaintiff fell is without merit. An out of possession landlord may not be held liable even if it had notice of the defective condition prior to the accident … . Padilla v Holrod Assoc. LLC, 2023 NY Slip Op 02082, First Dept 4-25-23

Practice Point: By the terms of the lease, the out-of-possession landlord was only responsible for structural repairs. The cracked step in this slip and fall case was not a structural defect. The fact that the landlord was aware of the defect was irrelevant.

 

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UNDER THE JONES ACT OHIO HAD JURISDICTION TO APPOINT ADMINSTRATORS OF THE ESTATE OF DECEDENT WHO ALLEGEDLY DIED OF EXPOSURE TO ASBESTOS ON MERCHANT MARINE SHIPS; THE NEW YORK EXECUTOR OF THE ESTATE WAS TIMELY AND PROPERLY SUBSTITUTED FOR THE OHIO ADMINISTRATORS (FIRST DEPT).

The First Department, over a dissent, in a complex decision which cannot be fairly summarized here, determined: (1) under the Jones Act Ohio had jurisdiction to appoint administrators for decedent who allegedly died from asbestos exposure on merchant marine ships where he was employed; and (2) substitution of a New York personal representative, executor of the estate, was proper and timely:

… [T]he Jones Act provides that when a seaman dies from an employment injury “the personal representative of the seaman may elect to bring a civil action at law, with the right of trial by jury, against the employer” (46 USC § 30104).

The Jones Act grants a right of action to the personal representative “without other description” … . The Act does not require that the personal representative be either “a domiciliary or ancillary administrator” … . A domiciliary administrator has standing to file a Jones Act or FELA [Federal Employers’ Liability Act] lawsuit in another state … . However, nothing “explicitly clothes a domiciliary administrator with the exclusive right to maintain such an action” because such a requirement is inconsistent with “the remedial nature” of FELA and the “representative character” of such a suit … .

Notably, the personal representative’s authority under the Jones Act derives from “a federal statutory right and power given to carry out the policy of the federal statutes” and “is not limited to the confines of the State where he was appointed but is co-extensive with general federal jurisdiction” … . Bartel v Maersk Line, Ltd., 2023 NY Slip Op 02058, First Dept 4-20-23

Practice Point: Under the Jones Act, the estate of a merchant-marine employee who died from exposure to asbestos on the employer’s ships may sue the employer. Here the suit was deemed properly started by administrators appointed by an Ohio court and the New York executor was properly and timely substituted for the Ohio administrators.

See also the companion decision: Bartel v Farrell Lines, 2023 NY Slip Op 02057, First Dept 4-20-23

 

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WHEN A JUVENILE PLEADS GUILTY TO AN OFFENSE FOR WHICH HE CANNOT BE HELD CRIMINALLY RESPONSIBLE, THE CONVICTION MUST BE VACATED AND DISMISSED (FIRST DEPT).

The First Department, vacating defendant’s conviction by guilty plea, determined that because defendant, a juvenile, cannot be held criminally responsible for the crime to which he pled guilty, the conviction must be vacated rather than sent to Family Court:

The People are correct that where a juvenile is charged with a crime for which he may not be criminally responsible, as well as others for which he may be criminally responsible, Supreme Court may assume jurisdiction over the case … . However, if convicted of a crime for which he cannot be criminally responsible, Supreme Court then “must order that the verdict be deemed vacated and replaced by a juvenile delinquency fact determination,” and remove the matter to Family Court … .

Here … defendant was convicted, by a plea of guilty to a crime to which he cannot be criminally responsible. This was not a case where a jury returned a verdict of guilty to the charge of criminal possession of a weapon in the second degree, thus requiring Supreme Court to transfer the case to Family Court for disposition … . Rather, the People specifically requested that in addition to the charge of attempted murder in the second degree, defendant enter a plea of guilty to the fifth count charging criminal possession of a weapon in the second degree, a crime for which the People now concede that defendant cannot be held criminally responsible. Given this, defendant’s conviction for criminal possession of a weapon in the second degree must be vacated and that charge dismissed. People v Raul A., 2023 NY Slip Op 01970, First Dept 4-18-23

Practice Point: If a juvenile goes to trial on offenses which include those for which a juvenile cannot be held criminally responsible, the court can assume jurisdiction over all the offenses. If convicted after trial of an offense for which a juvenile is not criminally responsible, the conviction is vacated and the matter is sent to Family Court for disposition. But if, as here, the conviction is by guilty plea it must be vacated and dismissed.

 

A DISMISSAL FOR FAILURE TO STATE A CLAIM IS NOT ON THE MERITS AND HAS NO RES JUDICATA EFFECT (FIRST DEPT).

The First Department noted that a dismissal for failure to state a claim is not on the merits and therefore does not have res judicata effect:

To the extent defendants rely on the doctrine of res judicata, this reliance is misplaced because a dismissal under CPLR 3211(a)(7) for failure to state a claim is not a dismissal on the merits with res judicata effect … .  Wilder v Fresenius Med. Care Holdings, Inc., 2023 NY Slip Op 01978, First Dept 4-18-23

Practice Point: A dismissal pursuant to CPLR 3211(a)(7) is not on the merits and therefore has no res judicata effect.

 

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PLAINTIFFS COULD NOT DEMONSTRATE RELIANCE UPON THE INFLATED RENTS DESCRIBED IN THE FILED REGISTRATION STATEMENTS; THEREFORE THE COMPLAINT ALLEGING A FRAUDULENT SCHEME TO DEREGULATE APARTMENTS SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Friedman, determined defendant landlord’s motion to dismiss the complaint alleging a fraudulent scheme to deregulate apartments should have been granted. The court found that the plaintiffs did not demonstrate the “reliance” element of fraud:

The primary question on this appeal is whether plaintiffs, who allege that the predecessor in interest of defendant 75-25 153rd Street, LLC initially registered an unlawfully inflated “legal regulated rent” for each of their apartments in 2007, have sufficiently alleged, in this action commenced in 2020, the perpetration of “a fraudulent scheme to deregulate” so as to avoid the bar of the four-year lookback rule and to allow recalculation of the legal rent on the base date (in 2016), utilizing the default formula referenced in Regina [35 NY3d 332], as a basis for overcharge damages. We hold that plaintiffs have failed to allege such a fraudulent scheme because neither plaintiffs nor their predecessors in interest could have reasonably relied upon the inflated legal regulated rents on the registration statements. As the Court of Appeals recognized in Regina [35 NY3d 332], reasonable reliance is as much an element of fraud in this context as in others (see id. at 356 n 7 [“Fraud consists of evidence of a representation of material fact, falsity, scienter, reliance and injury”] [emphasis added, internal quotation marks and brackets omitted]). As more fully explained below, the inflation of the legal regulated rents set forth on the publicly filed registration statements was evident from the registration statements themselves, negating the element of reliance as a matter of law. Burrows v 75-25 153rd St., LLC, 2023 NY Slip Op 01940, First Dept 4-13-23

Practice Point: In this action alleging the fraudulent deregulation of apartments, plaintiffs were unable to demonstrate reliance upon the inflated rents described in the registration statements. Therefore the complaint alleging a fraudulent scheme to deregulate apartments should have been dismissed.

 

THE ABSENCE OF A CERTIFICATE OF CONFORMITY FOR AN OUT-OF-STATE AFFIDAVIT OF SERVICE WAS A MERELY TECHNICAL DEFECT WHICH DID NOT PREVENT THE COURT FROM CONSIDERING THE AFFIDAVIT (FIRST DEPT).

The First Department, reversing Supreme Court, noted that the absence of a certificate of conformity for an out-of-state affidavit of service did not prevent the court from considering the affidavit in this dispute about the legitimacy of service of process in Nevada:

Ameritek’s [defendant’s] argument that the lack of a certificate of conformity prevents the affidavit of service from being considered is unavailing. Even if such a finding may not be made until after the court’s jurisdiction over Ameritek has been established … , any defects resulting from the absence of the certificate of conformity in this instance are merely technical and do not raise questions about “the likelihood that the summons and complaint will reach defendant and inform him that he is being sued” … . GS Capital Partners, LLC v Ameritek Ventures, 2023 NY Slip Op 01942, First Dept 4-13-23

Practice Point: The absence of a certificate of conformity for an out-of-state affidavit of service did not prevent the court from considering the affidavit.

 

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IN 2011 PLAINTIFF WITHDREW THE MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT WITHOUT PREJUDICE AND SUBSEQUENTLY ENGAGED IN SETTLEMENT NEGOTIATIONS FOR YEARS; THE ACTION SHOULD NOT HAVE BEEN DISMISSED AS ABANDONED AND TIME-BARRED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s action for a money judgment should not have been dismissed as abandoned and time-barred. In 2011 plaintiff withdrew its motion for summary judgment in lieu of complaint, without prejudice, and continued settlement negotiations for years, demonstrating plaintiff did not intend to abandon the lawsuit:

Supreme Court incorrectly determined that the action had been rendered a nullity by plaintiff’s withdrawal of his initial summons and motion for summary judgment in lieu of a complaint (CPLR 3213), as the parties’ course of conduct reflected an understanding that plaintiff was not discontinuing or abandoning the action. Plaintiff withdrew the summons and motion “without prejudice” after reaching a settlement agreement with Progressive and, by contrast, the settlement agreement expressly stated that the matter would be discontinued “with prejudice” upon Progressive’s full and complete compliance with its payment obligations. After Progressive defaulted, plaintiff and defendant, participated in further settlement discussions, court conferences, and motion practice for years before defendant invoked the argument that the action had been discontinued or abandoned. Rizzo v Progressive Capital Solutions, LLC, 2023 NY Slip Op 01948, First Dept 4-13-23

Practice Point: Although plaintiff withdrew the motion for summary judgment in lieu of complaint, without prejudice, in 2011, plaintiff continued settlement negotiations for years, demonstrating plaintiff did not intend to abandon the action. The dismissal of the action as abandoned was reversed.

 

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THE DEFENDANTS’ FAILURE TO APPEAR AT THE SCHEDULED EXAMINATIONS UNDER OATH BREACHED A CONDITION PRECEDENT FOR INSURANCE COVERAGE ENTITLING THE INSURER TO SUMMARY JUDGMENT ON ITS CAUSE OF ACTION FOR A DECLARATORY JUDGMENT OF NONCOVERAGE (FIRST DEPT).

The First Department, reversing Supreme Court, determined the plaintiff insurer was entitled to summary judgment for a declaratory judgment of noncoverage because the defendants did not appear at the scheduled Examinations Under Oath (EUOs):

Plaintiff insurer seeks a declaratory judgment of noncoverage based, among other things, on its allegations that defendants Munoz, Cameron, and Santiago (collectively, the claimants) each breached a condition precedent to coverage by failing to appear for properly noticed Examinations Under Oath (EUOs). In support of its motion for a default judgment against the defaulting defendants, plaintiff demonstrated through admissible evidence that the claimants each breached a condition precedent to coverage by failing to appear for properly and timely noticed EUOs … . The documentary evidence shows that plaintiff sent the EUO scheduling letters to the claimants within 15 business days of receiving the prescribed verification forms (in this case, NF-3 forms), as required … . Contrary to the motion court’s calculation, the 15-day period starts with receipt of the NF-3 forms, not the NF-2 Application for No-Fault Benefits forms … . State Farm Fire & Cas. Co. v Soliman, 2023 NY Slip Op 01949, First Dept 4-13-23

Practice Point: Failure to appear for an Examination Under Oath breaches a condition precedent in the insurance contract, entitling the insurer to a declaratory judgment of noncoverage.

 

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