You are here: / First Department

Tag Archive for: First Department

, , , , ,

THE COMPLAINT STATED CAUSES OF ACTION FOR BREACH OF FIDUCIARY DUTY, FRAUD, CONSTRUCTIVE FRAUD AND MUTUAL MISTAKE; PLAINTIFFS-PHYSICIANS ALLEGED THE FORMS THE EMPLOYER REQUIRED THEM TO SIGN CONSENTING TO THE DISTRIBUTION (TO THE EMPLOYER) OF THE PROCEEDS OF THE DEMUTUALIZATION OF THE MEDICAL MALPRACTICE INSURER WERE INVALID (FIRST DEPT).

The Frist Department, reversing (modifying) Supreme Court, determined the complaint by physicians against their employer/malpractice-insurance-policy-administrator stated causes of action for breach of fiduciary duty, fraud and mutual mistake. The dispute centers on whether the physicians or the employer which paid the malpractice insurance premiums are/is entitled to the proceeds when the insurer (MLMIC) demutualized. The employer had the physicians sign forms consenting to distributing the proceeds to the employer. The physicians allege the consent forms are invalid:

Plaintiffs allege that the forms by which they authorized MLMIC to distribute their demutualization proceeds to defendant are invalid because defendant obtained them in breach of its fiduciary duty, by fraud, or due to mutual mistake. If these forms are invalid, then the demutualization proceeds belong to plaintiffs … .

Transactions between a fiduciary and beneficiary are voidable if the fiduciary acts in its own interest and does not fully disclose all material facts … . Defendant is alleged not only to have withheld the policyholder information statement from plaintiffs, but to have significantly misrepresented their contents for its own gain. These allegations, which are not conclusively refuted by the documentary evidence, are sufficient to survive a motion to dismiss.

Fraud is another basis for rescinding the consent forms … . Plaintiffs also properly allege constructive fraud, because they were owed a fiduciary duty by defendant and so were “warranted to . . . relax the care and vigilance they would ordinarily exercise in the circumstances” … . …

Mutual mistake “may not be invoked by a party to avoid the consequences of its own negligence” … . For the purposes of this motion to dismiss, however, it cannot be said as a matter of law that plaintiffs were negligent … . Cordaro v AdvantageCare Physicians, P.C., 2022 NY Slip Op 05267, First Dept 9-27-22

Practice Point: The complaint adequately alleged the employer, which also served at the medical malpractice insurance policy administrator, breached a fiduciary duty owed to the plaintiffs-physicians by requiring them to consent to the distribution (to the employer) of the proceeds of the demutualization of the medical malpractice insurance carrier. The complaint also sufficiently alleged fraud, constructive fraud and mutual-mistake causes of action.

 

, ,

THE INSURED MISREPRESENTED HER HOME ADDRESS AND THE INSURERS DISCLAIMED COVERAGE; THE CONCLUSORY AFFIDAVIT SUBMITTED BY THE INSURERS WAS NOT SUPPORTED BY DOCUMENTARY EVIDENCE (UNDERWRITING MANUALS, RULES, BULLETINS) AND THEREFORE DID NOT DEMONSTRATE THE MISREPRESENTATION WAS MATERIAL (FIRST DEPT).

The First Department, reversing Supreme Court, determined the insurers which disclaimed coverage did not demonstrate the insured’s misrepresentation of her address was material. The insurers’ motion for summary judgment should not have been granted:

… [T]he insurers filed this action for a declaration of no-coverage and an injunction barring defendant medical providers from seeking any no-fault reimbursement under the claimant’s automobile insurance policy. The insurers alleged that the claimant had intentionally and materially misrepresented her home address in procuring the policy, as the proper policy address was not the Wappingers Falls address she had stated, but rather, an address in the Bronx.

The insurers submitted undisputed evidence that the claimant misrepresented her address based on her testimony at the Examination Under Oath (EUO). However, the insurers failed to establish, as a matter of law, that the alleged misrepresentation as to the correct address was a material misrepresentation. The affidavit of the insurers’ underwriter is conclusory and not supported by relevant documentary evidence such as underwriting manuals, rules, or bulletins …  Liberty Mut. Ins. Co. v Valera, 2022 NY Slip Op 05277, First Dept 9-27-22

Practice Point: To disclaim insurance coverage based upon a misrepresentation by the insured, the insurer must demonstrate the misrepresentation was material. Here, at the summary judgment stage, the insurers’ conclusory affidavit, which was not supported by underwriting manuals, roles or bulletins, was not enough.

 

,

THE JUDGE ASKED THE ADMITTEDLY BIASED JUROR WHETHER HE COULD DISREGARD A POLICE OFFICER’S TESTIMONY IF HE FELT THE OFFICER WAS LYING AND THE JUROR SAID HE COULD; THE QUESTION AND ANSWER DID NOT PROVIDE AN UNEQUIVOCAL ASSURANCE THE JUROR COULD RENDER A VERDICT SOLELY ON THE EVIDENCE; NEW TRIAL ORDERED (FIRST DEPT).

The First Department, reversing defendant’s conviction and ordering a new trial, determined the judge’s questions for the juror, who expressed a bias in favor of police officer, did not elicit an unequivocal assurance the juror could put aside the bias and render a verdict solely on the evidence:

The challenged panelist, who had many connections to law enforcement, stated “I’m definitely bias[ed] toward law enforcement, toward police officers. I know a lot of cops. If you ask me a plain question, I’ll say yes.” …

… [T]he court asked if the panelist could “evaluate the testimony,” and if a witness was “not telling the truth” and “happen[ed] to be a police officer,” would he “disregard that just because [his] best friend is a cop?” The court’s question was not properly framed to elicit an assurance of impartiality. When the panelist, somewhat confused by the court’s inquiry, replied, “No, if I’m understanding your question, I wouldn’t,” he did no more than confirm that in the event he actually found an officer’s testimony to be perjurious, the panelist would not overlook that fact because of his pro-police bias. The court’s next question — “You would be able to evaluate?” — and the panelist’s response that he “would be able to,” likewise fell short of the required express and unequivocal declaration … . “If there is any doubt about a prospective juror’s impartiality, trial courts should err on the side of excusing the juror, since at worst the court will have replaced one impartial juror with another” … . People v Tate, 2022 NY Slip Op 05286, First Dept 9-27-22

Practice Point: Here the potential juror acknowledged his bias in favor of police officers. The judge asked the juror if he could ignore a police officer’s testimony if he felt the officer was lying and the juror said he could. The First Department did not view the question and answer as providing an unequivocal assurance the juror could put aside his bias and render a verdict solely on the evidence. Conviction reversed.

 

, ,

PARTY ADMISSIONS WERE NOT HEARSAY AND SHOULD HAVE BEEN CONSIDERED BY SUPREME COURT IN THIS LABOR LAW 240(1), 241(6), 200 ACTION; THE “PARTY-ADMISSIONS” ARGUMENT, ALTHOUGH NOT RAISED BEFORE SUPREME COURT, CAN BE CONSIDERED AND DEEMED DISPOSITIVE ON APPEAL (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined many of the causes of action in this Labor Law 240(1), 241(6) and 200 action should not have been dismissed. Plaintiff’s decedent, Rosa, was electrocuted when working on live electrical equipment. Rosa’s boss, Cuevas (the building manager), testified he told Rosa not to work on the live equipment until he returned with rubber insulation and shut down the power to the building. Decedent’s daughter, however, testified Cuevas told her Rosa had to do the work with the power on because there was an upcoming inspection. Cuevas’ statement was deemed admissible as a party admission and should have been considered by Supreme Court. The “party-admissions” argument was raised for the first time on appeal:

When “a party raises a legal issue for the first time on appeal, as long as the issue is determinative and the record on appeal is sufficient to permit review, this Court may consider the new argument” … . We may also consider this testimony in our discretion because [defendants] also relied on it in support of their summary judgment motion … . …

… [P]laintiff testified to postaccident conversations that Cuevas had with her when he visited Rosa in the hospital, when he admitted to plaintiff that Rosa had to perform the bus duct work without shutting down the electricity because of the imminently scheduled building inspection, so as not to inconvenience the tenants, and to avoid any complaints attendant to a service interruption, such as a lack of elevator service. Cuevas never denied either having those conversations with plaintiff in the hospital or making those statements…. . In any event, assuming hypothetically that these statements were inadmissible hearsay, they may still be considered as they are not the only evidence in this record that the electricity was not shut down when Rosa performed the duct work … . Rosa v 47 E. 34th St. (NY), L.P., 2022 NY Slip Op 05144, First Dept 9-13-22

Practice Point: Party admissions are not hearsay. A legal issue (here “inadmissible hearsay” versus “party admission”) raised for the first time on appeal may be considered where, as here, the record is sufficient and the issue is determinative.

 

THE JURY SHOULD HAVE BEEN INSTRUCTED DEFENDANT DID NOT HAVE A DUTY TO RETREAT FROM A SHARED BATHROOM USED ONLY BY THE DEFENDANT AND THE COMPLAINANT; ASSAULT CONVICTION REVERSED (FIRST DEPT).

The First Department, reversing defendant’s assault second conviction, over an extensive two-justice dissent, determined it was reversible error for the judge to refuse to instruct the jury that the defendant did not have a duty to retreat (re: the justification defense). There is no duty to retreat from one’s own dwelling. Here the incident took place in a portion of the housing complex used only by the defendant and the complainant:

Defendant and the complainant lived in a housing complex where they each had a separate room that gave them access to a shared bathroom to which no one else had access. The court should have granted the defense’s request for a jury instruction that defendant, who asserted a defense of justification, had no duty to retreat from the bathroom he shared with the complainant as a matter of law … .

… [T]his bathroom, unlike a hallway bathroom, was accessible only from the respective rooms of defendant and the complainant. As a matter of law, the shared bathroom was a part of defendant’s dwelling, notwithstanding that he shared it with the complainant, as opposed to a common area in the building. Therefore, under Penal Law § 35.15 (2) (a) (i), defendant had no duty to retreat before using deadly physical force to defend himself … .

… [T]he court’s inaccurate instruction that whether the incident took place in defendant’s dwelling depended on the extent to which defendant exercised exclusive possession and control over the area in question could have led the jury to erroneously conclude that the bathroom was not part of defendant’s dwelling because he shared it with the complainant and that therefore defendant had a duty to retreat. People v Delisme, 2022 NY Slip Op 05130, First Dept 9-6-22

Practice Point: In the context of the justification defense to an assault charge, a defendant does not have a duty to retreat from his own dwelling. Here the incident apparently took place in a bathroom used only by the defendant and the complainant. The bathroom was part of defendant’s own dwelling. The jury should have been instructed that defendant did not have a duty to retreat before using deadly force

 

,

INSURANCE COVERAGE DEPENDED UPON WHETHER THE INJURED RESPONDENT RESIDED WITH HIS SON IN MAINE; RESPONDENT ALLEGED HE SPLIT HIS TIME BETWEEN RESIDING IN NEW YORK AND RESIDING WITH HIS SON; A PERSON MAY HAVE MORE THAN ONE RESIDENCE; A FRAMED-ISSUE HEARING WAS REQUIRED (FIRST DEPT).

The First Department, reversing Supreme Court, determined a framed-issue hearing was required to determine whether respondent was entitled to coverage under the uninsured/underinsured motorist (SUM) provision of respondent’s son’s policy. Whether respondent is covered depends upon whether he resides with his son. Respondent alleged he splits his time between residing in New York and residing with his son in Maine. A person may have more than one residence:

The policy contained an uninsured/underinsured motorist endorsement (SUM coverage) which defined an insured as, among other things, “1. You or any family member.” The policy defined “family member” as “a person related to you by blood, marriage or adoption who is a resident of your household.” * * *

The policy conditions the status of an insured relative on whether the relative resides with the named insured. Residency is established by a degree of permanency and an intention to remain, and a person may have more than one residence … . Here, both parties have proposed that it would be reasonable to hold a framed issue hearing, and Elliott [respondent] has raised sufficient facts to warrant one, including that he splits his time between Maine and New York, spends a portion of each year at 22 Huntress Street [Maine] where he keeps personal items and has a bedroom, furnishes the house and landscapes the yard jointly with Zachary [respondent’s son], and holds the only mortgage on the property. Matter of Travelers Home & Mar. Ins. Co. v Barowitz, 2022 NY Slip Op 05131, First Dept 9-6-22

Practice Point: Here whether the injuries to respondent were covered by an uninsured/underinsured motorist provision depended upon whether respondent resided with his son in Maine. A person may have more than one residence. Respondent alleged he resided both in New York and in Maine with his son. A hearing to was ordered to determine whether respondent in fact “resided” in both Maine and New York.

 

,

THE EMPLOYMENT CONTRACT MUST BE READ AS A WHOLE; THE PROVISION RELIED ON BY THE EMPLOYER TO AVOID PAYING DEFENDANT’S EARNED SALARY UPON TERMINATION APPLIED ONLY TO THOSE CURRENTLY EMPLOYED (ALLOWING PAYMENT TO BE DEFERRED WHEN AVAILABLE FUNDS ARE INSUFFICIENT); A DIFFERENT PROVISION REQUIRING PAYMENT IN CASH APPLIED TO TERMINATED EMPLOYEES (FIRST DEPT).

The First Department, reversing Supreme Court, determined the employment contract between Drone and defendant obligated Drone to pay defendant the salary which remained unpaid upon defendant’s termination. Drone unsuccessfully argued the provision of the contract which allowed cash payment of salaries to be deferred when there were insufficient funds applied only to persons who were employed, not to persons whose employment was terminated:

Drone claimed in opposition that it did not have to pay defendant his salary in cash, but had the option to pay defendant his wages in (worthless and unmarketable) Drone stock, relying on paragraph 3 in the employment agreement, governing compensation during the “employment period,” which states, “the Company may elect to . . . defer any cash payment until it has sufficient funds to do so.” Drone, however, ignores paragraph 5(b) of the employment agreement, applicable post-termination, which states that “[i]n the event that [defendant’s] employment with the Company is terminated . . . the Company shall pay or grant [defendant] any earned but unpaid salary, bonus, and Options through [defendant’s] final date of employment with the Company, and the Company shall have no further obligations to [defendant]” … . Read as a whole, the employment agreement makes clear that while payment of defendant’s salary could be deferred for lack of funds while he remained in Drone’s employ, “all earned but unpaid salary” was payable to defendant, unconditionally, upon termination of employment … . The finality of its language reflects an intent that the parties promptly settle up affairs within a reasonable time … . Drone USA, Inc. v Antonelos, 2022 NY Slip Op 05129, First Dept 9-6-22

Practice Point: Contracts must be read as a whole. Here the provision relied upon by the employer to avoid paying a former employee’s salary applied only to current employees (allowing payment to be deferred when there are insufficient funds available.) Another provision requiring payment to terminated employees was the operative provision.

 

,

PETITIONER’S APPLICATION FOR A PISTOL PERMIT SHOULD HAVE BEEN GRANTED; NEW YORK’S “PROPER CAUSE” STANDARD IS NO LONGER APPLICABLE PURSUANT THE US SUPREME COURT’S RULING IN “NEW YORK STATE RIFLE & PISTOL ASSN V BRUEN” (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the recent US Supreme Court decision New York State Rifle & Pistol Assn., Inc. v Bruen (597 US _, 142 S Ct 2111 [2022] required that petitioner’s application for a pistol permit be granted. New York’s “proper cause” standard is no longer applicable:

Petitioner commenced this CPLR article 78 proceeding challenging the determination by the New York City Police Department denying an application to renew a business carry handgun license. Supreme Court denied and dismissed the petition on the ground that the Police Department had a rational basis to deny the renewal of a business carry license where petitioner’s application did not establish “proper cause” within the meaning of Penal Law § 400.00 (see 38 RCNY 5-03). Supreme Court also found petitioner’s constitutional rights were not violated.

We are constrained by the recent United States Supreme Court decision in New York State Rifle & Pistol Assn., Inc. v Bruen (597 US _, 142 S Ct 2111 [2022]) which mandates the grant of this CPLR article 78 petition. Specifically, in Bruen , the United States Supreme Court held that denial of a license applications for failing to satisfy New York’s “proper cause” standard, under which the applicants had to demonstrate a special need for self-protection distinguishable from that of the general community, was unconstitutional as violative of the Second Amendment to the United States Constitution, which protects an individual’s fundamental right to keep a firearm, and the Fourteenth Amendment to the United States Constitution, which makes this right equally applicable throughout the states.  Matter of Callahan v City of New York, 2022 NY Slip Op 05057, First Dept 8-30-22

Practice Point: Pursuant to the US Supreme Court’s ruling in New York State Rifle & Pistol Assn., Inc. v Bruen (597 US _, 142 S Ct 2111 [2022] the “proper cause” standard for issuing a pistol permit no longer applies. Petitioner’s application should have been granted.

 

,

IN THIS BICYCLE-PEDESTRIAN COLLISION CASE WHERE THERE WAS A VIDEO OF THE INCIDENT, DEFENDANT’S EXPERT DEMONSTRATED, USING FACTS IN THE RECORD, THAT DEFENDANT BICYCLIST HAD THE RIGHT OF WAY, WAS TRAVELLING AT A REASONABLE SPEED, AND WAS NOT ABLE TO AVOID THE COLLISION WHEN PLAINTIFF STEPPED OFF THE CURB; PLANTIFF’S EXPERT’S OPINION TO THE CONTRARY WAS NOT SUPPORTED BY FACTS IN THE RECORD; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (FIRST DEPT). ​

The Frist Department, reversing Supreme Court, over a dissent, determined defendant bicyclist’s motion for summary judgment in this bicycle-pedestrian collision case should have been granted. Thee was a video of the incident. Defendant had the green light when plaintiff stepped off the curb into the bike lane. Defendant’s expert presented evidence defendant was travelling at a reasonable speed and could not have avoided striking the plaintiff without striking an obstruction or entering a traffic lane. Plaintiff’s expert’s opinions that defendant was travelling at an excessive speed and could have stopped before striking plaintiff were not based upon facts in the record:

… [P]laintiff failed to raise an issue of fact. There is no evidence that defendant operated his bicycle at an excessive rate of speed, in a negligent manner, or without due care to avoid colliding with any pedestrian, in violation of Vehicle and Traffic Law §§ 1180(a), 1146. Plaintiff attempts to raise an issue of fact through her expert, who opines, without any factual basis in the record, and in a conclusory and speculative manner, that defendant operated his bicycle at an excessive speed when compared to the speed of the three other bicyclists, and that in the three seconds (at most) that defendant had to react from the moment he is seen entering the screen, he could have slowed down, stopped, or maneuvered his bicycle to go around plaintiff to avoid the collision, or to make the impact substantially less severe.

Opinion evidence must be based on facts in the record. An expert cannot speculate, guess, or reach their conclusion by assuming material facts not supported by the evidence …  The opinion must be supported either by facts disclosed by the evidence or by facts known to the expert personally. It is essential that the facts upon which the opinion is based be established, or fairly inferable, from the evidence … . Min Zhong v Matranga, 2022 NY Slip Op 05063, First Dept 8-30-22

Practice Point: Expert opinion which is not supported by facts in the record will not raise a question of fact sufficient to preclude summary judgment.

 

,

PLAINTIFFS ALLEGED THE RESIDENTIAL-MORTGAGE-BACKED-SECURITIES ISSUED BY THE DEFENDANT TRUSTEES WERE WORTHLESS BECAUSE OF DEFENDANTS’ BREACHES OF CONTRACTUAL, FIDUCIARY AND STATUTORY DUTIES; MOST (BUT NOT ALL) OF DEFENDANTS’ MOTIONS TO DISMISS WERE DENIED BASED UPON CONTRACT-INTERPRETATION PRINCIPLES (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court in this residential-mortgage-backed-securities case, over an extensive two-justice partial dissent, determined certain post-Event of Default breach of contract and breach of fiduciary duty claims should have been dismissed, and the pre-Event of Default document defect repurchase enforcement claims should not have been dismissed. “Plaintiffs purchased residential mortgage-backed securities (RMBS) certificates issued by RMBS trusts for which defendants served as the trustees. In six separate actions brought in May 2016, plaintiffs allege that their investments are almost worthless as a result of defendants’ breaches of their contractual, fiduciary, and statutory duties.” The majority decision focuses on refuting the arguments in the partial dissent, resulting in a comprehensive overview of contract-interpretation-law which is worth reading but cannot be fairly summarized here. Generally, Supreme Court’s denial of most of the defendants’ motions to dismiss was affirmed. IKB Intl., S.A. v Wells Fargo Bank, N.A., 2022 NY Slip Op 05058, First Dept 8-30-22

Practice Point: The plaintiffs in this residential-mortgage-backed-securities action alleged the certificates issued by the defendant trustees were almost worthless as a result of the defendants’ breach of contract and fiduciary and statutory duties. Most of the plaintiffs’ causes of action survived defendants’ motions to dismiss. The decision includes a comprehensive discussion of the law of contract-interpretation which is worth consulting.

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy