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THE JUDGE DID NOT READ THE JURY NOTE IN ITS ENTIRETY TO THE PARTIES AND THE JUDGE’S PARAPHRASE OF THE CONTENTS OMITTED SIGNIFICANT ASPECTS OF IT; THE FACT THAT THE JURY ANNOUNCED IT HAD REACHED A VERDICT BEFORE THE NOTE WAS CALLED TO THE PARTIES’ ATTENTION DID NOT MATTER; THE MODE OF PROCEEDINGS ERROR REQUIRED REVERSAL (FIRST DEPT).

The First Department, reversing defendant’s conviction and ordering a new trial, determined the judge’s failure to read the entire note from the jury to the parties was a mode of proceedings error. The fact that the jury announced it had reached a verdict before the note was read was not determinative:

The trial court’s failure to read to the parties the entirety of a note submitted just before the jury reached a verdict deprived counsel of meaningful notice (see CPL 310.30 … ). The note was not shown to counsel, and the court’s paraphrase omitted significant aspects of the jury’s requests, including a request for reinstruction on the count charging second-degree assault, which was the only count on which defendant was found guilty. The fact that the jury announced that it had reached a verdict before the note was read did not cure this mode of proceedings error … . People v Heyworth, 2022 NY Slip Op 06072, First Dept 10-27-22

Practice Point: Here the jury had announced it had reached a verdict before the jury note was called to the parties attention. The judge did not read the note to the parties in its entirety and the judge’s paraphrase of its contents omitted important aspects of it. This was deemed a mode of proceedings error requiring a new trial.

 

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THE PLAINTIFF DID NOT DEMONSTRATE HIS DECEASED BROTHER MADE AN INTER VIVOS GIFT OF THE COOPERATIVE APARTMENT TO PLAINTIFF; THE STATUTE OF FRAUDS APPLIES AND THERE WAS NO WRITING; AND THE FAILURE TO FOLLOW THE TRANSFER PROVISIONS OF THE PROPRIETARY LEASE NEGATED A FINDING OF DONATIVE INTENT (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff did not demonstrate his deceased brother made an inter vivos gift of a cooperative apartment to plaintiff. The alleged transfer of the property was subject to the Statute of Frauds and there was no writing memorializing the alleged gift:

Defendant established that there was no valid inter vivos gift to plaintiff of the shares and proprietary lease for the apartment, as the statute of frauds applies to the sale of stock in a housing cooperative and there was no writing to effect the transfer … . …

Plaintiff’s claim further fails as a matter of law, as the decedent — his brother — failed to follow the transfer provisions of the proprietary lease, which required, among other things, a written assignment of shares signed by the shareholder and the approval of defendant’s board of directors to make a valid transfer of the shares to the apartment within the decedent’s lifetime … .

… [E]ven if the decedent had not been required to abide by the terms of the proprietary lease to make a valid inter vivos gift of the apartment, the lack of a writing also militates against establishing the decedent’s donative intent, which is a necessary element of a valid inter vivos gift … . Not only does the decedent’s failure to follow the procedures in the proprietary lease contradict any donative intent, but plaintiff also acknowledges that the delivery of the share certificate and proprietary lease were not made by the decedent himself, and the conflicting affidavits of the decedent’s girlfriend fail to establish that she was acting as decedent’s agent for that purpose. Rivera v 98-100 Ave. C Hous. Dev. Fund Corp., 2022 NY Slip Op 06074, First Dept 10-27-22

Practice Point: Plaintiff did not demonstrate his deceased brother made an inter vivos gift of a cooperative apartment. The Statute of Frauds applies and there was no writing. In addition the failure to follow the transfer provisions in the proprietary lease negated donative intent.

 

AN UNFAVORABLE ANONYMOUS GOOGLE REVIEW OF PLAINTIFF ORTHODONTIST, ALTHOUGH IT INCLUDED BOTH FACT AND OPINION, WOULD BE UNDERSTOOD BY A READER TO BE PURE OPINION; THE REVIEW IS NOT ACTIONABLE DEFAMATION (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined that an unfavorable Google review of plaintiff orthodontist by a former minor patient did not constitute actionable defamation:

Plaintiffs, an orthodontist and his professional corporation, allege that defendants — a former minor patient and that patient’s parents — defamed them in an unfavorable review posted on Google. Contrary to Supreme Court’s holding, we find that, although defendants’ Google review contains elements of both fact and opinion, it nevertheless is not actionable … , and it was not the motion court’s province to “sift[] through [the] communication for the purpose of isolating and identifying assertions of fact” … . Rather, the court should have considered the overall context in which the communication was made, an anonymous online review of plaintiff’s services … .

Here, a reasonable reader of defendants’ Google review would understand it to be pure opinion based on the context in which it was posted and its arguably “[l]oose, figurative, or hyperbolic” tone … . Furthermore, defendants’ Google review was posted anonymously online and, as we have recognized, “‘[R]eaders give less credence to allegedly defamatory remarks published on the Internet than to similar remarks made in other contexts'” … . DeRicco v Maidman, 2022 NY Slip Op 05921, First Dept 10-20-22

Practice Point: An unfavorable, anonymous Google review of plaintiff orthodontist, although it included both fact and opinion, would be understood by readers to be pure opinion. The review therefore did not constitute actionable defamation.

 

THE “INTERNAL AFFAIRS DOCTRINE,” WHICH ADDRESSES RELATIONSHIPS BETWEEN A COMPANY AND ITS DIRECTORS AND SHAREHOLDERS, APPLIES TO THE OFFICERS AND DIRECTORS AT THE TIME OF THE CONDUCT ALLEGED IN THE LAWSUIT, NOT AT THE TIME THE LAWSUIT WAS BROUGHT; CONTRARY AUTHORITY SHOULD NO LONGER BE FOLLOWED (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the “internal affairs doctrine” required the application of the law of the jurisdiction of FanDuel, a Scottish company.  The “internal affairs doctrine” addresses the relationships between a company and its directors and shareholders. The doctrine applies to officers and directors at the time of the conduct alleged in the suit, not at the time of the lawsuit. Prior authority to the contrary should not be followed:

We reject plaintiff’s argument that the internal affairs doctrine applies only to officers and directors at the time of the lawsuit. Rather, the question is whether defendants were “current officers [or] directors” … at the time of the events giving rise to the lawsuit … . Application of the doctrine to former directors protects the parties’ justified expectations, promotes uniformity and predictability of outcome, and prevents different laws from applying to different directors who all engaged in the same challenged transaction simply because of the date on which plaintiff chose to sue … . To the extent our past decisions could be interpreted as suggesting otherwise we clarify that the internal affairs doctrine applies to an officer or director at the time of the conduct at issue … . Eccles v Shamrock Capital Advisors, LLC, 2022 NY Slip Op 05750, First Dept 10-13-22

Practice Point: In corporation law, the “internal affairs doctrine,” which addresses the relationships between a company and its officers and directors, applies to the officers and directors at the time of the conduct alleged in the lawsuit, not at the time the lawsuit was brought. Authority to the contrary should no longer be followed.

 

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IN A CONSTRUCTION CONTRACT TRIAL, IT IS IMPROPER TO DETERMINE ADDITIONAL LABOR COST DUE TO DELAY BY USING A DEFENDANT’S PRECONTRACT ESTIMATE OF LABOR COST (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court in this construction contract case, determined the labor cost associated with a delay could not be determined by using the defendant’s precontract estimate of what its labor cost would be:

The trial court should not have awarded damages for additional labor costs due to defendants’ delays in the construction project. In general, it is impermissible to calculate delay damages for additional labor costs based on a comparison of the contractor’s precontract estimate of what its labor cost would be and what it claimed its labor cost actually turned out to be … . Nevertheless, in calculating the additional labor costs that plaintiff incurred from defendants’ delays, plaintiff’s expert improperly used plaintiff’s pre-bid estimate of the project’s expected labor costs, and Supreme Court erred in basing the award on this improper method of calculation. Five Star Elec. Corp. v A.J. Pegno Constr. Co., Inc./Tully Constr. Co., Inc.,2022 NY Slip Op 05659, First Dept 10-11-22

Practice Point: Here in this construction-contract trial, plaintiff’s expert should not have calculated the additional labor cost due to delay by using the defendant’s precontract labor cost estimate.

 

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THE PHRASE “CONSUMMATION OF THE ANTICIPATED MARRIAGE” IN THE PRENUPTIAL AGREEMENT, A CONDITION PRECEDENT, MEANT THE MARRIAGE CEREMONY, NOT SEXUAL RELATIONS; THE WIFE’S ARGUMENT THAT THE PRENUPTIAL AGREEMENT COULD NOT BE ENFORCED BECAUSE THE COUPLE NEVER HAD SEXUAL RELATIONS WAS REJECTED BY THE APPELLATE COURT (FIRST DEPT).

The First Department, reversing Supreme Court, determined the phrase “consummation of the anticipated marriage” in the prenuptial agreement meant the marriage ceremony, not sexual relations. In these divorce proceedings, the wife argued the prenuptial agreement was unenforceable because the couple never had sexual relations and “consummation” of the marriage was a condition precedent to the prenuptial agreement:

While the word “consummation” connotes sexual relations in certain contexts, such as annulment proceedings, that is not the only meaning of the word, which may simply mean achieve or fulfill (see Black’s Law Dictionary [11th ed 2019]). The plain meaning of “consummation,” in the context of the section titled “Marriage — a Condition Precedent and Effective Date” and defining the effective date of agreement as the date of the parties’ marriage, is consummation or fulfillment of the parties’ intention to enter into a valid “marriage.” Reading the contract as a whole, this interpretation of the section effectuates the parties’ expressed intention to fix their respective rights accruing upon marriage and to avoid unnecessary and intrusive litigation in the event of divorce, and sets an ascertainable date for determining the effectiveness and enforceability of the prenuptial agreement.

In contrast, accepting the wife’s position would render the parties’ respective rights uncertain and require the court to conduct a highly intrusive hearing into the parties’ intimate relations, which is both contrary to the parties’ stated intention and impractical. Fort v Haar, 2022 NY Slip Op 05660, First Dept 10-11-22

Practice Point: The condition precedent to the prenuptial agreement was the “consummation” of the marriage. The wife argued the agreement was unenforceable because the couple never had sexual relations. The appellate court found that the word “consummation” referred to the marriage ceremony, not sexual relations, and the agreement was therefore enforceable.

 

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THE JUDGE SHOULD NOT HAVE DELEGATED THE COURT’S AUTHORITY TO DECIDE VISITATION ISSUES TO A MENTAL HEALTH PROFESSIONAL; THE PROPER PROCEDURE FOR MODIFYING VISITATION ONCE FATHER HAS GAINED INSIGHT INTO THE CHILD’S NEEDS WAS EXPLAINED (FIRST DEPT). ​

The First Department, reversing (modifying) Family Court, determined the judge should not have delegated the court’s authority to decide visitation issues to a mental health professional:

… [T]he court improperly delegated to a mental health professional its authority to determine issues involving the child’s best interests — namely, when visits could resume and whether they should be supervised … . Accordingly, we modify to delete that provision of the order only. Upon an application to resume the father’s visits with the child, the applicant shall have the burden to demonstrate changed circumstances and that the modification requested is in the child’s best interests … , at which time the court may consider evidence that includes, but is not limited to, the testimony of a mental health expert about whether the father has gained insight into the child’s medical and emotional needs and the impact of his behavior on the child. Matter of M.K. v H. M., 2022 NY Slip Op 05663, First Dept 10-11-22

Practice Point: Family Court cannot delegate its authority to decide visitation issues to a mental health professional. The proper procedure for allowing father’s visitation to resume was explained, i.e., an application to resume visitation demonstrating a change in circumstances followed by an evidentiary hearing, including the testimony of a mental health expert.

 

PLAINTIFF SLIPPED AND FELL CARRYING A TANK WHILE WALKING ON THE MUDDY BOTTOM OF AN EXCAVATED HOLE; THE BOTTOM OF THE HOLE WAS NOT A PASSAGEWAY (LABOR LAW 241(6)) AND THERE WAS NO ELEVATION-RELATED RISK (LABOR LAW 240(1); THOSE TWO CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendants’ motion for summary judgment dismissing the Labor Law 240(1) and 241(6) causes of action should have been granted. Plaintiff slipped and fell walking in a muddy, excavated hole. The bottom of the hole was not a passageway within the meaning of Labor Law 241(6) and there was relevant elevation-related risk:

Plaintiff is not entitled to relief under Labor Law § 241(6) for the alleged violation of Industrial Code § 23-1.7(d), since the “excavation pit” where he slipped and fell, “which at that time was no more than a big hole in the ground with an unfinished muddy bottom[,] … was not the type of flooring or passageway contemplated by” the Industrial Code … . Contrary to plaintiff’s contention, his “accident did not occur on a floor, platform, passageway or similar work area or surface within the purview of [section 23-1.7(d)], but rather on muddy ground in an open area exposed to the elements” … . There was no testimony tending to establish that he was walking along a walkway or path that “workers generally took” … . …

Summary judgment also should have been granted to defendants dismissing plaintiff’s Labor Law § 240(1) claim, because there was no elevation-related risk involved with his carrying a tank on his shoulder while he walked along the ground … . Alvarado v SC 142 W. 24 LLC, 2022 NY Slip Op 05584, First Dept 10-6-22

Practice Point: Plaintiff slipped and fell while walking on the muddy bottom of an excavated hole. He was not walking on a passageway, so the Labor Law 241(6) cause of action should have been dismissed. There was no elevation-related risk, so the Labor Law 240(1) cause of action should have been dismissed.

 

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THE COMPLAINT DID NOT STATE A CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT BECAUSE IT DID NOT ADEQUATELY ALLEGE “OUT OF POCKET” DAMAGES (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint did not state a cause of action for fraudulent inducement because it did not allege “out of pocket” damages:

… [T]he complaint fails to plead a cause of action for fraudulent inducement because it does not adequately allege that plaintiff suffered any ascertainable out-of-pocket pecuniary damages resulting from the alleged fraud … . Although plaintiff alleges unspecified reputational damages and lost revenue or profits, these allegations are not sufficient to sustain a cause of action based on fraud … . Similarly, plaintiff fails to allege that it paid any particular amount to acquire the G&P law practice or name, alleging only the value of G&P’s practice when plaintiff acquired it; this allegation is insufficient to measure plaintiff’s damages … . Furthermore, although plaintiff states that G&P “carried undisclosed liabilities,” it does not elaborate on what those might be…. . CKR Law LLP v Dipaolo, 2022 NY Slip Op 05587, First Dept 10-6-22

Practice Point: A complaint alleging fraudulent inducement does not state a cause of action unless it adequately alleges “out of pocket” damages.

 

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THE FRAUD CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE “OUT OF POCKET” DAMAGES WERE NOT DEMONSTRATED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the fraud causes of action should have been dismissed because plaintiffs failed to demonstrate “out of pocket” damages:

Defendants are entitled to summary judgment because plaintiffs failed to show the “out of pocket” damages required for a fraud claim (see e.g. Kumiva Group, LLC v Garda USA Inc., 146 AD3d 504, 506 [1st Dept 2017]). Plaintiffs failed to submit evidence of the value of the … stock they received … . Danco Enters., LLC v Livexlive Media, Inc., 2022 NY Slip Op 05589, First Dept 10-5-22

Practice Point: Here the fraud causes of action were dismissed because plaintiffs did not demonstrate “out of pocket” damages. Decisions relied upon by the plaintiffs concerning exceptions to the “out-of-pocket” damages rule were deemed inapplicable.

 

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