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SUPREME COURT SHOULD NOT HAVE DISMISSED AN ACTION TO ENFORCE A MONEY JUDGMENT OBTAINED IN THE PEOPLE’S REPUBLIC OF CHINA (PRC) ON THE IMPLICIT GROUND THE DEFENDANTS WERE NOT AFFORDED DUE PROCESS IN THE PRC; THE US STATE DEPARTMENT DOCUMENTS UPON WHICH SUPREME COURT’S RULING WAS BASED DO NOT CONSTITUTE DOCUMENTARY EVIDENCE; THE COMPLAINT SUFFICIENTLY ALLEGED DEFENDANTS HAD AN OPPORTUNITY TO BE HEARD, WERE REPRESENTED BY COUNSEL AND HAD THE OPPORTUNITY TO APPEAL IN THE PRC ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint sufficiently alleged that the money judgment obtained by plaintiff in the People’s Republic of China (PRC) comported with the principles of due process. The complaint alleged the defendants had an opportunity to be heard, were represented by counsel, and had a right to appeal the underlying proceeding in the PRC. Plaintiff’s action to enforce the foreign judgment should not have been dismissed based upon US State Department reports alleging a lack of judicial independence in the PRC:

The court should not have dismissed the action on the ground that the U.S. State Department’s 2018 and 2019 Country Reports on Human Rights Practices (Country Reports) conclusively refuted plaintiff’s allegation that the PRC judgment was rendered under a system that comported with the requirements of due process. The Country Reports do not constitute “documentary evidence” under CPLR 3211(a)(1) … . In any event, the reports, which primarily discuss the lack of judicial independence in proceedings involving politically sensitive matters, do not utterly refute plaintiff’s allegation that the civil law system governing this breach of contract business dispute was fair. Shanghai Yongrun Inv. Mgt. Co., Ltd v Maodong Xu, 2022 NY Slip Op 01523, First Dept 3-10-22

Practice Point: Plaintiff obtained a money judgment in the People’s Republic of China (PRC) and sought to enforce it in New York. The complaint should not have been dismissed based upon US State Department reports alleging a lack of judicial independence in the PRC. The reports are not “documentary evidence” and the complaint adequately alleged defendants were afforded due process in the PRC.

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IN AN ACTION SEEKING TO ENFORCE A JUDGMENT AGAINST NON-DEBTORS PURSUANT TO CPLR ARTICLE 52, THE PETITIONERS ARE NOT ENTITLED TO A JURY TRIAL; THE ACTION IS EQUITABLE IN NATURE, DESPITE THE DEMAND FOR MONETARY DAMAGES (FIRST DEPT). ​

The First Department determined petitioner’s request for a jury trial in this action seeking to compel non-debtors to make assets accessible for execution should have been stricken. Even though money damages were demanded, the essence of the action is equitable:

Petitioners commenced a “turnover” special proceeding under CPLR article 52 and sought a judgment among other things, “seeking . . ‘turnover’ of [defendant] NYGFI assets to satisfy [p]etitioners’ judgment . . . compelling the non-debtor [r]espondents to disclose, bring within the jurisdiction, and make accessible for execution . . . all cash, income, distributions and funds . . . including all membership interests in limited lability companies . . . and shares in corporations and interests in partnerships . . . and granting the appointment of a CPLR [a]rticle 52 receiver.”

… “[A] [p]laintiff is not entitled to a jury trial . . . [when] he seeks to enforce a judgment against a party other than the judgment debtor, which is an equitable claim” … .

… “[T]he rule is fundamental that where a plaintiff seeks legal and equitable relief in respect of the same wrong, his right to trial by jury is lost” … . Moreover, “[i]nclusion of a demand for money damages in the [pleading] does not, in and of itself, guarantee entitlement to a jury trial. Rather, it must be determined whether the main thrust of the action is for legal damages or for equitable relief” … . Matter of Uni-Rty Corp. v New York Guangdong Fin., 2022 NY Slip Op 01525, First Dept 3-10-22

Practice Point: An action pursuant to CPLR Article 52 to enforce a judgment against non-debtors is equitable in nature. A jury trial is therefore not available. The demand for money damages (legal relief) did not alter the fact that petitioners are primarily seeking equitable relief.

 

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ALTHOUGH THIS SHAREHOLDERS’ DERIVATIVE ACTION AGAINST A SWISS CORPORATION REQUIRES THE APPLICATION OF SWISS LAW, NEW YORK IS THE PROPER FORUM; MOST ON THE BOARD OF DIRECTORS ARE RESIDENTS OF NEW YORK AND THE ALLEGATIONS IN THE COMPLAINT REFLECT A SUBSTANTIAL NEXUS TO NEW YORK (FIRST DEPT).

The First Department, reversing Supreme Court, determined New York, not Switzerland, was the proper forum for this shareholders’ derivative action against a Swiss corporation, despite the need to apply Swiss law:

Defendants did not establish that in the interest of substantial justice, this action should be heard in another forum, namely, Switzerland (see generally CPLR 327[a] …). Adjudication of plaintiffs’ claims, which are undisputedly governed by Swiss law, will not place an undue burden on New York courts … . New York courts are frequently called on to apply the laws of foreign jurisdictions and in this case, there is no indication that the relevant law, which is from only one foreign jurisdiction, is in dispute or is distinctly abstruse … . That plaintiffs seek certain nonmonetary relief that may not be available or enforceable in Switzerland does not cut in favor of dismissal because defendants can seek to limit the damages sought and plaintiffs are now willing to withdraw their requests for nonmonetary relief as against [defendant corporation].

Defendants do not claim that litigation in New York will cause them any hardship and although this matter could be litigated in Switzerland, Swiss courts do not permit trial by jury, which could pose some hardship to plaintiffs … . Moreover, most of defendant-board members are residents of New York and none are residents of Switzerland … . The allegations in the complaint make clear that this action has a substantial nexus to New York and at this point, it appears that the majority of the witnesses and evidence will be located in the United States, principally New York … . Wormwood Capital LLC v Mulleady, 2022 NY Slip Op 01526, First Dept 3-10-22

​Practice Point: Although this shareholders’ derivative action is against a Swiss corporation and requires the application of Swiss law, New York is the proper forum. Most of the directors live in New York, most of the witnesses are in the US and New York, most of the evidence is located in New York, and allegations in the complaint demonstrate a substantial nexus to New York. Defendants did not show they will suffer any prejudice if the suit is heard here.

 

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TENANTS’ CAUSES OF ACTION FOR TENANT (STATUTORY) HARASSMENT, PRIVATE NUISANCE, ASSAULT, BREACH OF THE WARRANTY OF HABITABILITY, AS WELL AS THE CLAIM FOR PUNITIVE DAMAGES, REINSTATED (FIRST DEPT).

The First Department, reversing Supreme Court, reinstated plaintiffs-tenants’ causes of action for statutory harassment, private nuisance, assault, breach of the warranty of habitability, as well as the demand for punitive damages, in this action by tenants against the landlord alleging both habitability-issues and the landlord’s imminent threat to use force. With respect to the tenant (statutory) harassment cause of action, the court wrote:

Plaintiffs alleged … there were repeated interruptions of essential services such as heat, hot water, gas, and electricity, as well as disruptions in elevator service, phone, television, and internet service; large amounts of construction dust, including lead dust, in the public hallways; flooding and mold on the tenth floor; rat and vermin infestations; a lack of building security in the lobby and a lack of a fire safety system. * * *

The complaint states a cause of action for harassment under Administrative Code of City of NY §§ 27—2005(d) and 27—2115(m), as Supreme Court is “a court of competent jurisdiction” for the purposes of Administrative Code § 27—2115(m)(2) … . Contrary to the motion court’s determination, the statute expressly provides that only claims arising [from conditions in the building, that is, under subparagraphs b, c, and g of Administrative Code § 27-2004(a)(48)(ii), require the existence of a predicate violation to state a claim for harassment. Here, plaintiffs assert their first cause of action under Administrative Code § 27-2004(a)(48)(ii)(a), based on allegations that defendant Chelsea Hotel Owner, LLC’s principal, defendant Ira Drukier, was “making express or implied threats that force will be used” against plaintiffs, and therefore no predicate violation was required for this cause of action. …

On the third cause of action, for harassment arising from deprivation of services, plaintiffs state a claim under the statute by asserting that the alleged conditions were the subject of violations that, if established, would support a claim for harassment (see Robinson v Day, 103 AD3d 584, 587 [1st Dept 2013] [“A complaint need only ‘allege the misconduct complained of in sufficient detail to inform the defendants of the substance of the claims'”]). Evidence of the specific violations issued in connection with the alleged conditions may be obtained in discovery as contemplated by the statute (see Administrative Code § 27-2115[h][2][ii]). Berg v Chelsea Hotel Owner, LLC, 2022 NY Slip Op 01511. First Dept 3-10-22

Practice Point: The courts have recently been fleshing out the proof requirements for tenant (statutory) harassment under the NYC Administrative Code. Here, both the habitability issues and the landlord’s assaultive behavior (imminent threat of force) fit into the criteria for a valid tenant (statutory) harassment cause of action.

 

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DEFENDANT’S EXPERT’S AFFIDAVIT ITSELF RAISED QUESTIONS OF FACT AND WAS OTHERWISE DEFICIENT IN THIS LABOR LAW 240(1) LADDER FALL CASE; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined plaintiff’s Labor Law 240(1) cause of action should not have been dismissed. Plaintiff alleged he fell off a ladder while cleaning glass with an extension pole. The court noted that the defendant’s expert affidavit was deficient and itself raised questions of fact precluding summary judgment in favor of the defendant:

Summary dismissal of the Labor Law § 240(1) claim is precluded by issues of fact as to whether plaintiff was exposed to an elevation-related risk “attendant to his work [of washing windows] as it was intended to be performed” … . Plaintiff testified that he performed the work using an extension pole with a squeegee attached to one end, while both of his feet were on the rung one or two steps below the top of a 12-foot ladder. Plaintiff was unable to estimate the height of the glass except that it was more than 15 feet above the floor, but he stated that he could not have cleaned the glass while standing on the floor because he would not have been able to apply sufficient force to the glass. * * *

The [defendant’s] expert’s statements raised issues of fact as to his own credibility in opining that plaintiff could have cleaned all of the glass while standing on the floor and plaintiff’s description of the supplies he needed to use and did use in performing the work. Durasno v 680 Fifth Ave. Assoc., L.P., 2022 NY Slip Op 01413, First Dept 3-8-22

Practice Point: Here the defendant’s expert’s affidavit failed to address all of the allegations made by plaintiff in this Labor Law 240(1) ladder-fall case and raised issues as to the expert’s credibility. Defendant’s motion for summary judgment should not have been granted.

 

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PLANTIFF ALLEGED FAILURE TO DIAGNOSE CANCER IN 2014 IN THIS MEDICAL MALPRACTICE ACTION; DESPITE THE ENACTMENT OF LAVERN’S LAW (CPLR 214-A) IN 2018, WHICH EXTENDED THE STATUTE OF LIMITATIONS FOR FAILURE TO DIAGNOSE CANCER BY VIRTUE OF ITS RETROACTIVE-APPLICATION AND REVIVAL PROVISIONS, THE ACTION WAS TIME-BARRED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s med mal action alleging failure to diagnose lung cancer based upon a CT scan in 2014 was time barred pursuant to the retroactive-application and revival limitations in CPRL 214-a, enacted on January 31, 2018 (called Lavern’s Law):

[Lavern’s Law] “appl[ies] to acts, omissions, or failures occurring within 2 years and 6 months prior to the effective date of this act, and not before” … . Thus, by its terms, the discovery toll in Lavern’s Law’s applies retroactively to causes of action that were not time-barred as of Lavern’s Law’s effective date, i.e., causes of action accruing on or after July 31, 2015. Plaintiff’s causes of action, which accrued on May 16, 2014, predate the earliest date to which Lavern’s Law’s retroactive discovery toll applies.

Lavern’s Law also provides for the revival of certain time-barred medical malpractice causes of action. Where a claim based on the negligent failure to diagnose cancer or a malignant tumor occurred and, “within ten months prior to the effective date of the act . . . became time-barred under any applicable limitations period then in effect, such action or claim may be commenced within six months of the effective date of the act . . . .” … . Therefore, a failure to diagnose cancer or malignant tumor cause of action that became time-barred between March 31, 2017 and January 31, 2018 may be revived if it is commenced no later than July 31, 2018 … . Because plaintiff’s claims became time-barred on November 16, 2016, the limited revival provision of the new law (for certain claims that became time-barred after March 31, 2017) does not avail her … .Ford v Lee, 2022 NY Slip Op 01414, First Dept 3-8-22

Practice Point: Lavern’s Law (CPLR 214-a, enacted in 2018) extended the statute of limitations for failure to diagnose cancer by virtue of its retroactive-application and revival provisions, neither of which applied to plaintiff here who alleged failure to diagnose in 2014.

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THE COMPLAINT SUFFICIENTLY STATED FACTS AMOUNTING TO A BREACH-OF-FIDUCIARY-DUTY CAUSE OF ACTION AGAINST DEFENDANT REAL ESTATE BROKER, DESPITE PLAINTIFF-SELLER’S CONSENT TO THE BROKER’S “DUAL AGENCY;” IT WAS ALLEGED THE BROKER WAS AWARE THE PROPERTY WAS TO BE SUBDIVIDED AND SOLD BY THE BUYERS FOR THREE TIMES THE PRICE AND SHE WOULD BE THE BUYERS’ BROKER FOR THE SUBSEQUENT SALES (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the complaint sufficiently stated a cause of action for breach of fiduciary duty by the defendant real estate broker, despite the plaintiff’s consent to the broker’s “dual agency:”

Although the complaint does not explicitly articulate a cause of action for breach of fiduciary duty, such a cause of action is manifest in its factual allegations, and the documentary evidence fails to utterly refute those allegations … . In connection with his sale of certain real property, plaintiff signed a disclosure form pursuant to Real Property Law § 443, giving his informed consent to a “dual agency with designated sales agent” relationship with defendants. The form states that a dual agent cannot give the seller or buyer “undivided loyalty.” Nevertheless, it does not relieve defendants from all fiduciary duty. The form states that defendant Nikki Carchedi, of defendant Stone House Properties, “is appointed to represent the seller in this transaction.” The complaint establishes a cause of action for breach of a fiduciary duty beyond the acknowledged “divided” duty by alleging that [defendant] Carchedi failed to disclose that she had a personal stake in the sale to the buyers, who planned to subdivide the property immediately after purchase and retain her as the broker for the sale of the subdivided parcels, and that they did so, listing the subdivided parcels for almost three times the price plaintiff received in his sale … . We also note plaintiff’s assertion that the agent representing the buyer was the son of Carchedi’s longtime client about whom plaintiff had expressed concern. Hahn v Stone House Props. LLC, 2022 NY Slip Op 01416, First Dept 3-8-22

​Practice Point: Even though breach-of-fiduciary-duty was not explicitly pled, the facts alleged stated a cause of action against defendant real estate broker.

Practice Point: Even though the seller signed a form consenting to the broker’s “dual agency,” the broker was not relieved of her fiduciary duty to the seller. Allegedly, the broker was aware the buyers were going to subdivide the property, sell it at three times the price, and that she would be the broker for the subsequent sales.

 

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DEFENDANTS’ MOTIONS TO AMEND THEIR ANSWERS IN THIS MED MAL CASE TO ALLEGE PLAINTIFF’S CULPABLE CONDUCT AND COMPARATIVE NEGLIGENCE (RE: HER WEIGHT AND SMOKING) SHOULD HAVE BEEN GRANTED; THE DELAY IN MAKING THE MOTION CAUSED NO PREJUDICE; GOOD CAUSE FOR THE DELAY NEED NOT BE SHOWN; FAILURE TO INCLUDE THE AMENDED PLEADINGS WITH THE MOTION PAPERS AND DEFECTS IN VERIFICATIONS SHOULD HAVE BEEN OVERLOOKED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined: (1) the defendants in this medical malpractice actions should have been allowed to amend their answers to allege culpable conduct and comparative negligence on the part of plaintiff, citing her weight and smoking habit: (2) the defendants failure to attach the proposed amended pleading to the motion papers was a technical defect which should have been overlooked; (3) the defendants did not need to submit a certificate of merit for the proposed amendments; and (4), the defects in the defendants’ verifications should have been overlooked:

“While [defendants were] or should have been aware of the facts and theories asserted in the amended [answers] long before amendment was actually sought, delay alone is not a sufficient ground for denying leave to amend” … . Under the circumstances in this case, there was no unreasonable delay by defendants in seeking leave to amend, as plaintiff has not filed her note of issue nor has the case has been certified as trial-ready … . Further, because there was no extended delay by defendants in moving to amend, they did not need to proffer a reasonable excuse for the delay … .

… “[O]n a motion for leave to amend, [the movant] need not establish the merit of its proposed new allegations, but simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit”  … Contrary also to plaintiff’s argument, Golson v Addei [216 AD2d 268] does not stand for the proposition that a comparative negligence defense in a medical malpractice case based on a plaintiff’s smoking history is per se meritless … . Johnson v Montefiore Med. Ctr., 2022 NY Slip Op 01418, First Dept 3-8-22

Practice Point: In a med mal case, plaintiff’s weight and smoking habit maybe grounds for affirmative defenses.

Practice Point: There was no need to submit a certificate of merit with the motion to amend the answers.

Practice Point: Where there has been no prejudice to the plaintiff, the unexcused delay in seeking amendment of the answers here was not a sufficient ground for denying the amendment.

Practice Point: Failure to include the proposed amended answers with the motion for leave to amend, and defects in defendants’ verifications, were technical defects which should have been overlooked.

 

A STACK OF SHEETROCK BOARDS WHICH WERE LEANING AGAINST A WALL FELL ON PLAINTIFF; THERE WERE QUESTIONS OF FACT ABOUT WHETHER IT WAS A GRAVITY-RELATED EVENT AND WHETHER THE ELEVATION DIFFERENTIAL WAS DE MINIMUS (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined there was a question of fact whether plaintiff could recover for injuries under Labor Law 240(1). A stack of 25 to 30 sheetrock boards which had been leaning against a wall fell on him. The court noted that the Labor Law 241(6) cause of action was properly dismissed because the incident happened in an apartment, not a “passageway:”

… [T]he record presents issues of fact as to whether plaintiff’s injuries flowed directly from the application of the force of gravity to the sheetrock, whether the elevation differential was de minimis, and whether the combined weight of the sheetrock panels could generate a significant amount of force as it fell … . Kuylen v KPP 107th St., LLC, 2022 NY Slip Op 01419, First Dept 3-8-22

​Practice Point: A stack of sheetrock boards which had been leaning against a wall fell on plaintiff. There were questions of fact re: whether the accident was covered by Labor Law 240(1) as a gravity-related event where the elevation differential was not de minimus.

 

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THE CONTRACTOR COULD NOT ESCAPE LIABILITY FOR PAYMENT OF THE SUBCONTRACTOR; THE PAY-WHEN-PAID CLAUSE IN THE CONTRACT IS INVALID; NOTHING IN THE CONTRACT INDICATED THE CONTRACTOR WAS ACTING SOLELY AS AN AGENT FOR THE OWNER (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moulton, determined defendant Sweet was not an agent such that it could avoid responsibility for paying a subcontractor, Arenson, for the construction work done by Arenson. The First Department further held General Business Law 756-a did not invalidate the precedent prohibiting pay-when-paid clauses like the one in the contract between Sweet and Arenson:

The scope letter, which is on Sweet’s letterhead, contains the following clause:”Subcontractor understands that Contractor is acting as an agent for the Owner, and agrees to look only to funds actually received by the Contractor (from the Owner) as payment for the work performed under this Subcontract.” [This is the prohibited pay-when-paid clause.] * * *

… Sweet was not an agent for a disclosed principal. The clearest indicator of Sweet’s role, its signature, supports this conclusion. The signature line for “Sweet Construction Approval” and the signature do not indicate that Sweet signed the contract as agent on behalf of a disclosed principal or reflect any limitations … . …

In characterizing itself as “only a facilitator of payment” and “merely a conduit” Sweet ignores that the subcontract provides that the work is to be performed pursuant to the “SCC General Requirements.” Those requirements, which also appear in the scope letter, provide that Arenson will … indemnify and hold Sweet harmless with respect to Arenson’s work; obtain liability insurance in Sweet’s favor; and recognize Sweet’s authority to issue safety violations and correct unsafe conditions. These general requirements, on their face, apply to Sweet in its own capacity, and not in its capacity as an agent. Bank of Am., N.A. v ASD Gem Realty LLC, 2022 NY Slip Op 01379, First Dept 3-3-22

 

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