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WHERE THERE IS A DISPUTE ABOUT THE EXISTENCE OF A CONTRACT A CAUSE OF ACTION FOR UNJUST ENRICHMENT IS NOT DUPLICATIVE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court noted that where there is a dispute about the existence of an enforceable contract, a cause of actiono for unjust enrichment is not duplicative:

With respect to the unjust enrichment … [t]hese claims should not have been dismissed as duplicative because “where there is a bona fide dispute as to the existence of a contract or the application of a contract in the dispute in issue, a plaintiff may proceed upon a theory of quasi contract as well as breach of contract, and will not be required to elect his or her remedies” … . CIP GP 2018, LLC v Koplewicz, 2021 NY Slip Op 03370, First Dept 5-27-21

 

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INFANT PLAINTIFF, H.M., WAS INJURED BY HOT WATER IN THE SHOWER; THE PROPERTY OWNER WHO REPLACED THE WATER HEATER MAY BE LIABLE; THE FOSTER-CARE SERVICE WHICH PLACED H.M. IN THE HOME, HOWEVER, COULD NOT HAVE FORESEEN THE INCIDENT (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined there was a question of fact whether the property owner could be liable for injury to a child, H.M. caused by hot water in the shower. The defendant placement service (Leake) had placed H,M. in the foster care of defendant Butler who lived in a home owned by Alicea. Butler had turned on the shower and was picking up H.M.’s clothes when H.M. climbed into the tub. There was a question of fact whether the property owner, Alicea, was liable because of conflicting expert evidence about the danger posed by the temperature of the water. However, the incident was not foreseeable from the perspective of the placement agency (Leake). Therefore, Leake’s motion for summary judgment should have been granted:

… [T]here is an issue of fact as to whether [Alicea] created the dangerous hot water temperature when he replaced the home’s hot water heater prior to the accident. …

Leake demonstrated prima facie entitlement to summary judgment dismissing the negligent supervision claim against it because it established that it did not have “sufficiently specific knowledge or notice of the dangerous conduct which caused injury,” and “[t]he scalding hot bath water was an intervening act or event that is divorced from and not the foreseeable risk associated with. . .defendant’s alleged negligence” … . The excessively hot water was not the foreseeable risk associated with Leake’s alleged negligence in placing more than five children in the home, and the momentary inattention of Butler was not an act that should have been foreseeable by Leake in the exercise of reasonable care … . H.M. v City of New York, 2021 NY Slip Op 03376, First Dept 5-27-21

 

DEFENDANT WAS TOLD HE FACED A 45-YEAR SENTENCE AFTER TRIAL WHEN THE ACTUAL SENTENCE WOULD HAVE BEEN CAPPED AT 20 YEARS; DEFENDANT’S DECISION TO PLEAD GUILTY WAS NOT KNOWINGLY AND VOLUNTARILY MADE (FIRST DEPT).

The First Department, vacating defendant’s guilty pleas, determined defendant’s pleas were not knowingly and voluntarily entered because was told he could be sentenced to 45 years after trial when the sentence would have been capped at 20 years:

Defendant was told that he faced the possibility of serving three 15-year sentences, to run consecutively, if he chose to proceed to trial, when at most he was facing 20 years because of the statutory cap … . Thus, he was weighing a 9-year plea offer against what he was told was a maximum of 45 years’ imprisonment. Because defendant was not told about the capping statute, he did not have a “full understanding of what the plea connotes and of its consequences” … .

This 25-year disparity between the true legal sentence and the sentence defendant was told he could receive was so significant alone as to render his plea involuntary … . As defendant explained in his affidavit, submitted in support of his CPL 440.10 motion, the prospect of spending 45 years in prison—and dying there—factored into the 42-year-old’s calculation of the relative pros and cons of accepting the plea … . People v Buchanan, 2021 NY Slip Op 03386, First Dept 5-27-21

 

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DEFENDANT ATTORNEY WAS UNABLE TO DEMONSTRATE PLAINTIFFS LEARNED OF DEFENDANT’S ALLEGED FRAUD MORE THAN TWO YEARS BEFORE THE ACTION WAS COMMENCED; THE STATUTE OF LIMITATIONS FOR THE UNJUST ENRICHMENT AND AIDING AND ABETTING BREACH OF FIDUCIARY DUTY IS SIX YEARS BECAUSE OF THE ALLEGATIONS OF FRAUD (FIRST DEPT).

The First Department determined the fraud, unjust enrichment and aiding and abetting breach of fiduciary duty causes of action were timely brought against defendant attorney. Defendant attorney represented a party who was found to have defrauded plaintiffs in an arbitration resulting in a $56,4 million judgment. Plaintiffs alleged the attorney’s participation in the fraud was not discovered until the arbitration proceedings:

The limitations period for fraud is the greater of six years from the date of the fraud or two years from the time when, with reasonable diligence, the plaintiff could have uncovered the fraud (CPLR 213[8] … ). In order to prevail, the defendant must show that there is no issue of fact under either prong. Here, defendant failed to show dispositively that plaintiffs were in possession of facts that would have triggered inquiry notice under CPLR 213(8) more than two years before the action was commenced … . …

Nor are plaintiff’s unjust enrichment or aiding and abetting breach of fiduciary duty claims time-barred. Both claims are subject to the six-year statute of limitations because they are based on allegations of actual fraud (CPLR 213[8] …). Sabourin v Chodos, 2021 NY Slip Op 03392, First Dept 5-27-21

 

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PLAINTIFF’S ALLEGATION DEFENDANT SUPERVISOR CONDITIONED HIS SUPPORT OF PLAINTIFF AT WORK ON HER COMPLIANCE WITH HIS DEMANDS FOR SEX SUPPORTED PLAINTIFF’S REQUEST FOR PUNITIVE DAMAGES RE: DEFENDANT SUPERVISOR AND DEFENDANT EMPLOYER (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the punitive damages request in this employment discrimination action should not have been dismissed:

The request for punitive damages should be reinstated. [defendant] Ravich’s conduct in conditioning his support of plaintiff at work on her compliance with his demands for sex, if proven, would be sufficient to demonstrate discrimination “with willful or wanton negligence, or recklessness, or a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard” … . Punitive damages could also be awarded against the TCW defendants if they are found vicariously liable for this conduct, although they would be entitled to mitigate such damages with proof of policies established to deter discrimination … . Tirschwell v TCW Group Inc., 2021 NY Slip Op 03397, First Dept 5-27-21

 

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THE GUARANTEES QUALIFED AS INSTRUMENTS FOR THE PAYMENT OF MONEY ONLY AND SUPPORTED SUMMARY JUDGMENT IN LIEU OF COMPLAINT; ONLY PURELY LEGAL ARGUMENTS RAISED FOR THE FIRST TIME ON APPEAL CAN BE CONSIDERED (FIRST DEPT).

The First Department determined the plaintiffs were entitled to summary judgment in lieu of complaint based upon guarantees which met the definition of instruments for the payment of money only. The court noted that two arguments raised for the first time on appeal (documents not qualified as business records and failure to include a payment schedule) could not be considered because they were not purely legal arguments. A third argument, which was purely legal, was considered:

Defendants’ contention that the guaranties do not qualify as instruments for the payment of money only, as required by CPLR 3213, because they guarantee performance as well as payment and reference must be made to documents outside the guaranties to determine if the debt service coverage ratio (DSCR) conditions have been met, is unavailing. Although this argument was raised for the first time on appeal, since these are “legal issues appearing on the face of the record which could not have been avoided” if they had been raised earlier, we will address the argument … .

The guaranty at issue in 27 West 72nd St. qualifies as an instrument for the payment of money only because it guarantees only payment and not performance. … [T]he … operative provision of the guaranty says, “Guarantor guarantees the payment of the Guaranteed Obligations.”

The guaranty at issue in 31 East 28th St. also qualifies as an instrument for the payment of money only. Although it says, “Guarantor guarantees the payment and performance of the Guaranteed Obligations as and when due and payable,” the mere addition of the words “and performance” does not necessarily remove the guaranty from the category of instruments for the payment of money only, particularly when the sentence ends with “as and when due and payable.”  27 W. 72nd St. Note Buyer LLC v Terzi, 2021 NY Slip Op 03364, First Dept 5-27-21

 

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DEFENDANT’S SPEEDY TRIAL MOTION SHOULD HAVE BEEN GRANTED; THE CASE COULD BE PRESENTED WITHOUT THE COMPLAINANT, WHO HAD NO MEMORY OF THE INCIDENT; DEFENSE COUNSEL WAS NOT UNAVAILABLE WITHIN THE MEANING OF THE STATUTE BECAUSE A COLLEAGUE WAS IN COURT REPRESENTING DEFENDANT (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s speedy trial motion should have been granted. The court noted the issue is the prosecution’s readiness for trial, not whether defense counsel is available:

The court erred, firstly, in excluding 93 days of pre-readiness delay in which the prosecution failed to present its case to the grand jury. “[T]he obligation to obtain a proper accusatory instrument is the prosecutor’s alone” … , making “the period prior to the People’s obtaining an indictment [] chargeable to them, absent the applicability of some exclusion” … . …

… [T]he prosecutor did not and could not establish its inability to proceed with the case since the complainant was not necessary to present its case to the grand jury. The charges against defendant were for leaving the scene of the accident without reporting it. The complainant remembered nothing of the accident, let alone defendant’s actions in its aftermath, professing to this lack of memory on the very day of the accident. …

The court also erred in excluding 83 days of post-readiness delay that was due to the prosecutor’s improper declaration that its readiness was “moot” because lead defense counsel was on trial. While acknowledging that a colleague of defense counsel was present, the court nonetheless erroneously concluded that “the People’s state of readiness is irrelevant where counsel is unavailable,” misconstruing the law as to what constitutes “unavailability.” …

Because a colleague of defense counsel stood up on the case on July 8, 2015, as the court itself acknowledged, defendant was not without representation on the basis that “counsel was unavailable.” People v Alvarez, 2021 NY Slip Op 03286, First Dept 5-25-21

 

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DEFENDANT’S WAIVER OF HIS RIGHT TO COUNSEL WAS INVALID BECAUSE DEFENDANT WAS NOT AWARE OF HIS SENTENCING EXPOSURE AND THE JUDGE DID NOT CONDUCT A SEARCHING INQURY; THE EVIDENCE OF CRIMINAL MISCHIEF AND AUTO STRIPPING WAS LEGALLY INSUFFICIENT AND THE CONVICTIONS WERE AGAINST THE WEIGHT OF THE EVIDENCE (FIRST DEPT).

The First Department, reversing defendant’s conviction, determined the waiver of defendant’s right to counsel was invalid and the evidence of criminal mischief and auto stripping was legally insufficient, and the convictions were against the weight of the evidence:

Defendant’s waiver of his right to counsel was invalid, because the record “does not sufficiently demonstrate that defendant was aware of his actual sentencing exposure” … . “The critical consideration is defendant’s knowledge at the point in time when he first waived his right to counsel”; the court’s subsequent warnings about sentencing “were incapable of retrospectively ‘curing’ the . . . court’s error” … . Moreover, the court “improperly granted defendant’s request to proceed pro se without first conducting a searching inquiry regarding defendant’s mental capacity to waive counsel” … , in light of his history of mental illness, as well as his statement, in response to the court’s reference to the “tremendous pitfalls of representing yourself,” that “[n]one of that has been explained,” even after the court had warned him of a number of such risks.

Defendant’s conviction of third-degree criminal mischief as to one of the vehicles he damaged (count four), and his conviction of first-degree auto stripping, were unsupported by legally sufficient evidence (a claim we review in the interest of justice), and were also against the weight of the evidence … . The People failed to establish that particular charge of criminal mischief because the evidence did not show that “the reasonable cost of repairing the damaged property” … . Such costs “may not be established by hearsay”… . The People relied on a nonexpert witness who was not the owner of the vehicle and did not pay for the repairs, but testified that he looked at a receipt and that the repair costs were $600 … , and the People do not invoke any exception to the hearsay rule. In the absence of admissible evidence as to the repair costs for that vehicle, the People also failed to establish that the aggregate damage to all the vehicles exceeded $3,000, the minimum value for first-degree auto stripping … . People v Jackson, 2021 NY Slip Op 03288, First Dept 5-25-21

 

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THE COMPLAINT STATED A CAUSE OF ACTION FOR FRAUD BASED UPON DEFENDANTS’ ALLEGED INFLATION OF THE VALUE OF THE BUSINESS PURCHASED BY PLAINTIFF; AND THE COMPLAINT STATED A CAUSE OF ACTION FOR BREACH OF CONTRACTUAL WARRANTIES WHICH DID NOT DUPLICATE THE FRAUD CAUSE OF ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint adequately alleged fraud (inflating the value of defendants’ business which was purchased by plaintiff) and breach of contract:

… [T]he key … element of a claim for fraudulent concealment — duty to disclose — is met here, given the hidden nature of the fraud, which turned on falsified records and bribed auditors, and the practical impossibility of discovering the fraud through ordinary diligence … .

Defendants’ alleged deception also breached numerous warranties set forth in the governing stock purchase agreement, including that … financial statements were materially complete and correct, that its [earning] projections were reasonable and made in good faith, that it had no material undisclosed liabilities, and that it conducted its business in compliance with applicable law. Nevertheless, “[a] warranty is not a promise of performance, but a statement of present fact. Accordingly, a fraud claim can be based on a breach of contractual warranties notwithstanding the existence of a breach of contract claim” … . Thus, the fraud claim does not duplicate the contract claim … . VXI Lux Holdco, S.A.R.L. v SIC Holdings, LLC, 2021 NY Slip Op 03294, First Dept 5-25-21

 

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ALTHOUGH THE NOTARY STAMP WAS MISSING FROM THE SCANNED MORTGAGE IN THE NYC REGISTER, PLAINTIFF BANK DEMONSTRATED THE MORTGAGE WAS PROPERLY ACKNOWLEDGED WHEN DELIVERED TO THE OFFICE OF THE REGISTER; THEREFORE DEFENDANT’S INTEREST IN THE PROPERTY WAS SUBORDINATE TO THE MORTGAGE (FIRST DEPT).

The First Department, over an extensive concurrence, determined defendant bank demonstrated the mortgage was properly recorded in the NYC Register and, therefore, plaintiff’s interest the property was subordinate to defendant’s mortgage:

The parties do not dispute that the mortgage, as reflected in the records of the Office of the New York City Register, did not bear a notary stamp or any indication that the mortgage was properly acknowledged as required by Real Property Law §§ 291, 298, 309-a(1), and 333(2). However, the bank proffered evidence establishing that the mortgage was properly acknowledged when submitted for recording. This evidence included the original inked mortgage containing the notary public’s information; an affidavit from the notary who affixed her notary stamp at the time; an affidavit from the title company that submitted the mortgage for recording, and an expert affidavit and report by a forensic document examiner in which he concluded that the Register’s scanner could have caused the notary stamp to disappear from the imaged mortgage. Plaintiff has failed to show by clear and convincing evidence that the acknowledgment was defective … . Thus, the bank demonstrated that the mortgage was “entitled to be recorded . . . and is considered recorded from the time of [ ] delivery [to the Office of the New York City Register]” (Real Property Law § 317).

Given that the mortgage was duly acknowledged, delivered and actually recorded, plaintiff is deemed to have constructive notice of it … . 80P2L LLC v U.S. Bank Trust, N.A., 2021 NY Slip Op 03275, First Dept 5-25-21

 

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