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PETITIONERS DID NOT TAKE STEPS TO PRESERVE THE STATUS QUO AND THE POWER PLANT BECAME OPERATIONAL AT THE OUTSET OF THE MOTION PRACTICE SEEKING TO VACATE CERTAIN PERMITS WHICH ALLOWED THE PLANT TO RESUME OPERATIONS, THE APPEAL WAS DEEMED MOOT AND THE PETITION WAS DISMISSED (FOURTH DEPT).

The Fourth Department determined that Sierra Club’s petition seeking to vacate permits issued to allow respondents to operate a natural gas and biomass power plant, which was formerly coal-powered, was properly dismissed as moot. Petitioner’s did not seek a temporary restraining order or other measures to preserve the status quo. The plant became operational while the motion seeking temporary injunctive relief was pending:

We agree with respondents that the appeal should be dismissed as moot … . Litigation over construction is rendered moot when the progress of the work constitutes a change in circumstances that would prevent the court from ” rendering a decision that would effectively determine an actual controversy’ ” … . In addition to the progress of the construction, other factors relevant to evaluating claims of mootness are whether the party challenging the construction sought injunctive relief, whether the “work was undertaken without authority or in bad faith” …, and whether “substantially completed work” can be undone without undue hardship… . The primary factor in the mootness analysis is “a challenger’s failure to seek preliminary injunctive relief or otherwise preserve the status quo to prevent construction from commencing or continuing during the pendency of the litigation”… . Generally, a petitioner seeking to halt a construction project must “move for injunctive relief at each stage of the proceeding” … .

The plant has been operating lawfully since March 2017. The failure to preserve the status quo is entirely the fault of petitioners, who waited until the last possible day to commence this proceeding, failed to request a TRO, failed to pursue an injunction with any urgency, waited until the last possible day to take an appeal, spent nine months perfecting the appeal, and failed to seek injunctive relief from this Court until approximately one year after the entry of the judgment, in a transparent attempt to avoid dismissal of this appeal. Matter of Sierra Club v New York State Dept. of Envtl. Conservation, 2019 NY Slip Op 01022, Fourth Dept 2-8-19

 

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ALLEGATIONS OF COMPENSABLE DAMAGES INSUFFICIENT, MOTION TO DISMISS FRAUD COMPLAINT SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the motion to dismiss fraud causes of action should have been granted because the allegation of compensable damages was deficient. “Plaintiff, a debt buying company, commenced this action alleging … [defendants] fraudulently induced it to purchase additional debt portfolios pursuant to its agreements with a third party by misrepresenting the terms of the financing arrangement secured by defendants to facilitate the purchase of such portfolios;”

“To allege a cause of action based on fraud, plaintiff must assert a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury’ ” … . ” The true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong’ or what is known as the out-of-pocket’ rule” … . “Under this rule, the loss is computed by ascertaining the difference between the value of the bargain which . . . plaintiff was induced by fraud to make and the amount or value of the consideration exacted as the price of the bargain’ ” … .

Here, we conclude that, even as supplemented by the affidavit of plaintiff’s president … , “plaintiff’s pleading is fatally deficient because [it] did not assert compensable damages resulting from defendants’ alleged fraud” … . With respect to the purchase of the subject portfolios, plaintiff received an interest therein worth more than the amount of its alleged investment … . Further, contrary to plaintiff’s contention, the allegation that it lost the enhanced collections on the portfolios that defendants purportedly told it that it could receive under the terms of the financing arrangement is a “quintessential lost opportunity, which is not a recoverable out-of-pocket loss”… . “Damages are to be calculated to compensate plaintiff[] for what [was] lost because of the fraud, not to compensate . . . for what . . . might have [been] gained . . . [T]here can be no recovery of profits which would have been realized in the absence of fraud” … . Southwestern Invs. Group, LLC v JH Portfolio Debt Equities, LLC, 2019 NY Slip Op 01035, Fourth Dept 2-8-19

 

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CLASSIFICATION OF THE PROPERTY AS COMMERCIAL IN TAX FILINGS DID NOT PRECLUDE THE APPLICABILITY OF THE ONE-OR-TWO-FAMILY HOME EXEMPTION TO LABOR LAW 240 (1) (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that defendant’s (Artifact’s) motion for summary judgment on the Labor Law 240 (1) cause of action should have been granted. The one-or-two-family home exemption applied, even though the property was classified as commercial in tax filings:

Contrary to plaintiff’s contention, Artifact’s classification of the property as commercial in certain tax filings does not estop it from relying upon the exemption in this action … . The Internal Revenue Code’s definition of a residential property is considerably narrower than the scope of the one- or two-family home exemption to liability under section 240 (1) … , and, as such, Artifact’s tax declarations are not ” logically incompatible’ ” with its current reliance upon that exemption … . Wood v Artifact Props., LLC, 2019 NY Slip Op 01030, Fourth Dept 2-8-19

 

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EXTENSION OF TIME TO FILE A MOTION TO VACATE A TAX FORECLOSURE JUDGMENT SHOULD NOT HAVE BEEN GRANTED, CPLR 2004 DOES NOT APPLY TO TIME LIMITS SPECIFICALLY CALLED FOR IN THE REAL PROPERTY TAX LAW (RPTL) (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined respondents’ motion to vacate a tax foreclosure judgment should not have been granted. The court noted that an extension of time pursuant to CPLR 2004 should not be granted where the Real Property Tax Law addresses the issue:

We further … with petitioner that the court erred in granting respondents’ implicit request for an extension of time to bring the motion (see CPLR 2004). The Court of Appeals has emphasized that, ” [a]s a general rule, there should be no resort to the provisions of the CPLR in instances where the [RPTL] expressly covers the point in issue’ “… . We conclude that RPTL article 11 comprehensively addresses the situation where a default judgment of foreclosure is properly obtained and the defaulting property owner seeks to reopen the default and, therefore, such property owner “may not reach outside of the RPTL to [reopen] such a proceeding”… . More particularly, RPTL 1131 expressly covers the point in issue here inasmuch as it provides, in unambiguous and prohibitory language, that “[a] motion to reopen any such default may not be brought later than one month after entry of the judgment” … . To countenance resort to CPLR 2004 under these circumstances would undermine the statutory scheme established by the legislature and erode the finality of foreclosure proceedings even after a defaulting property owner has been afforded due process … . Matter of Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The County of Wayne Relating To The 2015 Town & County Tax (Schenk), 2019 NY Slip Op 01029, Fourth Dept 2-8-19

 

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PERSONAL PROPERTY LOCATED ON REAL PROPERTY SUBJECT TO A TAX FORECLOSURE WAS NOT ABANDONED BY THE OWNER OF THE PERSONAL PROPERTY (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice Troutman, reversing Supreme Court, determined respondent’s application to vacate “that portion of a judgment of [tax} foreclosure that deemed respondent’s personal property located at a foreclosed property to be abandoned to petitioner” should have been vacated. The petitioner-city foreclosed on real property which was not owned by the respondent. The respondent owned hundreds of auto parts which were on the foreclosed property:

… [W]e agree with respondent that the court lacked jurisdiction to dispose of personal property. Supreme Court may exercise in rem jurisdiction over real property in a proceeding to foreclose a tax lien (see RPTL 1120 et seq.). A proceeding of that kind “produces a judgment binding only on those who have been named as parties and duly notified—the usual understanding of what due process requires”… . ” [T]he failure to substantially comply with the requirement of providing the taxpayer with proper notice constitutes a jurisdictional defect which operates to invalidate the sale or prevent the passage of title’ “… . Here, petitioner did not provide notice to respondent with respect to respondent’s personal property and could not have done so. The notice procedures in the statute relate to real property only, not personal property (see RPTL 1122-1125). Moreover, RPTL article 11 does not contain a mechanism by which the tax district may obtain a party’s personal property upon that party’s default. In the event of a default, the tax district is awarded “possession of any parcel of real property described in the petition of foreclosure” and is entitled to a deed conveying to the tax district full and complete title to the parcel (RPTL 1136 [3] [emphasis added]). Upon the execution of the deed, any person with a right or interest “in or upon such parcel shall be barred and forever foreclosed” of that right or interest (id. [emphasis added]).

Nothing in RPTL article 11 confers upon Supreme Court in rem jurisdiction over personal property. Matter of The Foreclosure of Tax Liens By Proceeding In Rem Pursuant To Art. 11 of The Real Prop. Tax Law By The City of Utica (Suprunchik), 2019 NY Slip Op 01020, Fourth Dept 2-8-19

 

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PLAINTIFF’S ACTION WAS NOT FRIVOLOUS WITHIN THE MEANING OF 42 USC 1988, PREVAILING PARTY SHOULD NOT HAVE BEEN AWARDED ATTORNEY’S FEES (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the award of attorney’s fees to the prevailing party pursuant to 42 USC 1988 based upon the finding that plaintiff’s action was frivolous should not have been granted. Plaintiff sued the county claiming that her employment was terminated in retaliation for her complaints about the special education provided to her son:

The court granted the motion on the basis of 42 USC § 1988, which authorizes the award of attorneys’ fees to a prevailing defendant “upon a finding that the plaintiff’s action was frivolous, unreasonable, or without foundation” … . Nonetheless, it remains ” very rare [for] victorious defendants in civil rights cases [to] recover attorneys’ fees’ “… .

Here, in determining that plaintiff’s claim against Whittemore [the county personnel director] was frivolous, the court relied on plaintiff’s testimony during her deposition. During her deposition, however, plaintiff specifically stated that the factual basis for her claim against Whittemore was that he was the personnel director and his conduct caused injury to her because he allowed someone else to be placed in the position to which she sought to be reinstated. Contrary to the court’s determination, any inability of plaintiff to provide further elaboration during her deposition, which was taken early in the litigation shortly after commencement of the action, did not establish that her claim against Whittemore was frivolous. Moreover, a claim may not “be deemed groundless where [, as here,] the plaintiff has made a sufficient evidentiary showing to forestall summary judgment and has presented sufficient evidence at trial to prevent the entry of judgment against him [or her] as a matter of law” … . Although the civil rights allegations against Whittemore may have been weak, we cannot deem plaintiff’s claim “frivolous, unreasonable, or without foundation” … . Calhoun v County of Herkimer, 2019 NY Slip Op 01025, Fourth Dept 2-8-19

 

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PLAINTIFF WAS DEFENDANT’S SPECIAL EMPLOYEE WHEN INJURED, PLAINTIFF’S SOLE REMEDY IS WORKERS’ COMPENSATION (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that defendant demonstrated plaintiff was its special employee. Therefore plaintiff’s sole remedy for his on the job injury is workers’ compensation:

It is well settled that “a general employee of one employer may also be in the special employ of another, notwithstanding the general employer’s responsibility for payment of wages and for maintaining workers’ compensation and other employee benefits” … . “[A] person’s categorization as a special employee is usually a question of fact”; however, a “determination of special employment status may be made as a matter of law where the particular, undisputed critical facts compel that conclusion and present no triable issue of fact” … . Here, defendant demonstrated that it exercised “complete and exclusive control over the manner, details and ultimate results of plaintiff’s work” … ; that Remedy [plaintiff’s usual employer] “was not present at the job site and had no right to direct, supervise or control plaintiff’s work’’ … ; that defendant provided plaintiff with all the training and materials necessary for plaintiff to perform his job … ; and that defendant “had the authority to fire plaintiff with respect to his employment at its job site” … . Ferguson v National Gypsum Servs. Co., 2019 NY Slip Op 00709, Fourth Dept 2-1-19

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THE TERMS OF THE PURCHASE CONTRACT INDICATED BUYER, WHO PURCHASED THE PROPERTY KNOWING IT WAS CONTAMINATED BY OIL, WOULD INDEMNIFY SELLER FOR COSTS RELATED TO THE ENVIRONMENTAL CONDITIONS, QUESTION OF FACT WHETHER BUYER, WHO SIGNED THE CONTRACT ‘ON BEHALF OF AN ENTITY TO BE FORMED,’ WAS INDIVIDUALLY LIABLE (FOURTH DEPT).

The Fourth Department determined that the terms of the purchase contract for property contaminated by oil indicated the buyer would indemnify the seller for costs associated with the condition of the property. The Fourth Department further held there was a question of fact whether the buyer signed the contract in his individual capacity in that he signed “on behalf of an entity to be formed:”

The purchase contract provided that a “Phase One Environmental report” had been completed on the property and that Marks, the “Buyer” of the property, was in receipt of the environmental report and “approve[d] of same.” The contract further provided that Atkin was the “Seller,” the property “was not in compliance with federal, state and/or local laws/ordinances,” the Buyer agreed to purchase the property “as is,” the “Buyer accept[ed] the property as is, with no representations or warranties as to environmental conditions” of the property, and the Buyer “release[d] and indemnifie[d] Seller with respect to any claims as to environmental conditions on or related to the property.” Thus, the terms of the contract establish that, prior to entering into the contract, both Atkin and Marks were generally aware of the property’s historical environmental contamination by the Exxon defendants and their predecessor, and the language in the indemnification provision, considered in light of the contract as a whole and the circumstances of the sale of the property, clearly and unambiguously expresses the intent of the parties that the Buyer would indemnify the Seller with respect to any claims regarding environmental conditions related to the property … . …

Although it is well settled that “[a]n individual who acts on behalf of a nonexistent corporation can be held personally liable” … , the determination “[w]hether a person is personally obligated on a preincorporation transaction depends on the intention of the parties” … . One Flint St., LLC v Exxon Mobil Corp., 2019 NY Slip Op 00752, Fourth Dept 2-1-19

 

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EXPERT TESTIMONY PROPERLY PRECLUDED BECAUSE OF LATE NOTICE, NEW TRIAL REQUIRED BECAUSE JURY WAS NOT INSTRUCTED ON MITIGATION OF DAMAGES (FOURTH DEPT).

The Fourth Department determined defendants in this Labor Law 240 (1) action were properly precluded from offering expert testimony because of late notice. The Fourth Department further determined that the jury should have been instructed on mitigation of damages, requiring a new trial:

… [T]he court determined that there was a willful failure to disclose because, prior to jury selection, defendants’ attorneys knew that they intended to present testimony from the psychiatric expert, but they did not disclose the expert until the day after jury selection began, which violated the court’s directive that defendants disclose an expert as soon as they knew of said expert. Although the record establishes that plaintiff was aware of the possibility that defendants would call an expert psychiatrist, he was prejudiced by the tardiness of the disclosure both because it impaired his ability to discuss the relevant issues during jury selection and because it hamstrung his opportunity to retain an expert psychiatrist of his own. Thus, based on the evidence in the record supporting the court’s determination that defendants had engaged in purposeful gamesmanship by withholding the information, and the resulting prejudice to plaintiff, we conclude that the court did not abuse its discretion in precluding the proposed expert testimony … .

We agree with defendants that the court erred in failing to instruct the jury on mitigation of damages insofar as it applied to past and future lost wages… . Here, plaintiff’s physicians unanimously agreed that he was capable of working in a light duty or sedentary setting and, although he did obtain work shortly after being advised by a doctor to seek job training, there is a question, under the circumstances, of whether the part-time job that he took was a reasonable mitigation of his damages. Flowers v Harborcenter Dev., LLC, 2019 NY Slip Op 00749, Fourth Dept 2-1-19

 

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STATEMENTS MADE BY THE COUNTY EXECUTIVE CONCERNING HER DECISION TO FIRE PLAINTIFF, THE EXECUTIVE DIRECTOR OF THE MONROE COMMUNITY HOSPITAL, WERE EITHER ABSOLUTELY OR QUALIFIEDLY PRIVILEGED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined statements made to the press by the county executive (Brooks) concerning her decision to terminate plaintiff (the executive director of the Monroe Community Hospital (MCH)) were either absolutely or qualifiedly privileged:

The absolute privilege defense affords complete immunity from liability for defamation to ” an official [who] is a principal executive of State or local government’ . . . with respect to statements made during the discharge of those responsibilities about matters which come within the ambit of those duties” …  “The first prong of that test . . . [requires an examination of] the personal position or status of the speaker,” and “the second prong . . . requires an examination of the subject matter of the statement and the forum in which it is made in the light of the speaker’s public duties” … . We conclude that absolute privilege applies here because Brooks was the Monroe County Executive (see id.) and her statements with respect to plaintiff’s termination concerned matters involving her official duties. Furthermore, because the investigation and the underlying actions of plaintiff became a matter of public attention and controversy, Brooks’s form of communication, i.e., statements to the press, was warranted … .

Even assuming, arguendo, that the statements were not covered by absolute privilege, we conclude that the defense of qualified privilege applies. “Generally, a statement is subject to a qualified privilege when it is fairly made by a person in the discharge of some public or private duty, legal or moral, or in the conduct of his [or her] own affairs, in a matter where his [or her] interest is concerned” … . Here, defendants satisfied their initial burden by establishing that Brooks made the relevant statements in her role as the Monroe County Executive, thereby discharging her responsibility to keep the public informed regarding a sensitive issue that had obtained extensive media attention … , and thus “the burden shifted to plaintiff[] to raise a triable issue of fact whether the statements were motivated solely by malice” … . Spring v County of Monroe, 2019 NY Slip Op 00747, Fourth Dept 2-1-19

 

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