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PLAINTIFFS ALLEGED THEY WERE OVERWHELMED BY THE DOCUMENTS THEY SIGNED AND DID NOT REALIZE THE DOCUMENTS TRANSFERRED THEIR PROPERTY TO DEFENDANT; THOSE ALLEGATIONS DID NOT SUPPORT SUMMARY JUDGMENT IN PLAINTIFFS’ FAVOR ON THEIR FRAUDULENT INDUCEMENT, UNJUST ENRICHMENT AND QUIET TITLE CAUSES OF ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiffs’ motion for summary judgment on their actions for fraudulent inducement, unjust enrichment and to quiet title should not have been granted. Plaintiffs alleged the were overwhelmed by the number of documents to sign and did not realize they documents transferred the property to the defendant:

… [T]he plaintiffs … each averred that the defendant misled them into believing that they were signing documents to arrange a short sale of the property when, in fact, they executed documents that transferred the property to the defendant. One of the documents … was the deed to the property that the plaintiffs signed. The plaintiffs do not aver in their affidavits or in the complaint that they failed to read the documents they signed or that they were illiterate, blind, or did not read English, nor do they allege that they expressed any difficulty in understanding what they were signing … . Instead, the plaintiffs contend that they were “overwhelmed by the paperwork” but do not allege any facts that would suggest that they were prevented from reading the documents prior to signing them or that they were forced to sign … . Holder v Folsom PL Realty, Inc., 2022 NY Slip Op 03890, Second Dept 6-15-22

Practice Point: Here the plaintiffs alleged they signed documents without realizing what they were agreeing to. Those allegations did not support summary judgment on their fraudulent inducement, unjust enrichment and quiet title causes of action. The plaintiffs did not allege they were prevented from reading the documents, or they could not understand the documents.

 

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PLAINTIFF OFFERED NO EXPLANATION FOR THE SEVEN-YEAR DELAY BETWEEN THE ORDER OF REFERENCE AND THE MOTION FOR A JUDGMENT OF FORECLOSURE AND SALE; THE ACCRUAL OF INTEREST DURING THE DELAY SHOULD HAVE BEEN TOLLED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the defendant was prejudiced by the unexplained seven-year delay between the order of reference in 2009 and the motion for a judgment of foreclosure and sale in 2016, Therefore the accrual of interest during the delay should have been tolled:

… [A]pproximately seven years elapsed between the entry of the order of reference and the time the plaintiff moved for a judgment of foreclosure and sale. … [Plaintiff] failed to offer any explanation for this delay or establish that the defendant caused this delay, as the record demonstrates that the defendant’s motions and the stays due to the defendant’s bankruptcy petitions did not occur during the period for which the defendant sought to toll the accrual of interest. Since the defendant was prejudiced by the plaintiff’s unexplained delay of approximately seven years, during which time interest had been accruing, the interest on the loan should have been tolled from October 9, 2009, … until September 21, 2016 … . GMAC Mtge., LLC v Yun, 2022 NY Slip Op 03887, Second Dept 6-15-22

Practice Point: Here the plaintiff could not explain the seven-year delay between the order of reference and the motion for a judgment of foreclosure and sale. Interest should not have accrued during the delay.

 

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THE PLAINTIFF SHOULD NOT HAVE DESTROYED THE UNDERGROUND OIL TANKS WHICH WERE ALLEGED TO HAVE LEAKED, CONTAMINATING PLAINTIFF’S PROPERTY; HOWEVER THE DEFENDANT OIL COMPANIES DID NOT DEMONSRTATE THE DESTRUCTION OF THE TANKS MADE IT IMPOSSIBLE TO PROVE A DEFENSE; THEREFORE AN ADVERSE INFERENCE JURY INSTRUCTION, NOT THE STRIKING OF THE COMPLAINT, WAS THE APPROPRIATE SANCTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the plaintiff should have preserved the underground oil tanks which allegedly leaked and contaminated plaintiff’s property, but that striking the complaint was not warranted under the doctrine of spoliation. Because the defendants did not demonstrate the destruction of the tanks made it impossible to mount a defense, an adverse inference instruction was the appropriate sanction:

The plaintiff commenced this action, inter alia, to recover damages for a violation of Navigation Law § 181, alleging that the defendants Chevron U.S.A., Inc., Getty Oil Company, Getty Refining and Marketing Company, and Getty Oil Company (Eastern Operations), Inc. (hereinafter collectively the defendants), discharged petroleum from underground storage tanks on the plaintiff’s property. * * *

… [T]he defendants demonstrated that the plaintiff had an obligation to preserve the tanks at the time they were disposed of, which was before the defendants had an opportunity to inspect the tanks, that the tanks were destroyed with a culpable state of mind, and that the tanks were relevant to the litigation … . However, the defendants failed to establish that their ability to prove a defense was fatally compromised by the destruction of the tanks, or that the destruction of the tanks was willful and contumacious … . Dagro Assoc. II, LLC v Chevron U.S.A., Inc., 2022 NY Slip Op 03884, Second Dept 6-15-22

Practice Point: Where spoliation of evidence does not take away the defendants’ ability to prove a defense, and where spoliation was not done willfully and contumaciously, striking the complaint is not warranted. The appropriate sanction is an adverse inference jury instruction.

 

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BECAUSE THE PRIOR FORECLOSURE ACTION WAS DISMISSED FOR LACK OF STANDING, THE PRIOR ACTION DID NOT ACCELERATE THE DEBT; THEREFORE DEFENDANT DID NOT DEMONSTRATE THE INSTANT ACTION WAS TIME-BARRED (SECOND DEPT).

The Second Department noted that the defendant in this foreclosure action did not demonstrate the foreclosure action was time barred. The initial foreclosure action was dismissed for lack of standing. Therefore the debt was not accelerated by the prior action:

Since the prior action was dismissed for lack of standing, [defendant] failed to establish that the plaintiff had the authority to accelerate the debt through the complaint filed in the prior action … . Wells Fargo Bank, N.A. v Rutty, 2022 NY Slip Op 03926, Second Dept 6-15-22

Practice Point: If a prior foreclosure action was dismissed for lack of standing that action will not be deemed to have accelerated the debt. The prior action, therefore, will not have started the statute-of-limitations clock..

 

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ALTHOUGH THE LOAN SERVICER’S AFFIDAVIT MAY HAVE LAID A PROPER FOUNDATION FOR THE DOCUMENTS DEMONSTRATING DEFENDANTS’ DEFAULT IN THIS FORECLOSURE ACTION, THE DOCUMENTS THEMSELVES WERE NOT PRODUCED, RENDERING THE AFFIDAVIT INADMISSIBLE HEARSAY (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not prove defendants’ default. The affidavit from the loan servicer may have laid a proper foundation for the relevant documents, but the business records themselves were not attached:

Even assuming that the subject affidavit established a sufficient foundation for the records relied upon, “it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . … [T]he affiant’s assertions regarding the defendants’ default, without the business records upon which he relied in making those assertions, constituted inadmissible hearsay … . U.S. Bank N.A. v Kahn Prop. Owner, LLC, 2022 NY Slip Op 03921, Second Dept 6-15-22

Practice Point: At the summary judgment stage, business records necessary to make out a prima facie case must be produced. An affidavit laying a proper foundation for the documents is inadmissible hearsay it the relevant business records themselves are not submitted.

 

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THE STIPULATION ACKNOWLEDGING THE PRIOR DEBT DEMONSTRATED THAT THE DEED TRANSFERRING THE PROPERTY CREATED ONLY A SECURITY INTEREST AND DID NOT TRANSFER LEGAL TITLE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the transfer of property by deed did not transfer title, but rather was a security interest for a loan (a mortgage):

… [T]he … deed never conveyed legal title to the plaintiff, but merely created a security interest in the subject property. “A deed conveying real property, which, by any other written instrument, appears to be intended only as a security in the nature of a mortgage, although an absolute conveyance in terms, must be considered a mortgage; and the person for whose benefit such deed is made, derives no advantage from the recording thereof, unless every writing, operating as a defeasance of the same, or explanatory of its being desired to have the effect only of a mortgage, or conditional deed, is also recorded therewith, and at the same time” (Real Property Law § 320).

Here, the … stipulation clearly recited the existence of a prior debt, authorized the decedent to continue occupying the property subject to certain terms and conditions, obligated her to maintain the property, and, most importantly, expressly authorized her to “retain ownership of the subject [p]roperty” … upon full repayment of the debt. Contrary to the plaintiff’s contention, such characteristics bear all the hallmarks of a security interest—not an outright conveyance of legal title … . RTT Holdings, LLC v Nacht, 2022 NY Slip Op 03916, Second Dept 6-15-22

Practice Point: Here a deed transferring the property was deemed to have created a security interest for a prior debt which was acknowledged in a stipulation. Legal title, therefore, was not transferred by the deed.

 

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DEFENDANT TOOK A KEY, GOT IN A U-HAUL VAN, SAT FOR TWO MINUTES AND GOT OUT OF THE VAN; THE PEOPLE DID NOT PROVE DEFENDANT INTENDED TO PERMANENTLY DEPRIVE THE OWNER OF ITS PROPERTY; GRAND LARCENY AND POSSESSION OF STOLEN PROPERTY CONVICTIONS REVERSED (SECOND DEPT).

The Second Department, reversing larceny and possession of stolen property convictions, determined the evidence defendant intended to permanently deprive the owner of the U-Haul van of its property was insufficient. Defendant took a key to the van, sat in it for two minutes, and then got out of the van:

… [I]n order to sustain a conviction for grand larceny the People must establish that the defendant had the requisite larcenous intent, which means the “intent to deprive another of property or to appropriate the same to himself or to a third person” (Penal Law § 155.05[1]).

“[T]he concepts of ‘deprive’ and ‘appropriate,’ which ‘are essential to a definition of larcenous intent,’ ‘connote a purpose . . . to exert permanent or virtually permanent control over the property taken, or to cause permanent or virtually permanent loss to the owner of the possession and use thereof'” … . For that reason, “[t]he mens rea element of larceny . . . is simply not satisfied by an intent temporarily to use property without the owner’s permission” … .

… [T]he evidence failed to establish beyond a reasonable doubt that the defendant intended to cause permanent or virtually permanent loss to the owner of the U-Haul van. …

… [A]jury could rationally infer that the defendant intended to use the van temporarily. To prove grand larceny, however, the People had to do more than prove that the defendant intended to use the van temporarily. They had to prove, in addition, that the defendant intended to “permanently deprive an owner of his or her property or to deprive the owner of it for so extended a period of time that a major portion of its economic value is lost” … . People v Golding, 2022 NY Slip Op 03741, Second Dept 6-8-22

Practice Point: Grand Larceny includes the intent to permanently deprive the owner of the property. Here defendant took a key to a U-Haul van, got in the van, sat for two minutes, and got out of the van. There was, therefore, no proof of an intent to permanently deprive the owner of its property. Because grand larceny was not proven, possession of stolen property was not proven as well.

 

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THE HIGH SCHOOL PRINCIPAL WAS CHARGED WITH GIVING STUDENTS UNAUTHORIZED CREDITS TO INCREASE GRADUATION RATES; THE CHARGES REQUIRED INTENTIONAL CONDUCT; THE HEARING OFFICER DETERMINED THE PRINCIPAL DID NOT ACT INTENTIONALLY BUT WAS GUILTY OF THE CHARGES; THE INCONSISTENCY RENDERED THE RULING ARBITRARY AND CAPRICIOUS (SECOND DEPT). ​

The Second Department, reversing the hearing officer’s ruling terminating petitioner’s employment as a high school principal, determined the hearing officer’s finding that petitioner did not act intentionally was inconsistent with finding petitioner guilty of any of the charges. Petitioner allegedly gave unauthorized credits to students in an effort to increase graduation rates:

… [T]he hearing officer’s finding that there was insufficient evidence to support a finding that the petitioner acted intentionally is inconsistent with a finding that the petitioner was guilty of any of the charges. Each of the 41 charges against the petitioner alleged that she knowingly and willfully approved the conferral of credits with full knowledge that such credit was unlawful, as part of an intentional scheme to accelerate credit acquisition in order to artificially inflate graduation rates. Because there was no allegation that the petitioner’s conduct was anything other than knowing and intentional, and because the hearing officer found that there was insufficient evidence that the petitioner acted intentionally, the hearing officer’s determination that the petitioner was guilty of all charges was arbitrary and capricious and without evidentiary support. At the hearing, the petitioner admitted to conduct that was, at most, negligent. There was no evidence to contradict the petitioner’s testimony that she did not act intentionally. Matter of Simpson v Poughkeepsie City Sch. Dist., 2022 NY Slip Op 03730, Second Dept 6-8-22

Practice Point: The high school principal was charged with giving students unauthorized credits to increase graduation rates. All the charges alleged intentional conduct. The hearing officer (correctly) found the principal did not act intentionally, but sustained the charges and terminated her employment. The inconsistency rendered the hearing officer’s ruling in the arbitration arbitrary and capricious.

 

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THE MANNER IN WHICH THE FIREFIGHTER’S GENERAL MUNICIPAL LAW 207-A INJURY CLAIM SHOULD BE PROCESSED IS ARBITRABLE BECAUSE THE ISSUE IS ADDRESSED IN THE COLLECTIVE BARGANING AGREEMENT (CBA); THE PETITION TO STAY ARBITRATION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the petition to stay arbitration in this General Municipal Law 207-a injury claim by a firefighter should not have been granted. The manner in which a section 207-a claim is processed is an arbitrable matter:

… [T]he union filed a grievance alleging, inter alia, that the City was in violation of the CBA [collective bargaining agreement] and the negotiated General Municipal Law § 207-a policy by failing to adhere to the required procedures in processing a claim by one of the union’s members for General Municipal Law § 207-a benefits. . …

It is undisputed that there is no constitutional, statutory, or public policy provision prohibiting the arbitration of the dispute at issue in this matter…. [G]iven the breadth of the arbitration clause in this case, the dispute regarding the City’s processing of claims for General Municipal Law § 207-a benefits bore a reasonable relationship to the general subject matter of the CBA, since Article 10 of the CBA expressly refers to the negotiated policy for the provision of such benefits … . “[T]he question of the scope of the substantive provisions of the CBA is a matter of contract interpretation and application reserved for the arbitrator” … . Matter of City of New Rochelle v Uniformed Fire Fighters Assn., Inc., 2022 NY Slip Op 03722, Second Dept 6-8-22

Practice Point: Here the issue (how a firefighter’s General Municipal Law 207-a injury claim should be processed) was addressed in the collective bargaining agreement (CBA) was therefore arbitrable. The petition to stay arbitration should not have been granted.

 

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NO REASON MOTHER’S ATTORNEY COULD NOT BE PRESENT, EITHER IN PERSON OR ELECTRONICALLY, DURING A HOME VISIT BY THE ADMINISTRATION FOR CHILDREN’S SERVICES (ACS) (SECOND DEPT).

The Second Department, reversing Family Court, determined there was no reason mother’s attorney could not be present, either in person of electronically, during a home visit by the Administration for Children’s Services (ACS):

Where, as here, the Family Court issued an order temporarily releasing a child who is the subject of a neglect proceeding to a parent pending a final order of disposition (see Family Ct Act § 1027[d]), the order may include a direction for the parent to “cooperat[e] in making the child available for . . . visits by the child protective agency, including visits in the home” (id. § 1017[3]). However, there are no provisions of the Family Court Act—nor does ACS cite to any other authority—prohibiting a respondent in a proceeding pursuant to Family Court Act article 10 from having counsel present during a home visit. Thus, the respondent is not automatically prohibited from having an attorney—or any other individual—present in her home during the home visit, either in person or electronically. Matter of Lexis B. (Natalia B.), 2022 NY Slip Op 03721, Second Dept 6-8-22

​Practice Point: The Administration for Children’s Services (ASC) did not cite any authority for its attempt to preclude mother’s attorney from being present, either in person or electronically, during ASC’s home visits.

 

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