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MOTIONS TO QUASH SUBPOENAS ISSUED IN SUPPORT OF OBJECTIONS TO AN ACCOUNTING OF A TRUST SHOULD NOT HAVE BEEN GRANTED; COUNSEL’S SUBMISSION OF EMAILS DEMONSTRATING A GOOD FAITH EFFORT TO SETTLE WERE SUFFICIENT (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the motions to quash subpoenas issued by appellants who objected to an accounting of a trust should not have been granted and the appellants’ counsel’s submissions demonstrating a good faith effort to settle the matter (22 NYCRR 202.7) were sufficient:

In a proceeding pursuant to article 22 of the Surrogate’s Court Procedure Act to settle an account of a trust, a party filing objections is “entitled to all rights granted under article thirty-one of the civil practice law and rules with respect to . . . discovery” (SCPA 2211[2]). CPLR 3101(a), which provides for “full disclosure of all matter material and necessary in the prosecution or defense of an action,” is to be liberally construed “to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” … .

A “party or nonparty moving to vacate the subpoena has the initial burden of establishing either that the requested [information] is utterly irrelevant’ to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious'” … . Matter of Cheryl LaBella Hoppenstein 2005 Trust, 2020 NY Slip Op 04846, Second Dept 9-2-20

 

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THE CONSTRUCTION OF TWO TOWERS, TWICE THE HEIGHT OF SURROUNDING BUILDINGS, DID NOT VIOLATE THE NYC ZONING RESOLUTION, THEREFORE THE NYC PLANNING COMMISSION’S APPROVAL OF THE PROJECT WITHOUT THE NEED FOR A SPECIAL PERMIT WAS NOT ARBITRARY AND CAPRICIOUS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gesmer, reversing Supreme Court, determined the proposed construction of two towers, twice the height of the surrounding buildings, did not violate the zoning resolution  (ZR). Therefore the approval of the construction by the NYC Planning Commission (CPC) without the need for a special permit was not arbitrary and capricious:

… [T]he ZR authorizes the CPC to issue special permits in the enumerated categories only where a waiver or modification of particular ZR provisions is necessary. It is undisputed that none of those categories applies here. The CPC reviewed the applications and the prior special permits and determined that no new special permit was or could be required under any applicable ZR provision. “We accord deference to the Commission’s rational” interpretation of the ZR … . Accepting petitioners’ argument that a special permit is nevertheless required “would result in the judicial enactment of a new restriction . . . not found in the Zoning Resolution” … . Matter of Council of the City of N.Y. v Department of City Planning of the City of N.Y., 2020 NY Slip Op 04812, First Dept 8-27-20

 

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PLEADING REQUIREMENTS FOR A BREACH OF FIDUCIARY DUTY CAUSE OF ACTION WERE NOT MET; ATTORNEY REPRESENTING A CORPORATION DOES NOT OWE A FIDUCIARY DUTY TO SHAREHOLDERS OR EMPLOYEES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the pleading requirements for a breach of fiduciary duty cause of action were not met and defendant attorneys, who represented the corporation, not the decedent, did not owe a fiduciary duty to decedent:

We disagree with the Supreme Court’s determination denying that branch of the Berger defendants’ [attorneys’] motion which was pursuant to CPLR 3211(a)(7) to dismiss the sixth cause of action, alleging breach of fiduciary duty against them. ” [T]he elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendants misconduct'” … . A cause of action to recover damages for breach of fiduciary duty must be pleaded with the particularity required under CPLR 3016(b) … . Here, the sixth cause of action, alleging breach of fiduciary duty against the Berger defendants, contained only bare and conclusory allegations related to damages, without any supporting detail, and failed to satisfy the requirements of CPLR 3016(b) … .

Additionally, the complaint alleges that the Berger defendants represented Rockland Inc., and owed a fiduciary duty to the decedent based upon that representation. However, a corporation’s attorney represents the corporate entity, not its shareholders or employees … . Mann v Sasson, 2020 NY Slip Op , 04737, Second Dept 8-26-20

 

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THE PROPER FOUNDATION FOR BUSINESS RECORDS WAS NOT LAID AND COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 WAS NOT DEMONSTRATED, THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s motion for summary judgment in this foreclosure action should not have been granted:

Harrell [bank vice president]  failed to establish that Wells Fargo was servicing the subject loan at the time of Bhatti’s [defendant’s] alleged default, and that she was personally familiar with the recordkeeping practices and procedures of the plaintiff and/or the loan servicer at that time. Therefore, the plaintiff failed to establish a proper foundation for the admission of the records relied upon to establish Bhatti’s default under the business records exception to the hearsay rule (see CPLR 4518[a] …). …

“By requiring the lender or mortgage loan servicer to send the RPAPL 1304 notice by registered or certified mail and also by first-class mail, the Legislature implicitly provided the means for the plaintiff to demonstrate its compliance with the statute, i.e., by proof of the requisite mailing, which can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure” … .

Here, the … affidavits were insufficient to establish that the plaintiff mailed the 90-day pre-foreclosure notice required by RPAPL 1304, “as the representative[s] did not provide evidence of a standard office mailing procedure and provided no independent evidence of the actual mailing” … .

Moreover, the Harrell and Green affidavits were also insufficient to establish that a notice of default was in fact mailed to Bhatti by first-class mail, or actually delivered to the designated address if sent by other means, which was required by the terms of the mortgage … . HSBC Bank USA, Natl. Assn. v Bhatti, 2020 NY Slip Op 04734, Second Dept 8-26-20

 

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ALTHOUGH THE QUESTION WHETHER THE NOTICE REQUIREMENTS OF RPAPL 1304 APPLIED ONLY TO HIGH-COST OR SUBPRIME LOANS WAS NOT RAISED BELOW, THE QUESTION WAS CONSIDERED AND REJECTED ON APPEAL; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department considered an issue raised for the first time on appeal because it raised an issue of law which could not have been avoided if raised below. The defendant argued that the strict compliance with the notice requirements of RPAPL 1304 applies only to high-cost or subprime loans, not the loan at issue in the case. The Second Department rejected the argument and reversed Supreme Court finding the plaintiff did not demonstrate compliance with RPAPL 1304:

We decline to construe RPAPL 1302(2) in a manner that would render the amendment to RPAPL 1304 superfluous and the requirements set forth in that statute ineffective. Thus … compliance with RPAPL 1304 was a component of its prima facie burden on its motion for summary judgment … . …

Although Mahdak [plaintiff’s representative] stated in her affidavit that the notices were sent to the defendant at his last known address and the subject property, Mahdak did not have personal knowledge of the mailing, and [plaintiff] failed to provide any documents to prove that the notices were actually mailed … . [Plaintiff] also failed to submit a copy of any United States Post Office document indicating that the notices were sent by registered or certified mail as required by the statute … . Furthermore, Mahdak did not aver that she was familiar with [plaintiff’s] mailing practices and procedures, and therefore did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . H&R Block Bank, FSB v Liles, 2020 NY Slip Op 04733, Second Dept 8-26-20

 

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PLAINTIFF ENTITLED TO UNPAID SALARY, PREJUDGMENT INTEREST AND ATTORNEYS FEES PURSUANT TO LABOR LAW 198 AND CPLR 5001 IN THIS BREACH-OF-A-WRITTEN-EMPLOYMENT-CONTRACT ACTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff was entitled to salary, prejudgment interest and attorney’s fees stemming from plaintiff’s employer’s breach of a written employment agreement:

Pursuant to CPLR 5001 et seq., the plaintiff is entitled to such statutory prejudgment interest based on the defendant’s breaches of the written agreement. Moreover, contrary to the defendant’s contention, the plaintiff’s unpaid wages … and the severance wages fall within the definition of wages as set forth in Labor Law § 190(1) … . Therefore, such wages are protected by the provisions set forth in Labor Law § 193 and fall within the ambit of remedies provided by Labor Law § 198 … . * * *

… [F]or the same reasons that the plaintiff is entitled to prejudgment interest, the plaintiff also established his entitlement to judgment as a matter law on so much of the second cause of action as sought an award of reasonable attorney’s fees under Labor Law § 198(1-a) … . Gertler v Davidoff Hutcher & Citron , 2020 NY Slip Op 04731, Second Dept 8-26-20

 

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PLAINTIFF RAISED QUESTIONS OF FACT ABOUT WHETHER A CONSTRUCTIVE TRUST ON REAL PROPERTY HAD BEEN CREATED, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff had raised questions of fact about whether a constructive trust on real property had been created:

The defendant established his prima facie entitlement to judgment as a matter of law dismissing the complaint by submitting his affidavit denying the existence of any agreement with the plaintiff regarding ownership or an interest by the plaintiff in the premises, and denying that the plaintiff performed repairs to the premises. However, in opposition, the plaintiff submitted the affidavits of two nonparties who each attested, inter alia, to admissions made by the defendant that the plaintiff was an equal owner of the premises with the defendant. Thus, the affidavits submitted by the parties raise triable issues of fact as to whether the parties, who are in-laws by virtue of the defendant’s marriage to the plaintiff’s daughter and who lived with each other for several years prior to the defendant moving out, orally agreed to a shared ownership of the subject premises, and as to whether the plaintiff relied on that agreement by paying for repairs and expenses on the home for the benefit of the defendant. Accordingly, the defendant’s motion for summary judgment should have been denied … . Abehsera v Saldin, 2020 NY Slip Op 04723, Second Dept 8-26-20

 

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THE BANK’S DISCONTINUANCE OF THE FORECLOSURE ACTION DID NOT REVOKE THE ACCELERATION OF THE DEBT; THE REQUEST, AFTER DISCONTINUANCE, FOR A DECLARATION THE ACCELERATION HAD BEEN REVOKED WAS A REQUEST FOR AN IMPERMISSIBLE ADVISORY OPINION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the acceleration of the debt had not been revoked by the discontinuance of the foreclosure action and plaintiff’s request for a declaration the acceleration had been revoked, made after the action was discontinued, was an improper request for an advisory opinion:

Upon discontinuance of the action, a judicial declaration on the issue of whether the plaintiff elected to revoke its acceleration would be merely advisory inasmuch as there was no active case in which such declaration could have an immediate effect. Indeed, by seeking voluntary discontinuance of the action, the plaintiff, in effect, waived any right to seek any further judicial relief in the action … . …

In this Department, a lender’s mere act of voluntarily discontinuing an action does not constitute, in and of itself, an affirmative act revoking an earlier acceleration of the debt … . This is so because “the full balance of a mortgage debt cannot be sought without an acceleration, whereas the voluntary discontinuance of a foreclosure action may be occasioned for any number of different reasons, including those that have nothing to do with an intent to revoke the acceleration” … . Thus, it is the plaintiff who has authority to revoke its election to accelerate the mortgage debt under the terms of a note, and not the court. U.S. Bank Natl. Assn. v McCaffery, 2020 NY Slip Op 04805, Second Dept 8-26-20

 

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THE RPAPL 1304 NOTICE WAS DEFECTIVE ON ITS FACE; PLAINTIFF’S SUMMARY JUDGMENT MOTION IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not demonstrate compliance with RPAPL 1304 in this foreclosure action:

… [T]he plaintiff failed to establish, prima facie, its strict compliance with RPAPL 1304. In support of its motion, the plaintiff submitted copies of both its RPAPL 1304 notice and the 30-day notice of default required by the mortgage agreement. Both notices were dated April 15, 2013; however, these notices contained a factual discrepancy regarding the cure date, to wit, the cure date stated in the RPAPL 1304 90-day notice was May 15, 2013, whereas the cure date stated in the 30-day notice was May 20, 2013. Given the factual inaccuracy contained in at least one of the notices, and because the potential inaccuracy in the 90-day notice involved information that was required under RPAPL 1304, the plaintiff’s submissions did not eliminate the existence of a triable issue of fact as to whether the RPAPL 1304 notice was defective on its face … . Sparta GP Holding Reo Corp. v Lynch, 2020 NY Slip Op 04803, Second Dept 8-26-20

 

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DEFENDANT’S PHYSICAL CONDITION AFTER A STROKE WARRANTED A DOWNWARD MODIFICATION OF HIS SORA RISK LEVEL FROM THREE TO TWO (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined defendant’s application for a downward modification of his SORA risk level should have been granted:

… [T]he defendant established, by a preponderance of the evidence … , facts warranting a downward modification of his existing risk level classification to risk level two … . The medical evidence adduced at the hearing demonstrated that the defendant, who uses a wheelchair, suffered from a stroke in 2009, resulting in permanent paralysis on the right side of his body. A treating physician testified, inter alia, that there is no possibility of improvement of the paralysis condition. He also testified that although the defendant is able to transfer himself from a bed to a wheelchair, he requires assistance in propelling the wheelchair and in transferring himself to a shower stall. In addition, he is unable to stand for any length of time. Furthermore, the record indicates that the defendant had no disciplinary infractions in prison, spanning a lengthy period of time preceding the hearing. People v Sanchez, 2020 NY Slip Op 04796, Second Dept 8-26-20

 

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