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THERE WAS A DE FACTO MERGER SUCH THAT THE SUCCESSOR CORPORATION WAS LIABLE FOR THE TORTS OF ITS PREDECESSOR; THE CORPORATE VEIL WAS PROPERLY PIERCED TO FIND THE OWNER OF THE CORPORATION LIABLE (SECOND DEPT).

The Second Department determined Supreme Court properly found there was a de factor merger such that the successor corporation is liable for the torts of its predecessor, and further found that Supreme Court properly found the owner of the corporation was personally liable for damages awarded against the corporation. The facts are too complex to fairly summarize here:

“Generally, a corporation which acquires the assets of another is not liable for the torts of its predecessor'” … . “However, such liability may arise if the successor corporation expressly or impliedly assumed the predecessor’s tort liability, there was a consolidation or merger of seller and purchaser, the purchaser corporation was a mere continuation of the seller corporation, or the transaction was entered into fraudulently to escape such obligations” … . Accordingly, “[a] transaction structured as a purchase of assets may be deemed to fall within this exception as a de facto merger” … .

“The hallmarks of a de facto merger are the continuity of ownership; cessation of ordinary business and dissolution of the [predecessor] as soon as possible; assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and, continuity of management, personnel, physical location, assets, and general business operation'” … . Where the acquired corporation is “shorn of its assets” and becomes a “shell,” legal dissolution is not required to support a finding of de facto merger … . “[I]n non-tort actions, continuity of ownership is the essence of a merger'” … . * * *

[Re: piercing the corporate veil:] It is the plaintiff’s burden to demonstrate ” that the corporation was dominated as to the transaction attacked and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences'” … . Factors to be considered in determining whether the owner has abused the privilege of doing business in the corporate form include whether there was a failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use” … . Bonanni v Horizons Invs. Corp., 2020 NY Slip Op 00563, Second Dept 1-29-20

 

DEFENDANT DRIVER HAD THE BURDEN TO PROVE FREEDOM FROM COMPARATIVE NEGLIGENCE IN THIS TRAFFIC ACCIDENT CASE; DEFENDANT FAILED TO ELIMINATE QUESTIONS OF FACT ABOUT WHETHER HE WAS TRAVELLING TOO FAST AND WHETHER HE KEPT A PROPER LOOKOUT FOR PLAINTIFF BICYCLIST; DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant driver, Perrone, did not eliminate questions of fact concerning whether he was negligent in travelling too fast for conditions or in keeping a proper lookout. Plaintiff bicyclist was struck while trying to see around a construction wall separating the bicyclist from the traffic:

Since there can be more than one proximate cause of an accident, a defendant moving for summary judgment has the burden of establishing freedom from comparative negligence as a matter of law … . “In order for a defendant driver to establish entitlement to summary judgment on the issue of liability in a motor vehicle collision case, the driver must demonstrate, prima facie, inter alia, that he or she kept the proper lookout, or that his or her alleged negligence, if any, did not contribute to the accident” … . The issue of comparative fault is generally a question for the trier of fact … .

Here, the defendants failed to establish, prima facie, that Perrone was free from comparative fault in the happening of the accident. In particular, the defendants failed to eliminate triable issues of fact as to whether Perrone kept a proper lookout or was traveling at a reasonable and prudent speed as he approached the intersection in light of the conditions then present … . Ballentine v Perrone, 2020 NY Slip Op 00562, Second Dept 1-29-20

 

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PLAINTIFFS CAN NOT RAISE A NEW THEORY OF LIABILITY IN OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT, SUPREME COURT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant hospital’s motion for summary judgment in this medical malpractice action should have been granted. The plaintiffs attempted to raise an evidentiary issue and theory of liability for the first time in opposition to the motion:

… [T]he plaintiffs improperly alleged, for the first time, a new theory claiming that other employees of the hospital were negligent in failing to properly administer Decadron and Heparin in accordance with the prescription of the plaintiff’s attending physician. ” A plaintiff cannot, for the first time in opposition to a motion for summary judgment, raise a new or materially different theory of recovery against a party from those pleaded in the complaint and the bill of particulars'” … . Bacalan v St. Vincents Catholic Med. Ctrs. of N.Y., 2020 NY Slip Op 00561, Second Dept 1-29-20

 

CONTRACTUAL PROVISION LIMITING DAMAGES IS ENFORCEABLE, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the contractual provision limiting damages was enforceable. Plaintiff, Astoria, owned a power station and hired defendant, Rileu, to overhaul a steam boiler, which exploded. The contract limited Riley’s damages to one and a half times the contract price:

A clear contractual provision limiting damages is enforceable, unless there is a special relationship between the parties, there is a statutory prohibition against it, or it is against public policy because the conduct of the party seeking to enforce it was grossly negligent … . Here, Riley established, prima facie, that the clear limitation of liability provision contained in the addendum to the contract was part of an arm’s length transaction between the parties, two sophisticated commercial entities, and is thus valid and enforceable … . Riley further established, prima facie, that there was no special relationship between it and Astoria, that there was no statutory prohibition against the limitation of liability provision, and that the provision was not against public policy … . Astoria Generating Co., LP v Riley Power, Inc., 2020 NY Slip Op 00560, Second Dept 1-29-20

 

PROTECTIVE ORDER VACATED UPON EXPEDITED REVIEW (SECOND DEPT).

The Second Department, vacating the protective order issued by Supreme Court, determined defense counsel should have been heard in opposition to the application for the protective order:

… [T]he matter is remitted to the Supreme Court, Nassau County, to afford the defendant an opportunity to make arguments to that court with respect to the People’s application for a protective order.

Under the circumstances of this case, the Supreme Court should have granted defense counsel’s request for an opportunity to be heard with respect to the People’s application for a protective order pursuant to CPL 245.70 … . … [T]he People advised this Court that they no longer oppose the application. People v Belfon, 2020 NY Slip Op 00519, Second Dept 1-27-20

 

SUPREME COURT DID NOT ABUSE ITS DISCRETION IN GRANTING A PROTECTIVE ORDER ALLOWING THE PEOPLE TO DELAY DISCLOSURE OF EVIDENCE IN THIS MURDER CASE UNTIL ONE WEEK BEFORE TRIAL; CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, in an expedited review of Supreme Court’s granting a protective order in a murder case, determined Supreme Court did not abuse its discretion, in part because defense counsel was notified of the ex parte proceeding:

On January 15, 2020, the Supreme Court convened in an open session in the presence of the prosecutor, defense counsel, and the defendant. After ascertaining that defense counsel would not waive a hearing on the protective order, the court ordered the courtroom sealed. The defendant was removed from the courtroom, and defense counsel stepped out of the courtroom. Defense counsel did not voice an objection to the court’s conduct of an ex parte proceeding. Nor did defense counsel seek to offer any arguments concerning any of the factors relevant to the determination as to whether, and to what extent, a protective order should be issued. The court then proceeded to conduct an ex parte proceeding regarding the People’s application. Thereafter, the court resumed with a continued open session attended by both defense counsel and the defendant. After the court informed defense counsel that it had granted the People’s application, the parties and the court proceeded to discuss other matters related to the case. During these proceedings, defense counsel inquired as to whether there was description of the shooting by a witness. The court responded by stating that defense counsel had been provided with a videotape that “pretty much shows you how the shooting occurred.” … The defendant now seeks expedited review of the court’s ruling pursuant to CPL 245.70(6).

… [T]he record reflects that the court considered the possibility of allowing defense counsel access to the information on the condition that it not be shared with the defendant personally; the court raised this possibility sua sponte.

It would have been better in my view to allow defense counsel to see the portions of the People’s written application that contained legal argument or other matter that would not reveal the information sought to be covered by the protective order, pending the court’s determination as to whether the sensitive portions of the People’s application should be sealed. Further, it would have been better in my view, even assuming that portions of the People’s written and oral presentations should be sealed, to permit defense counsel to participate in portions of the protective order proceeding where the substance of the sealed information is not discussed. In my view, defense counsel should be excluded from participation in the protective order review process only to the extent necessary to preserve the confidentiality of sensitive information pending the court’s determination as to the issuance, and scope, of the protective order. People v Nash, 2020 NY Slip Op 00520, First Dept 1-27-20

 

PROTECTIVE ORDER ALLOWING THE PEOPLE TO HOLD BACK INFORMATION (OTHERWISE SUBJECT TO AUTOMATIC DISCLOSURE) UNTIL AFTER JURY SELECTION VACATED; MATTER REMITTED TO ALLOW THE DEFENSE TO OPPOSE THE REQUEST FOR THE ORDER; THE PROCEDURAL REQUIREMENTS OF THE NEW DISCOVERY PROVISIONS ADDRESSED IN SOME DETAIL (SECOND DEPT).

The Second Department, in an expedited appellate review of the issuance of a protective order by Supreme Court, vacated the protective order and sent the matter back to allow the defense to make an argument in opposition. The defendant is accused of stabbing his wife multiple times. The People, pursuant to CPL 245.70, ex parte, applied for and were granted an order delaying, until after jury selection, the turning over of information otherwise subject to automatic disclosure under CPL 245.70. The decision makes an effort to explain how these new disclosure provisions should be handled by the trial courts:

Unlike the prior discovery statute, which allowed the People to wait until the time of trial to turn over witness statements (see CPL former 240.45), the new statutory scheme provides that disclosure is to be made within days after arraignment (see CPL 245.10[1][a]). The new statute provides that there shall be a “presumption in favor of disclosure” when interpreting certain listed provisions of CPL article 245 (CPL 245.20[7]), although the provision relating to protective orders (CPL 245.70) is not among those that are listed (see CPL 245.20[7]).

CPL 245.70 provides that upon a showing of good cause by either party, the court may at any time order that discovery be denied, restricted, conditioned, or deferred, or make such other order as is appropriate (see CPL 245.70[1]). It further provides that the court “may permit a party seeking or opposing a protective order under this section, or another affected person, to submit papers or testify on the record ex parte or in camera,” and that any such papers and a transcript of any such testimony may be sealed and constitute a part of the record on appeal (CPL 245.70[1]). …

The statute cannot be reasonably construed to permit a protective order to be sought entirely ex parte in every case. Since entirely ex parte proceedings should be allowed only in some cases, it necessarily follows that proceedings on applications for a protective order should be entirely ex parte only where the applicant has demonstrated the clear necessity for the entirety of the application, and the submissions in support of it, to be shielded from the opposing party. …

The necessity for appellate intervention would have been reduced had the Supreme Court, either before or after granting the subject protective order, afforded defense counsel the opportunity to be heard and thereafter determined whether to grant, adhere to, modify, or rescind the protective order. People v Bonifacio, 2020 NY Slip Op 00517, Second Dept 1-23-20

Similar issues and result in People v Reyes-Fuentes, 2020 NY Slip Op 00518, Second Dept 1-23-20

 

FATHER’S NONVOLUNTARY UNION DUES SHOULD HAVE BEEN DEDUCTED FROM HIS INCOME FOR CALCULATION OF CHILD SUPPORT (SECOND DEPT).

The Second Department, reversing (modifying) Family Court, determined father’s nonvoluntary union dues should have been deducted from his income for the calculation of child support:

Although no deduction from income for union dues is specifically mandated by the Family Court Act, there is an allowable deduction for “unreimbursed employee business expenses except to the extent said expenses reduce personal expenditures” (Family Ct Act § 413[1][b][5][vii][A]). Nonvoluntary union dues may be deducted under this category … . “However, such expenses are properly deducted from parental income in calculating child support obligations only when proven, usually by tax returns accompanied by records and receipts” … .

At the hearing, counsel for the mother consented to the deduction of the father’s nonvoluntary union dues from the father’s income for the purposes of calculating his child support and related financial obligations. Thus, the Family Court should have granted the father’s objection to so much of the Support Magistrate’s order as failed to deduct the father’s nonvoluntary union dues from his income in calculating his child support and related financial obligations. Matter of Julien v Ware, 2020 NY Slip Op 00414, Second Dept 1-22-20

 

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QUESTION OF FACT WHETHER HOSPITAL MAY BE VICARIOUSLY LIABLE FOR TREATMENT PROVIDED BY A NON-EMPLOYEE IN THE HOSPITAL EMERGENCY ROOM (SECOND DEPT).

The Second Department determined there was a question of fact whether the hospital, Good Samaritan, was vicariously liable for the alleged malpractice of a physician, Chin, who, although not a hospital employee, treated plaintiff in the hospital emergency room:

“In general, under the doctrine of respondeat superior, a hospital may be held vicariously liable for the negligence or malpractice of its employees acting within the scope of employment, but not for negligent treatment provided by an independent physician, as when the physician is retained by the patient himself” … . However, “[a]n exception to this general rule exists where a plaintiff seeks to hold a hospital vicariously liable for the alleged malpractice of an attending physician who is not its employee where a patient comes to the emergency room seeking treatment from the hospital and not from a particular physician of the patient’s choosing” … . …

Here, although Good Samaritan established that Chin was not its employee, the evidence submitted in support of its motion for summary judgment was insufficient to demonstrate, prima facie, that the plaintiff entered Good Samaritan’s emergency room seeking treatment from a privately selected physician rather than from the hospital itself … . Fuessel v Chin, 2020 NY Slip Op 00404, Second Dept 1-22-20

 

PLAINTIFF WAS PROVIDED WITH A LADDER WITHOUT RUBBER FEET WHICH SLID CAUSING PLAINTIFF TO FALL; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON HIS LABOR LAW 240(1) CAUSE OF ACTION PROPERLY GRANTED (SECOND DEPT).

The Second Department determined plaintiff was entitled to summary judgment on his Labor Law 240(1) cause action in this ladder fall case:

We agree with the Supreme Court’s determination granting that branch of the plaintiff’s motion which was for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action asserted against [defendant]. The plaintiff established, prima facie, [defendant’s] liability under Labor Law § 240(1) through the submission of a transcript of the plaintiff’s deposition testimony, which demonstrated that he was provided with a ladder that lacked rubber feet, and that the ladder, which was leaning against a wall, slid away from the wall, causing the plaintiff to fall to the ground … . Chapa v Bayles Props., Inc., 2020 NY Slip Op 00397, Second Dept 1-22-20

 

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