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ONCE AGAIN, BECAUSE THE RELEVANT BUSINESS RECORDS WERE NOT ATTACHED TO THE AFFIDAVITS, THE STATEMENTS IN THE AFFIDAVITS WERE HEARSAY; PLAINTIFF BANK DID NOT PROVE STANDING TO FORECLOSE OR DEFENDANT’S DEFAULT (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not prove standing and did not prove defendant’s default because the relevant business records were not attached to the relevant affidavits (yet another of the hundreds of reversals on this issue):

… “‘[i]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted'” … . Thus, “[w]hile a witness may read into the record from the contents of a document which has been admitted into evidence, a witness’s description of a document not admitted into evidence is hearsay” … . In addition, “‘[a] proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures'” … . Here, neither affidavit relied upon by the plaintiff to establish its physical possession of the note stated that the affiant had personal knowledge of … the plaintiff’s record-keeping practices, and the affiants did not annex the records that they relied upon to their affidavits. Thus, the affidavits were inadmissible hearsay lacking in evidentiary value.

Likewise, without the submission of the business records upon which she relied, Ballard’s assertions regarding the defendant’s alleged default on the loan were inadmissible … . HSBC Bank USA, N.A. v Pacifico, 2024 NY Slip Op 04198, Second Dept 8-14-24

Practice Point: If the business records described in an affidavit are not attached, the statements in the affidavit about the records are inadmissible hearsay.

 

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​HERE THE DEFENDANTS DID NOT PRESENT A REASONABLE EXCUSE FOR FAILING TO APPEAR OR ANSWER AND DID NOT DEMONSTRATE THE EXISTENCE OF A POTENTIALLY MERITORIOUS DEFENSE; THE JUDGE SHOULD NOT HAVE, SUA SPONTE, GRANTED DEFENDANTS AN EXTENSION OF TIME TO ANSWER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, granted defendants an extension of time to answer the complaint in the face of plaintiff’s cross-motion to enter a default judgment, The defendants did not demonstrate a reasonable excuse for failing to appear or answer or the existence of a potentially meritorious defense:

… [I]n support of that branch of the plaintiff’s cross-motion which was for leave to enter a default judgment on the issue of liability against the defendants, the plaintiff submitted proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defendants’ default in answering or appearing … . The defendants’ motion, which was, in effect, pursuant to CPLR 3211(a)(4), was untimely, since it was made after the time to file an answer had lapsed … . By not opposing the facially adequate branch of the plaintiff’s cross-motion which for leave to enter a default judgment, in form or in effect, the defendants did not meet their burden of establishing a reasonable excuse for their default and demonstrating the existence of a potentially meritorious defense to the action. Accordingly, that branch of the plaintiff’s cross-motion which was for leave to enter a default judgment on the issue of liability against the defendants should have been granted … , and the Supreme Court erred by, sua sponte, granting the defendants an extension of time to answer the complaint … . Digital Direct & More, Inc. v Dialectic Distrib., LLC, 2024 NY Slip Op 04196, Second Dept  8-14-24

Practice Point: Here is another example of the appellate courts cracking down on “sua sponte” rulings on motions which have no support in the record.

 

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ABSENT AN ORDER BASED UPON AN EXCEPTION TO THE SECRECY PROVSIONS IN TAX LAW SECTION 697, THE NYS DEPARTMENT OF TAXATION AND FINANCE WAS NOT REQUIRED TO TURN OVER TAX FORMS SUBMITTED BY THE CORPORATE DEFENDANTS IN THIS LABOR LAW ACTION TO RECOVER UNPAID WAGES AND TIPS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiffs’ subpoena demanding that the nonparty NYS Department of Taxation and Finance turn over tax forms submitted by the corporate defendants should have been quashed. The plaintiffs brought a class action to recover unpaid wages and tips pursuant to Labor Law 196-d. The relevant portion of the Tax Law prohibits disclosure of the tax forms absent an order based upon an exception in the controlling statute:

The Supreme Court should have granted that branch of the Department’s motion which was to quash so much of the subpoena as sought “All Form NYS-45 for each quarter from 2009 until present submitted by or related to” the corporate defendants pursuant to Tax Law § 697 (see CPLR 2304). The Department established that it should not be required to disclose the information contained in any return filed with it, as, pursuant to Tax Law § 697(e)(1) and (2), “‘[e]xcept in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful’ for the [D]epartment or any of its officers to divulge the information contained in any return filed with it, and . . . it ‘shall not be required to produce any of them or evidence of anything contained in them in any action or proceeding in any court'” … . “[A] ‘proper order’ is one which either effectuates the enumerated exceptions within the statute or which arises out of a case in which the report is itself at issue, as in a forgery or perjury prosecution” … . In opposition, the plaintiffs failed to identify any exceptions to the statute … or demonstrate extraordinary circumstances … . Cornejo v Rose Castle Corp., 2024 NY Slip Op 04193, Second Dept 8-14-24

Practice Point: The NYS Department of Taxation and Finance is not required to turn over tax forms pursuant to a subpoena absent a court order based upon an exception to the privacy/secrecy provisions in Tax Law section 697​.

 

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PURSUANT TO THE PRIMARY JURISDICTION DOCTRINE, PLAINTIFFS’ COMPLAINTS ABOUT FINES IMPOSED BY DEFENDANT NATURAL-GAS PROVIDER MUST FIRST BE HEARD BY THE PUBLIC SERVICE COMMISSION (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the “primary jurisdiction” doctrine required that plaintiffs bring their complaint against defendant natural-gas provider before the Public Service Commission:

“The doctrine of primary jurisdiction is intended to co-ordinate the relationship between courts and administrative agencies to the end that divergence of opinion between them not render ineffective the statutes with which both are concerned, and to the extent that the matter before the court is within the agency’s specialized field, to make available to the court in reaching its judgment the agency’s views concerning not only the factual and technical issues involved but also the scope and meaning of the statute administered by the agency” … . “[W]hile concurrent jurisdiction does exist, where there is an administrative agency which has the necessary expertise to dispose of an issue, in the exercise of discretion, resort to a judicial tribunal should be withheld pending resolution of the administrative proceeding” … .

Here, the Public Service Commission has primary jurisdiction over the plaintiff’s claims … . The defendant was permitted to impose a $100 fine on any customer who prevented or hindered Brooklyn Union from inspecting the gas meters and gas lines of a building (see Public Service Law § 65[9][b]). Thus, the plaintiff’s claim that she and other members of the prospective class were improperly charged a fine involves intricate questions of fact, thereby requiring the specialized knowledge and expertise of the Public Service Commission … . Calle v National Grid USA Serv. Co., Inc., 2024 NY Slip Op 04190, Second Dept 8-4-24

Practice Point: Here plaintiffs’ complaint against defendant natural-gas provider raised issues within the expertise of the Public Service Commission. The doctrine of primary jurisdiction required that the Commission, not the court, hear the case first.

 

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HERE THE RIGHT OF FIRST REFUSAL IN THE ORIGINAL DEED DIVIDING THE PROPERTY INTO EIGHT PARTS WAS A VALID DEFENSE TO THE PARTITION ACTION; HOWEVER, IF DEEMED TO RUN WITH THE LAND, THE RIGHT OF FIRST REFUSAL VIOLATED THE RULE AGAINST PERPETUITIES (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the right of first refusal in the original deed which divided the property into eight parts was a valid defense to the partition action. However the right of first refusal could not be enforced because it violated the rule against perpetuities:

A right of first refusal . . . is a preemptive or contractual right to ‘receive an offer'” … . “[I]t is a restriction on the power of one party to sell without first making an offer of purchase to the other party upon the happening of a contingency” … . A reasonable, valid, and enforceable right of first refusal constitutes a good defense to a partition action … . However, with narrow exceptions not applicable here, rights of first refusal are subject to the rule against perpetuities and are thus invalid if it is possible for the future interests they represent to vest outside the prescribed time period (see EPTL 9-1.1[b] …).

Here, the 1966 deed demonstrates that the right of first refusal was for the benefit of the original grantees only … . Moreover, to the extent that the surrounding circumstances demonstrate an intent that the covenant should run with the land … , the restriction would violate the rule against perpetuities (see EPTL 9-1.1[b]…). Block 865 Lot 300, LLC v Baione, 2024 NY Slip Op 04189, Second Dept 8-14-24

Practice Point: A right of first refusal in a deed is a valid defense to a partition action.

Practice Point: Here the right of first refusal in the original deed applied only to the original grantees and, if deemed a covenant which runs with the land, it violated the rule against perpetuities.

 

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TO, SUA SPONTE, DECIDE BRANCHES OF A MOTION AND CROSS-MOTION ON A GROUND NOT RAISED BY THE PARTIES DEPRIVED PLAIINTIFF OF THE OPPORTUNITY TO REFUTE THE JUDGE’S DETERMINATION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court in this foreclosure action, determined the judge should not have decided branches of a motion and cross-motion on a ground not raised by the parties, i.e. “in the interest of justice” on the ground the action was commenced “when foreclosures were stayed due to [the[ Covid-19 pandemic:”

“The lack of notice and opportunity to be heard implicates the fundamental issue of fairness that is the cornerstone of due process” … . As the plaintiff correctly contends, the Supreme Court improperly determined the subject branches of the parties’ motion and cross-motion on the ground that the action was commenced when “foreclosures were stayed due to [the] Covid-19 pandemic.” Sino [defendant] did not argue in support of the cross-motion that the plaintiff improperly commenced the action during any COVID-19-related stay or that it was prejudiced because the action was commenced during any COVID-19-related stay. Thus, the plaintiff was prejudiced, since it was “never afforded the opportunity to present evidence refuting the court’s sua sponte determination” … . Accordingly, the court should not have determined the subject branches of the motion and cross-motion on a ground that was never raised by the parties … . Austin 26 Dental Group, PLLC v Sino Northeast Metals (U.S.A.), Inc., 2024 NY Slip Op 04187, Second Dept 8-14-24

Practice Point: Judges cannot decide motions on a ground not raised by the parties.

 

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HERE ALLEGATIONS OF FRAUD WERE ESSENTIAL TO THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION; THEREFORE THE SIX-YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIED AND THE CAUSE OF ACTION WAS TIME-BARRED (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, determined the six-year statute of limitations for fraud controlled the breach of a fiduciary duty cause of action (which was therefore time-barred):

… [T]he six-year statute of limitations governing actions based on fraud applies (see CPLR 213[8]). “‘[W]here an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213(8)'” … . Here, the defendants alleged that Hollander was part owner of a limited liability company that competed directly with the defendants, that Hollander failed to disclose that alleged conflict, and that Hollander used confidential information obtained from the defendants to directly compete with them. The plaintiffs allegedly denied GFR and Friedman Group, LLC, the opportunity to purchase at least four specific properties and used trade secrets to compete with GFR and Friedman Group, LLC, on at least three specific properties. The allegations of fraud are thus essential to the breach of fiduciary duty counterclaim, and the six-year statute of limitations applies. South Shore Estates, Inc. v Guy Friedman Realty Corp., 2024 NY Slip Op 04156, Second Dept 8-7-24

Practice Point: Where allegations of fraud are essential to a breach of fiduciary duty cause of action, the six-year statute of limitations for fraud applies.

 

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PLAINTIFF WAS STOPPED WHEN PLAINTIFF WAS REAR-ENDED BY DEFENDANT; BECAUSE DEFENDANT DID NOT OFFER A NONNEGLIGENT EXPLANATION, PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT ON LIABILITY; HOWEVER PLAINTIFF MAY HAVE BEEN STOPPED ON AN ENTRANCE RAMP; THEREFORE DEFENDANT’S COMPARATIVE NEGLIGENCE AFFIRMATIVE DEFENSE PROPERLY SURVIVED DISMSSAL (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff was entitled to summary judgment on liability in the rear-end-collision traffic accident case. However, because plaintiff may have been parked on an entrance ramp to an expressway, the comparative negligence affirmative defense properly survived dismissal:

A rear-end collision with a stopped vehicle establishes a prima facie case of negligence on the part of the operator of the rear vehicle, thereby requiring that operator to rebut the inference of negligence by providing a nonnegligent explanation for the collision … . Here, the plaintiff established her prima facie entitlement to judgment as a matter of law on the issue of liability through the submission of, among other things, her affidavit, which established that the plaintiff’s vehicle was parked on the side of a service road to the Major Deegan Expressway in the Bronx (hereinafter the expressway), with the hazard lights activated, when it was struck in the rear by the defendants’ vehicle … . In opposition to the plaintiff’s prima facie showing, the defendants failed to rebut the inference of negligence with admissible evidence … . …

The plaintiff also established her prima facie entitlement to judgment as a matter of law dismissing the defendants’ affirmative defenses alleging comparative negligence by demonstrating that she was not at fault in the happening of the accident … . In opposition to the plaintiff’s prima face showing, however, the defendants raised triable issues of fact as to whether the plaintiff was comparatively at fault in the happening of the accident, including whether the plaintiff’s vehicle was stopped on the entrance ramp to the expressway (see Vehicle and Traffic Law § 1202[a][1][j] …). Ramirez v Greiner, 2024 NY Slip Op 04154, Second Dept 8-7-24

Practice Point: Unless defendant offers a nonnegligent explanation for a rear-end collision with plaintiff’s stopped vehicle, plaintiff is entitled to summary judgment on liability.​

Practice Point: However, summary judgment on liability in favor of plaintiff does not preclude a valid comparative-fault affirmative defense.

 

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DEFAMATORY STATEMENTS RELATING TO ISSUES OF BROAD PUBLIC INTEREST POSTED ON FACEBOOK MAY BE ENCOMPASSED BY THE ANTI-SLAPP STATUTE; HERE, HOWEVER, THE STATEMENTS (ALLEGATIONS OF SEXUAL ABUSE) RELATED TO A PURELY PRIVATE MATTER AND, THEREFORE, WERE NOT ENCOMPASSED BY THE STATUTE (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Love, determined (1) Facebook is a “public forum” within the meaning of the anti-SLAPP statute, and (2) the allegedly defamatory statements defendants posted on Facebook involved a “purely private matter,” not an issue of broad public interest, and therefore was not encompassed aby the anti-SLAPP statute. Therefore plaintiff’s defamation per se cause of action properly survived dismissal:

… [T]he defendants … posted a series of responses to a post on the personal Facebook page of the plaintiff … alleging that the plaintiff had sexually abused [one of the defendants] approximately 17 years prior when she was 4 years old … . * * *

Based upon the intent of the Legislature to redefine New York’s anti-SLAPP statute as broadly as possible, and the interpretation in decisions by other state courts of their similar state anti-SLAPP statutes defining Facebook and other social media applications as public forums, we conclude that Facebook is a public forum within the meaning of Civil Rights Law § 76-a(1). …

… [T]his action is not subject to the anti-SLAPP statute because the defendants’ statements published on the plaintiff’s Facebook page concerned “a purely private matter” … and were “directed only to a limited, private audience” … . Although the defendants made generic reference to issues of broad public interest, their primary focus was not an issue of broad public interest. Nelson v Ardrey, 2024 NY Slip Op 04147, Second Dept 8-7-24

Practice Point: Facebook is a “public forum” within the meaning of the anti-SLAPP statute.

Practice Point: Statements which relate to purely private matters, here Facebook posts alleging sexual abuse, as opposed to statements relating to a broad public interest, are not encompassed by the anti-SLAPP statute.

 

PLAINTIFF, AN INNOCENT PASSENGER IN THIS TRAFFIC ACCIDENT CASE, WAS ENTITLED TO SUMMARY JUDGMENT DISMISSSING DEFENDANT’S AFFIRMATIVE DEFENSES AS AGAINST HER (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that plaintiff (Brizan), a passenger in a car involved in an accident, was entitled to summary judgment dismissing defendant’s affirmative defenses alleging comparative negligence, contributory negligence and culpable conduct on Brizan’s part:

The right of an innocent passenger to summary judgment on the issue of whether he or she was at fault in the happening of an accident is not restricted by potential issues of comparative negligence as between two defendant drivers (see CPLR 3212[g] …). Brizan demonstrated, prima facie, that she did not engage in any culpable conduct that contributed to the happening of the accident … . Husbands v City of New York, 2024 NY Slip Op 04126, Second Dept 8-7-24

Practice Point: An innocent passenger in a traffic accident is not subject to the affirmative defenses raised by the defendant against the driver of the car in which plaintiff was riding.​

 

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