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Question of Fact Whether Withdrawal Was Authorized, Despite Absence of Signature

The Second Department, over a dissent, determined the bank had raised a question of fact about whether a $50,000 withdrawal, where the withdrawal slip was not signed, was authorized. The assistant branch manager submitted an affidavit stating that he received authorization by phone from the account holder. The court explained the relevant analytical criteria:

Generally, an unauthorized signature—defined as a signature made without authority, including a forgery (see UCC 1-201[41])—is ineffective to pass title or authorize a drawee bank to pay … . The UCC imposes strict liability on a bank that charges against a customer’s account any item not properly payable, such as a check bearing a forgery of the customer’s signature (see UCC 4-401[2][a]; UCC 4-104[1][g], [j]…). A bank, however, avoids such liability if it demonstrates that the customer’s negligence substantially contributed to the forgery and that the bank acted in good faith and in accordance with reasonable commercial standards (see UCC 3-406 …). Proactive Dealer Servs., Inc. v TD Bank, 2015 NY Slip Op 07016, 2nd Dept 9-30-15

 

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Ornaments Hanging from Rear-View Mirror Justified Vehicle Stop

The Second Department, over a dissent, determined the police officer had probable/reasonable cause to believe defendant had committed a traffic infraction.  Therefore, the vehicle stop and the subsequent search of the vehicle (which turned up a weapon) were proper. There was an ornamental sandal and necklace hanging from the rear-view mirror. The court held the officer had reasonable cause to believe the sandal and necklace obstructed the driver’s view in violation of Vehicle and Traffic Law 375 (30):

Under the Fourth Amendment to the United States Constitution and article I, § 12, of the New York State Constitution, a police officer may stop a vehicle when the officer has probable cause to believe that the driver of the vehicle has committed a traffic infraction … . In this case, the credible evidence adduced at the suppression hearing established that the police had probable cause to stop the Altima. The officer who stopped the Altima testified that when he stopped his patrol car behind the Altima, he saw an ornamental sandal on a string and a necklace hanging from the Altima’s rearview mirror. The officer further testified that the sandal was four to five inches long and “[p]ossibly about [two] inches in width,” and that it was hanging about four to five inches beneath the rearview mirror. Contrary to the defendant’s contention and to our colleague’s dissent, this testimony demonstrated that the officer had reasonable cause to believe that the sandal was hung “in such a manner as to obstruct or interfere with the view of the operator through the windshield” (Vehicle and Traffic Law § 375[30]…). Accordingly, the officer’s stop of the Altima was not improper .. . Probable cause does not require certainty, and the officer’s testimony about the size and location of the ornaments was sufficient to establish probable cause. People v Bookman, 2015 NY Slip Op 07037, 2nd Dept 9-30-15

 

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Question Whether Loan At Issue Was a “Home Loan” Requiring a Settlement Conference, Hearing Ordered

The Second Department found that a hearing was required to determine whether the loan at issue was a “home loan” such that a settlement conference pursuant to CPLR 3408 was required. The court explained the analytical factors:

“CPLR 3408 does not apply to every residential foreclosure action” … . CPLR 3408 only mandates a settlement conference in a residential foreclosure action involving a “home loan” as that term is defined by RPAPL 1304, and when the “defendant is a resident of the property subject to foreclosure” (see CPLR 3408…).

RPAPL 1304(5)(a)(i)-(iv) defines a qualifying home loan as one in which, inter alia, the borrower is a natural person; the borrower incurs the debt primarily for personal, family, or household purposes; and the loan is secured by a mortgage on real property in this state “used or occupied, or intended to be used or occupied wholly or partly, as the home or [the] residence of one or more persons and which is or will be occupied by the borrower as the borrower’s principal dwelling” … .

Here, the conflicting affidavits submitted by the parties reveal a sharp factual dispute, inter alia, as to whether the subject loan was made for the defendant’s personal, family, or household use, and whether the mortgaged premises was to be occupied as the defendant’s principal dwelling. Richlew Real Estate Venture v Grant, 2015 NY Slip Op 07018, 2nd Dept 9-30-15

 

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[Harmless] Error to Deny Defense a Hearing to Determine Admissibility of Testimony of Private Investigator About What Could Be Seen from a Certain Vantage Point (Calling Into Question Testimony Identifying the Defendant)

The Second Department, over a vehement and detailed dissent, affirmed defendant’s assault and attempted murder convictions. The majority and dissent agreed that defendant should have been allowed to present the testimony of a private investigator about what could be seen from a certain vantage point (calling into question testimony identifying defendant), but disagreed about whether the error was harmless. The dissent explained the defendant’s right to present a defense:

FROM THE DISSENT:

The People correctly concede that it was error by the court to preclude the defense counsel from calling his private investigator as a witness. A defendant’s right to call witnesses in his or her behalf is a constitutional right essential to due process of law … . In the absence of bad faith, the general rule is that where the defendant seeks to call a witness, the witness should be sworn and asked questions, to permit the court, upon proper objection, to rule upon the admissibility of the evidence offered … .

Here, the defense counsel’s request for a hearing on the admissibility of the witness’s testimony was improperly denied on the ground that opinion testimony from lay witnesses is inadmissible. However, there is no categorical proscription against the admission of opinions from lay witnesses … . Further, the proposed testimony about the ability to see a point from another stated vantage point constituted testimony as to the facts—and would not necessarily include opinions … . Since the defendant had a constitutional right to put forth a defense, contrary to the conclusion of my colleagues, the error cannot be deemed harmless … . People v Smith, 2015 NY Slip Op 07043, 2nd Dept 9-30-15

 

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Pleading Requirements for “Fraud” and “Aiding and Abetting Fraud” Causes of Action Succinctly Described

The Second Department, in affirming the denial of a motion to dismiss “fraud” and “aiding and abetting fraud” causes of action, explained the elements which must be alleged in the complaint:

To state a cause of action sounding in fraud, a plaintiff must allege that “(1) the defendant made a representation or a material omission of fact which was false and the defendant knew to be false, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) there was justifiable reliance on the misrepresentation or material omission, and (4) injury” … . To plead a cause of action to recover damages for aiding and abetting fraud, the complaint “must allege the existence of [the] underlying fraud, knowledge of the fraud by the aider and abettor, and substantial assistance by the aider and abettor in the achievement of the fraud”. Moreover, pursuant to CPLR 3016(b), where a cause of action is based upon fraud or aiding and abetting fraud, the “circumstances constituting the wrong” must be “stated in detail.” Caravello v One Mgt. Group, LLC, 2015 NY Slip Op 07000, 2nd Dept 9-30-15

 

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Appropriate Statutes of Limitations and Accrual Dates Explained for “Breach of Fiduciary Duty,” Civil RICO,” and “Declaratory Judgment” Causes of Action

The Second Department described the analytical criteria for determining the statutes of limitations and accrual dates for (1) breach of fiduciary duty claims where allegations of fraud are essential; (2) civil RICO claims; (3) and declaratory judgment actions seeking a constructive trust:

“New York law does not provide a single statute of limitations for breach of fiduciary duty claims. Rather, the choice of the applicable limitations period depends on the substantive remedy that the plaintiff seeks. Where the remedy sought is purely monetary in nature, courts construe the suit as alleging injury to property’ within the meaning of CPLR 214(4), which has a three-year limitations period. Where, however, the relief sought is equitable in nature, the six-year limitations period of CPLR 213(1) applies” … .

“[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)” … . “An exception to this rule . . . is that courts will not apply the fraud Statute of Limitations if the fraud allegation is only incidental to the claim asserted; otherwise, fraud would be used as a means to litigate stale claims'” … . “Thus, where an allegation of fraud is not essential to the cause of action pleaded except as an answer to an anticipated defense of Statute of Limitations, courts look for the reality, and the essence of the action and not its mere name” … . …

CPLR 213(8) provides, in part, “the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.” “The discovery accrual rule also applies to fraud-based breach of fiduciary duty claims. An inquiry as to the time that a plaintiff could, with reasonable diligence, have discovered the fraud turns upon whether a person of ordinary intelligence possessed knowledge of facts from which the fraud could be reasonably inferred” … . …

“The statute of limitations for civil RICO claims is four years” … . “A RICO claim is deemed to have accrued when the plaintiff knew or should have known of his or her injury, regardless of when he or she discovered the underlying fraud'” … . …

“Actions for declaratory judgments are not ascribed a certain limitations period. The nature of the relief sought in a declaratory judgment action dictates the applicable limitations period. Thus, if the action for a declaratory judgment could have been brought in a different form asserting a particular cause of action, the limitations period applicable to the particular cause of action will apply” … .

The … action for a declaratory judgment could have been brought … as a cause of action to impose a constructive trust … . A constructive trust is equitable in nature and governed by a six-year statute of limitations … . DiRaimondo v Calhoun, 2015 NY Slip Op 07002, 2nd Dept 9-30-15

 

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Substantial Evidence Did Not Support Department of Health’s Finding that Property Transfers Rendered Petitioner Ineligible for Medicaid Benefits

The Second Department annulled the Department of Health’s (DOH’s) finding that petitioner was ineligible for Medicaid benefits based on transfers of property made well before she exhibited signs of dementia. The court explained the analytical criteria:

In reviewing a Medicaid eligibility determination made after a fair hearing, the court must review the record as a whole to determine if the agency’s decisions are supported by substantial evidence and are not affected by an error of law … . Substantial evidence has been defined as “such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact” … . While the level of proof is less than a preponderance of the evidence, substantial evidence does not arise from bare surmise, conjecture, speculation, or rumor (see id. at 180), or from the absence of evidence supporting a contrary conclusion … . When determining Medicaid eligibility, an agency is required to “look back” for a period of 60 months immediately preceding the first date the applicant was both “institutionalized” and had applied for Medicaid benefits to determine if any asset transfers were uncompensated or made for less than fair market value (42 USC § 1396p[c][1][A], [B]; Social Services Law § 366[5][e][1][vi]). If such a transfer was made during that period, the applicant may become ineligible for Medicaid benefits for a specified period of time (see 42 USC § 1396p[c][1][A], [E]; Social Services Law § 366[5][e][3]), unless there is a “satisfactory showing” that, inter alia, the assets were transferred exclusively for a purpose other than to qualify for medical assistance (42 USC § 1396p[c][2][C][i], [iii]; Social Services Law § 366[5][e][4][iii]). It is the petitioner’s burden to rebut the presumption that the transfer of funds was motivated, in part if not in whole, by anticipation of a future need to qualify for medical assistance … .

Here, the evidence at the fair hearing showed that the latest of the subject transfers was made approximately two years before the petitioner started to exhibit signs of dementia. At the time of the transfers and in the years preceding her need for nursing home care, the petitioner was in good health and living independently. She was driving, cooking, exercising, and paying her own bills. The transfers themselves constituted gifts to her relatives, and the petitioner still had more than $250,000, not including Social Security benefits, following the transfers. Under these circumstances, the petitioner met her burden of rebutting the presumption that the subject transfers were motivated by the anticipation of a future need to qualify for medical assistance … . Matter of Sandoval v Shah, 2015 NY Slip Op 07034, 2nd Dept 9-30-15

 

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Town Board’s “Adverse Effects” Findings Annulled as Inconsistent with Final Environmental Impact Statement (FEIS)

The Second Department determined Supreme Court properly annulled the town board’s findings that a project would have adverse environmental effects because the board’s findings were not consistent with the Final Environmental Impact Statement (FEIS). The court explained the board’s obligations and the courts’ review powers in this context:

Judicial review of an agency determination under SEQRA [State Environmental Quality Review Act] is limited to whether the agency procedures were lawful and “whether the agency identified the relevant areas of environmental concern, took a hard look’ at them, and made a reasoned elaboration’ of the basis for its determination” … . “In a statutory scheme whose purpose is that the agency decision-makers focus attention on environmental concerns, it is not the role of the courts to weigh the desirability of any action or choose among alternatives, but to assure that the agency itself has satisfied SEQRA, procedurally and substantively” … . The agency decision should be annulled only if it is arbitrary, capricious, or unsupported by the evidence … .

“The purpose of an environmental impact statement is to provide detailed information about the effect which a proposed action is likely to have on the environment, to list ways in which any adverse effects of such an action might be minimized, and to suggest alternatives to such an action so as to form the basis for a decision whether or not to undertake or approve such action” (ECL 8-0109[2]). In a findings statement, the lead agency “considers the relevant environmental impacts presented in an EIS, weighs and balances them with social, economic and other essential considerations, provides a rationale for the agency’s decision and certifies that the SEQRA requirements have been met” (6 NYCRR 617.2[p]…). Agencies have considerable latitude in evaluating environmental effects and choosing between alternatives … .

While an agency’s ultimate conclusion is within the discretion of the agency, it must be based upon factual evidence in the record and not generalized, speculative community objections … . “While an EIS does not require a public agency to act in any particular manner, it constitutes evidence which must be considered by the public agency along with other evidence which may be presented to such agency” … .

Here, the Supreme Court properly annulled the Board’s findings statement as unsupported by the evidence. The Board was required to render its conclusions regarding the sufficiency of mitigation measures, the propriety of permit approvals, and a balancing of considerations, based on the evidence contained in the environmental review. The Board’s conclusions in the findings statement were based, at least in part, on factual findings which were contradicted by the scientific and technical analyses included in the FEIS and not otherwise supported by empirical evidence in the record … .

The findings statement also failed to give sufficient consideration to the various alternative plans reviewed in the FEIS … . Matter of Falcon Group Ltd. Liab. Co. v Town/Village of Harrison Planning Bd., 2015 NY Slip Op 07025, 2nd Dept 9-30-15

 

Requirements of Adverse Possession by “Tacking” Explained (Not Met Here)

In affirming the grant of defendant’s motion for summary judgment dismissing the complaint claiming adverse possession of a strip of land, the Second Department explained the requirements for adverse possession by “tacking” the possession of prior owners:

A party claiming adverse possession may establish possession for the statutory period by “tacking” the time that the party possessed the property onto the time that the party’s predecessor adversely possessed the property … . Tacking is permitted where there is an “unbroken chain of privity between the adverse possessors” … . For tacking to apply, a party must show that the party’s predecessor “intended to and actually turned over possession of the undescribed part with the portion of the land included in the deed” … . In order to succeed on a claim of adverse possession, a party must provide clear and convincing evidence that the possession was “hostile and under a claim of right”; (2) actual; (3) open and notorious; (4) exclusive; and (5) “continuous for the statutory period of 10 years” … . The party must also show that the disputed property was “usually cultivated or improved” or “protected by a substantial inclosure” (RPAPL former § 522 …). Munroe v Cheyenne Realty, LLC, 2015 NY Slip Op 06902, 2nd Dept 9-23-15

 

Deed-Escrow Conditions Never Satisfied—Transfer Never Took Place

The Second Department explained that property is not transferred until the escrow conditions (re: a deed held in escrow) are satisfied:

“When a deed is delivered to be held in escrow, the actual transfer of the property does not occur until the condition of the escrow is satisfied and the deed is subsequently delivered to the grantee by the escrow agent” … . Here, in support of their motion for summary judgment dismissing the complaint, the defendants established their prima facie entitlement to judgment as a matter of law … by submitting, inter alia, an escrow agreement … entered into by the plaintiff and the defendant … . Pursuant to the agreement, an escrow agent was required to hold the deed to the subject property until the plaintiff paid certain sums due on a purchase money mortgage. The evidence proffered by the defendants established, prima facie, that the plaintiff failed to satisfy the aforementioned condition of the escrow agreement and, thus, actual transfer of the subject property to the plaintiff never took place. Xui v Iron City Properties, Inc., 2015 NY Slip Op 06898, 2nd Dept 9-23-15

 

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