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Class Certification Not Available When Action Seeks Payment of a Nonwaivable Penalty

The Second Department, reversing Supreme Court, determined the respondent county’s request for class certification should not have been granted because the action sought payment of a penalty.  The county was seeking to act on behalf of 55 other governmental agencies to recover a “hotel tax” which allegedly was not fully paid by the appellants, online sellers of hotel accommodations:

Pursuant to CPLR 901(b), “Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.” “However, even where a statute creates or imposes a penalty, the restriction of CPLR 901(b) is inapplicable where the class representative seeks to recover only actual damages and waives the penalty on behalf of the class, and individual class members are allowed to opt out of the class to pursue their punitive damages claims” … . Nonetheless, the “waiver” exception to CPLR 901(b) does not apply where a penalty is mandatory and cannot be waived … .

Here, the plaintiff cannot obtain class certification of this action because, under the plaintiff’s own Hotel Tax law, it is required to recover a “penalty” of 5% of the amount of the tax allegedly due from the appellants within the meaning of CPLR 901(b), the recovery of which in a class action is not specifically authorized in the Hotel Tax law, and the imposition of which cannot be waived, as conceded by the plaintiff’s representative during the deposition. Accordingly, the Supreme Court should have denied the plaintiff’s motion pursuant to CPLR article 9 for class certification of this action. County of Nassau v Expedia Inc, 2014 NY Slip Op 06050, 2nd Depy 9-10-14

 

60-Day Rule Did Not Apply—Failure to Submit Proposed Order Within 60 Days Did Not Constitute Abandonment of the Claim

The Second Department determined the 60-day rule with respect to the submission of orders did not apply:

22 NYCRR 202.48, entitled “[s]ubmission of orders, judgments and decrees for signature,” states in pertinent part:

“(a) Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted.

“(b) Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown.”

Here, the so-called 60-day rule set forth in 22 NYCRR 202.48 is not applicable because the Supreme Court’s direction that the defendants submit a proposed order with respect to an award of an attorney’s fee did not specify that the proposed order be settled or submitted on notice … . Accordingly, the plaintiff’s contention that the defendants abandoned their claim for an award of an attorney’s fee by failing to comply with the 60-day rule is without merit. 47 Thames Realty LLC v Robinson, 2014 NY Slip Op 06051, 2nd Dept 9-10-14

 

Collateral Estoppel Precluded Plaintiff’s Action—Defendant’s Alleged Default Irrelevant

The Second Department determined defendant’s default did not preclude the dismissal of the complaint pursuant to the collateral estoppel doctrine:

“The litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in the prior action against a party,” and “the party to be precluded from relitigating the issue bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination” … .

Here, the defendant established that the decisive issues in this case were necessarily decided against the plaintiff in the prior case, and the plaintiff failed to demonstrate that he was not afforded a full and fair opportunity to contest that prior determination. Thus, the doctrine of collateral estoppel barred the plaintiff from maintaining this action. Although the defendant allegedly defaulted in answering the complaint in the instant action, even where such a default has occurred, a plaintiff is only entitled to a default judgment if the complaint states a viable cause of action … . Under these circumstances, the plaintiff has no viable cause of action against the defendant that would warrant entry of a default judgment against it … . Abrahams v Commonwealth Land Tit Ins Co, 2014 NY Slip Op 06042, 2nd Dept 9-10-14

 

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General Permit for Municipal Storm Water Discharge Does Not Violate Federal or State Law

The Second Department reversed Supreme Court’s determination that a general permit issued by the NYS  Department of Environmental Conservation (DEC) to municipalities for storm water discharge violated federal and state law.  One of the principle objections to the general permit was that it did not ensure municipalities would set appropriate limits on storm water pollutants.  The decision is very detailed and cannot be briefly summarized here:

The petition organized the alleged violations of state and federal law into four general groups, asserting that:

(1) the General Permit failed to ensure that small municipalities reduced their pollutant discharges to the maximum extent practicable, in violation of 33 USC § 1342(p)(3)(B)(iii) and ECL 17-0808(3)(c);

(2) the General Permit failed to ensure that small municipalities complied with state water quality standards, in violation of ECL 17-0811(5) and ECL 17-0813;

(3) the General Permit failed to ensure that small municipalities monitored their storm water discharges, in violation of 33 USC § 1318(a) and ECL 17-0815(8); and

(4) the General Permit did not provide for public participation in the permit process, in violation of 33 USC §§ 1251(e), 1342(a)(1), and 1342(j), and ECL 17-0805(1)(a)(ix). * * *

The General Permit at issue on this appeal is consistent with the scheme for general permits envisioned by the EPA, and is designed to meet the maximum extent practicable standard prescribed by 33 USC § 1342(p)(3)(B)(iii) and ECL 17-0808(3)(c). The General Permit requires entities seeking coverage to “develop, implement and enforce” a stormwater management plan designed to address pollutants of concern and “reduce the discharge of pollutants from the small MS4” to the maximum extent practicable, so as “to protect water quality, and to satisfy the appropriate water quality requirements of the ECL and the Clean Water Act” (see General Permit at 14, 95). A stormwater management plan must, inter alia, identify and describe the chosen best management practices and include measurable goals for each such practice (see General Permit at 95). The General Permit provides applicants with resources, including examples of successful stormwater management plans, a “menu” of best management practices, and suggested measurable goals (see General Permit at 95).  Matter of Natural Resources Defense Council Inc New York State Dept of Envtl Conservation, 2014 NY Slip Op 06090, 2nd Dept 9-10-14

 

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City’s Operation of a Parking Garage is a Proprietary Not Governmental Function—City Can Be Sued For Failing to Provide Adequate Safety to Patrons

The Second Department determined a wrongful death action against the city alleging failure to provide adequate safety measures in a parking garage (owned and operated by the city) could go forward.  The court determined the operation of the garage was a proprietary function and the city could therefore be sued:

The security deficiencies alleged by the plaintiffs do not involve governmental functions or arise out of a pure “exercise of discretion . . . with respect to [overall] security measures and the deployment of limited police resources” … . The instant matter does not involve allegations of, for example, the lack of patrol cars or officers on foot patrolling the garage and the lack of general police protection …, “mobilization of police resources for the exhaustive study of the risk of terrorist attack, the policy-based planning of effective counterterrorist strategy, and the consequent allocation of such resources” …, participation by a teacher in supervising a playground as part of a school district’s overall security system strategy …, or a policy decision with respect to how the issue of homelessness should be addressed … . Rather, the gravaman of the complaint is not that the City failed to properly allocate government resources and services to the public at large, which was utilizing the garage, but that it failed in its capacity as a commercial owner of a public parking garage to meet the basic proprietary obligation of providing minimal security for its garage property via lighting, alarms, cameras, and warning signs. These measures are within the normal range of security measures necessary to satisfy the duty of care owed by any landlord or commercial property owner to its tenants or invitees. In the “continuum of responsibility to individuals and society deriving from its governmental and proprietary functions,” the lapses complained of encompass a failure to maintain the reasonable security measures expected of any landlord … .

Since the City acted in its proprietary, rather than its governmental, capacity here, we must consider the issue of whether or not the attack upon the decedent was foreseeable in light of a landlord’s duty to take minimal precautions to protect its tenants and invitees from foreseeable harm … . Here, the Supreme Court correctly determined that triable issues of fact existed as to the foreseeability of an attack upon the decedent, thus precluding the award of summary judgment to the City … . Granata v City of White Plains, 2014 NY Slip Op 06053, 2nd Dept 9-10-14

 

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Elements of Fraud, Money Had and Received, and Unjust Enrichment Explained

In finding the allegations in the complaint insufficient, the Second Department explained the elements of causes of action for fraud, money had and received, and unjust enrichment:

The elements of a cause of action based on fraud are “a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury” … . The misrepresentation may be in the form of an omission of a material fact … . Although the question of what constitutes reasonable reliance is usually fact-intensive …, where the plaintiff alleges only that the defendant omitted a material fact when making a representation to another party, the plaintiff has failed to state a cause of action against either the representor or the representee … . * * *

“The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money”… . * * *

In a cause of action to recover damages for unjust enrichment, “[a] plaintiff must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered” … . The plaintiff, in his complaint, did not identify any money that was retained … at his expense and, in any event, “[a]lthough privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated” … . Lebovits v Bassman, 2014 NY Slip Op 06061, 2nd Dept 9-10-14

 

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County’s Failure to Demonstrate Proper Maintenance of Sewer System Precluded Summary Judgment

The Second Department determined the county was not entitled to summary judgment dismissing a complaint based upon negligent maintenance of a sewer system:

A municipality is immune from liability “arising out of claims that it negligently designed [a] sewerage system” … . However, a municipality “is not entitled to governmental immunity arising out of claims that it negligently maintained the sewerage system as these claims challenge conduct which is ministerial in nature” … . In order for a municipality to demonstrate its prima facie entitlement to judgment as a matter of law in sewer backup cases, the municipality must show that it had no ” notice of a dangerous condition,'” and that “it regularly inspected and maintained the subject sewer line” … .

Here, although there is nothing in the record to show that the defendant County of Suffolk had prior notice of a dangerous condition in the subject sewer system, the County’s proof regarding its regular inspection and maintenance of the sewer system was deficient. Gugel v County of Suffolk, 2014 NY Slip Op 06054, 2nd Dept 9-10-14

 

Arbitrator’s Award Which Did Not Resolve the Controversy Properly Vacated

The Second Department held the arbitrator’s award was properly vacated because it was neither final nor definite and failed to determined damages.  The petitioner was injured while riding in respondent-county’s bus:

Although judicial review of arbitration awards is limited …, an award will be vacated when the arbitrator making the award “so imperfectly executed it that a final and definite award upon the subject matter submitted was not made” (CPLR 7511[b][1][iii]…). An award will be vacated as indefinite or nonfinal for purposes of CPLR 7511 if it does not “dispose of a particular issue raised by the parties” …, or ” if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy'” … .

Here, the arbitrator’s award was neither definite nor final, as it failed to resolve the controversy submitted, to wit, the negligence of each party and the amount of damages, if any. The arbitrator did not make any specific findings of fact or credibility or dispose of the issues raised by the parties. Instead, the arbitrator pointed to a fact not in dispute—that the petitioner was not wearing a seatbelt—and determined that he did not need to decide whether the County was negligent. In doing so, the arbitrator failed to dispose of the controversy with which he had been charged … .

Moreover, the arbitrator also failed to determine damages and instead referred to the parties’ agreement, to which he was not privy, and awarded the petitioner “the low” sum of damages, despite finding that the petitioner was barred from recovering any damages … .  Matter of Andrews v County of Rockland, 2014 NY Slip Op 06078, 2nd Dept 9-10-14

 

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Allegations of Mutual Mistake in Counterclaim and Affirmative Defense Not Made With Requisite Particularity

The Second Department determined the allegations of mutual mistake were not made with the requisite particularity and the related counter claim and affirmative defense were properly granted:

“A claim of mutual mistake is stated where the allegations indicate that the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement” … . Absent fraud, “the mistake shown must be one made by both parties to the agreement, so that the intentions of neither are expressed in it” … . “A claim predicated on mutual mistake must be pleaded with the requisite particularity necessitated under CPLR 3016(b)” …, which provides that “where a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail.” Ultimately, the proponent of reformation based on mutual mistake must demonstrate the particulars of the actual agreement intended by the parties, based on the particularized allegations in the complaint… . Friedland Realty Inc v 416 W LLC, 2014 NY Slip Op 06052, 2nd Dept 9-10-14

 

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