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Denial of “Defective” No-Fault Claim (on Form UB-40) Was of No Effect—Failure to Respond Within 30 Days to a Subsequent “Correct” Claim (on Form NF-5) Precluded Insurer from Raising Defenses to the Claim

The Second Department determined the insurer’s denial of a defective claim was of no effect and the insurer’s failure to respond to the valid claim within 30 days precluded raising defenses to the claim:

[The insurer] contends that the 30-day period commenced when it received the Form UB-04 in December 2011, that it timely requested verification of the claim, and that, after it received the medical records, it timely denied the claim in January 2012. [the hospital] could not commence the 30-day clock anew by submitting the same claim several months later … .

We conclude that the Supreme Court erred in denying [the hospital’s] motion for summary judgment on the complaint and in granting [the insurer’s] cross motion for summary judgment dismissing the complaint. Under our decision in Sound Shore [106 AD3d 157], the 30-day period for [the insurer] to pay or deny the claim did not begin to run until March 26, 2012, when [the hospital] submitted the Form NF-5, which contained the information needed. Because [the insurer] did not pay or deny the claim within 30 days thereafter, it was precluded from raising defenses. In other words, the defective “claim” submitted in December 2011 did not start the 30-day clock, so [the insurer’s] denial in January 2012 was of no effect … . Mount Sinai Hosp v New York Cent Mut Fire Ins Co, 2014 NY Slip Op 05779, 2nd Dept 8-13-14

 

Mistaken Classification of Property Resulting In a Much Too Large Tax Bill Was a “Clerical Error” Which Could Be Corrected by the City Department of Finance—No Need for Property Owner to Commence a Tax Certiorari Proceeding

The Second Department, in a full-fledged opinion by Justice Leventhal, over a dissent, determined that the petitioner could challenge a mistaken classification of his property (which resulted in a property tax more than $40,000 too high) through an Article 78 proceeding finding that a tax certiorari proceeding under the Real Property Tax Law (RPTL) was not the exclusive vehicle for the challenge.  The Article 78 proceeding was timely, a tax certiorari proceeding would not have been timely.  The mistake was deemed a “clerical error” which could have been corrected by the NYC Department of Finance (DOF) pursuant to City Administrative Code sectionn 11-206:

We agree with the petitioner that the DOF’s determination, at the very least, suggests that it misapprehended both the relief sought by the petitioner as well as its authority to grant the relief actually requested. Administrative Code § 11-206 vests the DOF with the discretion to correct tax assessments that are erroneous due to a clerical error or to an error of description; the DOF’s authority is not limited to transcription errors or arithmetical errors. Moreover, contrary to the DOF’s representation in the letter dated March 24, 2011, the authority to correct such an error pursuant to Administrative Code § 11-206 does not lie with the Tax Commissioner or the judiciary. Therefore, the Supreme Court erred in granting the respondents’ motion pursuant to CPLR 3211(a)(5) and (7) to dismiss the petition on the grounds that it fails to state a cause of action and that the proceeding was time-barred. Matter of Better World Real Estate Group v New York City Dept of Fin, 2014 NY Slip Op 05786, 2nd Dept 8-13-14

 

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Failure to Move to Sever Unrelated Counts of Indictment Constituted Ineffective Assistance of Counsel

The Second Department determined defense counsel’s failure to move to sever unrelated counts of the indictment constituted ineffective assistance of counsel:

In this case, based solely on the complainant’s identification, the defendant and his codefendant were charged with robbery in the first degree and robbery in the second degree in connection with a robbery that occurred on November 6, 2005. The same indictment also separately charged the defendant with four drug offenses and resisting arrest, stemming from his arrest at his mother’s home on January 16, 2006, despite the fact that the drug and resisting arrest charges had no connection to the November 6, 2005, robbery. Defense counsel failed to make an on-the-record pretrial motion to sever the robbery charges from the other charges and did not raise the issue at trial, and the defendant was tried on all counts in the indictment. * * *

As a result of defense counsel’s error, the same jury that heard evidence regarding the robbery also heard voluminous evidence concerning the defendant’s arrest and the large quantity of drugs found in his mother’s home. Consequently, the jury could have inferred that the robbery at issue was committed for a drug-related purpose, and it is probable that the improper joinder tainted the jury’s evaluation of the separate, unrelated incidents … . Under the circumstances presented here, the defendant was deprived of the effective assistance of counsel, based on defense counsel’s failure to make a proper pretrial motion to sever the charges of robbery from the drug charges. People v Hall, 2014 NY Slip Op 05802, 2nd Dept 8-13-14

 

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Plaintiff Should Have Been Allowed to Add Doctor to Medical Malpractice Action After the Statute of Limitations Had Run—All the Relation-Back Criteria Were Met

The Second Department, reversing Supreme Court, found that the relation-back doctrine allowed the addition of a doctor (Persky) to a malpractice action after the statute of limitations had run.  Several notes in decedent’s medical records were signed by the doctor and the decedent died soon after she was discharged from the hospital, which plaintiff alleged was premature.  The court explained the relevant law:

“The relation-back doctrine, which is codified in CPLR 203(b), allows a claim asserted against a defendant in an amended complaint to relate back to claims previously asserted against a codefendant for statute of limitations purposes where the two defendants are united in interest'” … . In order for a claim asserted against a new defendant to relate back to the date the claim was filed against another defendant, the plaintiff must establish that (1) both claims arose out of the same conduct, transaction, or occurrence; (2) the new defendant is united in interest with the original defendant, and by reason of that relationship can be charged with notice of the institution of the action such that he or she will not be prejudiced in maintaining a defense on the merits; and (3) the new defendant knew or should have know that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against him or her as well … . “The linchpin’ of the relation-back doctrine is whether the new defendant had notice within the applicable limitations period” … .

it was not reasonable for Persky to conclude that the plaintiff intended to proceed only against the defendants named in the original summons and complaint, especially since the decedent died soon after she was discharged from the hospital, and the complaint asserted specific allegations of negligence relating to the decedent’s premature hospital discharge … . In addition, contrary to the conclusion of the Supreme Court, the plaintiff demonstrated that the failure to originally name Persky as a defendant was the result of a mistake, and there was no need to show that such mistake was excusable … . Roseman v Baranowski, 2014 NY Slip Op 05635, 2nd Dept 8-6-14

 

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Distinction Between New York College Funds, Which Are Protected Against Creditors, and College Funds Established in Other States, Which Are Not Protected, Does Not Violate the Equal Protection Clause

The Second Department determined that a college fund established under the laws of New Hampshire, unlike a college fund established under the laws of New York, was not entitled to the protection from creditors afforded by CPLR 5205.  The distinction between New York funds and funds established in other states was deemed to be constitutional:

The parties do not dispute that the protection from creditors afforded by CPLR 5205(j)(2) to college tuition savings program accounts defined in 26 USC § 529 (hereinafter 529 savings plans) does not apply where, as here, the accounts are not qualified college savings program accounts established pursuant to the New York State College Choice Tuition Saving Program, as set forth in Education Law article 14-A. The Supreme Court correctly concluded that the distinction made in CPLR 5205(j) between 529 savings plans established under the laws of New York, and those established in other states, or under the laws of other states, does not violate the equal protection clause of the United States Constitution. Since the classification “is not based on an inherently suspect characteristic and does not impermissibly interfere with the exercise of a fundamental right, it need only rationally further a legitimate state interest to be upheld as constitutional” … . Applying this standard of rational basis review, the court properly determined that CPLR 5205(j) was not unconstitutional, as the disparate treatment is not ” so unrelated to the achievement of any combination of legitimate purposes'” as to be irrational … . County Bank v Broderick, 2014 NY Slip Op 05621, 2nd Dept 8-6-14

 

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“Sua Sponte” Dismissal of Complaint Based on Lack of Standing Reversed

The Second Department, in a foreclosure action, determined Supreme Court abused its discretion in dismissing, sua sponte, the complaint on the ground the plaintiff lacked standing.  The court explained that sua sponte dismissal is warranted only in extraordinary circumstances, the defendants had not raised the “lack of standing” defense, and lack of standing is not a jurisdictional defect:

A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal … . Here, the Supreme Court was not presented with extraordinary circumstances warranting sua sponte dismissal of the complaint and cancellation of the notice of pendency. Since the defendants did not answer the complaint and did not make pre-answer motions to dismiss the complaint, they waived the defense of lack of standing … . Furthermore, a party’s lack of standing does not constitute a jurisdictional defect and does not warrant a sua sponte dismissal of the complaint by the court … . Bank of NY v Cepeda, 2014 NY Slip Op 05614, 2nd Dept 8-6-14

 

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Ordinary Negligence Standard Applied Where Ambulance (Responding to an Emergency) Struck Plaintiff Who Was Lawfully in the Crosswalk/Questions of Fact Whether There Was a “Special Relationship” Between the City’s Crossing Guard and the Plaintiff, and Whether the Crossing Guard Was Performing Ministerial, Rather than Discretionary, Functions (Such that the City Could Be Held Liable)

In a case involving a pedestrian who was lawfully crossing a street when struck by an ambulance responding to an emergency, in the presence of a city employee acting as a crossing guard, the Second Department determined that ordinary negligence standards applied to the ambulance (not the “emergence” “reckless disregard” standard of Vehicle and Traffic Law 1104) and that there were questions of fact whether the city was liable based upon a “special relationship” with the plaintiff and whether the city was liable because the crossing guard was performing ministerial, rather than discretionary, functions:

Failure to abide by the provisions set forth in Vehicle and Traffic Law §§ 1111 (duty to yield to pedestrians in crosswalk) and 1112 (pedestrian has right of way), which was the injury-causing conduct at issue here, is not privileged conduct pursuant to Vehicle and Traffic Law § 1104(b). As the injury-producing conduct was not specifically exempted from the rules of the road by Vehicle and Traffic Law § 1104(b), the principles of ordinary negligence apply … . * * *

“To impose liability [upon a municipality], there must be a duty that runs from the municipality to the plaintiff. We have recognized a narrow class of cases in which a duty is born of a special relationship between the plaintiff and the governmental entity” … . One of the ways that a special relationship arises is when the municipality “assumes a duty that generates justifiable reliance by the person who benefits from the duty” … . * * *

Further, “[g]overnment action, if discretionary, may not be a basis for liability, while ministerial actions may be, but only if they violate a special duty owed to the plaintiff apart from any duty to the public in general” … . Here, the City defendants failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against them on the basis that the crossing guard’s actions were discretionary. Based on their submissions in support of their cross motion, and under the circumstances here, the City defendants failed to eliminate all triable issues of fact as to whether the crossing guard’s actions constituted ministerial governmental functions … . Benn v New York Presbyt Hosp, 2014 NY Slip Op 05615, 2nd Dept 8-6-14

 

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Drug Treatment and Drug Testing Facilities Do Not Have a Duty to Provide the Test Results With a Disclaimer Indicating the Tests Were Done According to “Clinical,” Not “Forensic,” Standards—Here the “Clinical” Results Were Disseminated and Used In Court Proceedings

The Second Department, in a full-fledged opinion by Justice Skelos, with a concurring memorandum, determined that a substance abuse treatment facility (Daytop) and a drug testing laboratory (Bendiner) could not be liable for damages stemming from the dissemination of the results of drug tests (affecting Family Court and Drug Court proceedings).  The plaintiffs did not claim that the testing procedures were flawed or that the test results were false.  Rather, they claimed that, because the tests were done for “clinical,” not “forensic,” purposes, the results should have included a disclaimer indicating that they should not be used in court proceedings.  The Second Department refused to extend the duty owed to the plaintiffs by the defendants beyond the duty to ensure accurate test results:

Landon (91 AD3d 79, aff’d 22 NY3d 1) makes clear that there is a duty running from a drug testing laboratory to the subject of a drug test despite the lack of a contractual relationship between those parties. Further, it cannot be gainsaid that Daytop owes some duty of reasonable care to individuals it treats. The question presented here, as to both defendants, concerns the proper scope of that duty. More particularly, the question is whether the defendants’ duty of reasonable care includes the duty to label or place a disclaimer on a report, so as to indicate that the results are to be used only for clinical purposes. * * *

We conclude … that Bendiner did not have a duty to the plaintiffs to label its drug test results with a disclaimer, and that Daytop, when reporting the results to the drug treatment courts, did not have a duty to the plaintiffs to provide a disclaimer indicating that the positive test results were to be used for clinical purposes only.  Braverman v Bendiner & Schlesinger Inc, 2014 NY Slip Op 05618, 2nd Dept 8-6-14

 

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Criteria Re: Counties’ and Foster Care Agencies’ Liability for the Acts of Foster Parents Explained

In dismissing a complaint against a foster care agency based upon the alleged failure of the foster parent to seek medical care for the foster child, the Second Department explained the relevant law:

Counties and foster care agencies cannot be vicariously liable for the negligent acts of foster parents, who are essentially contract service providers … .

However, counties and foster care agencies may be sued to recover damages for negligence in the selection of foster parents and in supervision of the foster home … . In order to establish its prima facie entitlement to judgment as a matter of law dismissing so much of the complaint as alleged that it engaged in negligent placement and supervision, the appellant had to establish, prima facie, that it did not have sufficiently specific knowledge or notice of the alleged dangerous conduct which caused the infant’s injuries … . In other words, the appellant had to show that the third-party acts could not have been reasonably anticipated … . Keizer v SCO Family of Servs, 2014 NY Slip Op 06630, 2nd Dept 8-6-14

 

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Failure to Submit Management Agreement Required Dismissal of Property Managing Agent’s Motion for Summary Judgment in a Slip and Fall Case—the Terms of the Agreement Determine the Agent’s Liability

The Second Department determined that the property managing agent, in a slip and fall case, did not eliminate all triable issues of fact concerning liability for plaintiff’s fall on black ice because it did not submit a copy of the managing agreement with its motion for summary judgment:

As a general rule, liability for a dangerous or defective condition on real property must be predicated upon ownership, occupancy, control, or special use of that property … . A duty of care on the part of a managing agent may arise where there is a comprehensive and exclusive management agreement between the agent and the owner that displaces the owner’s duty to safely maintain the premises … . Here, in moving for summary judgment, the … defendants failed to submit a copy of the written management agreement. Consequently, they failed to establish, prima facie, that the managing agent owed no duty of care to the plaintiff … . Calabro v Harbour at Blue Point Home Owners Assn Inc, 2014 NY Slip Op 05620, 2nd Dept 8-6-14

 

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