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Strict Foreclosure and Reforeclosure Actions Not Available Against Easement Holder

The Second Department determined that neither a strict foreclosure action (RPAPL 1352) nor a reforeclosure action (RPAPL 1503) can be brought to extinguish an easement where the easement holder was not named in the foreclosure action:

A purchaser of foreclosed property may, under certain circumstances, commence a strict foreclosure action pursuant to RPAPL 1352 … . RPAPL 1352 “authorizes the court to issue a judgment that fixes a time period within which any person having a right of redemption or right to foreclose a subordinate lien must act to redeem or begin a foreclosure action” (id.; see RPAPL 1352). If the person with a right of redemption or subordinate lien fails to redeem the property or commence a foreclosure action within the fixed time period, “all title or interest” this person has in or against “such property shall thereby be extinguished and terminated” (RPAPL 1352…).

A purchaser of a foreclosed property may, under certain circumstances, also commence a reforeclosure action pursuant to RPAPL 1503 … . “When real property has been sold pursuant to a judgment in an action to foreclose a mortgage,” a purchaser of a foreclosed property may maintain a reforeclosure action “to determine the right of any person to set aside such judgment, sale or conveyance or to enforce an equity of redemption or to recover possession of the property, or the right of any junior mortgagee to foreclose a mortgage” (RPAPL 1503). * * *

An easement holder, unlike a mortgagee … or a tenant …, does not fall within the class of persons against whom a strict foreclosure or reforeclosure action may be brought (see RPAPL 1352, 1503). An easement is not a lien or a mortgage… . Moreover, an easement holder that is not named in the foreclosure action does not have a right of redemption. An easement holder, unlike a tenant, does not have a possessory interest in the burdened land (…Property § 450; 1 Rasch, New York Law and Practice of Real Property § 18.8 [2d ed]). Thus, such actions cannot be maintained against an easement holder. Bass v D Ragno Realty Corp, 2013 NY Slip Op 07924, 2nd Dept 11-27-13

 

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Driver’s Statement In a Plea Proceeding that She Did Not Have Permission to Use Defendant-Owner’s Vehicle at the Time of the Accident Insufficient to Overcome Statutory Presumption Of Operation with Owner’s Consent

The Second Department determined defendant (Tumbiolo) had not overcome the presumption that the driver (Commisso) of Tumbiolo’s vehicle was operating the vehicle with Tumbiolo’s permission:

Vehicle and Traffic Law § 388 creates a strong presumption that the driver of a vehicle is operating it with the owner’s consent, which can only be rebutted by substantial evidence demonstrating that the vehicle was not operated with the owner’s permission” … . “Although the rule is not absolute or invariable, in most cases uncontradicted disavowals of permission by both the owner of the vehicle and the driver will constitute substantial evidence negating permissive use and entitle the owner to summary judgment”… . * *

…[T]o the extent that Tumbiolo seeks to utilize a transcript of a plea proceeding dated October 21, 2011, wherein Commisso answered “[n]o” when asked if she had “permission” to “take” the subject vehicle, Commisso’s prior statement is not admissible under the provisions of CPLR 4517. Further, Commisso’s prior statement would be admissible as an “admission by a party” only as against Commisso, not as against the plaintiff … . Additionally, Tumbiolo failed to show that Commisso’s prior statement would be admissible as a declaration against pecuniary, proprietary, or penal interest, which are exceptions to the rule against hearsay (… Jerome Prince, Richardson on Evidence § 8-403 [Farrell 11th ed 2008]). Diaz v Tumbiolo, 2013 NY Slip Op 07930, 2nd Dept 11-27-13

 

 

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Defendant Not Prejudiced by Disposal of Damaged Goods (Spoliation)/Lost Profits Recoverable Where Purchase Price Set at Time of Damage

The Second Department affirmed several rulings made by the trial court in the damages aspect of a trial in which plaintiff alleged defendant’s malfunctioning sprinkler system ruined over $1 million worth of clothing stored in the building. The fact that plaintiff disposed of some of the damaged clothes and sold the remainder for salvage (spoliation) did not prejudice the defendant. And, the fact that a purchase price for some of the goods had already been set at the time of the loss allowed recovery for lost profits because the loss was not speculative:

The Supreme Court providently exercised its discretion in denying that branch of the defendant’s motion which was pursuant to CPLR 3126 to preclude the plaintiff from offering at trial any evidence of damages based upon spoliation of evidence. The defendant failed to establish that it was severely prejudiced by the disposal and sale of the damaged goods, fatally compromising its ability to mount a defense and necessitating such relief as a matter of fundamental fairness… . * * *

“Generally, where property is damaged but not destroyed, the measure of damages is the difference between the market value before the damage and the market value afterwards” … . The market value of a merchant’s goods is the price at which they could be replaced in the market, not the retail price at which they could be sold … . This is because allowing recovery of the retail value of damaged goods “would in effect overcompensate the merchant by allowing recovery of unearned profits” (2-248 Warren’s Negligence in New York Courts § 248.01[3][b] [2013]).

Here, however, the plaintiff was not holding the goods in stock in anticipation of trying to sell them at retail for “uncertain and indefinite profits which the plaintiff might have made” from their sale … . Rather, the goods were already under contract for a specified price and awaiting delivery. “[W]here . . . a loss of profits is the natural and probable consequence of the [defendant’s negligence], and their amount is shown with reasonable or sufficient certainty, there may be a recovery” … .  Ever Win Inc v 1-10 Indus Assoc, 2013 NY Slip Op 07933, 2nd Dept 11-27-13

 

Defendant Presented No Evidence When Defective Bar Stool Was Last Inspected and No Evidence the Defect Was Latent—Summary Judgment Properly Denied

The Second Department determined the defendant was not entitled to summary judgment in a premises liability case.  Part of plaintiff’s finger was severed when he sat down on a bar stool.  There was a gap when the stool was lifted by the seat because the screws connecting the seat to the frame were either missing or loose:

In a premises liability case, the defendant property owner who moves for summary judgment has the initial burden of establishing that it did not create the defective condition or have actual or constructive notice of its existence … . To provide constructive notice, “a defect must be visible and apparent and it must exist for a sufficient length of time prior to the accident to permit defendant’s employees to discover and remedy it… . “[C]onstructive notice will not be imputed where a defect is latent and would not be discoverable upon reasonable inspection” … .

Here, the Supreme Court properly denied the defendant’s motion for summary judgment dismissing the complaint since the defendant failed to establish, prima facie, that it maintained its premises in a reasonably safe condition and that it did not create the alleged defective condition or have actual or constructive notice of it … . The defendant failed to specify when it last inspected the subject stool prior to the accident. Additionally, the defendant failed to show that the alleged defective condition of the stool was latent. McGough v Cryan Inc, 2013 NY Slip Op 07944, 2nd Dept 11-27-13

 

Questions of Fact About Whether Amusement Ride On Sidewalk Created an Inherently Dangerous Condition and Whether the Hazard Was Latent or Open and Obvious

The Second Department determined a question of fact had been raised about whether the placement of an amusement ride on the sidewalk created an inherently dangerous condition.  Plaintiff turned a corner and was injured when he bumped into the machine

[Defendants’] submissions failed to establish that the Mickey Mouse ride had been placed on the sidewalk in such a manner as to comply with the New York City Administrative Code (see Administrative Code of City of NY § 19-136[a], [j]). Hence, they failed to exclude the possibility that the ride obstructed the sidewalk or otherwise created an inherently dangerous condition. Moreover, “the issue of whether a hazard is latent or open and obvious is generally fact-specific and thus usually a jury question” …. . “A condition that is ordinarily apparent to a person making reasonable use of his or her senses may be rendered a trap for the unwary where the condition is obscured or the plaintiff is distracted” … . Here, in view of the alleged circumstances of the plaintiff’s accident, a triable issue of fact exists as to whether the condition was open and obvious. Toro v Friedland Props Inc, 2013 NY Slip Op 07960, 2nd Dept 11-27-13

 

Father Demonstrated His Loss of Employment Justified a Downward Modification of Child Support

The Second Department determined Family Court erred when it held father had not demonstrated his loss of employment constituted a substantial and unanticipated change in circumstances justifying a downward modification of his child support obligations:

Loss of employment may at times constitute a substantial and unanticipated change in circumstances … . A party seeking a downward modification of his or her child support obligation based upon a loss of employment has the burden of demonstrating that he or she diligently sought to obtain employment commensurate with his or her earning capacity … .

Here, the father testified that he is unable to pay child support because he lost his prior job in October 2010. More specifically, he stated that he had been working at a restaurant in the dual capacity of manager and head waiter. Following his loss of that employment, he sought and obtained a position as a manager at a restaurant at a lesser salary, but could not find a position working in the dual capacity of manager and head waiter.

Under these circumstances, the father demonstrated that his loss of employment and obtainment of new employment at a lesser salary constituted a substantial and unanticipated change in circumstances, and that he made a good faith effort to obtain new employment which was commensurate with his qualifications and experience… .  Matter of Dimaio v Dimaio, 2013 NY Slip Op 07969, 2nd Dept 11-27-13

 

 

Defendant Should Have Been Advised of His Right to Be Heard in Resentencing Proceeding Pursuant to CPL 440.46

The Second Department determined the failure to inform defendant of his right to be heard in a resentencing proceeding pursuant to CPL 440.46 required a remittance:

The statutory procedures governing the determination of a motion for resentencing pursuant to CPL 440.46 provide, in pertinent part, that “[t]he court shall offer an opportunity for a hearing and bring the applicant before it” (L 2004, ch 738, § 23; see CPL 440.46[3]…). The defendant’s presence is not required for the court’s threshold determination of the purely legal issue of whether the defendant meets the statutory eligibility requirements for relief pursuant to CPL 440.46 …, but the defendant is entitled to appear before the court and to be given an opportunity to be heard with respect to the merits of the resentencing motion … .

Here, the defendant was not brought before the Supreme Court prior to the court’s determination that, although he met the statutory eligibility requirements, substantial justice dictated that his motion for resentencing should be denied. There is nothing in the record to indicate that the defendant was ever advised of his statutory right to be brought before the court, or that he knowingly, intentionally, and voluntarily chose to relinquish that right … .The Supreme Court therefore failed to comply with the statutory mandate… .  People v Duke, 2013 NY Slip Op 07983, 2nd Dept 11-27-13

 

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Double Hearsay in Presentence Report Did Not Render the Information Unreliable Re: a SORA Sex Offender Proceeding

The Second Department determined that the presence of double hearsay in a presentence report did not render the information unreliable such that it could not be considered in a SORA proceeding to determine the level of a sex offender:

“In assessing points, evidence may be derived from the defendant’s admissions, the victim’s statements, evaluative reports completed by the supervising probation officer, parole officer, or corrections counselor, case summaries prepared by the Board of Examiners of Sex Offenders . . . or any other reliable source, including reliable hearsay” … . Here, as the People correctly point out, the presentence report prepared by the Department of Probation, the felony complaint sworn to and signed by the arresting officer, and the arrest report constituted “reliable hearsay” (Correction Law § 168-n[3]) and provided clear and convincing evidence that the defendant was armed with a dangerous instrument during the commission of the rape … . Contrary to the defendant’s contention, the fact that certain statements contained in these documents constituted “double hearsay” did not necessarily render them unreliable for purposes of a SORA hearing … . Moreover, even though certain proof may not have been admissible at the criminal trial, the Legislature did not limit the types of materials admissible in a SORA proceeding to what would be admissible at a civil or criminal trial… . People v Dash, 2013 NY Slip Op 07948, 2nd Dept 11-27-13

 

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Condominium Owners Stated a Cause of Action Based Upon Third-Party-Beneficiary Status Re: a Contract Between the Village and an Engineer Hired to Inspect the Condominiums/The Contract Cause of Action Precluded the Professional Malpractice Cause of Action

The Second Department determined that a cause of action based upon the theory that condominium owners were third-party beneficiaries of a contract between a village and an engineer hired to inspect the condominiums should not have been dismissed.  It was alleged that the engineer approved the buildings (leading to the issuance of certificates of occupancy by the village) despite defects, including the absence of firewalls. Because a contract-based theory had been properly alleged, the related professional malpractice cause of action, sounding in negligence, should have been dismissed:

In determining third-party beneficiary status it is permissible for the court to look at the surrounding circumstances as well as the agreement . . . Moreover, it is well settled that the obligation to perform to the third party beneficiary need not be expressly stated in the contract” … . Here, the plaintiffs submitted an affidavit from the Village Attorney attesting that the Village engaged the defendant to perform the subject inspections for the benefit of the purchasers of the subject condominiums … . Moreover, “the identity of a third-party beneficiary need not be set forth in the contract or, for that matter, even be known as of the time of its execution” … .

The plaintiffs asserted in the complaint that the defendant “negligently performed inspection services relative to the homes in [Encore I] and [Encore II],” in that, inter alia, the defendant “fail[ed] to detect the existence of defects in the homes and appurtenant common areas.” “[M]erely alleging that a party breached a contract because it failed to act with due care will not transform a strict breach of contract claim into a negligence claim” … . This is because “[o]bligations that flow exclusively from a contract must be enforced as contractual duties under a theory of contract law” … . “[A] court enforcing a contractual obligation will ordinarily impose a contractual duty only on the promisor in favor of the promisee and any intended third-party beneficiaries” … . “Thus where a party is merely seeking to enforce its bargain, a tort claim will not lie'” .. . Taking into account the applicable factors, including “the nature of the injury, the manner in which the injury occurred and the resulting harm” … , it is clear that the plaintiffs, as third-party beneficiaries, are seeking enforcement of the defendant’s promise to properly inspect the construction of the subject homes. Thus, the only claim the plaintiffs have alleged against the defendant is one sounding in contract, and they have failed to state a cause of action sounding in tort. Accordingly, the Supreme Court properly directed dismissal of the second cause of action pursuant to CPLR 3211(a)(7). Encore Lake Grove Homeowners Assn Inc v Cashin Assoc PC, 2013 NY Slip Op 07932, Second Dept 11-27-13

 

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CPLR 3408, Which Requires a Settlement Conference in a Foreclosure Action Involving a Primary Residence, Does Not Apply Where the Mortgage Collateralizes a Personal Guaranty of a Commercial Loan to a Corporation

In a full-fledged opinion by Justice Cohen, the Second Department determined a statute designed to assist homeowners faced with foreclosure on their primary residence (calling for a settlement conference) did not apply where the mortgage collateralizes a personal guaranty of a commercial loan to a corporation:

CPLR 3408 (requiring a settlement conference) is certainly applicable to many residential foreclosure actions. However, CPLR 3408 does not apply to every residential foreclosure action. Indeed, CPLR 3408 is limited to residential foreclosure actions involving home loans as the term “home loan” is defined by RPAPL 1304. As so defined, home loans are those which are made to a natural person and in which the debt incurred is primarily for personal, family, or household purposes (see RPAPL 1304[5][a][ii], [iii]).

The borrower, as defined under the instant term loan agreement and the note, and the entity that is recognized in the guaranty, was [a corporation]. … The borrower …was not a natural person (see RPAPL 1304[5][a][ii]).

Further, the debt incurred was the $230,000 loan given to [the corporation]. The Supreme Court correctly determined that since the purpose of the loan was to purchase machinery and equipment, and to fund other various start-up, closing, and construction costs associated with fashioning a … store, it was clearly not primarily incurred for personal, family, or household purposes (see RPAPL 1304[5][a][ii]…).  Independence Bank v Valentine, 2013 NY Slip Op 07937, 2nd Dept 11-27-13

 

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