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Late Disclaimer of Coverage Invalid 

In finding the insurer’s (Country-Wide’s) disclaimer of coverage invalid, the Second Department wrote:

[County-Wide’s] written disclaimer of coverage was untimely and invalid as a matter of law (see Insurance Law § 3420[d][2]). It is undisputed that [plaintiff] Jose R. Ramirez gave notice of the accident and claim to Country-Wide in a letter dated June 14, 2011, and that Country-Wide did not issue its disclaimer until August 15, 2011. While an insurer’s time to give written notice of disclaimer “is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage” …, the record demonstrates that the facts supporting the disclaimer in this case were either apparent from the claim documents submitted by Ramirez or were readily ascertainable upon the performance of a cursory investigation by Country-Wide … . Therefore, even if some investigation was warranted in this matter, the burden was on Country-Wide to demonstrate that the two-month delay in disclaiming was reasonably related to its performance of a prompt, diligent, thorough, and necessary investigation … . Since Country-Wide merely made a conclusory statement that the delay was occasioned by its investigation, and provided no details with regard to the specific efforts undertaken in conducting that investigation, it failed to sustain its burden of demonstrating that the delay was excusable, and the disclaimer was untimely as a matter of law … . Matter of Country-Wide Ins. Co. v Ramirez, 2013 NY Slip Op 01828, 2012-02056, Index No 12759/11, 2nd Dept. 3-20-13

 

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Criteria for Dismissal of Cause of Action Based on Documentary Evidence Explained 

The Second Department, in reversing the dismissal of causes of action in a complaint, explained the criteria for dismissal based on documentary evidence:

A motion to dismiss based on documentary evidence pursuant to CPLR 3211(a)(1) may be appropriately granted “only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” … . Here, to the extent that the sponsor’s submissions constituted “documentary evidence” within the meaning of CPLR 3211(a)(1) …, they failed to utterly refute the cooperative’s allegations … . Accordingly, the Supreme Court should have denied those branches of the sponsor’s motion which were to dismiss the first, second, and fourth causes of action pursuant to CPLR 3211(a)(1). North Shore Towers Apts. Inc. v Three Towers Assoc., 2013 NY Slip Op 01812, 2012-00848, Index No 11834/10, 2nd Dept. 3-20-13​

 

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Criteria for Motion to Renew Based on New Facts Not Met

In reversing the trial court’s grant of summary judgment, the Second Department explained that CPLR 2221(a) had been misused to revisit a prior motion, and that the motion should have been brought under CPLR 2221 (e) as a motion for leave to renew based on new facts.  The motion should have been denied because the defendant failed to provide “reasonable justification” for the failure to present the “new” facts in the first motion:

The Supreme Court improperly granted the defendant’s motion, denominated as one pursuant to CPLR 2221(a) to modify the order entered September 28, 2011. CPLR 2221(a) merely provides that certain motions may be made, on notice, to the judge who signed the order that is the subject of the motion. In actuality, the defendant sought to present new facts in partial opposition to the motion for summary judgment, which were not presented on the initial motion. Thus, the defendant’s motion should have been made pursuant to CPLR 2221(e) for leave to renew its prior opposition to the motion for summary judgment, based upon new facts, and we construe it as such. However, the defendant failed to show its entitlement to that relief. The defendant failed to demonstrate “reasonable justification” for its failure to present such facts on the prior motion (CPLR 2221[e][2]). Mount Sinai Hosp v Dust Tr., Inc., 2013 NY Slip Op 01811, 2012-03767, Ind No 10715/10, 2nd Dept. 3-20-13

 

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Court’s Sua Sponte Dismissal of Complaint Reversed

The Second Department reversed the trial court’s sua sponte dismissal of plaintiff’s mortgage foreclosure complaint.  The trial court dismissed the complaint on the ground that the plaintiff lacked standing and imposed sanctions based on plaintiff’s alleged reliance upon a “robosigner” (according to the trial court’s own Internet research).  On the issues of “sua sponte” dismissal and standing, the Second Department wrote:

The Supreme Court abused its discretion in, sua sponte, directing dismissal of the complaint with prejudice and cancellation of the notice of pendency … . “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 any extraordinary circumstances warranting sua sponte dismissal of the complaint. Moreover, as the defendants failed to 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 sua sponte dismissal of a complaint by the court … .  HSBC Bank USA, NA v Taher, 2013 NY Slip Op 01806, 2011-06455, 2012-00841, Index No 9320/09, 2nd Dept. 3-20-13

 

Amendment of Reply to Add Statute of Limitations Defense Allowed

In affirming the grant of a motion to amend a reply to add the “statute of limitations” defense, the Second Department wrote:

“Leave to amend a pleading should be freely given (see CPLR 3025[b]), provided that the amendment is not palpably insufficient, does not prejudice or surprise the opposing party, and is not patently devoid of merit” … . “A determination whether to grant such leave is within the Supreme Court’s broad discretion, and the exercise of that discretion will not be lightly disturbed” … . “Mere lateness is not a barrier to the amendment. It must be lateness coupled with significant prejudice to the other side” … .The plaintiff waived its statute of limitations defense by failing to assert it as an affirmative defense in its initial reply to the appellants’ counterclaims (see CPLR 3211[e]). However, defenses waived under CPLR 3211(e) can nevertheless be interposed by leave of court pursuant to CPLR 3025(b) so long as the amendment does not cause the other party prejudice or surprise resulting directly from the delay … . Aurora Loan Services, LLC v Dimura, et al, 2013 NY Slip Op 01797, 2012-04739,Index No 2455/09, 2nd Dept. 3-20-13

 

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No Appeal Lies from Direction to Settle Judgment on Notice

After denying a motion to set aside a verdict, the trial court directed the parties to settle judgment on notice.  The appeal of ruling was dismissed.  The Second Department explained: “[N]o appeal lies from a decision, or an appealed paper directing the settlement of a judgment (see CPLR 5512[a]; … . Moreover, plaintiff’s right to a direct appeal from any order denying a motion to set aside the verdict terminated with the entry of a judgment (see CPLR 5501…).”  Ryals v New York City Tr. Auth., 2013 NY Slip Op 01630, 9544 21244/04, 1st Dept. 3-14-13

 

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Res Ipsa Loquitur Is Rarely a Basis for Summary Judgment/Questions of Fact About Defendant’s Control of the Instrumentality Causing Injury Precluded Summary Judgment.

A homeowner was sued by a utility employee who was injured when a staircase leading to the homeowner’s basement collapsed.  At the deposition the homeowner testified the house was new when he bought it and he had made no alterations to the stairway.  The plaintiff was granted summary judgment pursuant to the doctrine of res ipsa loquitur.  The Second Department reversed because it could not be ruled out that the builder of the home, and not the defendant, was negligent.  It was not demonstrated, therefore, that the accident was caused by an instrumentality in the exclusive control of the defendant.  The Court wrote:

The plaintiff’s reliance on the doctrine of res ipsa loquitur was insufficient to establish his prima facie entitlement to judgment as a matter of law. A plaintiff must establish the following in order for the doctrine to apply: “(1) the event must be of a kind which ordinarily does not occur in the absence of someone’s negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; (3) it must not have been due to any voluntary action or contribution on the part of the plaintiff” … . Only in the rarest cases will a plaintiff be awarded summary judgment or judgment as a matter of law in the course of a trial by relying upon the doctrine of res ipsa loquitur … .  Bunting v Haynes, 2013 NY Slip Op 01521, 2012-01717, Index No 25382/10, Second Dept. 3-13-13

 

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Doctrine of Equitable Mootness for Bankruptcy Ruling ​

In this contract action, the issue at the heart of the case before the Second Department was the preclusive effect of a bankruptcy court ruling and the doctrine of “equitable mootness” which prohibits disturbing a bankruptcy plan already implemented.  The easiest way to convey the nature of the legal issues in the case is to quote the relevant discussions in the Second Department’s decision:

In light of authority holding that a court should apply the rules of res judicata followed in the jurisdiction that rendered the earlier decision …, we apply federal res judicata law in determining whether the doctrine of res judicata bars this action … .

Under federal res judicata law, subsequent litigation is prohibited if a prior court ruling ” was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case involving the same parties or their privies, and (4) involving the same cause of action” … . This rule applies with full force to matters decided by the bankruptcy courts, including those concerning Chapter 11 reorganization … . Moreover, in the bankruptcy context, the court must also consider whether an independent judgment in a separate proceeding would ” impair, destroy, challenge, or invalidate the enforceability or effectiveness'” of the reorganization plan … .

The plaintiffs contend that there was no final judgment on the merits because the appeal from the 2009 New York bankruptcy court order was dismissed on the ground of equitable mootness. Equitable mootness is invoked to avoid disturbing a reorganization plan once implemented …. When a plan has been substantially consummated, an appeal should be dismissed unless several requirements, the most important of which is that the appellant sought a stay of confirmation, are satisfied … .

Here, the District Court dismissed the appeal from the 2009 New York bankruptcy court order because the Kmart reorganization plan had been implemented and RM 18 had failed to seek a stay of the confirmation. Once the appeal was dismissed as moot, the 2009 New York bankruptcy court order became final …. Since there was no vacatur of the 2009 New York bankruptcy court order, it has preclusive effect … . …[T]he plaintiffs may not maintain the present litigation, which challenges [the] final adjudication by a court of competent jurisdiction … .  RM 18 Corp. v Bank of NY Mellon Trust Co., N.A., 2013 NY Slip Op 01541, 2011-o9112, Index No 15992/10, 2nd Dept. 3-13-13

 

 

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Taser or Stun Gun Is Not a “Dangerous Instrument” for Purposes of Burglary and Menacing Statutes; Court Must Articulate Specific Reasons for Shackling Defendant During Trial

Proof that the defendant threatened the complainant with a taser or stun gun was legally insufficient to establish the “dangerous instrument” element of burglary in the first degree and menacing in the second degree.  Although the Second Department determined it was harmless error, the Court also noted that it was error to shackle the defendant and put black bunting around the defense table, without also putting black bunting around the prosecution table. The jury, in that circumstance, may have inferred the bunting was designed to hide shackles.  “The federal constitution ‘forbids the use of visible shackles … unless that use is justified by an essential state interest … specific to the defendant on trial’ …”.  County Court, in this instance, failed to articulate on the record an adequate justification individualized to the defendant for the shackling … .  People v Morillo, 2013 NY Slip Op 01572, 2010-11438, Ind No 2052/09, 2nd Dept. 5-13-13

 

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Guilty Plea Precludes Appeal of Statutory Speedy Trial Violation But Not Constitutional Speedy Trial Violation

By pleading guilty a defendant forfeits appellate review of a claim that his statutory right to a speedy trial pursuant to Criminal Procedure Law 30.30 was violated. However, a defendant’s constitutional speedy trial claim survives both a guilty plea and a waiver of the right to appeal. People v Franco, 2013 NY Slip Op 01570, 2009-10119, Ind No 10795/07, 2nd Dept. 3-13-13

 

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