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No Need to Be a Shareholder to Bring an Action Pursuant to BCL 720(b)

The Second Department noted there is no need to be a shareholder at the time a disputed resolution was adopted to bring an action for waste or breach of fiduciary duty pursuant to Business Corporation Law 720(b):

Unlike Business Corporation Law § 626, which authorizes a shareholder to bring a derivative action in the right of the corporation, Business Corporation Law § 720(b) authorizes a corporation, or an officer or director thereof, to commence an action to redress corporate waste or breach of fiduciary duty owed by officers and directors of the corporation … . While Business Corporation Law § 626(b) requires the plaintiff to be a shareholder at the time of the transaction of which he or she complains, there is no similar rule when a corporation, a director, or an officer commences an action pursuant to Business Corporation Law § 720(b) … . Gabel v Gabel, 2013 NY Slip Op 02050, 2011-10621, Index No 9839/10, 2nd Dept 3-27-13

 

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Criteria for 1983 Action Against Municipality Based On Policy or Custom

In reversing the trial court’s setting aside a verdict in favor of the plaintiff in an action for false arrest, the Second Department laid out the criteria for a 1983 action against a municipality in this context:

… [A]plaintiff may prevail on a cause of action to recover damages pursuant to 42 USC § 1983 against a municipality where the plaintiff proves the existence of “(1) an official policy or custom [on the part of a municipal defendant] that (2) cause[d] the claimant to be subjected to (3) a denial of a constitutional right” … . “For a cause of action pursuant to 42 USC § 1983 to lie against a municipality, the action that is alleged to be unconstitutional must implement[ ]or execute[ ] a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body’s officers'” …, or have occurred pursuant to a practice “so permanent and well settled as to constitute a custom or usage’ with the force of law” … .

“A municipal custom or policy can be shown by establishing that an official who is a final policy maker directly committed or commanded the violation of the plaintiff’s rights” … . Liability for a violation of 42 USC § 1983 may be predicated on “a single act, as long as it is the act of an official authorized to decide policy in that area” … .  Bassett v City of Rye, 2013 NY Slip Op 02037, 2011-10149, Index No 20430/05, 2nd Dept 3-27-13

 

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Assisting Resident Can Not Be Sued for Malpractice

In dismissing a medical malpractice complaint against a resident who assisted another doctor during surgery, the Second Department wrote:

A resident or fellow who is supervised by a doctor during a medical procedure, and who does not exercise any independent medical judgment, cannot be held liable for medical malpractice unless the resident or fellow knows that the supervising doctor’s orders are so clearly contraindicated by normal practice that ordinary prudence requires inquiry into the correctness of the orders, or the resident or fellow commits an independent act that constitutes a departure from accepted medical practice …. Poter v Adams, 2014 NY Slip Op 02061, 2012-03922, Index No 27069/09, 2nd Dept 3-27-13

 

Reapplication for Visitation Can Not Be Conditioned on Counseling or Treatment

In reversing Family Court’s denial of a petition for visitation by a noncustodial parent without a hearing, the Second Department determined a hearing must held and no counseling or treatment can be ordered as a condition of future visitation:

“[A] noncustodial parent is entitled to meaningful visitation. Denial of that right is so drastic that it must be based on substantial evidence that visitation would be detrimental to the welfare of the child” … . Generally, visitation should be determined after a full evidentiary hearing to determine the best interests of the child … . * * *

Moreover, “a court may not order that a parent undergo counseling or treatment as a condition of future visitation or reapplication for visitation rights, but may only direct a party to submit to counseling or treatment as a component of visitation” … .  Matter of Lew v Lew, 2013 NY Slip Op 02076, 2012-01599, Docket No V-6403/11, 2nd Dept 3-27-13

 

Excuse for Default Found Inadequate

The Second Department determined the motion court erred when it found defendant’s excuse for default in appearing or answering adequate:

While the determination of what constitutes a reasonable excuse lies within the sound discretion of the Supreme Court, a general assertion that the default was occasioned by the defendant’s insurance broker or liability carrier is insufficient … . Here, the defendant’s unsubstantiated claims that he believed that his insurance broker had forwarded the summons and complaint to his insurer and that his insurer was providing a defense are unreasonable given that the defendant was served with the plaintiff’s motion for leave to enter a default judgment … .   Spitzer v Landau, 2013 NY Slip Op 02067, 2012-05686, Index No 001868/11, 2nd Dept 3-27-13

 

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Defaulting Party Can Give Testimony and Present Evidence at Damages Proceeding 

The defendant’s answer in a partition action was struck due to his failure to comply with disclosure requests and court orders.  At the inquest the defendant was allowed to cross-examine plaintiff’s witnesses but was not allowed give testimony or offer proof in mitigation of the alleged damages.  The Second Department wrote:

[A] defendant whose answer is stricken as a result of a default admits all traversable allegations in the complaint, including the basic allegation of liability, but does not admit the plaintiff’s conclusion as to damages'” … . Indeed, where an entry of a default judgment against a defendant is made after an application to the court, the defendant is entitled to a ” full opportunity to cross-examine witnesses, give testimony and offer proof in mitigation of damages'” … .  Rawlings v Gillert, 2013 NY Slip Op 02063, 2011-11951, Index No 7570/08, 2nd Dept 3-27-13

 

Notice of Appearance Does Not Waive Lack of Jurisdiction Defense

The Second Department noted that filing a Notice of Appearance does not waive the lack of personal jurisdiction which can be raised in a motion to dismiss pursuant to CPLR 3211(a)(8) or as a defense in the answer pursuant to CPLR 3211.  Frederic v Israel, 2013 NY Slip Op 02049, 2012-03475, Index No 20290/06, 2nd Dept 3-27-13

 

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Criteria for Motions to Dismiss Pursuant to CPLR 3211 Discussed in Detail

In a full-fledged opinion by Justice Dickerson, the Second Department laid out the requirements for determining a motion to dismiss pursuant to CPLR 3211(a)(7), the elements of the theory of agency, the requirements for a judgment based on documentary evidence pursuant to CPLR 3211(a)(1), and the elements of a cause of action alleging breach of a fiduciary duty.  Faith Assembly v Titledge Of NY Abstract, LLC, 2013 NY Slip Op 02046, 2011-04345, Index No 28579/09, 2nd Dept 3-27-13

 

Plaintiff Could Not Demonstrate Valid “Nail and Mail” Service

The Second Department affirmed the trial court’s determination that plaintiff was unable to demonstrate the defendant had been validly served using the “nail and mail” method:

…[T]he Supreme Court properly granted that branch of the plaintiff’s motion which was to dismiss the complaint pursuant to CPLR. Where service is effected pursuant to CPLR 308(4), the so-called “nail and mail” method, the plaintiff must demonstrate that service pursuant to CPLR 308(1) or (2) (personal service or residence service) could not be made with ” due diligence'” … .This requirement must be ” strictly observed, given the reduced likelihood that a summons served pursuant to that section will be received'” … .

Here, the plaintiff produced the process server’s affidavit, which satisfied its prima facie burden regarding service. However, in her responsive affidavit, [defendant] rebutted that showing by stating specifically that (1) she was never personally served in this action, (2) she had never resided at the address where the process server attempted personal service and eventually affixed the papers, and (3) the summons and complaint were never affixed to the door of the subject premises where she had lived for more than 20 years. This showing was sufficient to warrant a hearing … .\At the hearing, the plaintiff failed to demonstrate that its process server made a genuine effort to determine [defendant’s] correct address or that he made “quality” efforts to serve her with process … . Aurora Loan Services, LLC v Gaines, et al, 2013 NY Slip Op 02034, 2011-04002, Index No 20180/08, 2nd Dept. 3-27-13

 

Buyout Upon Dissolution Can Be Ordered by Judge 

The Second Department determined a court can order a buyout of another’s interest in a limited liability company (LLC) upon judicial dissolution of the LLC:

The Limited Liability Company Law “does not expressly authorize a buyout in a dissolution proceeding “ … . Nonetheless, in certain circumstances, a buyout may be an appropriate equitable remedy upon the dissolution of an LLC … . Under the facts of this case, the remedy of a buyout by the plaintiff is appropriate … . Contrary to the defendant’s contention, the provisions of the LLC agreement regarding dissolution of the LLC do not preclude an order authorizing a buyout upon the judicial dissolution of the LLC pursuant to Limited Liability Company Law § 702 … . Mizrahi v Cohen, 2013 NY Slip Op 02056, 2012-02021, Index No 3865/10, 2nd Dept 3-27-13

 

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