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THE TAX APPEALS TRIBUNAL’S DETERMINATION THAT PETITIONERS CANNOT REDUCE THEIR NEW YORK ADJUSTED GROSS INCOME BY THE AMORTIZED PREMIUMS ON THEIR OUT-STATE-BONDS UPHELD (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Fisher, upheld the Tax Appeals Tribunal’s determination that petitioners can not reduce their New York adjusted gross income by amortized premiums on their out-of-state bonds:

Petitioners are married and residents of New York. During the years 2012 through 2016 (hereinafter the years at issue), they engaged in an investment strategy that included purchasing out-of-state bonds on the secondary market. Due to the initial interest rate of the bonds being higher than the prevailing market rate at the time of purchase, petitioners also paid an additional premium to acquire the bonds. Where the duration of a bond exceeded one year, petitioners further made an upfront premium payment for each remaining year until the bond’s maturity. As relevant here, the amount of the premium paid for each year of the bond is called the amortized premium.

On their respective tax returns for the years at issue, petitioners sought to reduce their New York adjusted gross income by the amortized premiums on their out-of-state bonds. Following an audit, notices of deficiency were issued to petitioners by the Department of Taxation and Finance (hereinafter the Department) stating that they owed additional income taxes for the years at issue, plus interest and penalties. Thereafter, the Department determined that petitioners could not subtract the premiums directly from their interest income, but rather may only report such premiums as part of their itemized deduction, and ultimately issued notices of disallowance. Matter of Ciardullo v McDonnell, 2025 NY Slip Op 03365, Third Dept 6-5-25

 

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THE STATUTE OF LIMITATIONS FOR BREACH OF FIDUCIARY DUTY BEGINS TO RUN WHEN THERE HAS BEEN AN OPEN REPUDIATION OF FIDUCIARY OBLIGATIONS; HERE THERE HAS NOT BEEN SUCH AN OPEN REPUDIATION; THE STATUTE NEVER BEGAN TO RUN AND THE MOTION TO DISMISS THE SHAREHOLDER DERIVATIVE ACTION AS UNTIMELY SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that this shareholder derivative action, which alleged breach of fiduciary duty, should not have been dismissed as time barred. Open repudiation of the the fiduciary obligation, which triggers the running of the statute of limitations, never occurred:

To dismiss a cause of action pursuant to CPLR 3211 (a) (5) on the ground that it is barred by the applicable statute of limitations, a defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired” … . “[C]laims alleging a breach of fiduciary duty do not accrue until there is either an open repudiation of the fiduciary obligation or a judicial settlement of the account” … . This is so because, “absent either repudiation or removal, the aggrieved part[y] [is] entitled to assume that the fiduciary would perform his or her fiduciary responsibilities” … . “The party asserting the statute of limitations defense bears the burden of proof on the issue” … . “Open repudiation requires proof of a repudiation by the fiduciary which is clear and made known to the beneficiaries” … . “Where there is any doubt on the record as to the conclusive applicability of a [s]tatute of [l]imitations defense, the motion to dismiss the proceeding should be denied, and the proceeding should go forward” … .

Here, defendants did not proffer, or even assert, that they have openly repudiated their obligations as fiduciaries or that the relationship has otherwise terminated. Lambos v Karabinis, 2025 NY Slip Op 03367, Third Dept 6-5-25

Practice Point: Here there was never an open repudiation of fiduciary obligations so the statute of limitations on the breach-of-fiduciary-duty cause of action never began to run.

 

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HERE FATHER MOVED TO DISMISS MOTHER’S PETITION TO MODIFY CHILD SUPPORT AT THE CLOSE OF MOTHER’S PROOF; AT THAT STAGE OF THE PROCEEDINGS THE COURT MUST ACCEPT PETITIONER’S EVIDENCE AS TRUE AND RESOLVE ALL CREDIBILITY QUESTIONS IN PETITIONER’S FAVOR; THE MOTION TO DISMISS SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT).

he Third Department, reversing Family Court’s dismissal of mother’s petition to modify child support, determined that the judge applied the wrong standard when deciding father’s motion to dismiss at the close of mother’s proof. At that stage the judge must accept petitioner’s evidence as true, and must resolve all credibility issues in petitioner’s favor. The judge’s comments on witness credibility indicated the correct standard was not applied:

A noncustodial parent’s statutory duty to support his or her child until they reach 21 years of age may be suspended where the noncustodial parent establishes that the custodial parent has wrongfully interfered with or withheld visitation rights … . Although the parent seeking such suspension must ultimately demonstrate “deliberate frustration” or “active interference” with their visitation rights by a “preponderance of the evidence” … , where, as here, “Family Court is tasked with deciding a motion to dismiss at the close of the petitioner’s proof, the court must accept the petitioner’s evidence as true and afford the petitioner every favorable inference that could reasonably be drawn from that evidence, including resolving all credibility questions in the petitioner’s favor” … . * * *

Family Court’s commentary on witness credibility in resolving the subject motion to dismiss suggests to this Court that an incorrect legal standard was applied … . When viewed in the proper light, we find that the … proof was sufficient to withstand a motion to dismiss …  Thus, without passing judgment upon the ultimate success of the mother’s claim, we reverse. Matter of Crystal NN. v Joshua OO, 2025 NY Slip Op 03368, Third Dept 6-5-25

Practice Point: In this modification of child support proceeding, father moved to dismiss mother’s petition at the close of mother’s proof. In evaluating the motion at that stage of the proceedings, the court must accept all of petitioner’s evidence as true, afford the petitioner all favorable inferences from the evidence, and resolve all credibility issues in petitioner’s favor. The failure to apply those standards to consideration of the motion to dismiss requires reversal.

 

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AN ADMINISTRATIVE PROCEEDING WAS BROUGHT BY THE UNIVERSITY AGAINST PETITIONER-STUDENT BASED UPON ANOTHER STUDENT’S (THE REPORTING INDIVIDUAL’S) ALLEGATIONS SHE WAS SEXUALLY ASSAULTED; THE UNIVERSITY’S TITLE IX GRIEVANCE POLICY PROVIDES THAT WHERE, AS HERE, THE REPORTING INDIVIDUAL IS ABSENT FROM THE HEARING AND IS NOT SUBJECT TO CROSS-EXAMINATION, ANY DETERMINATION BY THE UNIVERSITY CANNOT BE BASED UPON STATEMENTS ATTRIBUTED TO THE REPORTING INDIVIDUAL; THE DETERMINATION WAS ANNULLED ON THAT GROUND (THIRD DEPT).

The Third Department, annulled the university’s determination petitioner had violated the university’s “Community Rights and Responsibilities” by sexually assaulting the reporting individual. Petitioner did not deny kissing an touching the reporting individual, but contended all the interactions were consensual. The reporting individual did not testify at the hearing. The university’s Title IX grievance policy provides that, when the reporting individual does not testify and is not subject to cross-examination, the determination cannot be based upon any statement attributed to the reporting individual. Here statements by the reporting individual were the basis for the university’s determination:

Petitioner contends that he was denied due process because he was not afforded the opportunity to question the reporting individual, who did not testify at the hearing or otherwise submit to cross-examination. Under the circumstances presented here, we agree and conclude that annulment is required. “In general, there is a limited right to cross-examine an adverse witness in an administrative proceeding, and the right to cross-examine witnesses generally has not been considered an essential requirement of due process in school disciplinary proceedings” … . Nevertheless, “[i]t is well established that once having adopted rules or guidelines establishing the procedures to be followed in relation to suspension or expulsion of a student, colleges or universities — both public and private — must substantially comply with those rules and guidelines” … . Matter of Bibler v State Univ. of N.Y. at Albany, 2025 NY Slip Op 03373, Third Dept 6-5-25

Practice Point: In a university disciplinary proceeding stemming from an allegation of sexual assault, the right to cross-examine the accuser is not considered an essential requirement of due process. However, the university is required to abide by its own rules. Here the rules stated that, where the accuser is absent from the hearing and is not cross-examined, the university’s determination cannot be based upon statements made by the accuser. The university’s failure to comply with that rule required that the determination be annulled.

 

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THE NYS DEPARTMENT OF EDUCATION’S CALCULATION OF THE STUDENT TUITION TO BE PAID TO CHARTER SCHOOLS UPHELD (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Ceresia, upheld the NYS Education Department’s calculation of the student tuition to be paid to petitioners, operators of charter schools in New York City. The calculation was not “arbitrary or capricious.” Matter of Coney Is. Preparatory Pub. Charter Sch. v New York State Educ. Dept., 2025 NY Slip Op 03374, Third Dept 6-5-25

 

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BECAUSE THE CRIMES INVOLVED ARE NOT “REGISTRABLE OFFENSES” AND NOTHING IN DEFENDANT’S CRIMINAL HISTORY WERE SEX OFFENSES, THE JUDGE SHOULD NOT HAVE IMPOSED SPECIALIZED SEXUAL OFFENDER CONDITIONS UPON DEFENDANT’S PROBATION (THIRD DEPT).

The Third Department, modifying the judgment of conviction, determined the specialized sexual offender conditions should not have been imposed upon defendant’s probation because the underlying offenses had no connection to sex offenses:

Although neither burglary in the third degree (see Penal Law § 140.20), the crime for which defendant was indicted, nor criminal trespass in the second degree (see Penal Law § 140.15 [1]), the crime for which defendant was convicted, qualify as registerable offenses under Correction Law § 168-a (2), we previously have held that it may be “proper to impose sex offender conditions in cases which do not technically qualify as sex offender cases, . . . so long as the conditions imposed are reasonably related to the defendant’s rehabilitation, are reasonably necessary to insure that the defendant will lead a law-abiding life, and are necessary or appropriate to ameliorate the conduct which gave rise to the offense or to prevent the incarceration of the defendant” … . That said, upon reviewing defendant’s criminal history and considering the circumstances underlying the crime of conviction, we agree with defendant that the specialized sexual offender conditions imposed by County Court do not meet that standard.

Regardless of whether defendant completed sex offender treatment prior to being successfully discharged from probation in Florida in September 2000, the fact remains that — in the nearly 25 years that have elapsed since then — defendant has not been charged with any additional sex offenses; indeed, prior to the underlying trespass incident in March 2023, it appears that defendant — with the exception of an unspecified “criminal registration” offense in Florida in November 2000 — was not charged with any new crimes at all. Additionally, the criminal trespass conviction did not stem from defendant entering a school, no children were present at the time of the offense (or otherwise involved or implicated in its commission) and the underlying crime was not even tangentially related to either a sex or child welfare offense … . Under these circumstances, County Court abused its discretion in imposing the specialized sexual offender conditions upon defendant’s probation. People v Rhodehouse, 2025 NY Slip Op 03228, Third Dept 5-29-25

Practice Point: Although specialized sexual offender conditions can be imposed upon probation where the underlying crimes are not sex offenses, here it was an abuse of discretion to do so, based upon the absence of sex offenses from defendant’s criminal history.

 

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BECAUSE DEFENSE COUNSEL DID NOT CONSENT TO THE ISSUANCE OF A PROTECTIVE ORDER REGARDING THE PEOPLE’S DISCOVERY OBLIGATIONS, THE JUDGE WAS REQUIRED TO HOLD A HEARING; MATTER REMITTED; ON REMITTAL THE PEOPLE SHOULD PROVIDE WRITTEN NOTICE OF THE REQUEST TO DEFENSE COUNSEL AND, TO FACILITATE ANY REQUEST FOR AN EXPEDITED REVIEW, DEFENSE COUNSEL SHOULD BE PROVIDED WITH A COPY OF THE PROTECTIVE ORDER (THIRD DEPT). ​

The Third Department, vacating the protective order and remitting the matter, determined the County Court failed to hold the hearing which is required where defense counsel did not consent to the issuance of a protective order. The Third Department offered guidance on how the further proceedings should be conducted, i.e., defense counsel should be given advanced written notice of the request for a protective order (a motion by order to show cause), and, to facilitate an expedited review, defense counsel should be provided with a copy of the protective order:

Pursuant to CPL 245.70 (3), “[u]pon request for a protective order, unless the defendant voluntarily consents to the people’s request for a protective order, the court shall conduct an appropriate hearing within three business days to determine whether good cause has been shown.” Here, it is undisputed that defense counsel did not consent to the People’s proposed protective order for the disputed materials…. . …

… [I]t is true that, under certain circumstances and in an appropriate case, CPL 245.70 (1) permits a court to conduct ex parte proceedings and accept in camera submissions. … “[T]he better practice, in most cases, would be for the People to provide the defendant with advanced written notice, by way of motion brought on by order to show cause, that certain information had not been disclosed and a protective order was being sought under CPL 245.70” … . Proceeding in this manner would “allow defense counsel to see the portions of the People’s written application that contained legal argument or other matter that would not reveal the information sought to be covered by the protective order” … , and ensure that defense counsel has a meaningful opportunity to participate in the hearing to the fullest extent practicable. …

… [R]ecognizing that CPL 245.70 (6) provides an opportunity for expedited review of a protective order by a Justice of the Appellate Division, “within two business days of the adverse or partially adverse ruling,” the party seeking such expedited review should be provided a copy of the subject order. While the papers submitted in support of the People’s application for a protective order and the hearing transcript may be appropriately sealed to preserve the confidentiality of sensitive information … , the same does not hold true for the protective order itself. That said, in drafting a protective order, the court should be mindful not to discuss the protected materials or include confidential information that would obviate the basis for granting the protective order or sealing the documents and materials considered. People v Murphy, 2025 NY Slip Op 02975, Third Dept 5-15-25

Practice Point: Where defense counsel does not consent to a protective order, the statute requires the judge to conduct a hearing. Failure to hold the hearing requires vacation of the protective order.

Practice Point: The better practice is to notify defense counsel of the request for a protective order by a motion brought by an order to show cause.

Practice Point: Defense counsel who seeks an expedited review should be provided with a copy of the protective order.

 

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DEFENDANT WAS ENTITLED TO THE ASSIGNMENT OF NEW COUNSEL BASED UPON COUNSEL’S REMARK THAT DEFENDANT’S REQUEST TO WITHDRAW HIS PLEA WAS UNWARRANTED; THE JUDGE SHOULD HAVE CONDUCTED AN INQUIRY ABOUT DEFENDANT’S REQUEST FOR SUBSTITUTE COUNSEL AND HIS REQUEST TO WITHDRAW HIS PLEA; MATTER REMITTED FOR ASSIGNMENT OF NEW COUNSEL AND A SUFFICIENT INQUIRY BY THE JUDGE (THIRD DEPT).

The Third Department, over a dissent, determined defendant’s appeal waiver was invalid, defendant demonstrated a conflict of interest on assigned counsel’s part, and the judge did not conduct a proper inquiry about defendant’s requests for new counsel and to withdraw his guilty plea. The Third Department vacated defendant’s sentence, not the conviction or plea, and remitted the matter for the assignment of new counsel and an inquiry about defendant’s request for substitute counsel and his request to withdraw his plea:

At sentencing, the Conflict Defender explained that she had “numerous phone conversations” with defendant about the grounds for his motion — namely, that assigned counsel’s communication of the People’s plea offer amounted to coercion; that defendant’s learning disability had prevented him from comprehending the consequences of his plea; and that the Conflict Defender was herself conflicted out of representing defendant. Based on her conversations with defendant, the Conflict Defender stated to County Court, “I don’t believe there is anything that warranted [defendant] withdrawing a plea, so I didn’t file a motion” … . “While apparently inadvertent, counsel’s remark . . . affirmatively undermined arguments her client wished the court to review, thereby depriving defendant of effective assistance of counsel” … , and the court should have relieved the Conflict Defender and assigned new counsel to represent defendant on the motion … .

We also agree with defendant that the allegations of assigned counsel’s ineffectiveness were sufficiently serious and factually specific to trigger County Court’s duty to consider his request for substitute counsel … . An indigent defendant’s right to court-appointed representation “does not encompass a right to appointment of successive lawyers at defendant’s option” … . “Rather, a defendant may be entitled to new counsel only upon showing good cause for a substitution, such as a conflict of interest or other irreconcilable conflict with counsel” … . * * *

In addition to alleging that assigned counsel coerced him into pleading guilty, defendant’s letters to County Court asserted that assigned counsel failed to visit him in jail or discuss his case with him; dodged his phone calls on specific dates; sent other attorneys to represent defendant who did not seem to be knowledgeable about the case; intended to oppose any motion defendant made to substitute counsel; and told defendant that his only other options for representation were to hire private counsel or represent himself. Further, defendant indicated that assigned counsel misadvised defendant about his sentencing exposure in a prior case, resulting in an appeal from that conviction on the ground of assigned counsel’s ineffectiveness. Defendant also alleged that assigned counsel was not relaying information or following his instructions in representing him in a separate, contemporaneous criminal action against him. Reading defendant’s allegations of ineffectiveness in the context of defendant’s purported history with assigned counsel, defendant’s complaints set out a plausible claim that the trust and communication between him and assigned counsel had broken down irretrievably … . Faced with these complaints, the court was required to “make at least a minimal inquiry, and discern meritorious complaints from disingenuous applications by inquiring as to the nature of the disagreement or its potential for resolution” … . People v Ubrich, 2025 NY Slip Op 02824, Third Dept 5-8-25

Practice Point: Here defense counsel’s remark that defendant’s request to withdraw his plea was unwarranted demonstrated a conflict of interest requiring the assignment of new counsel.

Practice Point: Here defendant raised serious issues about assigned counsel’s representation requiring the judge to consider his request for substitute counsel.

Practice Point: Here defendant raised serious issues in support of his request to withdraw his guilty plea which required an inquiry by the judge.

 

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BECAUSE THE INITIAL USE OF THE ROADWAY WAS PERMISSIVE, AND THERE WAS NO HOSTILE USE FOR THE REQUIRED TEN YEARS, THE CRITERIA FOR A PRESCRIPTIVE EASEMENT WERE NOT MET; HOWEVER BECAUSE THE INITIAL USE WAS PERMISSIVE AND CONTINUED FOR 50 YEARS, THE CRITERIA FOR AN EASEMENT BY ESTOPPEL WERE MET (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that plaintiffs did not have a prescriptive easement over defendants’ properties, but did have an easement by estoppel. Because there was an agreement among the original owners of the three adjacent camps to construct, maintain and use a roadway providing vehicular access to all three camps, and because there had been no hostile use of the roadway for ten years, the requirements for a prescriptive easement were not met. However plaintiffs were entitled to an easement by estoppel. The court noted that the Statute of Frauds does not apply to an easement by estoppel:

[Re; a prescriptive easement] … [B]ecause plaintiffs’ predecessors’ use of the extension was permissive, the element of hostility was negated … . Therefore, no adverse use could have arisen until there was the assertion of a hostile right … , which, at the earliest, occurred in 2018. We are presented with a permissive use that did not ripen into a prescriptive one for the time required … .

Yet, these same facts establish plaintiffs’ entitlement to an easement by estoppel … . “An easement by estoppel may arise when, among other things, a party reasonably relies upon a servient landowner’s representation that an easement exists” … . The uncontested existence of the agreement between the parties’ predecessors for the construction and use of the extension, together with the time and expense of not only the initial construction but, also, the continued 50-year maintenance thereof, demonstrates that plaintiffs “undertook . . . action[s] to their detriment in reasonable reliance upon a representation that they held an easement” … . Sardino v Scholet Family Irrevocable Trust, 2025 NY Slip Op 02828, Third Dept 5-8-25

Practice Point: Consult this decision for clear illustrations of the criteria for a prescriptive easement and an easement by estoppel.

 

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CONFINEMENT IN A RESIDENTIAL MENTAL HEALTH TREATMENT UNIT (RMHU) FOR 17 HOURS A DAY, WITH AT LEAST SEVEN HOURS OF OUT-OF-CELL TIME PER DAY, FOR MORE THAN THREE DAYS, DOES NOT VIOLATE THE HUMANE ALTERNATIVES TO LONG-TERM SOLITARY CONFINEMENT ACT (HALT ACT) (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Pritzker, determined the sanctions imposed upon petitioner, an incarcerated person with serious mental illness, did not violate the Humane Alternatives to Long-Term Solitary Confinement Act (HALT Act) but did violate the Special Housing Unit Exclusion Law (SHU Exclusion Law):

… [P]etitioner remained in the RMHU [residential mental health treatment unit] where he received at least seven hours of out-of-cell time, therefore he was not in segregated confinement, which is defined as “the confinement of an incarcerated individual in any form of cell confinement for more than [17] hours a day” (Correction Law § 2 [23]). * * * Therefore, based on the foregoing, DOCCS [Department of Corrections and Community Supervision] did not violate Correction Law § 137 (6) (k) (ii) by placing petitioner in the RMHU longer than three days without the requisite findings under the HALT Act.

However … we do find that the disciplinary sanctions, as written, violated the SHU Exclusion Law as set forth in Correction Law § 401. To that end, Correction Law § 401 provides that “[a]n incarcerated individual . . . shall not be sanctioned with segregated confinement for misconduct [in an RMHTU], or removed from the unit and placed in segregated confinement or a[n RRU (residential rehabilitation unit)], except in exceptional circumstances where such incarcerated individual’s conduct poses a significant and unreasonable risk to . . . safety . . . and . . . has been found to have committed an act or acts defined in [Correction Law § 137 [k] [6] [ii]]” (Correction Law § 401 [5] …). “Because the statute is phrased in the disjunctive” … , DOCCS must find that exceptional circumstances existed and a Correction Law § 137 (6) (k) (ii) act occurred if either 1) the incarcerated individual is sanctioned with segregated confinement for misconduct on the unit or 2) the incarcerated individual is removed and placed in segregated confinement or an RRU. Here, the former applies as petitioner was sanctioned, in writing, with segregated confinement in the RMHU but was not found, in a written determination, to have committed an act pursuant to Correction Law § 137 (6) (k) (ii), a fact which is uncontested by either party. Thus, the written disciplinary sanction was in violation of the SHU Exclusion Law. Therefore, the disciplinary sanctions imposed upon petitioner must be annulled. Matter of Walker v Commissioner, N.Y. State Dept. of Corr. & Community Supervision, 2025 NY Slip Op 02834, Third Dept 5-8-25

 

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