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Although a “Fundamental” Error Requiring Reversal If Preserved, Failure to Administer the Oath of Truthfulness to Potential Jurors is Not a “Mode of Proceedings” Error

The Third Department determined that defendant was not entitled to reversal based on the trial judge’s failure to administer the oath of truthfulness to potential jurors (Criminal Procedure Law 270.15(1)(a))  because the error, although fundamental, was not preserved for appeal by objection. It was not a “mode of proceedings” error (which would not need to be preserved by objection to require reversal). Had the error been preserved, reversal would have been mandatory. People v Chancey, 2015 NY Slip Op 03197, 3rd Dept 4-16-15

 

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Criteria for an Application for a Use Variance Explained—Not Met Here

The Third Department reversed Supreme Court’s dismissal of a petition to annul the zoning board of appeals’ grant of a use variance to the respondent.  Respondent operates a manufacturing facility in a residential zone.  The facility pre-dated the ordinance making the zone exclusively residential.  The Third Department, in a previous appeal, determined that an addition to the manufacturing facility constituted an unlawful expansion of a nonconforming use.  Thereafter the respondent procured a use variance from the zoning board of appeals.  In concluding the use variance must be annulled, the Third Department explained that the applicant for a use variance must demonstrate the property cannot “yield a reasonable return if used for any of the purposes permitted as it is currently zoned…”.  In this case, the respondent was required to show that using the property for manufacturing without using the disputed addition would not yield a reasonable return. And the respondent was required to demonstrate that converting the entire property, not just the disputed addition, to residential use would not yield a reasonable return.  The respondent indicated only that the addition would be used to store old equipment and only attempted to demonstrate that conversion of the disputed addition (not the entire property) to residential use would not yield a reasonable return. Neither showing was sufficient:

An applicant for a use variance bears the burden of demonstrating, among other things, that the property cannot yield a reasonable return if used for any of the purposes permitted as it is currently zoned (see Town Law § 267-b [2] [b]…). Where, as here, a use variance is sought to expand a nonconforming use, “the applicant must demonstrate that the land cannot yield a reasonable return if used as it then exists or for any other use allowed in the zone” … . Such an inability to yield a reasonable return must be established through the submission of “dollars and cents” proof with respect to each permitted use (… .

Since the operation of the industrial manufacturing facility, as it existed at the time the prohibitory zoning ordinance was enacted in 1983, was a nonconforming use that was permitted to continue because the property was devoted to such a use before the ordinance took effect, it was a use that was permitted in that zone. Further, the property is located in an R1 residential district and, thus, residential uses were also permitted in that zone. Therefore, respondents had the burden of proving that their property could not yield a reasonable return if used as a presently existing nonconforming use — i.e., as a manufacturing facility without use of the addition for manufacturing purposes — or if used for any residential use … . Respondents’ proof was insufficient to meet either of these showings.

With regard to whether the property could yield a reasonable rate of return if continued to be used for manufacturing purposes without utilizing the 800-square-foot addition, the evidence presented at the hearing established that the addition is used to house older equipment that has been replaced by more advanced, efficient equipment. * * *

Even if there were sufficient proof to demonstrate an inability to realize a reasonable return on the property if used as it presently exists for manufacturing purposes, no evidence was presented as to the financial implications of converting the entire property to residential use, [*3]which is a use permitted in that zone. While financial evidence was presented on the cost of converting the addition to a residential use, “[it] is . . . with respect to the whole tract that reasonableness of return is to be measured”… . The fact that respondents’ application for a use variance was limited to the addition is of no moment; the inquiry as to an inability to realize a reasonable return may not be segmented to examine less than all of an owner’s property rights subject to a regulatory regime … . Matter of Nemeth v Village of Hancock Zoning Bd. of Appeals, 2015 NY Slip Op 03008, 3rd Dept 4-9-15

 

Employer Did Not Exercise Sufficient Control over Claimant’s Work—Finding that Claimant Was an Employee Was Not Supported

The Third Department reversed the Unemployment Insurance Appeal Board’s ruling that claimant was an employee of Stacy Blackman Consulting (SBC).  The court explained: “Claimant … executed an agreement that designated him an independent contractor. He further negotiated his own fee, was not reimbursed for expenses, and was not provided with any benefits. SBC did not train, supervise or otherwise direct claimant in the performance of his work, although it did require him to turn over whatever application materials he had helped prepare. SBC also did not perform any substantive review of claimant’s work, did not require him to attend any meetings or consult with it, and allowed him to decline assignments and take time off as he saw fit. Moreover, while the parties’ agreement required claimant to keep sample application materials provided by SBC confidential and imposed restrictions on his ability to work for competitors in the field, the president of SBC testified without contradiction that she had never enforced those provisions and had permitted claimant to work elsewhere. ”  Matter of Jhaveri (Commissioner of Labor), 2015 NY Slip Op 03019, 3rd Dept 4-9-15

The Third Department reversed the Unemployment Insurance Board’s ruling that claimant was an employee of Encore, an event staffing company which refers persons, called brand ambassadors,  to clients who want to promote a product at an event. The court wrote: “…[T]he pertinent inquiry is whether Encore exercised control “over the results produced or the means used to obtain those results, with control over the latter being the more important factor to consider” … Here, the evidence reveals that Encore retained little or no control over either the means or results of the work performed by the brand ambassadors. Significantly, Encore did not conduct interviews, auditions or background checks, did not review credentials or set the rate of pay, did not provide training or supervision at events, did not establish work schedules, did not supply equipment, clothing or props and did not evaluate performance. Notably, it was the clients who directed the brand ambassadors by providing them with instruction on how to promote the specific products or services.” Matter of Lee (Commissioner of Labor), 2015 NY Slip Op 03022, 3rd Dept 4-9-15

 

Bank May Still Be Lawful Holder of a Note and Mortgage, and Therefore Have Standing to Bring a Foreclosure Action, After the Loan Has Been Sold

The Third Department reversed Supreme Court’s grant of summary judgment to defendant in a foreclosure action.  Supreme Court held that the plaintiff, Wells Fargo Bank, did not have standing to bring the foreclosure action because the loan had been sold to Fannie Mae at the time the action was started.  The Third Department explained that if Wells Fargo was the lawful holder of the note and mortgage when the action was brought, even though the beneficial interests in the note had been sold, it would have standing. “Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff … .” Here a question of fact whether plaintiff physically possessed the note at the time the action was commenced precluded summary judgment:

Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff (see UCC 1-201…). Notably, “[t]he holder of an instrument whether or not he [or she] is the owner may transfer or negotiate it[, and] discharge it or enforce payment in his [or her] own name” (UCC 3-301 … ).. Here, the note was originated by plaintiff and a copy submitted on the motion, alleged to be in plaintiff’s possession at the time it commenced this action, is endorsed in blank. Thus, notwithstanding the sale of the beneficial interests of the note to Freddie Mac, plaintiff has the right to enforce the note as its lawful holder so long as it can prove that it physically possessed the note at the time the action was commenced. Wells Fargo Bank, NA v Ostiguy, 2015 NY Slip Op 03015, 3rd Dept 4-9-15

 

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Where It Was Not Clear that Grand Jury Proceedings in Which a County Employee Was Directed to Appear Involved a Criminal Matter, as Opposed to Civil Misconduct or Neglect, the County Was Required to Pay for the Employee’s Defense Pursuant to Public Officers Law Section 18

The Third Department affirmed Supreme Court’s ruling that petitioner, a county employee, was entitled to attorney’s fees pursuant to Public Officers Law section 18 in connection his appearances in grand jury proceedings.  The county argued that the statute only requires payment for the defense of an employee “in [a] civil action or proceeding” and a grand jury proceeding is criminal in nature.  The Third Department noted that the district attorney would not divulge the nature of the grand jury proceedings and grand juries can be convened to consider noncriminal misconduct or neglect by public employees.  Therefore the employee was entitled to attorney’s fees for his defense:

Respondent failed to demonstrate what the object of the grand jury proceeding was, readily admitting that the District Attorney had not made his “intentions [known] in relation to the potential for criminal charges.” While grand juries may indict a person for a criminal offense (see CPL 1.20 [18]; 190.60 [1]), they are also empowered “to make presentments as to noncriminal misconduct or neglect by public officers and employees” … . Thus, because there is no indication that criminal charges are [*3]actually being contemplated, Supreme Court properly “reject[ed] respondent’s claim that because the [g]rand [j]ury proceeding[s] could have resulted in criminal charges against petitioner, the proceeding[s] [were] not civil in nature” … . “Any other holding would defeat the clear intent of the statute, which insulates public employees from litigation expenses arising out of their employment” … . Matter of Mossman v County of Columbia, 2015 NY Slip Op 03005, 3rd Dept 4-9-15

 

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Venue Was Not Proper—However, Because the Party Seeking the Change of Venue Did Not Comply With the Statutory Procedure, Whether to Grant a Change of Venue Was Discretionary—In the Exercise of Discretion, Change of Venue Was Properly Denied

Respondent law firm filed a default judgment prematurely (re: attorney’s fees) and immediately took steps freeze petitioner’s assets. Petitioner started the instant proceeding in Ulster County pursuant to CPLR 5240 seeking a protective order and vacation of all the enforcement devices used by the law firm.  The law firm made a cross-motion for a change of venue. Supreme Court denied the cross-motion, found that the law firm had engaged in frivolous conduct, directed the law firm to pay petitioner costs and counsel fees, and ordered the managing attorney of the law firm to complete eight hours of continuing legal education (CLE) in civil practice.  The Third Department affirmed Supreme Court, with the exception of the CLE sanction, which Supreme Court did not have the authority to order. The bulk of the decision is devoted to a discussion of the law surrounding a change of venue.  Supreme Court denied the change of venue cross-motion “as of right,” finding that Ulster County was the proper venue for the CPLR 5240 proceeding brought by the petitioner.  The Third Department disagreed, ruling that Ulster County was not the proper venue because the law firm, the respondent in the proceeding, did not have an office in Ulster County as required by the relevant provisions of the CPLR. But, after an extensive analysis, the Third Department concluded the cross-motion to change venue was properly denied as an exercise of discretion. Because the respondent did not follow the statutory procedure (CPLR 511) for seeking a change of venue (no demand for such relief was served before the cross-motion was made), the cross-motion was addressed to Supreme Court’s discretion. CPLR 510 allows a change of venue where “(1) the designated county is not a proper county, (2) “there is reason to believe that an impartial trial cannot be had in the proper county” or (3) “the convenience of material witnesses and the ends of justice will be promoted by the change”… .  Although the first criterium was met, the other two were not. Denial of the cross-motion was a proper exercise of discretion:

By failing to comply with the statutory procedure for changing venue, respondent was not entitled to a change of venue as of right. Where a respondent believes that a petitioner has chosen an improper venue, the respondent shall serve, with or before service of the answer, a written demand on the petitioner that venue be changed to a county that the respondent specifies as proper (see CPLR 511 [a], [b]). The petitioner has five days after service of the demand to serve a written consent to change venue (see CPLR 511 [b]). If no such consent is served by the petitioner, the respondent must move to change venue within 15 days of service of the demand (see CPLR 511 [b]). If a respondent fails to comply with these procedures and time limits, the respondent is not entitled to have the motion granted as of right, even if the venue was improper; the motion instead becomes one addressed to the court’s discretion… ). Here, respondent served a cross motion seeking to change venue without having first served a demand for such relief. Accordingly, the motion was addressed to Supreme Court’s discretion… . * * *

Petitioners commenced this proceeding in Ulster County pursuant to CPLR 5240, which provides that “[t]he court may at any time, on . . . the motion of any interested person, . . . make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure.” If a judgment that is sought to be enforced was entered in Supreme Court anywhere in New York, “a special proceeding authorized by [CPLR article 52] shall be commenced, either in the supreme court or a county court, in a county in which the respondent resides or is regularly employed or has a place for the regular transaction of business in person,” if such a county exists in the state (CPLR 5221 [a] [4]). CPLR 5240 is found within CPLR article 52, and the Court of Appeals has stated that a request for court action under CPLR 5240 is properly commenced as a “special proceeding” … . Respondent, by its very designation in the caption, is the “respondent” as mentioned in CPLR 5221 (a). Respondent is a law firm with its main office in Oswego County, which is considered its residence (see CPLR 503 [c]), and no office or place of business in Ulster County. Under a plain reading of CPLR 5221 (a), the instant special proceeding was required to be commenced in Oswego County (or another county in New York where respondent has an office where it regularly transacts business), rather than Ulster County.* * *

Thus, as Oswego County, rather than Ulster County, is the proper venue under either subdivision of CPLR 5221, the first ground under CPLR 510 could support respondent’s discretionary motion to change venue.

The second ground for discretionary change of venue does not support a change, as the record contains no information that an impartial trial would be difficult to obtain in Oswego County. As for the third ground, petitioners asserted that they are residents of Ulster County and the banks that were served the restraining notices and information subpoenas are all in or around Ulster County, so numerous material witnesses appear to be located in that county. Additionally, it appears that the ends of justice would not be promoted by changing venue. In sum, the first ground would support changing venue, while the second and third grounds do not. Although Supreme Court erred in denying respondent’s cross motion as of right, in the exercise of our discretion we reach the same conclusion. Matter of Aaron v The Steele Law Firm, P.C., 2015 NY Slip Op 03018, 3rd Dept 4-9-15

 

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The Breach of Contract Cause of Action Which Was Based Upon Clauses Which Merely Stated the Common Law Standard of Care for Professionals Was Duplicative of the Professional Malpractice Cause of Action and Should Have Been Dismissed/Proper Measure of Damages for Negligent/Defective Building Design Is the Cost of Remediation

Plaintiff hospital alleged that the seismic retrofit of one of the hospital buildings would not operate as intended and sued the architectural firm which designed the retrofit under breach of contract and professional malpractice theories.  Plaintiff prevailed on both causes of action in a non-jury trial. The Third Department determined Supreme Court should have dismissed the breach of contract cause of action because it was duplicative of the professional malpractice cause of action. The only relevant clauses in the contract held the architectural firm to the common law standard for professionals.  Breach of those clauses, therefore, duplicated the professional malpractice cause of action. The Third Department affirmed the professional malpractice verdict and the award of damages, 1.7 million, which reflected the cost of remediation:

The contract does contain two clauses regarding defendant’s performance. They provide that defendant’s “services shall be performed as expeditiously as is consistent with professional skill and care and the orderly progress of the [w]ork,” and “shall be provided . . . in a manner consistent with the standards of care and skill exhibited in its profession for projects of this nature, type and degree of difficulty.” These provisions simply incorporate into the contract the common-law standard of care for a professional. “Making such ordinary obligations express terms of an agreement does not remove the issue [of a violation thereof] from the realm of negligence . . ., nor can it convert a malpractice action into a breach of contract action” … . Inasmuch as a breach of contract cause of action based on the violation of these particular contract provisions would be duplicative of a professional malpractice cause of action, Supreme Court should have dismissed plaintiff’s breach of contract cause of action. * * *

We reject defendant’s contention that plaintiff’s proposed amount of damages constitutes economic waste. The proper measure of damages due to the defective design of a building is the cost to remedy the defect, unless such amount is “grossly and unfairly out of proportion to the good to be attained” by fixing the building … . The defects here were not trivial, but were substantial as to the seismic function of the building, such that plaintiff was entitled to damages in the amount necessary to remediate the defects … . Mary Imogene Bassett Hosp. v Cannon Design, Inc., 2015 NY Slip Op 03016, 3rd Dept 4-9-15

 

Determination Annulled and Expunged—Hearing Officer Did Not Take Any Steps to Confirm the Reliability of the Confidential Information Upon Which the Determination Was Based

The Third Department annulled and expunged the determination that petitioner was properly placed in involuntary protective custody (IPC), finding that the hearing officer did not conduct the necessary independent investigation into the reliability of the confidential information which provided the basis for the IPC.  The hearing officer did not take any steps to learn the details of the investigation or to confirm that the source of relevant information was reliable:

…[W]e agree with petitioner that the Hearing Officer did not conduct the necessary independent assessment of the reliability of the confidential information that provided the basis for the IPC recommendation. Although the Hearing Officer took testimony from the captain who obtained the confidential information and issued the IPC recommendation, the Hearing Officer did not conduct an in camera interview of the captain to ascertain further details of his investigation, nor did he review any notes or letters that the captain may have received that threatened petitioner’s life … . Notably, the captain acknowledged that the confidential source who initially disclosed the threat would not identify the inmate who made it. Indeed, the only confirmation of this source’s reliability was the captain’s conclusory statement that he believed this individual was reliable based upon past dealings. Under the circumstances presented, we find that this was insufficient and that substantial evidence does not support the determination placing petitioner in IPC … . Matter of Melendez v Commissioner of The Dept. of Corrections & Community Supervision, 2015 NY Slip Op 03011, 3rd Dept 4-9-15

 

Law of the Case Doctrine Should Not Have Been Invoked—Criteria Explained

In a breach of contract action, Supreme Court ruled on a summary judgment motion, finding it premature.  When a second summary judgment motion was made before a different judge, the new judge granted summary judgment to the plaintiff on liability for breach of contract and noted that the first order required the ruling because it was the “law of the case.” Although the Third Department ultimately upheld the breach of contract finding, the appellate court explained that the “law of the case” doctrine did not apply because the first order merely found there were issues of fact concerning the amount owed plaintiff and did not determine there was a breach of contract. The court explained that the doctrine of “law of the case” only applies to a ruling upon a “question of law that is essential to the determination of the matter”… :

…[W]e reject plaintiff’s contention that Supreme Court was required to rule that defendants were liable for breaching the Agreement by the doctrine of the law of the case, which bars courts from reconsidering “pre-judgment rulings made by courts of coordinate jurisdiction” in the same case … . The doctrine applies only when the prior ruling directly passed upon a question of law that is essential to the determination of the matter …. . Here, the only determination made in the 2012 order was that material issues of fact existed as to the amount owed. Although additional remarks were made in that order, these were merely dicta, and did not constitute a legal determination as to whether defendants breached the Agreement by deducting expenses — an issue that was not directly addressed by the 2012 order … . Karol v Polsinello, 2015 NY Slip Op 03024, 3rd Dept 4-9-15

 

Failure to Empanel the First Six Jurors Chosen by the Parties Justified Setting Aside the Verdict

The Third Department upheld Supreme Court’s setting aside the verdict in a medical malpractice case after the jury had found “no cause for action.”  A rule in the Third Judicial District allowed the clerk to randomly select the jurors and alternates.  The plaintiff moved to set aside the verdict because the first six jurors chosen by the parties were not empanelled by the clerk, as required by CPLR 4105.  Under the CPLR jurors 1 through 6 should have constituted the jury and jurors 7 and 8 should have been designated the alternate jurors. The clerk selected jurors 1, 2, 3, 4, 5 and 8.  The Third Department perceived no abuse of discretion in setting aside the verdict:

After having determined that its application of the Third Judicial District rule contravened plaintiff’s substantial right to empanel the first six jurors that had been selected by the parties, pursuant to the “mandatory procedure” set forth in CPLR 4105, Supreme Court exercised its discretion and granted plaintiff’s motion to set aside the verdict and order a new trial in the interest of justice. In the absence of evidence that the court abused such discretion, we will not disturb Supreme Court’s determination in that regard … . Piacente v Bernstein, 2015 NY Slip Op 03009, 3rd Dept 4-9-15

 

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