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“Confidential Relationship” With Decedent Not Demonstrated As a Matter of Law

The Third Department determined Supreme Court properly ruled that petitioners had not demonstrated, as a matter of law,  the existence of a confidential relationship between the decedent and respondent. Where a confidential relationship is demonstrated, the stronger party has the burden of showing by clear and convinciing evidence that a particular transaction from which the stronger party benefitted was not the result of undue influence.  The court explained the operative criteria for a confidential relationship:

A confidential relationship is one that is “of such a character as to render it certain that [the parties] do not deal on terms of equality” … . Such inequality may occur from either one party’s “superior knowledge of the matter derived from a fiduciary relation, or from an overmastering influence” or from the other’s “weakness, dependence, or trust justifiably reposed” on the stronger party … .

The limited issue presented on this appeal is whether Supreme Court erred when it declined to find, as a matter of law, that there was a confidential relationship between respondent and decedent. The basis for petitioners’ claim that such a relationship existed was, in part, the familial relationship between respondent and decedent. A familial relationship, however, is not necessarily a confidential relationship … . Importantly, the existence of a confidential relationship is ordinarily a factual determination based upon “evidence of other facts or circumstances showing inequality or controlling influence”… . Matter of Bonczyk v Williams, 2014 NY Slip Op 05231, 3rd Dept 7-10-14

 

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Failure to Comply with a Time-Limit for a Buy-Out in a Shareholders’ Agreement Was Trumped by the Overall Purpose of the Agreement—Shareholder Properly Compelled to Sell His Shares

The Third Department determined a shareholders’ agreement. although it did not address the particular problem at issue, must be read to avoid a result which would be at odds with the clear purposes of the agreement.  One of the three shareholders of the closely held corporation (the defendant) was convicted of a felony and the other shareholders terminated his employment and sought to buy his shares. The defendant sought to prohibit the buy-out by arguing it was untimely under the terms of the shareholders’ agreement.  Because the corporation distributed alcoholic beverages, if the defendant remained a shareholder the corporation would lose its distributor’s license:

A shareholders’ agreement — like any other contract — should be enforced according to its terms … . In so doing, “[t]he contract must be read as a whole to determine its purpose and intent, and it should be interpreted in a way [that] reconciles all its provisions, if possible” … . To that end, “the goal should be a practical construction of the language used so that the reasonable expectations of the parties are realized” …, and “the contract must be interpreted so as to give effect to, not nullify, its general or primary purpose” … .

Here, the shareholders’ agreement reflects “[t]he shareholders[‘] desire to establish a market value for their shares, to effectively control the management of the company, for their mutual best interests, and to protect against divisive relationships which would arise if outsiders with incompatible management philosophies gained interests in the company.” Consistent with that stated objective, the agreement further recognizes that “[t]he company is dependent upon and derives substantial benefit from the continued active interest and participation of those shareholders who participate in the management of the company.” In an attempt to preserve the closely-held nature of the corporation, the agreement provides that when a shareholder’s employment with the corporation ceases, “he or she shall be treated as though he or she were selling all of his or her shares under paragraph A of . . . [s]ection [t]wo [of the agreement],” which outlines the procedures to be followed when a shareholder, during the course of his or her lifetime, “transfer[s] any of his or her shares to anyone other than a family member.” In such case, the shareholder is to give notice of his or her intention to sell and, “[f]or a period of thirty [30] days after the notice is delivered, the [corporation] shall have an option to purchase all or any part of the offered shares on the payment terms specified in [s]ection [f]our [of the agreement].” If the corporation does not exercise such option, then the remaining shareholders are granted an additional 30-day option to purchase any or all of the available shares. * * *

…[R]eading the agreement as a whole and affording it a practical construction that is consistent with and gives proper effect to the parties’ stated intentions …, we are satisfied that Supreme Court properly granted plaintiffs’ motion to compel [defendant] to sell his shares to the corporation — even if that option to purchase was not timely exercised. To hold otherwise and permit [defendant] to retain his shares due to the asserted noncompliance with the time period set forth in the shareholders’ agreement not only would effectively rewrite the parties’ agreement and undermine its stated purpose, i.e., to retain managerial control within the closely-held family corporation, but would place the corporation at risk of losing its distributor’s license, thereby rendering its stock worthless… . A Cappione Inc v Cappione, 2014 NY Slip Op 05230, 3rd Dept 7-10-14

 

Alleged Error Did Not Raise a Question of Jurisdiction or Constitute a Constitutional Defect—Therefore the Alleged Error Did Not Survive the Guilty Plea

The Third Department described the types of fundamental errors which survive a guilty plea. The prosecutor’s alleged failure to inform the grand jury of defendant’s request to call witnesses in not one of them:

By his plea of guilty, defendant forfeited this argument. “As a rule, a defendant who in open court admits guilt of an offense charged may not later seek review of claims relating to the deprivation of rights that took place before the plea was entered” … . As relevant here, a claim “that the District Attorney did not inform the grand jury of defendant’s request to call witnesses to testify on his behalf as required by CPL 190.50 (6) . . . does not activate a question of jurisdiction or constitute a constitutional defect and, thus, does not survive a guilty plea” … . People v McCommons, 2014 NY Slip Op 05215, 3rd Dept 7-10-14

 

Defendant Failed to Prove Three Elements of Adverse Possession

The Third Department determined that defendant failed to demonstrate it had acquired plaintiff’s property by adverse possession:

To establish adverse possession, defendant was required to demonstrate, by clear and convincing evidence, that its possession was “(1) hostile and under claim of right; (2) actual; (3) open and notorious; (4) exclusive; and (5) continuous for the required [10-year] period” … . Additionally, where, as here, the claim of right is not founded upon a written instrument, it was necessary for defendant to “establish that the land was ‘usually cultivated or improved’ or ‘protected by a substantial inclosure'” … . Upon our review of the record, we agree with Supreme Court’s conclusion that defendant failed to raise an issue of fact with respect to more than one of these elements.

Specifically, defendant has failed to establish that its use of the disputed parcel was continuous or exclusive * * * [and] … defendant presented no evidence that it cultivated or improved the disputed parcel during the relevant period.  Salerno v CE Kill Inc, 2014 NY Slip Op 05224, 3rd Dept 7-10-14

 

As a Matter of Discretion, the Court Can Grant a Separate Property Credit for Property Which Was Originally Separate But Which Was “Transmuted” into Marital Property (Overruling Precedent)—the Credit Was Properly Denied Here

The Third Department determined that, under the facts of the case, Supreme Court properly denied the wife a credit for the marital home which originally was her separate property.  The wife subsequently put the property in both her and her husband’s names and the property was used to consolidate the debts of both husband and wife.  However, the Third Department took the opportunity to explain that property which is originally separate but which is then “transmuted” to marital property can be the basis of a separate-property credit, overruling a case relied upon by Supreme Court to deny the credit.  The credit can be applied as a matter of discretion:

…[T]o the limited extent that Campfield [95 AD3d 1429] may be read to limit a court’s discretion to award a separate property credit to a spouse, like the wife, who transmutes separate property into marital property without changing the nature of the property itself, it should no longer be followed. As we have subsequently noted without reference to the way in which a marital asset was acquired, credits are often given for the value of the former separate property (see Murray v Murray, 101 AD3d at 1321). We have also subsequently explained that the decision to award a separate property origination credit in such a situation is a determination left to the sound discretion of Supreme Court (see Alecca v Alecca, 111 AD3d at 1128; Murray v Murray, 101 AD3d at 1321). Therefore, our own jurisprudence subsequent to Campfield indicates that such credit is not precluded as a matter of law when separate property has been transmuted into marital property. Myers v Myers, 2014 NY Slip Op 05228, 3rd Dept 7-10-14

 

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Where There Has Been a Failure of a Material Condition of a Judicial Instrument of Surrender (of Guardianship and Custody of a Child), the Parent May Bring an Action to Revoke the Surrender Instrument

The Third Department, in a full-fledged opinion by Justice Devine, determined, where a parent agrees to surrender guardianship and custody of a child pursuant to a judicial instrument of surrender, a substantial failure of a material condition of the instrument allows the parent to bring an action to revoke the instrument.  In this case the persons specified in the surrender would not adopt the child:

In Matter of Christopher F. (supra), we were presented with a biological parent’s application to revoke a judicial instrument of surrender. We concluded that, although no procedures beyond notification of the parent were set forth in the statute at that time (see Social Services Law § 383-c [6] [former (c)], as added by L 1990, ch 479, § 2), “based upon our common-sense interpretation of the applicable statutory framework,” the failure of the provision of the surrender instrument conditioning the biological parent’s surrender on adoption of the child by the person specified in the surrender “permitted [the biological parent] to revoke her consent to the adoption” … . Accordingly, we granted the parent’s application for revocation of the judicial surrender. “‘The Legislature is . . . presumed to be aware of the decisional and statute law in existence at the time of an enactment'” … . Since the subsequent statutory amendments did nothing to abrogate or replace the relevant portions of our holding in Matter of Christopher F. (260 AD2d at 99-101), we conclude that, when there has been a substantial failure of a material condition of a judicial instrument of surrender, the procedure we endorsed in Matter of Christopher F. (supra) remains the appropriate procedure. In such a circumstance, the surrendering parent may bring an application before the court — either by petition or by motion — for revocation of the instrument (see id. at 101). Matter of Bentley XX, 2014 NY Slip Op 05222, 3rd Dept 7-10-14

 

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Substantial Evidence Supported Finding that Allowing a Child to Wander Away Near a Four-Lane Highway Constituted Maltreatment

The Third Department determined the Commissioner of Children and Family Services properly denied a petition to have a report maintained by the Central Register of Child Abuse and Maltreatment amended to be unfounded and expunged.  Petitioner called law enforcement because her grandchild had wandered away from her front yard and was found unharmed about 200 yards away.  There was no fence and the home faced a four-lane highway:

Substantial evidence supports the finding of maltreatment. In order to establish maltreatment, the agency was required “to demonstrate by a fair preponderance of the evidence that ‘the child’s physical, mental or emotional condition ha[d] been impaired or [was] in imminent danger of becoming impaired as a result of the [caregiver’s] failure to exercise a minimum degree of care'” in providing the child with appropriate supervision … . Upon review of such an administrative determination, “this Court’s inquiry is limited to whether the decision is rational and supported by substantial evidence” … . A determination is supported by substantial evidence “when reasonable minds could adequately accept the conclusion or ultimate fact based on the relevant proof” … .

Although petitioner’s home is at the end of a dead-end street, testimony by respondent Michelle Kelley, a caseworker for the Saratoga County Department of Social Services, and photographs introduced into evidence established that the home also faces a four-lane divided highway with a speed limit ranging from 45 to 55 miles per hour. Notably, the same evidence showed that there is no fence, or any similar physical barrier, directly between petitioner’s front yard and this highway. Matter of Cheryl Z v Carrion, 2014 NY Slip Op 05226, 3rd Dept 7-10-14

 

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Flawed Appraisals Would Not Allow a Determination of the Highest and Best Use of the Taken Land

The Third Department determined the appraisal reports submitted for both side were flawed such that the highest and best use of the taken land could not be determined.  The matter was sent back to the Court of Claims.  The court explained the operative principles:

When private property is appropriated for public use, just compensation must be paid, which requires that the owner be placed in the financial position that he or she would have occupied had the property not been taken … . Upon a partial taking of real property, an owner is not only entitled to the value of the land taken — i.e., direct damages — but also to consequential damages, which consist of the diminution in value of the owner’s remaining land as a result of the taking or the use of the property taken … . Damages must be measured based upon the fair market value of the property as if it were being put to its highest and best use on the date of the appropriation, whether or not the property was being used in such manner at that time … . Matter of State of New York…, 2014 NY Slip Op 05002, 3rd Dept 7-3-14

 

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Court Should Not Have Precluded Expert Evidence About the Quality of Representation Received by Indigent Defendants

The Third Department determined Supreme Court (acting as the trier of fact) should not have precluded the presentation of expert evidence in a case concerning the quality of legal services received by indigent criminal defendants:

Under familiar rules, expert opinions are admissible on subjects involving professional or scientific knowledge or skill not within the range of ordinary training or intelligence” of the trier of fact … . “[T]his principle applies to testimony regarding both ‘the ultimate questions and those of lesser significance'” … . Notably, expert testimony is “appropriate to clarify a wide range of issues calling for the application of accepted professional standards” … .

Here, the experts possess the requisite skill, training, education, knowledge and/or experience to qualify as experts on the operation of indigent defense systems and the evaluation of such systems in light of prevailing professional standards … . * * *

At its core, this litigation is about system-wide conditions relating to and affecting the delivery of public defense — such as caseloads, funding and oversight, among others — and whether these conditions in the defendant counties are such that “the basic constitutional mandate for the provision of counsel to indigent defendants at all critical stages is at risk of being left unmet” … . By virtue of their extensive experience, the experts possess specialized knowledge with respect to the operation of public defense systems, the professional standards applicable to such systems, and the impact of systemic shortcomings on the provision of counsel to indigent criminal defendants at all critical stages. Such particularized knowledge is, manifestly, beyond that of a typical Supreme Court Justice, whose experience is oft confined to case-by-case determinations … . Hurrell-Harring v State of New York 2014 NY Slip Op 05010, 3rd Dept 7-3-14

 

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Prosecutor’s Remarks In Summation Required Reversal

The Third Department determined the prosecutor’s remarks in summation required reversal:

Counsel is afforded wide latitude in advocating for his or her case during summation, but “[t]here are certain well-defined limits” that may not be exceeded … . Here, the prosecutor strayed beyond those parameters by, among other things, repeatedly making remarks that impermissibly shifted the burden of proof from the People to defendant … . He described defense counsel’s summation as “throwing mud,” which he characterized as something done by people who “don’t have a reasonable excuse as to crimes that they’ve committed” — thus not only denigrating the theory of defense, but suggesting that it was defendant’s affirmative burden to present such an excuse. He then averred that nothing in the trial record established that defendant had not committed the alleged acts. * * * He stated that, in order to find defendant not guilty, jurors would have to believe that police officers were engaged in a scheme whereby they staged audio recordings of the controlled buys and planted evidence on defendant to frame him, referencing a comedy skit in which police purportedly got away with mistreating people “by sprinkling drugs on them.” * * *

The prosecutor also repeatedly and improperly expressed his personal opinion in an effort to vouch for the credibility of witnesses …. . When discussing a forensic chemist’s testimony that the substances allegedly sold and possessed by defendant were heroin, the prosecutor stated that the issue was “done” and that it was “a closed case.” He repeatedly described his witnesses as honest or declared that they had told the truth. He told the jury to take the male CI’s word for what had happened during one of the controlled buys, adding that he “believe[d] that [the male CI] was more than credible.”* * *  People v Casanova, 2014 NY Slip Op 04978, 3rd Dept 7-3-14

 

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