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No Duty to Defend Where Causes of Action Are Excluded from Coverage Under the Terms of the Policy

The Third Department determined that the terms of two insurance policies prohibited plaintiff’s suit for a declaration the insurance companies had a duty to defend and indemnify plaintiff.  The causes of action brought against plaintiff (tortious interference with contract, unfair and deceptive trade practices and misappropriation of trade secrets) did not constitute a violation of “a person’s right to privacy” within the meaning of the policies. And the causes of action explicitly excluded from coverage, therefore the insurance companies were not obligated to provide a defense:

…[P]laintiff’s actions —–tortious interference with contract and business relations, unfair and deceptive trade practices and misappropriation of trade secrets –do not constitute a violation of “a person’s right of privacy” within the meaning of either Twin City’s or CastlePoint’s policy.

…[I]it is well settled that “[a]n insurer need not provide a defense . . . when it demonstrates that the complaint’s allegations cast that pleading solely and entirely within the policy exclusions, and further, that . . . the allegations, in toto, are subject to no other interpretation” … . Here, Twin City relies upon three exclusions relative to the personal and advertising injury coverage otherwise afforded by its policy — the intentional conduct exclusion, the breach of contract exclusion and the trademark exclusion [FN4]. In the context of an insurance policy, “the phrase ‘arising out of’ is ordinarily understood to mean originating from, incident to, or having connection with . . . [and] requires only that there be some causal relationship between the injury and the risk for which coverage is provided or excluded” … . Without belaboring the point, suffice it to say that our review of the underlying complaint leads us to conclude that all of the allegations contained therein with respect to plaintiff fall within at least one of the cited exclusions. Accordingly, coverage was properly denied for this reason as well. Sportsfield Specialties Inc v Twin City Fire Ins Co, 2014 NY Slip Op 02646, 3rd Dept 4-17-14

 

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Complaint Stated Causes of Action for a Constructive Trust and Quantum Meruit

Plaintiff alleged the expenditure of resources for the development of a quarry on defendant’s land. Defendant had changed the locks to the property and refused plaintiff further access. In determining that plaintiff had stated causes of action for a constructive trust and quantum meruit, the Third Department explained the relevant criteria:

Supreme Court correctly denied the motion to dismiss the cause of action seeking to impose a constructive trust on the business property. This equitable remedy may be imposed “when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest” … . To prove entitlement to this relief, a plaintiff must establish “a confidential or fiduciary relationship, a promise, a transfer in reliance thereon and unjust enrichment” … . The element of transfer has been interpreted to include the expenditure of effort and resources in reliance upon a promise to share in a property interest … .

Here, the complaint alleges that plaintiff had a confidential or fiduciary relationship with defendant, that defendant made promises that plaintiff and defendant had a partnership and that plaintiff had vested rights and interests in the quarry business and property, that plaintiff relied on these promises and the fiduciary relationship in contributing resources to develop the business, and that defendant breached these promises and would be unjustly enriched in the absence of a constructive trust. Deeming these allegations to be true, construing them liberally, and granting plaintiff the benefit of every favorable inference, as we must …, we find that the amended complaint adequately states a cause of action for the imposition of a constructive trust… .

The cause of action in quantum meruit requires a showing of “a plaintiff’s performance of services in good faith, acceptance of those services by a defendant, an expectation of compensation and proof of the reasonable value of the services provided” … . The complaint alleges that plaintiff acted in good faith and in the expectation of compensation in making the previously-discussed contributions to the business, that defendant accepted its services and contributions, and that plaintiff has been damaged in the amount of the reasonable value of its contributions. Plaintiff further submitted the affidavit of its principal (see CPLR 3211 [a] [7]…) , alleging that plaintiff contributed more than $200,000 toward the business as well as all of the knowledge, labor, equipment and other resources necessary for its development, that a substantial amount of processed material that it had paid to create remained on the property when plaintiff was locked out in 2011, and that defendants have continued to benefit from plaintiff’s contributions thereafter by selling materials from the business without compensating plaintiff accordingly. Thus, despite defendants’ contention that plaintiff’s services were performed primarily for its own benefit, we agree with Supreme Court that the complaint states a cause of action in quantum meruit … . Rafferty Sand & Gravel LLC v Kalvaitis, 2014 NY Slip Op 02656, 3rd Dept 4-17-14

 

Displaying What Appeared to Be a Firearm to Someone Other than the Robbery Victim During Flight from the Robbery Scene Supported Second Degree Robbery Conviction

After noting that merely telling the cashier he had a gun was not enough to meet the criteria for displaying a firearm in the course of a robbery, the Third Department determined that defendant’s “displaying” of what “appeared to be” a firearm to someone other than the victim of the robbery, as he was fleeing from the store he robbed, was sufficient to support his conviction for robbery in the second degree:

To prove the display element, “[t]he People must show that the defendant consciously displayed something that could reasonably be perceived as a firearm, with the intent of forcibly taking property, and that the victim actually perceived the display” … . While the object displayed need not in fact be a firearm …, “it must appear to the victim by sight, touch or sound that he [or she] is threatened by a firearm” …. The display requirement “cannot be read so broadly as to include mere statements that a robber is armed with a gun” … . While such statements can give meaning to a robber’s otherwise ambiguous actions, such as “a hand consciously concealed in clothing” …, “words alone will not constitute a display of what appears to be a firearm” … .

Here, the cashier testified that defendant said the word “gun” when demanding that she turn over the money, but she did not testify to witnessing any action on his part that would constitute a display of a firearm, nor did she testify that she believed he possessed a firearm. Thus, her testimony is insufficient to establish that defendant displayed a firearm during the robbery. But the inquiry does not end there. Although several cases address the issue as whether the victim perceived the gun …, the statute does not mention to whom the apparent weapon must be displayed (see Penal Law § 160.10 [2] [b]; …). The language of the statute — namely, that the display can occur in the course of “immediate flight” from the robbery and not just during the commission thereof — implies that the display may be directed at an individual other than the victim of the robbery, with the implication that the apparent weapon must be displayed for the purpose of allowing the defendant to deter someone from attempting to either recover possession of the stolen property or impede the defendant’s escape (Penal Law § 160.10 [2] [b]). People v Colon, 2014 NY Slip Op 02626, 3rd Dept 4-17-14

 

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Res Ipsa Loquitur Doctrine Raised Question of Fact About Whether Anesthesiologist, Who Was Alone With the Unconscious Decedent at the Time of Death, Was Negligent

The Third Department noted that the doctrine of res ipsa loquitur raised a question of fact about whether an anesthesiologist (Waid) was negligent:

…[P]laintiff submitted a detailed expert affidavit … . The expert opined that Waid, through overinflation or improper insertion of the endotracheal tube, caused the hemorrhage that immediately led to decedent’s death. Although the exact source of bleeding was never identified, the expert explained possible ways that Waid may have caused the hemorrhage and stated that such bleeding does not ordinarily occur in the absence of negligence, Waid had exclusive control over decedent’s body and the medical instrumentalities at the time, and decedent was unconscious so he could not have contributed to the situation. Therefore, questions of fact exist and plaintiff may rely on the doctrine of res ipsa loquitur to attempt to establish Waid’s negligence… .  Cole v Champlain Val Physicians’ Hosp Med Ctr, 2014 NY Slip Op 02654, 3rd Dept 4-17-14

 

Judge Immune from Suit

The Third Department upheld the dismissal of a suit against a judge which alleged “intentional professional and malicious misconduct.”  The court explained the applicable law:

It is well settled that a “[j]udge is immune from civil liability for acts done in the exercise of his [or her] judicial function” … . “Absolute immunity is . . . necessary to assure that judges, advocates, and witnesses can perform their respective functions without harassment or intimidation” … and “discourages inappropriate collateral attacks on court rulings and fosters judicial independence by protecting courts and judges from vexatious litigation” … . There are only two recognized exceptions to the broad cloak of judicial immunity, namely “when a [j]udge does not act as a [j]udge, or when a [j]udge, though acting under color of judicial authority, lacks any jurisdiction supporting judicial authority for the action taken” … . As to the latter exception, there is a clear “‘distinction between acts performed in excess of jurisdiction[, which fall within the scope of immunity,] and acts performed in the clear absence of any jurisdiction over the subject matter,'” which do not…. .  Best v State of New York 2014 Slip Op 02484, 3rd Dept 4-10-14

 

Commissioner’s Finding Site Constituted a Significant Threat to Public Health or Environment Upheld

The Third Department affirmed the Commissioner of Environmental Conservation’s denial of petitioner’s request to reclassify a hazardous waste site.  The site is polluted with PCBs and is classified at level 2 (significant threat to public health or environment–action required).  The petitioner sought reclassification at level 3 (no significant threat to public health or environment–action may be deferred).  In finding the Commissioner’s determination supported by the evidence, the court wrote:

The Commissioner did not … premise his determination in this matter upon the mere presence of PCBs at the site and a potential for harm. He found that a highly toxic contaminant (i.e., PCBs) was present in concentration levels at the site that exceeded the environmental quality standards (see 6 NYCRR part 703; see also 6 NYCRR former 375-1.4 [b] [7]; 375-2.7 [a] [3] [viii]), and he determined that, under such circumstances, the contaminant could constitute a significant threat. We need not decide in this case whether such exceedances of environmental standards alone can — as stated by the Commissioner — constitute a significant threat since ultimately he did not premise his determination solely on such ground. Although setting forth in detail the reasons and record proof supporting a conclusion that the onsite impact of the PCB contamination at the site constituted a significant threat, he went on to find record support for actual threats and offsite impact on the river, wetlands and nearby wildlife. The exceedances of groundwater standards was clearly a significant factor; however, it was considered in conjunction with other proof pertinent to the ultimate finding of a significant threat. We are not persuaded that the Commissioner used an analysis at odds with the regulations or case law. Matter of ELG Utica Alloys Inc v Department of Envtl Conservation, 2014 NY Slip Op 02485, 3rd Dept 4-10-14

 

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Code Provision Requiring Issuance of Rental Certificate by City Prior to Leasing an Apartment Deemed Constitutional

The Third Department determined the code provision (Rental Certificate Ordinance or RCO) which required the issuance a rental certificate each time a vacant apartment is about to be leased is constitutional.  Entry to the apartment is accomplished either with the consent of the owner, or upon the issuance of a search warrant:

The RCO provided, in relevant part, that “[i]t shall be unlawful for any owner to permit the occupancy of any rental unit subject to [former article X of the Code of the City of Schenectady], unless such unit has a current and valid rental certificate or temporary rental certificate” (Code of City of Schenectady former § 167-59 [A]). Thus, “[w]henever a vacancy shall exist in a rental unit and a leasing is about to occur, or whenever there is a change in occupancy, the owner [must] submit a written application for a rental certificate” (Code of City of Schenectady former § 167-60 [A] [1]) and, “within five working days of receipt of [such] application, the Building Inspector [must] inspect the rental unit to determine if [it] is in compliance with” certain enumerated housing standards (Code of City of Schenectady former § 167-60 [A] [2]). If the Building Inspector is unable to perform the necessary inspection within the five-day window, the property owner may apply for a temporary rental certificate, which “is valid for 30 days or until the unit is inspected . . . , whichever is less” (Code of the City of Schenectady former § 167-60 [B]). In the event that the property owner refuses to grant access to the premises, “the Building Inspector shall apply for a search warrant or court order in an appropriate court and upon a showing that there [are] reasonable grounds to believe that a building or rental unit within [the] building is rented and occupied in violation of” the RCO (Code of the City of Schenectady former § 167-61). A property owner’s violation of the RCO may result in the imposition of a fine or other civil or criminal penalties (see Code of the City of Schenectady former § 167-67).

“It is well established that the 4th Amendment protection against unreasonable searches and seizures extends to administrative inspections of private commercial premises. [Thus,] to the extent that the challenged ordinance directly or in practical effect authorizes or requires a warrantless inspection, it will not pass constitutional muster” … . Here, however, the RCO expressly required either the consent of the property owner or the issuance of a valid search warrant in order for the Building Inspector to conduct the administrative inspection. As the inclusion of the warrant requirement is sufficient to safeguard plaintiff’s constitutional rights, his challenge to the facial validity of the RCO must fail … . Wisoff v City of Schenectady, 2014 NY Slip Op 02479, 3rd Dept 4-10-14

 

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No Negligence Cause of Action Against Commissioner of Mental Health (Based Upon Alleged Statutory Violations)

The Third Department determined claimant, an insanity acquittee, could not bring a negligence cause of action against the Commissioner of Mental Health based upon alleged violations of Criminal Procedure Law 330.20.  The court explained the applicable law re: the liability of a governmental agency (special duty/special relationship):

The rule is well established “that an agency of government is not liable for the negligent performance of a governmental function unless there existed a special duty to the injured person, in contrast to a general duty owed to the public” … . A special duty will only arise from a special relationship, which can be formed in three ways: “(1) when the [governmental entity] violates a statutory duty enacted for the benefit of a particular class of persons; (2) when it voluntarily assumes a duty that generates justifiable reliance by the person who benefits from the duty; or (3) when the [governmental entity] assumes positive direction and control in the face of a known, blatant and dangerous safety violation” … . Inasmuch as claimant asserts that CPL 330.20 creates a statutory duty for the benefit of the class of which he is a member, i.e., insanity acquittees, only the first of these categories is potentially applicable.

Significantly, “[t]o form a special relationship through breach of a statutory duty, the governing statute must authorize a private right of action” … . Because CPL 330.20 does not expressly confer upon insanity acquittees the right to seek civil damages for any failure by the Commissioner to follow the statute’s provisions, “recovery may be had only if a private right of action can be implied” … . A private right of action may be fairly implied when all of the prerequisites are fulfilled, namely: “(1) the [claimant] is one of the class for whose particular benefit the statute was enacted; (2) recognition of a private right of action would promote the legislative purpose of the governing statute; and (3) to do so would be consistent with the legislative scheme” … . In our view, the legislative history supports the finding of the Court of Claims that CPL 330.20 was primarily enacted to benefit the public, rather than insanity acquittees … . Justice v State of New York, 2014 NY Slip Op 02483, 3rd Dept 4-10-14

 

Intra-Agency Exemption Applied to FOIL Request About AIG Prosecution

The Third Department determined the “intra-agency” exemption applied to documents requested from the Attorney General’s office concerning the prosecution of American International Group (AIG):

The intra-agency exemption applies to “opinions, ideas, or advice exchanged as part of the consultative or deliberative process of government decision making” (…see Public Officers Law § 87 [2] [g]…). The purpose of such exemption is “to protect the deliberative process of the government by ensuring that persons in an advisory role [will] be able to express their opinions freely to agency decision makers” … . Matter of Smith v New York State Off of the Attorney Gen, 2014 NY Slip Op 02488, 3rd Dept 4-10-14

 

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Corporate Officer Personally Liable for Outstanding Sales and Use Taxes

The Third Department determined the evidence was sufficient to hold a corporate officer personally liable for outstanding sales and use taxes.  The court explained the criteria for such personal liability:

Tax Law § 1133 (a) imposes personal liability on any person who is responsible for collecting tax under Tax Law article 28. A person required to collect tax (a responsible person) includes “any officer, director or employee of a corporation . . . who . . . is under a duty to act for such corporation . . . in complying with any requirement of [Tax Law article 28]” (Tax Law § 1131 [1]). Whether a person has a duty to act for a corporation and is responsible for collecting sales tax is a factual determination to be made on a case by case basis (…20 NYCRR 526.11 [b] [1], [2]). The factors that the courts have considered relevant to this determination include (1) authority to sign corporate checks, (2) responsibility for managing the corporation and maintaining its books, (3) ability to hire and fire employees, (4) status as a corporate officer, and (5) receipt of substantial income from the corporation or stock ownership … . Significantly, this Court has stressed that “[w]hat must be considered is [the person’s] authority and responsibility to exercise control over the corporation, not his [or her] actual assertion of such authority” … . Matter of Ippolito v Commissioner of NY State Dept of Taxation & Finance, 2014 NY Slip Op 02475, 3rd Dept 4-10-14

 

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