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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

 

Detention by Immigration Officials Did Not Disqualify Claimant from Receiving Workers’ Compensation Benefits

The Third Department determined detention by immigration officials did not disqualify claimant from receiving Workers’ Compensation benefits.  Claimant had been convicted of a felony sex offense, but was sentenced to probation, not incarceration:

We cannot agree with the employer’s argument that claimant’s detention by immigration officials amounts to incarceration “upon conviction of a felony,” thereby rendering him ineligible to receive benefits pursuant to Workers’ Compensation Law § 10 (4). That statutory language was enacted in 2007 to codify existing case law (see L 2007, ch 6, § 37; Governor’s Program Bill Memo, Bill Jacket, L 2007, ch 6…). In our view, giving plain meaning to each of the words used, the statute reflects an intent that benefits should not be paid if a sentence of incarceration is imposed as punishment for a felony conviction. While claimant was convicted of a felony, his punishment did not include incarceration. Rather, he was sentenced to 10 years of probation. His confinement for immigration purposes, on the other hand, was civil and nonpunitive in nature, and its purpose was to determine whether he should be deported (see 8 USC § 1226…). Accordingly, we are unpersuaded that claimant was “incarcerated upon conviction of a felony” as that phrase is used in the statute. Matter of Islam v BD Constr & Bldg, 2014 NY Slip Op 02474, 3rd Dept 4-10-14

 

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Statutory Notice Requirements for Tax Foreclosure Me

The Third Department determined the tax foreclosure proceedings were valid.  The motion to reopen the default judgment was untimely and the statutory notice requirements were met:

A motion to reopen a default judgment of tax foreclosure ‘may not be brought later than one month after entry of the judgment'” … . Significantly, “‘the statute of limitations set forth in RPTL 1131 applies even where, as here, the property owner asserts that he or she was not notified of the foreclosure proceeding'”… .

…[W]e reject respondent’s contention that the statute of limitations period for its motion to vacate never commenced running because petitioner failed to comply with the notice requirements of RPTL 1125. Pursuant to RPTL 1125 (1) (b) (i), notice of a foreclosure proceeding shall be sent to a party entitled to notice by certified mail and first class mail and “notice shall be deemed received unless both the certified mailing and the ordinary first class mailing are returned by the United States postal service within [45] days after being mailed” … . Further, where one of the notices is not returned within the requisite period, a petitioner is “‘not obligated to take additional steps to notify [the] respondent of the foreclosure proceeding'” … . Here, the first class mailing sent to respondent in October 2011 was never returned to petitioner. Additionally, although the November 2011 first class and certified mailings were both returned, that did not occur within 45 days; they were returned more than 100 days after being mailed. As a result, the mailings were deemed received and petitioner’s obligation to provide notice under the statute was satisfied … . Matter of County of Clinton, 2014 NY Slip Op 02486, 3rd Dept 4-10-14

 

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Appraisal Report Lacking Required Supporting Data Properly Struck

The Third Department determined Supreme Court properly struck the appraisal report offered by the petitioner in an effort to reduce the assessed value of petitioner’s golf courses.  The report was struck for failure to include supporting data (required by 22 NYSRR 202.59 [g][2]):

Petitioner’s appraisal report employed the income capitalization approach …, which purported to establish value by capitalizing the anticipated net operating income from a single year by a market oriented capitalization rate. The appraisal report used as a key component income and expenses from two other golf courses, and this information formed the basis for the operating expense ratio. However, the identity of the other two courses used in compiling this information was not provided, but was listed as “confidential” since petitioner’s appraiser had ostensibly obtained the information when working for such courses. We agree with Supreme Court that this information was critical and, since undisclosed, ran afoul of 22 NYCRR 202.59 (g) (2) … . *  *  *

We further note that, even if the presumption regarding the assessor’s value is rebutted, petitioner still had the burden of establishing overvaluation by a preponderance of the evidence …, and we generally accord deference to Supreme Court’s credibility determinations in analyzing the appraisal reports, as well as its decision, so long as they are “not based upon an error of law or against the weight of the evidence” … . Here, Supreme Court set forth several deficiencies in the appraiser’s report and the appraiser’s testimony that caused it to reject petitioner’s contention regarding value. Matter of Bove v Town of Schodack, 516416, 3rd Dept 4-3-14

 

Denial of For Cause Juror Challenges Required Reversal

After determining one of the counts of the sex-offense indictment must be dismissed as duplicitous because more than one offense was alleged to have taken place during the  time period described in the count, the Third Department reversed defendant’s conviction finding that for cause challenges to jurors should have been granted:

It is well established that “a prospective juror whose statements raise a serious doubt regarding the ability to be impartial must be excused unless the juror states unequivocally on the record that he or she can be fair and impartial” … . When a juror’s impartiality is in doubt, it is the court’s obligation to make further inquiries and to excuse the juror if the doubt is not fully dispelled … . In this respect, the court should err on the side of disqualification, as “the worst [it] will have done in most cases is to have replaced one impartial juror with another impartial juror” (…see CPL 270.20 [1] [b]; [2]…). Conversely, the denial of a challenge for cause to a biased juror calls fundamental fairness into question and “casts a doubt on the legitimacy of the verdict even before the trial begins” … .Here, one juror stated that his job experience as a correction officer “might” affect his ability to be impartial; when asked whether his employment would prevent him from applying “basic principles” granting certain rights to defendant, he responded, “It may.” A second juror said that her husband’s employment in law enforcement “could” cause her to give greater weight to a police officer’s testimony, and a third juror said that he could not “guarantee” that he would follow an instruction not to grant greater weight to such testimony. A fourth juror stated that her husband’s work as a sheriff’s deputy would”[p]ossibly” cause her to hesitate in providing defendant his constitutional protections; she further confirmed that she would be reluctant to apply the presumption of innocence. A fifth juror said that she believed that children who accused parents of sexual abuse could not lie, and a sixth juror agreed with other jurors that it was “highly unlikely” that a child would lie about this subject, and that it was probable that such a charge must be true because of its seriousness. Finally, a seventh juror expressed doubt when asked whether she would draw an adverse inference from a defendant’s choice not to testify, explaining that “it brings the question up why wouldn’t you[?]” Although she stated that she would follow the judge’s instructions in this regard, she added that she could not “control myself to take something that’s already in my mind away.” The prosecutor advised County Court that at least one of these jurors required rehabilitation because of such expressions of uncertainty, stating that “there should be inquiry from the court. “Nevertheless, the jurors were not questioned further, and none made “unequivocal assertion[s] of impartiality”… . People v Russell, 105083, 3rd Dept 4-3-14

 

Purchaser of a Firearm is an Accomplice of the Seller for Corroboration Purposes

The Third Department determined the trial court’s failure to instruct the jury that a witness against the defendant (Lewandowski) was an accomplice as a matter of law (requiring corroboration of his testimony) was reversible error. Lewandowski bought a firearm from the defendant and therefore was an accomplice of the seller for corroboration purposes:

“A defendant may not be convicted of any offense upon the testimony of an accomplice unsupported by corroborative evidence tending to connect the defendant with the commission of such offense” (CPL 60.22 [1]). Pursuant to CPL 60.22, an accomplice is a person who “may reasonably be considered to have participated in . . . [t]he offense charged; or . . . [a]n offense based upon the same or some of the same facts or conduct which constitute the offense charged” (CPL 60.22 [2] [emphasis added]). Notably, the definition of an accomplice for the purpose of the corroboration rule differs significantly from the definition of an accomplice for purposes of accomplice criminal liability (…compare CPL 60.22 with Penal Law § 20.00). CPL 60.22 broadens the definition of an accomplice “‘in order to provide a more equitable, operable and consistent standard for the courts in determining when the requirement of corroboration is applicable'”… . Thus, to be an accomplice for corroboration purposes, the witness “must somehow be criminally implicated and potentially subject to prosecution for the conduct or factual transaction related to the crimes for which the defendant is on trial” … .

Here, the evidence established that Lewandowski did not have a license to possess the handgun he bought from defendant. Thus, although Lewandowski could not be subject to prosecution for criminal sale of a firearm, he was potentially subject to prosecution for – and was, in fact, charged with – criminal possession of a weapon in the fourth degree since he unlawfully possessed the weapon as soon as he made the purchase (see Penal Law §§ 265.01 [1]; 265.20 [a] [3]). Just as the purchaser in a drug sale is, as a matter of law, an accomplice of the seller for corroboration purposes …, here Lewandowski was an accomplice as a matter of law with respect to defendant’s weapon sale and possession charges since he could have been (and was) charged with a crime “based upon some of the same facts or conduct” upon which the charges against defendant were based (CPL 60.22 [2] [b]…). County Court was therefore required to instruct the jury that Lewandowski was an accomplice as a matter of law as to those charges, and that defendant could not be convicted on Lewandowski’s testimony absent corroborative evidence… . People v Medeiros, 105941, 3rd Dept 4-3-13

 

Trial Court’s Decision to Conduct Trial in Defendant’s Absence Without Consideration of the Factors Mandated for Consideration by the Court of Appeals Required Reversal

The Third Department reversed defendant’s conviction because the trial judge did not consider the appropriate factors before continuing with the trial without the defendant’s presence:

“A defendant’s right to be present in the courtroom during his or her trial is one of the most basic rights guaranteed by the Federal and New York Constitutions, and by statute” … . Even where, as here, “a defendant has waived the right to be present at trial by not appearing after being apprised of the right and the consequences of nonappearance, trial in absentia is not thereby automatically authorized”… . Rather, it must also appear from the record that the trial court considered “all appropriate factors” before proceeding in defendant’s absence, “including the possibility that defendant could be located within a reasonable period of time, the difficulty of rescheduling [the] trial and the chance that evidence will be lost or witnesses will disappear” … . As the Court of Appeals has instructed, “[i]n most cases the simple expedient of adjournment pending execution of a bench warrant could provide an alternative to trial in absentia unless, of course, the prosecution can demonstrate that such a course of action would be totally futile” … .

Here, the record fails to demonstrate that Supreme Court considered any of the appropriate factors. When defendant failed to appear on the morning that trial was scheduled to commence, defense counsel represented to the court that he had no information as to defendant’s whereabouts and requested an adjournment. Supreme Court declined to grant an adjournment, issued a bench warrant for defendant’s arrest and pronounced its decision to proceed immediately to trial. People v June, 105292, 3rd Dept 4-3-14 

 

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Elements of Prima Facie Tort Explained—Disinterested Malevolence Not Demonstrated

The Third Department, in finding the allegations insufficient to make out the cause of action, explained the elements of prima facie tort:

“To sufficiently allege a cause of action for prima facie tort . . . a plaintiff must plead the intentional infliction of harm without justification or excuse, which results in special damages, by one or more acts which would otherwise be lawful” … . Moreover, “there is no recovery in prima facie tort unless malevolence is the sole motive for the defendant’s otherwise lawful act” … . The act “must be a malicious one unmixed with any other and exclusively directed to injury and damage of another” … . Even egregious conduct by an attorney during the course of representing a client that aids to some degree the attorney’s client or the attorney’s practice generally will not satisfy the disinterested malevolence requirement of a prima facie tort, because such conduct is not motivated solely to harm the defendant … .

… While plaintiffs’ pleadings are liberally interpreted in the context of a CPLR 3211 (a) (7) motion, such liberal standard “will not save allegations that consist of bare legal conclusions or factual claims that are flatly contradicted by documentary evidence or are inherently incredible”  Wiggins & Kopko LLP v Masson, 517155, 3rd Dept 4-3-14

 

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Breach of Fiduciary Duty Cause of Action Stated Against Actuary

After sorting out professional malpractice claims (negligence—three-year S/L) from breach of contract claims (intentional—six year S/L), the Third Department explained the elements of a “breach of fiduciary duty” cause of action in the context of actuarial services (provided by SGRisk):

Actuaries are not considered professionals for the purpose of the shortened statute of limitations applicable to malpractice claims … . Despite not being deemed professionals in that context, actuaries can still develop relationships of trust and confidence sufficient to give rise to a fiduciary duty. Courts must conduct a fact specific inquiry to determine whether a fiduciary relationship exists based on confidence on one side and “resulting superiority and influence on the other” … . Plaintiff alleged that SGRisk “held itself out as being a skilled and competent actuarial” firm that “adhered to accepted professional standards,” that it rendered services for the trusts’ benefit, provided advice and created “a relationship of trust and confidence between” itself and the trusts. Plaintiff also alleged that SGRisk agreed to exercise “good faith and undivided loyalty” when determining appropriate valuation of the trusts’ future claims liability and the trusts reasonably relied on this, placing confidence in SGRisk that it would accurately produce truthful annual actuarial reports with correct estimates of future claims reserves. Additionally, plaintiff alleged that SGRisk breached the duty by knowingly and consistently underestimating the claims liabilities and necessary reserves and failing to identify dangerous underfunding … .  New York State Workers’ Compensation Board… v SGRisk LLC, 517387, 3rd Dept 4-3-14

 

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Keeping Animals In Cages On the Same Lot as Petitioner’s Home, as Part of the Operation of a Business, Constituted a “Home Occupation” Requiring Approval by the Zoning Board

The Third Department determined the zoning board of appeals had properly ruled that petitioner was conducting a business inside his home without approval, a so-called “home occupation.”  The fact that large animals were kept outside petitioner’s home in permanent cages was found to be within the scope of the relevant definition of an “accessory structure:”

Petitioner contends that the activities occur in the cages on his property, not in any building on the property or any offsite location. There is no evidence in this record to show that business activities are conducted “inside the residence” or “at off-site locations,” so such activities must be conducted in “a legally constructed accessory building” to fall within the ordinance (Zoning Law [2008] of the Town of Mayfield § 202 [A] [42]). An “[a]ccessory [s]tructure” is defined as a building “which is located on the same lot” as, and “the use of which is incidental to that of,” a one- or two-family dwelling (Zoning Law[2008] of the Town of Mayfield § 202 [A] [1]). “Building” is defined as a one- or two-family dwelling or portion thereof “intended to be used for human habitation” but also “shall include accessory structures thereto” (Zoning Law [2008] of theTown of Mayfield § 202 [A] [10]). While cages would not generally be considered buildings, the Zoning Law contains a section on “[w]ord [u]sage” stating that “[t]he word ‘building’ includes the word ‘structure'” (Zoning Law [2008] of the Town of Mayfield § 201). That provision clarifies any ambiguity concerning the definitions of the relevant terms here, as a cage that is built into the ground – like these cages apparently are – can be considered a structure, and the cages are on the same lot as and incidental to the use of petitioner’s residence … .The code enforcement officer did not assert that the cages were illegally constructed. Thus, as petitioner is carrying on business activities in legally constructed accessory structures, he is operating a home occupation. Matter of Salton v Town of Mayfield Zoning Board of Appeals, 516523, 3rd Dept 4-3-14

 

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