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Investigatory Powers of NYS Commission on Public Integrity Explained​

The investigatory powers of the NYS Commission on Public Integrity were at the heart of this case.  The Commission was investigating allegations the petitioner (the Chief Executive Officer of the State University of New York Research Foundation) provided a job to the daughter of a prominent politician for which she was not qualified and did little work.  During the course of the investigation the Commission issued a Notice of Reasonable Cause (NORC) to the petitioner alleging a violation of Public Officers Law 74 (3) and requiring, by subpoena, the petitioner to provide testimony.  The petitioner argued that the commission’s power to issue a subpoena, under the controlling statutes and regulations, ended upon the issuance of the NORC.  In rejecting that argument, and accepting the Commission’s contrary argument that its power to investigate continued after the issuance of an NORC, the Third Department wrote:

Notably, the Commission’s interpretation of its regulation is consistent with the overall purpose and spirit of Executive Law § 94, which is to “strengthen the public’s trust and confidence in government through fair and just adjudicatory procedures that afford all parties due process protection and  fair and just resolution of all matters” (19 NYCRR 941.1…).   Following the issuance of a NORC, the Commission could become aware of other potential witnesses or additional information relevant to the possible violations.  Thus, construing the regulation to permit the Commission to continue its investigation, despite having issued a NORC, would best serve the underlying purposes of the statute. Conversely, to interpret the regulation as precluding investigation into new evidence, based solely on the fact that a NORC had been issued, would clearly impede the truth seeking function of the Commission.  In the Matter of O’Connor v Ginsberg…, 514200, 3rd Dept, 5-9-13

 

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Public Access Easement to Recreation Area Granted; Public Hearing Not Required

In a full-fledged opinion by Justice Stein, the Third Department upheld the grant of a petition pursuant to the Eminent Domain Procedure Law (EDPL) to acquire a public access easement over private land abutting a recreation area on land owned by a hydroelectric facility. The condemnation proceeding was triggered when the owner of the private property abutting the recreation area blocked roads which for years had provided public access to the recreation area. In a lengthy and detailed opinion, the Third Department explained the applicable procedures pursuant to the EDPL and why statutory exemptions to the public hearing requirement of the EDPL applied in this case.  In the Matter of Eagle Creek Land Resources, LLC, et al v Woodstone Lake Development, LLC, 514046, 3rd Dept, 5-9-13

 

Presumption of Validity of Property Tax Assessment Rebutted

In affirming Supreme Court’s determination that petitioner’s Adirondack land had been over-valued for property tax purposes, the Third Department thoroughly examined the appraisal techniques employed and explained the review process as follows:

…[W]e  find that petitioner rebutted the presumption of validity of the disputed tax assessments, by presenting a detailed competent appraisal by a qualified appraiser, based upon accepted appraisal techniques, which constituted substantial evidence of overvaluation and presented a genuine dispute concerning valuation … .  Upon  review of Supreme  Court’s determination that petitioner met its burden of establishing, by a preponderance of the evidence, that parcels one  and  two  had  been  overvalued, we “weigh the entire record” … and  “review the trial court’s finding to determine whether it is supported by or against the weight of the evidence” … .Valuation of assessed property presents the court with a factual question…, and this Court   will defer to the trial court’s decision “unless such  finding is based upon [an] erroneous theory of law or [an] erroneous ruling in the admission or exclusion of evidence, or unless it appears that the court . . . has failed to give to conflicting evidence the relative weight which it should have and thus has arrived at a value which is excessive or inadequate” … . Matter of Adirondack Mountain Reserve v Board of Assessors of the Town of North Hudson, et al, 515190, 3rd Dept, 5-9-13

 

No Standing to Bring Judicial Dissolution Action; Could Not Demonstrate 50% Ownership​

In upholding Supreme Court’s determination that the petitioner did not have standing to bring the judicial dissolution action because 50% ownership of the corporation stock (by the petitioner) was not demonstrated, the Third Department explained the relevant review process:

As  the  party  seeking  judicial dissolution of the corporation, petitioner bore the burden of demonstrating by a preponderance of the evidence his standing to seek such relief based on  his ownership of at least one half of the votes of all of Sunburst’s  outstanding  shares  (see  Business  Corporation  Law§ 1104 [a]…).Our review of Supreme Court’s determination, made after a hearing, “is not limited to whether [its] findings were supported by credible evidence; rather, if it appears that a finding different from that of Supreme Court is not unreasonable, we must weigh the probative force of the conflicting evidence and the relative strength of conflicting inferences that may  be drawn, and grant judgment as warranted” …. However, deference is given to the trial court’s credibility determinations, as that court “had the advantage of observing the witnesses firsthand and was in a better position to assess the evidence and weigh credibility” … .  Matter of Dissolution of Sunburst Associates, Inc v Vilardi, 515011, 3rd Dept, 5-9-13

 

Criteria for Common-Law Indemnification Explained

In upholding Supreme Court’s determination that a cause of action for common-law indemnification should not be dismissed, the Third Department explained:

Common-law indemnification …is a quasi-contract claim in which a  contract is implied in law in order to avoid unjust enrichment, accomplished  by  shifting a  loss by  “placing the obligation where  in equity it belongs” …..   Common-law  indemnification avoids  unfairness  and  unjust  enrichment  by  “recogniz[ing]  that [a] person  who,  in whole  or in part, has discharged a duty which is owed  by  him  but  which  as between  himself and  another should have been discharged by  the other, is entitled to indemnity” …  It “requires a showing that [the] plaintiff and [the] defendant[] owed a duty to third parties, and that [the] plaintiff discharged the duty which, as between [the] plaintiff and [the] defendant[], should have been discharged by [the] defendant[]” … .Murray Bresky Consultants, Ltd v New York Compensation Manager’s Inc, 515591, 3rd Dept, 5-9-13

 

“Unconscionable Contract” Elements Explained

In finding the arbitration clause in a contract valid, the Third Department explained the criteria for an “unconscionable” contract as follows:

As to the crux of petitioner’s appeal – that the contracts at issue are unconscionable and/or constitute contracts of adhesion – “an unconscionable contract [is] defined as one which is so grossly unreasonable as to be unenforcible because  of an absence  of meaningful choice on  the part of one  . . . part[y] together with contract terms which are unreasonably favorable to the other” …   Unconscionability, in turn, has two  elements. Substantive unconscionability “appear[s] in the content of the contract per se” and may include, by way of example, “inflated prices, unfair termination clauses,  unfair  limitations on consequential damages  and  improper disclaimers of warranty”… .Procedural unconscionability, on the other hand, entails “an examination of the contract formation process and the alleged lack of meaningful choice” ….  In this regard, “[t]he focus is on such matters as the size and commercial  setting of the transaction, whether deceptive or high- pressured tactics were  employed,  the use of fine print in the contract, the experience and education of the party claiming unconscionability, and whether  there  was  disparity  in  bargaining power” … . Matter of Conifer Realty …, 515560, 3rd Dept, 5-9-13

 

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In-Court Stipulation Enforceable Even Though Party Not Represented by Counsel​ 

The Third Department upheld an in-court stipulation concerning a mortgage foreclosure action that was entered without counsel:

Open court stipulations of settlement are highly favored, binding on  the parties and  strictly enforced, and generally will not be  cast aside absent a showing  of “fraud, collusion, mistake or accident” … .The fact that a party was not represented by counsel when entering into a  stipulation, while certainly relevant, is not sufficient  in  itself to  invalidate  a  stipulation,  particularly where the party was advised to retain counsel and chose not to … Liquori v Liquori, 515502, 3rd Dept, 5-9-13

 

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Absence of Privity Precluded Application of Collateral Estoppel Doctrine 

The Third Department, in reversing Supreme Court, determined the absence of privity precluded the application of the doctrine of collateral estoppel.  Northrop owned a gas station which was a designated spill site (gasoline). The Department of Environmental Conservation spent about $125,000 cleaning it up. Northrop sought payment for the clean-up from its insurance carrier (the defendant here). In a prior declaratory judgment proceeding Supreme Court determined the policy did not cover petroleum contamination. Then the state, the plaintiff here, started an action against the defendant insurance company under Navigation Law 190 seeking reimbursement of the clean-up expenses.  Supreme Court dismissed the complaint as barred by the doctrine of collateral estoppel (the prior declaratory judgment finding the insurance policy did not cover the clean-up expense).  In reversing, finding collateral estoppel should not have been invoked because Northrop and the state were not in privity, the Third Department wrote:

Plaintiff is the entity that has undertaken the cleanup and now seeks reimbursement for monies expended. Thus, plaintiff has a right of indemnification against Northport to recoup these costs …, establishing an indemnitor-indemnitee relationship. Plaintiff’s right of indemnification,  however, is independent of Northport’s contractual right to have its insurance carrier, defendant, cover these costs under the terms of the liability insurance  policy. Moreover, Navigation Law § 190 authorizes plaintiff to commence a direct action against defendant, and this right is independent of plaintiff’s right of indemnification against Northport. Given that plaintiff’s rights are not conditioned upon and do not derive from Northport’s, the existence of an indemnitor-indemnitee relationship between Northport and plaintiff does not establish privity between these parties.  State of New York v Zurich American Insurance Company, 514916, 3rd Dept, 5-9-13

 

Backhoe Bucket Not “Falling Object” Within Meaning of Labor Law 240 (1)

Plaintiff was severely injured when a backhoe bucket that had been suspended over him came down and crushed him.  With respect to the Labor Law 240 (1) cause of action, the issue was whether the backhoe bucket was a “falling object” within the meaning of the statute. In affirming Supreme Court’s determination that the backhoe bucket was not a falling object, the Third Department wrote:

 …[L]iability does not extend to “harm . . . caused by an inadequate, malfunctioning or defectively designed  scaffold, stay or hoist” unless the injury itself was  caused by  “the application of the force of gravity to an  object or person” … .  Viewing the facts in the light most favorable to plaintiffs, the accident occurred as a result of … jostling the controls, causing the backhoe’s properly functioning hydraulic system to lower the bucket. Thus, the evidence  submitted  by  plaintiffs, if accepted  as true, would establish that “the backhoe  bucket  crushed  plaintiff[] . . . not because  of gravity, but  because  of its mechanical  operation by  an allegedly negligent co-worker” ….   Under these circumstances, Supreme Court properly dismissed plaintiffs’ section 240 (1) claim because there was no falling object – “the harm [did not] flow[] directly from the application of the force of gravity to [an] object” …, but from the usual and ordinary dangers of a construction site … .  Mohamed v City of Watervliet, 515473, 3rd Dept 5-9-13

 

Question of Fact Raised About Whether Injury Incurred by State Trooper; Paramedic when Removing Injured Person from Crashed Car Was Covered “Occurrence” Under Trooper; Paramedic’s Supplementary Uninsured-Underinsured Motorist Policy

Plaintiff, a state trooper, licensed registered nurse and paramedic, was injured helping to remove an injured person (Williams) from a car struck by Prindle’s car. Plaintiff sued Prindle and the action was settled for the policy limit. Then plaintiff sought to recover under his own supplementary uninsured-underinsured motorist policy (hereinafter SUM) (the defendant in this case).  The defendant insurance company denied coverage, claiming plaintiff was not injured in an automobile accident.  In affirming Supreme Court’s finding that the insurance company was not entitled to summary judgment dismissing the action because the policy language allowed the interpretation plaintiff’s injury was related to the “use” of Pringle’s vehicle, the Third Department wrote:

“[SUM] coverage policies, such as the one at issue herein, apply only when an insured’s injuries are [proximately] ’caused by an accident arising out of [the underinsured] motor vehicle’s ownership, maintenance or use'”….  Under the circumstances here, Supreme Court properly concluded that defendant failed to meet  its threshold burden of demonstrating  that plaintiff’s injury was not caused by the use of Prindle’s underinsured vehicle. We reject defendant’s narrow interpretation of the SUM policy’s provision requiring  that  the  insured’s  injuries be directly caused by an accident that arose out of the use of a vehicle and defendant’s related assertion that the accident complained of here occurred only at the time of plaintiff’s injury. Construing the language of the policy liberally and resolving any ambiguity in favor of the insured …, defendant’s interpretation is contrary to the plain meaning thereof.  Kesnick v New York Central Mutual Fire Insurance Company, 514901, 3rd Dept, 5-9-13

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