In Pludeman v. Northern Leasing Sys., Inc., small business owners from the states of Missouri, Texas, Washington, and New York, sued Northern Leasing after realizing they had been tricked into signing lease agreements for credit card terminals and other business equipment.

Kevin Pludeman, and others, alleged Northern had presented them with what they thought was a single page contract resting on a clip board when, in actuality, it was concealing three other pages.

While the first page seemingly covered all the pertinent contract terms, the other three pages contained "a no-cancellation clause, and no warranties clause, absolute liability for insurance obligations, a late charge clause, a provisions for attorney's fees and New York as the chosen forum."

Pludeman acknowledged that the initial page noted "page 1 of 4," but countered that "microprint" deprived customers of the ability to knowingly consent to the transaction's terms.

After Northern moved to dismiss the case, the New York County Supreme Court found the complaint sufficiently stated a fraud claim against the sales representatives responsible for the alleged fraud. On appeal, the Appellate Division, First Department, affirmed.

When the case reached the New York State Court of Appeals, our state's highest court agreed that Pludeman and the other business owners offered enough details about the alleged scam to state a "fraud" claim. While a state law -- CPLR 3016(b) -- requires specificity in such cases, the Court noted that the standard should not be "so strictly interpreted" when there is a great risk that a viable cause of action may be lost.

Since many of the disputed facts were "peculiarly within the knowledge" of Northern, the governing pleading requirement was satisfied "when the facts [were] sufficient to permit a reasonable inference" of fraud. As this was a long-term, "nation-wide scheme," the Court of Appeals found such an inference was warranted here.

A lone dissenter -- Judge Smith -- thought the business owners didn't meet the law's specificity requirement as they failed to raise "allegations specific to individual defendants." Additionally, since the individual salespeople were not Northern employees, Smith believed that company's officers couldn't be "blamed for any trickery in which the salespeople engaged."

Were these business owners trying to back-out of a bad deal?

Judge Smith certainly thought so.

Gotta give them credit for trying.

To download a copy of the Court of Appeals' decision, please use this link: Pludeman v. Northern Leasing Sys., Inc. 

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In People v. Luciano, Ruben Luciano was charged with multiple crimes after allegedly shooting a man named Angel Rodriquez.

When Luciano's lawyer used up "peremptory challenges" -- and objected to eight individuals serving on the jury -- prosecutors required defense counsel to give a "gender-neutral reason" for its attempt to remove all the women.

When it found two of those challenges had been discriminatorily applied, the Bronx County Supreme Court refused to reinstate them, finding they had been forfeited due to the misconduct.

After he was convicted of "criminal possession of a weapon in the second degree and assault in the second degree," and sentenced up to 15 years, he appealed to the Appellate Division, First Department, which reversed on the grounds that "each party 'must be allowed' the statutorily prescribed number of challenges."

On appeal, the New York State Court of Appeals concluded that while forfeiture of peremptory challenges was a "permissible remedy to be exercised in a trial judge's discretion," it is a sanction which must sparingly issue. And before that kind of relief may be granted, a trial judge must consider "whether the challenged juror is available to be reseated," whether there appears to be a "pattern of discrimination," and the number of challenges remaining.

Since the Bronx County Supreme Court failed to take the relevant factors into consideration, forfeiture of Luciano's peremptory strikes was "reversible error," which entitled him to a new trial.

Guess you got lucky, Luciano!

To download a copy of the Court of Appeals's decision, please use this link: People v. Luciano  

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

In People v. Umali, Isaias Umali witnessed his friend, Chan, getting grabbed by the throat and pushed toward an exit by a nightclub bouncer named Blake.

In the scuffle, Umali stabbed Blake in the groin, severing his femoral artery and causing him to bleed to death. Although Umali tried to conceal what had transpired, he was eventually caught and indicted.

At his trial, Umali alleged that "he stabbed Blake in order to protect [Chan] from the use of deadly physical force."

While the defendant was testifying, the court was forced to recess for a four-day period and ordered Umali to refrain from talking to his lawyer. A day and a half later, defense counsel objected to the directive, and the court agreed the "ban" was "impermissible" -- leaving only two and a half days for Umali to consult with his attorney.

After he was convicted of manslaughter in the first degree, Umali appealed to the Appellate Division, First Department, contending the gap of time was prejudicial and warranted the conviction's reversal. Umali also claimed the instructions given to the jury regarding his "justification defense" were deficient since the judge indicated the evidence had to establish "beyond a reasonable doubt" that Umali believed he was trying to prevent Blake from using deadly physical force on Chan when, in actuality, prosecutors had the "burden to prove [beyond a reasonable doubt] that defendant did not believe force was needed."

Finding neither argument convincing, the AD1 affirmed.

On appeal to our state's highest court, the New York State Court of Appeals thought Umali's inability to confer with counsel was "insignificant," and while the jury instructions were not perfect, any error was seen as harmless since "a charge may be sufficient, indeed substantially correct, even though it contains phrases which, isolated from their context, seem erroneous."

The Court of Appeals reviewed the "context and content of the entire charge," and determined there was no risk of jury confusion since the jury was "repeatedly reminded that the burden was on the prosecution to prove its case beyond a reasonable doubt," that this burden never shifted to Umali, and the jury "never expressed any confusion about the justification charge or asked for supplemental instructions on the subject."

How justifiable was that?

To download a copy of the Court of Appeals' decision, please use this link: People v. Umali   

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (1)

Bianca Jagger, a rent-stabilized tenant, has lost her multi-year battle to keep her New York City home because she is a "foreign national."

Since she was allowed to enter the United States by way of a tourist visa -- which required her to maintain a "principal, actual dwelling place" in another country -- our state's highest court was of the opinion Jagger couldn't show the Manhattan apartment was her "primary residence" and thus could be evicted.

Will she not fade away?

To download a copy of the Court of Appeals's decision, please use this link: Katz Park Ave. Corp. v. Jagger

Our prior post, dated October 26, 2007, follows:

JAGGER EVICTED FOR BEING AN ALIEN

Posted by Lucas A. Ferrara, Esq. at 11:00 AM | Permalink | TrackBacks (0) | Comments (5)

In Jericho Water Dist. v. One Call Users Council, Inc., Jericho Water District (JWD) filed suit against One Call Users Council, Inc. (OCUCI) seeking a judge to find JWD wasn't obligated to contribute to the "one-call" system.

Before an excavation or demolition may begin, contractors must contact OCUCI, which affords notice to all utility (and other service) providers of any work to be performed in the immediate area of the latter's easements or installations. The participants then map out exactly where "pipes, cables, wires, and the like" are situated in order to prevent someone from excavating in those areas.

OCUCI is funded by its member operators who are statutorily required to join and pay the associated costs. However, since "municipalities" are exempt from remitting those fees, JWD -- a water district located in Oyster Bay, Long Island -- claimed it wasn't required to contribute to the system.

When the Nassau County Supreme Court disagreed, JWD appealed to the Appellate Division, Second Department, which reversed.

On appeal, the New York State Court of Appeals again reversed, finding the exemption inapplicable because JWD didn't exercise "governmental functions."

The outcome turned on the definition of the word "municipality." And since that term is narrowly defined, our state's highest court saw no reason to give it a broader application.

What a drip!

To download a copy of the Court of Appeals' decision, please use this link: Jericho Water Dist. v. One Call Users Council, Inc.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Matter of Humane Society of the United States v. Empire State Development Corp., the Humane Society sought information from the Empire State Developmnt Corp (ESDC) about a grant the latter had given to HVFA, LLC doing business as Hudson Valley Foie Gras (HVFG).

HVFG, a producer of foie gras up in Sullivan County, was given $420,000 in funding from ESDC for the construction of manure treatment plants (and other improvements).

The Humane Society requested copies of the ESDC's project plan and the memorandum of understanding (MOU). While ESDC provided some documents, it claimed an MOU didn't exist and "declined to provide a project finance memorandum and cost-benefit analysis," based on a statutory exemption.

When the Humane Society filed suit, alleging its information request had been wrongfully denied and the ESDC's decision was "arbitrary and capricious," the Albany County Supreme Court dismissed the case. After an appeal to the Appellate Division, Third Department, the ESDC was directed to release "redacted copies of the project finance memorandum and cost-benefit analysis."

The appellate court believed documents touching upon "purely factual data regarding HVFG's financial and operating history" were disclosable. The ESDC's "opinions and projections regarding economic issues," on the other hand, were "exempt" as "intra-agency materials."

Will the Court of Appeals force-feed a different result?

To download a copy of the Appellate Division's decision, please use this link: Matter of Humane Society of the United States v. Empire State Development Corp.  

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In People v. Mitchell, Curtis Mitchell and Charles May were seen breaking and entering into a Manhattan building. Although police were summoned, the two were no longer in the area by the time officers arrived. Some time later that evening, when the duo return to the crime scene, officers were able to intercept the men as they were again forcibly entering the structure.

Although the grand jury indicated the pair on a single count of burglary, it wasn't clear whether that indictment applied to the first or second entry.

After the jury found Mitchell guilty, he appealed to the Appellate Division, First Department, arguing that since he had been indicted on only one count, reversible error had occurred because jurors had been permitted to consider both entries, thus making it unclear which led to his conviction.

Finding no irregularity, the AD1 upheld the outcome, as did the New York State Court of Appeals. While the prosecutor presented evidence of two distinct burglaries, each occurred on the date and location set out in the indictment. Additionally, since he failed to object to the trial judge's jury instructions, Mitchell was found to have waived any objection to their irregularity.

Was that a criminal outcome?

To download a copy of the Court of Appeal's decision, please use this link: People v. Mitchell

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (4)

In Matter of Seasia D. v. Mr. & Mrs. Anonymous, wanted to adopt Seasia D., an infant born out of wedlock, who had been surrendered by her 14-year old mother.

After the child's biological father filed a challenge, the Queens County Family Court found the "extrajudicial surrender by the birth mother was invalid" because she had done so "under duress," and the father had been denied an opportunity to consent to the surrender. On appeal, the Appellate Division, Second Department, affirmed.

When the case reached the New York State Court of Appeals, it held that because Seasia's mother was in favor of her child's adoption, and never claimed to have been "forced to surrender" the child, the record didn't support the lower courts' findings.

Furthermore, our state's highest court noted that in order for Seasia's biological father to have been in a position to "consent," he must have promptly asserted his rights and needed to demonstrate "an ability and willingness to assume custody" within six months prior to the child's adoption. Since those standards weren't met in this case -- "the record was replete with excuses for his paternal lapses" -- the Court of Appeals reinstated the Anonymous's adoption petition.

Who says it isn't great to be Anonymous?

To download a copy of the Court of Appeals' decision, please use this link: Matter of Seasia D. v. Mr. & Mrs. Anonymous 

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (1)

In Galasso v. Wegmans Food Mkts., Inc., Laurie Galasso was trying to hang a construction sign on the side of the road when a Wegmans Food Markets tractor-trailer was travelling by, at some 10 to 15 miles per hour over the speed limit, and generated a gust of wind which caused the sign to fall on her.

After the Erie County Supreme Court denied Wegmans' request to dismiss the case, the Appellate Division, Fourth Department, agreed and rejected the company's arguments that it didn't owe a duty to Galasso and that the risk of injury wasn't foreseeable.

In a dissenting opinion, Justices Smith and Peradotto believed the case should have been knocked out. 

While a tractor-trailer must be safely operated, the dissenters didn't believed there is a duty owed to "an off-road pedestrian to avoid the effect of the wind turbulence created by ... [a] vehicle as it travels down the road." (The dissenters noted that even if the driver had been traveling within the speed limit, the sign still could have fallen.)

Will the Court of Appeals let the air out of them tires?

To download a copy of the Appellate Division's decision, please use this link: Galasso v. Wegmans Food Mkts., Inc.  

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

In Marmelstein v. Kehillat New Hempstead: Rav Aron Jofen Community Synagogue, Adina Marmelstein felt that her Rabbi, Mordecai Tendler, breached a "fiduciary duty" owed to her.

Marmelstein was a congregant at Tendler's synagogue when Tendler began counseling her about various "life issues," which included her "desire to find a husband and have children."

Tendler supposedly told Marmelstein that he was the "Messiah" and that her only hope would be to engage in a "course of sexual therapy" with Tendler.

Marmelstein consented, and the two began a sexual relationship which lasted 3 1/2 years.

Tendler allegedly told Marmelstein that if she informed anyone about their relationship he would ban her from the synagogue community.

In a lawsuit filed with the New York County Supreme Court, Marmelstein sought damages predicated on fraud, breach of fiduciary duty, intentional and negligent infliction of emotional distress, and, also asserted a negligence claim against Kehillat New Hempstead (KNH) for hiring Tendler as Rabbi. When the Supreme Court dismissed all but the emotional distress and KNH related negligence allegations, the parties appealed to the Appellate Division, First Department, which ended the dispute in its entirety.

When the matter reached our state's highest court, the New York Court of Appeals concurred with the AD1's decision, since Marmelstein's "general allegations" against Tendler were insufficient to "demonstrate the existence of a true fiduciary relationship, " which is established when one person "is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation."

Merely stating that the two engaged in an illicit sexual relationship, or that Tendler resorted to "seductive conduct" with Marmelstein, wasn't enough to show Tendler assumed "de facto control and dominance" over her or that she became "uniquely vulnerable and incapable of self-protection."

While he may have deceived Marmelstein and acted immorally, because this was an "extended voluntary sexual affair between consenting adults," there were no legal consequences for the alleged misbehavior. 

Miss Marmelstein!  Miss Marmelstein! ... I could bust! To download a copy of the Court of Appeals' decision, please use this link: Marmelstein v. Kehillat New Hempstead: Rav Aron Jofen Community Synagogue 

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

In Porcari v. Gannett Satellite Info. Network, Inc., Lawrence A. Porcari, Jr., filed suit against Gannett for "defamatory" remarks made about him in The Journal News Westchester.

It was reported that Porcari had been sanctioned for "ongoing frivolous conduct and noncompliance with court orders," was "employed as an attorney in the Office of the City of Yonkers Corporation Counsel," and sanctioned for a "private practice matter."

Porcari, however, had been mistaken for his father, who shared the same name.

When Porcari filed suit to recover damages, the Westchester County Supreme Court denied Gannett's request to dismiss the case, since the statements "tended to disparage [Porcari, Jr.] in his trade, business, or profession."

On appeal, the Appellate Division, Second Department, concluded that Porcari wasn't required to plead the remarks in question were "published with actual malice" as Porcari, a lawyer for the City of Yonkers, didn't qualify as a "public official."  [According to the U.S. Supreme Court in the case of New York Times v. Sullivan, remarks made about "public officials" are given more latitude as the "public has an independent interest in the qualifications and performance" of those who hold such positions.]

As a "private person," Porcari only needed to establish the publisher "acted in a grossly irresponsible manner" by disseminating inaccurate information.

We're wondering what the Court of Appeals will publish about that. 

To download a copy of the Appellate Division's decision, please use this link: Porcari v. Gannett Satellite Info. Network, Inc.  

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Falk v. Chittenden, Robert Falk attempted to have Timothy Chittenden's attorney, Jonathan Lovett, disqualified because of a "conflict of interest."

When Falk, the lieutenant of Rye's Police Department, filed misconduct charges against Officer Chittenden, the latter retained Lovett as counsel. But it just so happens that three years earlier, when Chittenden alleged Falk was an "incompetent," Falk sought legal advice from Lovett on "how to retain his position" and considered bringing disciplinary charges against Chittenden.

Though Falk never filed a complaint, he regularly communicated with Lovett and was never told the attorney intended to represent Chittenden, nor asked to give his consent to the arrangement. (Falk alleged that Lovett's representation of Chittenden posed a conflict since "confidential information" had been exchanged. Chittenden and his attorney disputed those conversations were enough to establish an attorney-client relationship.)

After the Westchester County Supreme Court decided in Chittenden's favor, the Appellate Division, Second Department, affirmed. While Falk had consulted with Lovett as a private citizen, in this particular instance his involvement was "in his official capacity as a lieutenant of the Rye City Police Department."

On appeal, the New York Court of Appeals reviewed New York's rules of attorney conduct - or Disciplinary Rules -- which concern, among other things, the preservation of confidences and secrets imparted by former clients.

Our state's highest court found Lovett and Falk had an attorney-client relationship, involving the "same or a substantially related matter" and the parties' interests were "materially adverse."

The matters were seen as substantially related because Falk's interest in pursuing "insubordination" charges would likely arise in Chittenden's disciplinary proceeding. And, since the two were "obvious antagonists," Lovett's continuing representation violated the state's Disciplinary Rules and couldn't be permitted to continue.

Don't you just Love it?

To download a copy of the Court of Appeals's decision, please use this link: Falk v. Chittenden   

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (2)

In Matter of Christopher H. v. Lisa H., the Dutchess County Family Court found a father had been sexually abusing and neglecting his two daughters and terminated his visitation rights until the childrens' therapist thought it appropriate to resume and ordered the father to "submit to a psychological evaluation, ... attend and participate in a sex offender program, ... and complete a parenting program."

In 2007, the father asked Family Court to modify the order, since he had completed the recommended parenting programs and undergone a psychological evaluation by the Dutchess County Department of Social Services. He also submitted a therapist's report which noted the father had submitted to a clinical polygraph examination in which his denials of ever sexually abusing his daughters registered as truthful and he thus was not an "appropriate candidate for specialized sex offender treatment."

When the Family Court denied the request on the grounds that the father failed to adhere to the court's earlier directive he attend a sex offender program, an appeal to the Appellate Division, Second Department, ensued.

The AD2 was of the belief the Family Court should have conducted a hearing, particularly in view of evidence the guy wasn't an appropriate candidate for the program. It declined to determine whether his daughters had been abused or whether the resumption of visitation was in their best interests. It merely believed this dad deserved his day.

Will someone please buy the guy a tie?

To download a copy of the Court of Appeals's decision, please use this link: Matter of Christopher H. v. Lisa H. 

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Tirado v. Elrac Inc., Miguel Tirado sued Elrac and U-Haul Inc. (UHI) for injuries sustained in a car accident. (Tirado was a passenger in a car owned by Elrac and hit by a U-Haul truck.)

Claiming it was "vicariously liable" for the accident, Tirado sued UHI believing it was the truck's owner. However, the vehicle was actually owned by U-Haul Co. of Arizona (UHAZ). And to complicate things just a bit, some 12 days after his suit was filed, Congress enacted the "Safe, Accountable, Flexible, Efficient Transportation Equity Act," also known as the "Graves Amendment," which prohibits claims against vehicle lessors for injuries stemming from the negligent operation of leased vehicles.

U-Haul Co. of New York (UHNY) filed an answer on UHI's behalf, believing it was the intended defendant and later moved to dismiss the case since UHAZ was the truck's owner and UHI was an inactive corporation which hadn't been in operation at the time of the accident. UHNY also argued that Tirado couldn't add UHAZ to the case due to the "Graves Amendment."

Tirado cross-moved and argued that under a New York law -- CPLR 203(a) -- an amendment of a pleading "relates back" to the suit's filing date which, in this instance, preceded the federal statute's passage and effective date.

After the Bronx County Supreme Court refused to allow Tirado to amend the complaint and dismissed the matter, he appealed to the Appellate Division, First Department.

Citing Jones v. Bill, a case wherein the New York State Court of Appeals found "[n]othing in the language of the Graves Amendment suggests that it bars vicarious claims asserted in an amended pleading in an action commenced prior to its effective date," the AD1 reversed.

Since Tirado filed suit against UHI 12 days before the federal law came into existence, his dispute was "removed from the [statute's] pre-emptive reach."

In other words, far from Graves, Tirado's case got a new lease on life.

To download a copy of the Appellate Division's decision, please use this link: Tirado v. Elrac Inc.

To view our prior post on this topic, please use this link: HOW GRAVES WAS IT?

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Matter of Barron v. Board of Elections in the City of New York, Inez D. Barron sued the New York City Board of Elections (BOE) for hindering her New York State Assembly candidacy.

On April 8, 2008, Assembly member Diane Gordon was forced to resign after she was convicted of bribery and misconduct in public office. BOE issued a vacancy notice, and Barron -- believing there would be a special election (in addition to primary and general elections for the slot) -- circulated petitions. When she learned that a special election wasn't going to be held, Barron filed suit against the BOE and violations of New York State's Election Law were alleged.

While the Kings County Supreme Court aligned with Barron and directed the BOE to conduct an election to fill the unexpire term, it also found Barron had secured an "unfair advantage over other possible candidates ... in that she had started circulating designating petitions ... at a time when other possible candidates may not have been aware that a primary election and a general election would be held." In effect, the signatures she compiled prior to July 2, 2008 were invalidated.

On appeal, the Appellate Division, Second Department, believed penalizing the candidate for her foresight, and disenfranchising voters who signed her petitions, would be unjust and inequitable and elected to reverse that part of the decision which adversely impacted the signatures she had secured from registered voters.

Late last week, our state's highest court decided the timing of Gordon's resignation was such that the law required the seat to remain vacant through December 31, 2008 -- the unexpired balance of Gordon's term.

Barron's efforts were not for naught. If she wins tomorrow's primary, and the election in November, her term will start January 1, 2009 (rather than immediately).

To download a copy of the Court of Appeals's decision, please use this link:  Matter of Barron v. Board of Elections in the City of New York

To download a copy of the Appellate Division's decision, please use this link: Matter of Barron v. Board of Elections in the City of New York

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

In Petrone v. Fernandez, Melanie Petrone -- a mail carrier -- was working her route when she observed a rottweiller named "Kai" positioned on Fernandez's lawn only feet away from her.

Since the animal was unleashed, Petrone retreated. When she noticed Kai was starting to chase her, Petrone also began to run, jumping through the window of her vehicle and injuring her finger.

James McCloy, Kai's custodian, alleged the dog was asleep on the front lawn, that Petrone ran away from the house yelling and screaming, but the animal remained on the lawn the entire time.

McCloy also claimed Kai couldn't pursue Petrone because the animal suffered from a severe arthritic condition, and, both Fernandez and McCloy testified Kai never "exhibited vicious propensities."

When Petrone filed suit against the two men for negligence in "failing to guard [Petrone] from the dog's known vicious propensities" and for violating the New York City leash laws, the Queens County Supreme Court dismissed the case.

On appeal, the Appellate Division, Second Department, modified the outcome.

After reviewing the Court of Appeals' decision in Bard v. Jankhe -- which established strict liability "for harm caused by an animal, where it is established that the owner knew or should have known of the animal's vicious propensities and harm is caused as a result of those propensities" -- the AD2 used Petrone's case as a platform to highlight an appellate discord which now exists in New York.

While the First and Second Departments have recognized "common-law liability independent of an animal's vicious propensities," the Third and Fourth Departments "generally have not ... absent evidence of the animal's vicious propensities."

Since Bard v. Jankhe wasn't a leash-law case but a dispute dealing with a "bull in a barn of a dairy farm," the AD2 didn't believe the Cout of Appeals addressed the "question of whether negligence involving the violation of a leash law can result in liability when an unleashed dog engages in a chase that proximately causes injury."

Relying on its own precedent, which recognized dog owners' liability for leash law violations, the AD2 concluded the Supreme Court erred in dismissing the case against McCloy since questions of fact remained as to Kai's behavior on the afternoon in question. (The AD2 agreed Fernandez sufficiently established he wasn't Kai's owner, he wasn't home at the time Petrone was injured, and owed no duty to Petrone.)

Will the Court of Appeals muzzle this case?

To download a copy of the Appellate Division's decision, please use this link: Petrone v. Fernandez   

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Matter of Markowitz v. Serio, Brooklyn Borough President Marty Markowitz sought to investigate the "redlining" practices of Farmers New Century Insurance Company by using the Freedom of Information Law (FOIL).

"Redlining" in the insurance industry involves "an insurer's refusal to issue or renew ... a policy premised exclusively on the geographic location of the risk."

Markowitz wanted to know how many Brooklyn insurance policies had been issued, renewed, or cancelled and, when a FOIL request was filed, the State Insurance Department (SID) refused to release the information, reasoning that would allow competitors access to "trade secrets or records" and "would cause substantial injury to [their] competitive position [as] insurers."

After Markowitz filed suit, Gregory Serio, SID's Superintendent, claimed the refusal to release the information was "reasonable and consistent with lawful procedure," and not "arbitrary and capricious." The New York County Supreme Court disagreed and ruled in Markowitz's favor, but the Appellate Division, First Department, reversed.

On appeal, the New York Court of Appeals, again reversed and found SID was required to release the information.

While there are certain FOIL exemptions -- particularly when the release of trade secrets could cause substantial financial or competitive injury -- Serio and SID failed to show how the reports fell "squarely within a FOIL exemption" and didn't offer a "particularized and specific justification for denying access."

And even though SID contended releasing the information would allow competitors to exploit a "weakspot," our state's highest court found that argument "theoretical at best."

Will SID get foiled again?

To download a copy of the Court of Appeals' decision, please use this link: Matter of Markowitz v. Serio

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (1)

 In Dykeman v. Heht, Crysta Dykeman and her parents were guests in Raymond Heht's home when within 30 to 45 minutes after their arrival, Heht's dog bit Crysta in the face, severing part of her eyelid and tear duct and cutting her lips.

According to Crysta's mother, the dog had "barked, snarled, growled, and bared its teeth at them" on a prior visit to Heht's home, but was subdued without incident.

Crysta and her mother filed suit against Heht to recover damages for personal injuries and claimed strict liability. After Heht's request to dismiss the case was denied by the Dutchess County Supreme Court, an appeal to the Appellate Division, Second Department, followed.

Interestingly, the appellate court was of the opinion that the dog's behavior "raised a question of fact as to whether Heht should have known of his dog's vicious propensities."

A lone dissenter -- Justice Dillon -- was of the opinion caselaw required more than just growling and barking to establish an animal's "vicious propensities." Dillon also noted that Heht's dog hadn't previously exhibited aggressive behavior, and the animal always responded to Heht's commands.

Will the Court of Appeals respond viciously to this case?

To download a copy of the Appellate Division's decision, please use this link: Dykeman v. Heht  

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In 936 Second Ave. L.P. v. Second Corporate Dev. Co., Inc., Second Corporate Development Co. (Second) leased three adjoining buildings -- with 22 rent-regulated apartments and four retail stores -- to 936 Second Avenue by way of a 20-year net lease. The parties' agreement provided that if 936 exercised a renewal option, "the annual rent would be seven percent of the value of the [leased] premises as of the date of commencement of each successive 10-year period."

The document provided that if the parties couldn't agree on the property's value, they could each seek their own appraisal.

When a dispute arose, Second's appraiser valued the property at $7.1 million, 936's appraiser came back with $3.43 million -- with the latter expert having "considered the effect of the net lease on the value of the premises."

936 later filed suit asking a court to declare that the net lease and all its terms had to be considered when calculating the property's value. When the New York County Supreme Court disagreed with 936's position, the company appealed to the Appellate Division, First Department, which affirmed.

On appeal to our state's highest court, the New York State Court of Appeals determined "valuations of land must take into consideration all encumbrances, including restrictions as to its use, unless there is a clear provision to the contrary." Since it impeded the property's "highest and best use," the net lease couldn't be disregarded. ["If the parties to a lease desire to exclude that encumbrance in valuing the property, they need only include language to that effect in their agreement. Indeed, courts have routinely enforced such provisions."]

We'll second that! 

To download a copy of the Court of Appeals' decision, please use this link: 936 Second Ave. L.P. v. Second Corporate Dev. Co., Inc.   

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Matter of 9th & 10th St. LLC v. BSA of City of New York, 9th & 10th St. LLC filed suit against the Board of Standards & Appeals (BSA) to compel the agency to provide the LLC with a permit to build a proposed dormitory.

The LLC proposed to construct a 19-story structure, whose use was restricted to a "Community Facility." While the proposal was to provide housing for "college or school students," BSA was concerned the dorm might later may be converted into an apartment complex and denied a permit on the grounds there was insufficient evidence that the building could, in fact, be used for the intended purpose. (Although an apartment building was a lawful, that kind of structure was restricted to 10 stories rather than the proposed 19.)

To qualify as a dormitory, a building needs to be "operated by, or on behalf of, at least one college or school." The LLC failed to provide an adequate "institutional nexus" despite its production of a lease to "University House Corps.," an LLC-created entity which promised to rent out the units to students.

When the New York County Supreme Court denied the LLC's challenge it appealed to the Appellate Division, First Department, which was of the opinion that a building permit couldn't be refused on the basis of "a possible future illegal use."

BSA then appealed to our state's highest court which held that when there is a reasonable apprehension a building's planned use isn't legally permissible, the City is "not required to let the property owner build the building and see what happens."

The Court of Appeals was of the opinion that seeking assurances from the developers wouldn't suffice as it "would create needless problems if petitioner built a 19 story building, only to find that it could not use it in a legally-permitted way. The City would then face a choice between waiving the legal restrictions and requiring the building to remain vacant or be torn down."

Since the BSA was trying to avoid that dilemma, the Court of Appeals reinstated the Supreme Court's denial of the challenge.

Are sweet dreams made of this?

To download a copy of the Court of Appeals' decision, please use this link: Matter of 9th & 10th St. LLC v. BSA of City of New York

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In People v. Sparber, Daniel Sparber pled guilty to assault and was sentenced to 15 years in prison. Since he was a "second violent felony offender," Sparber was required to serve an additional five-year period of post-release supervision (PRS).

Sparber argued he shouldn't undergo PRS since the court hadn't "pronounced [the PRS] orally, in his presence in open court" and the omission violated his constitutional due process rights.

On appeal, the Appellate Division, First Department, disagreed and affirmed Sparber's conviction and sentence.

When the dispute reached the New York State Court of Appeals, the sentencing court's procedure was viewed as "flawed" and noncompliant with the law's requirements.

While Sparber argued that the error warranted the expungement of the PRS obligation, the court feared giving him a "windfall" -- particularly, in the absence of any palpable prejudice and the omission's "ministerial" nature.

Our state's highest court was of the opinion that the misstep was correctable by vacating Sparber's sentence and sending his case back for a new sentencing hearing.

I'm sorry, I'm not feeling it. What's the motivation?

For a copy of the Court of Appeals's decision, please use this link: People v. Sparber   

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In People v. Williams, Michelle Williams alleged that her right to be present during the jury selection process was violated.

Williams was charged with filing a false police complaint and car theft affidavit.

Although her counsel insisted upon Williams' right to monitor jury questioning or "voir dire," she supposedly wasn't present during sidebars concerning the possible bias of three potential jurors.

Following a trial by the Bronx County Supreme Court, Williams was convicted and an appeal ensued.

The Appellate Division, First Department, agreed Williams had been prejudiced and noted that "a criminal defendant has a fundamental right to be present at all material stages of trial and that a sidebar discussion with a prospective juror regarding her background, bias and ability to be impartial is considered a material stage of a trial." Finding Williams never waived that right, nor was near enough to be able to hear the sidebars, the AD1 reversed the conviction and remanded the criminal case for a new trial.

Two dissenting justices -- Williams and Buckley -- would have preferred a hearing to determine whether Williams could see and hear the sidebar in dispute.

Can you hear the appeal to the Court of Appeals?

 To download a copy of the Appellate Division's decision, please use this link: People v. Williams

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In Wilson v. Galicia Contr. & Restoration Corp., Lamont Wilson's left eye was seriously injured when he was supposedly hit by a falling piece of metal scaffolding that had been assembled by Safeway Steel Products.

Wilson withdrew his case against other defendants -- after an expert concluded the object in his eye was not scaffolding-related, but rather a lead air-gun pellet -- but continued his claim against Safeway because the company's answer had been stricken due to its noncompliance with the court's discovery directives. (As a result, Safeway was deemed to have admitted "all traversable allegations in the complaint, including the basic allegation of liability.")

Even though Safeway produced evidence that Wilson's claim was "fraudulent," the Kings County Supreme Court held it couldn't be considered and denied Safeway's motion to dismiss the case.

Since the company was unable to present an excuse justifying its failure to comply with the underlying discovery order, the Appellate Division, Second Department, affirmed.

When the case reached the New York State Court of Appeals, our state's highest court determined Safeway was unable to offer a defense to Wilson's claim in view of it's "absolute" liability.

In a dissent, Judge Pigott argued the "compelling" evidence should have been considered and, at a minimum, a hearing should have been required to determine whether Wilson "procured the judgment by fraud."

Would that have been a safe way for the majority to go?

 

For a copy of the Court of Appeals' decision, please use this link: Wilson v. Galicia Contr. & Restoration Corp 

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In Matter of Johna M.S. v. Russell E.S., Johna and Russell entered into a separation agreement wherein Russell agreed to pay Johna $100 per week in spousal maintenance, and $250 per week in child support, and, Johna could later seek additional maintenance by addressing it with Russell or asking the court to modify the arrangement. Any application made by Johna was to be treated as a new or "de novo" request -- because the agreement didn't consider Johna's future needs or Russell's future earnings.

When Johna later filed for an increase, the Otsego County Family Court denied the request citing the "lack of jurisdiction," and both the Appellate Division, Third Department, and, the New York State Court of Appeals, agreed.

According to our state's highest court, the Family Court lacked the power to alter or rescind a valid separation agreement, unless the spouse was "likely to become in need of public assistance or care." Finding the statutory exception inapplicable here, the parties' agreement didn't give the Family Court the necessary power. The court further noted that Johna wasn't really bringing a "de novo" application for maintenance, but was asking for the agreement's "modification," which could only be achieved by way of a Supreme Court action for separation or divorce.

How divorcing is that?

To download a copy of the Court of Appeals' decision, please use this link: Matter of Johna M.S. v. Russell E.S.

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In Matter of Garner v. New York State Dept. of Correctional Servs., Elliot Garner challenged the power of the New York State Department of Correction Services (DOCS) to require him to undergo five years of "post-release supervision" (PRS).

Back in January of 2000, when Garner was sentenced to a five-year prison term for pleading to an attempted robbery, the Albany County Supreme Court didn't advise him of a mandatory PRS which was to be imposed as result of his conviction, nor was that term noted in a "commitment order."

When Garner learned DOCS set a PRS some four years later, he signed a conditional release agreement "under protest" and, when he failed to participate in a substance abuse program, was later returned to prison.

When a special proceeding was filed, the Albany County Supreme Court denied Garner's challenge because it was "time-barred." (The case hadn't been brought within a four-month period after DOCS had taken action.)

On appeal, the Appellate Division, Third Department, could discern no irregularity and was of the opinion DOCS was merely applying Garner's sentence as required by law.

When he appealed to our state's highest court, the New York State Court of Appeals concluded DOCS was "acting in a judicial capacity" and inappropriately invoked a power only a sentencing judge could exercise. As a result, the Court of Appeals granted Garner's challenge and prohibited DOCS from applying a PRS, period.

"Funny situation, ain't it?"

To download a copy of the Court of Appeals' decision, please use this link: Matter of Garner v. New York State Dept. of Correctional Servs.

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In Rios v. Carrillo, Maria Rios leased a residential apartment to Alfredo Carrillo for a period of two years. A year into that lease, Carrillo left the apartment, stopped paying rent, and claimed he did so with Rios' consent. Rios didn't agree and filed suit in 2003 seeking the monies due.

Since Rios hadn't demonstrated that she attempted to "mitigate" or reduce her damages by re-renting the space, advertising its availability and/or listing the apartment with real-estate brokers, the Queens County Supreme Court decided Rios wasn't entitled to the cash and dismissed her case.

On appeal, the Appellate Division, Second Department, reversed.

While Carrillo argued that a landlord should have a duty to take action, the AD2 found that "well-settled law in [New York] imposes no duty on a residential landlord to mitigate damages."

Relying on the Court of Appeals' decision in Holy Props. v. Cole Prods., 87 N.Y.2d 130, 637 N.Y.S.2d 964 (1995), the AD2 noted that unlike other contracts, "'leases have been historically recognized as a present transfer of an estate in real property,'" a sort of "hybrid" between a contract and a conveyance in land. Therefore, since landlords aren't required to re-rent or otherwise assist the tenant find a replacement during the lease term, Carrillo remained liable for all monies that accrued in his absence.

Only the Court of Appeals can mitigate that.

For a copy of the Appellate Division's decision, please use this link: Rios v. Carrillo  

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (6)

In Matter of Piel, Elizabeth McNabb sued to recover her share of a $9.7 million trust.

Elizabeth was born to Barbara Piel who, "within days" of Elizabeth's birth, allowed the child to be adopted by "total strangers."

Piel later inherited two irrevocable trusts which, upon her death, were to go to her descendents. Elizabeth claimed that the trustee, Fleet Bank, was required to distribute a third of the trust's principal and income to her.

Since an "adopted-out" child is typically excluded from staking an inheritance right to a biological parent's estate, the Surrogate's Court denied the request.

On appeal, the Appellate Division, Fourth Department, reversed and granted Elizabeth her fair share.

When the dispute reached our state's highest court, McNabb was denied a piece of the distribution. According to the New York State Court of Appeals, the law's intent was to "promote [the adopted child's] assimilation ... by providing the new family with the 'legal relation of parent and child'" and to safeguard the "finality of judicial decrees."

In other words, McNabb was left with nothing to grab.

For a copy of the Court of Appeals' decision, please use this link: Matter of Piel

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During a phone call made to the mother of his two children, Marcos Urbaez supposedly threatened to "withhold child support, beat her, knock out her teeth and break her face."

As a result of that misconduct, Urbaez was charged with aggravated harassment -- a class A misdemeanor. When prosecutors opted to reduce the charge to "attempted aggravated harassment" -- a class B misdemeanor -- Urbaez objected, arguing that the maneuver was intended to deny him a jury trial.

Both the New York City Criminal Court, and the Appellate Term, First Department, could discern no irregularity by the reduction.

On appeal, the New York State Court of Appeals held that a defendant has the right to a jury only when a "serious offense" is concerned and the maximum penalty for incarceration is over seven months.

Because Urbaez faced no jail time for his "relatively nonserious" crime, our state's highest court affirmed noting that by allowing prosecutors to process a "high volume of misdemeanor cases" as they saw fit, "the important public interest of effective judicial administration" was promoted.

Next!

To download a copy of the Court of Appeals' decision, please use this link: People v. Urbaez  

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In Fleming v. Graham, Cedric Fleming was injured when the van in which he was riding collided with a school bus driven by an employee of Evergreen Bus Service.

Fleming sustained scars on his forehead and right upper eyelid and it was unclear whether his scars were correctable. Since New York's Workers Compensation Law allows injured workers to file a negligence case when they suffer "permanent and severe facial disfigurement," the Kings County Supreme Court denied his employer's request to dismiss the case, citing "issues of fact" On appeal, the Appellate Division, Second Department, affirmed.

When the dispute reached our state's highest court, the New York State Court of Appeals found Fleming's injuries didn't meet the law's "severity" standard because his scarring wasn't shocking, unsightly, nor detrimentally altered his "natural beauty, symmetry or appearance."

Beauty was in the eyes of those beholders.

 

For a copy of the Court of Appeals' decision, please use this link: Fleming v. Graham

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In Swiderska v. New York University, Eugenia Swiderska sued New York University pursuant to Labor Law section 240(1) for injuries she sustained while cleaning some large dorm windows.

Before undertaking the task, Eugenia supposedly asked for a ladder but was told to use the existing furniture. While standing on a bed, Eugenia fell and suffered "multiple fractures and other injuries."

When the New York County Supreme Court dismissed her case -- finding Eugenia was engaged in "routine maintenance" and thus not covered by the law -- she appealed to the Appellate Division, First Department, which affirmed.

When the case reached our state's highest court, the New York State Court of Appeals concluded that Eugenia was entitled to relief in her favor, particularly since she had been subjected to an "elevation-related risk" when directed to climb upon furniture to perform her job and wrongfully denied "a ladder, scaffold or other safety device."

Looks like Eugenia will be the one cleaning up here!

To download a copy of the Court of Appeals' decision, please use this link: Swiderska v. New York University

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In Mann v. Abel, Monroe Mann sued Bernard Abel for libel in connection with an article Abel wrote for a local newspaper.

The piece was written during a "heated" local election for control of the Rye Town Board, and featured Mann, the Rye Town Attorney.

In the article, entitled "Who is the real Mann?," Abel called Mann a "political hatchet Mann?," and "one of the biggest powers behind the throne." He also claimed that "Mann pulls the strings," and that he was "leading the town of Rye to destruction."

Mann filed suit claiming that Abel's statements were false and published with malice. Abel and the newspaper countered that the article was protected by the First Amendment because it contained expressions of opinion.

After trial, when the jury found the statements defamatory and awarded both compensatory and punitive damages, an appeal to the Appellate Division, Second Department, ensued. While the AD2 agreed that Mann was defamed, it reduced the compensatory damages award and dismissed the punitive damages component. Abel and the newspaper then appealed to our state's highest court on constitutional grounds.

Since the column appeared on an "opinion" page, and a "reasonable reader" would recognize the content as expressions of opinion, the New York State Court of Appeals reversed.

Clearly, the Court of Appeals didn't think Monroe was the Mann.

 

To download a copy of the Court of Appeals' decision, please use this link: Mann v. Abel

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In Pultz v. Economakis, David Pultz and others sought to stop Catherine Economakis and her husband from evicting all of the building's stabilized tenants. 

Everyone had been served with nonrenewal notices which noted the owners' intention to recover possession of these units for their "personal use."

Pultz and others filed suit alleging that the Rent Stabilization Law was designed to severely limit situations in which an owner can recover regulated apartments, and sought a court order declaring the Economakis’ plan violative of law. 

Mr. and Mrs. Economakis countered that the governing rules currently permit  owners to recover an unlimited number of apartments for their personal use so long as they can demonstrate (to a judge's satisfaction) a "good faith" intention to occupy the units as a primary residence.

While the tenants won before the New York County Supreme Court, the Appellate Division, First Department, reversed, and an appeal to our State’s highest court ensued.

Just a few days ago, on June 3, 2008, the New York State Court of Appeals found the “plain language” of the law allows owners to recover “one or more” stabilized apartments for their use “or that of a family member.” The Court noted that the law’s “unambiguous language” permits landlords “to live in their own buildings if they so choose," even if that means the loss of affordable housing and diminishes the available supply of regulated apartments.

Tenant advocates are in an uproar over this decision.

Let's just say, they don’t have much use for this "owner’s use" case.

To download a copy of the Court of Appeals’ decision, please use this link: Pultz v. Economakis

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In Smalley v. Dreyfus Corp., five former at-will employees sued the Dreyfus Corporation for fraudulently inducing them to join and remain with the company under false pretenses.

In January of 2001, Gerald Thunelius, one of the five plaintiffs, heard a rumor that Dreyfus’ parent corporation was considering the acquisition of Standish Ayer & Woods, a funds management company. When Thunelius confronted Dreyfus’ Chief Executive Officer about the merger, the latter denied any negotiations were underway.

Of course, Standish was acquired three months later and, from 2001 to 2004, assurances were given to Thunelius, and others, that the “Taxable Fixed Income Group” (TFIG) wouldn’t merge with Standish. In reliance of those promises, and presumably the inference of job stability, the five employees either remained with TFIG or accepted new employment with the Group. In 2004, Standish and TFIG merged, and every TFIG member was terminated.

When litigation ensued, the New York County Supreme Court denied the former employees’ claims in their entirety, finding that “at-will employees cannot reasonably rely upon their employer’s promises of continued employment, and that these employees failed to allege injuries apart from their termination.”

On appeal, the Appellate Division, First Department, modified the Supreme Court’s order by reinstating the fraudulent inducement claim. The AD2 noted that, “Dreyfus misrepresented a material fact” and held that the employees had asserted injuries apart from mere termination.

On review, the Court of Appeals reversed.

New York law provides that without "a constitutionally impermissible purpose, a statutory proscription, or an express limitation in the individual contract of employment, an employer’s right at any time to terminate an employment at will remains unimpaired."

Since there was no promise to keep the individuals employed, the reliance of the “no-merger” representations was immaterial and no individual injury or damage could be established by their employment’s termination.

Our state’s highest court noted that, “Absent injury independent of termination, plaintiffs cannot recover damages for what is at bottom an alleged breach of contract in the guise of a tort.”

No TGIF for TFIG.

To download a copy of  the Court of Appeals’ decision, please use this link: Smalley v. Dreyfus Corp.

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In Innophos, Inc. v. Rhodia, S.A., Innophos contested a $130 million water-usage fee which the Government of Mexico demanded be paid after Rhodia’s operations had been acquired by Innophos.

In early 2004, the Comision Nacional del Agua (CNA) informed Rhodia the latter owed money for water usage. In June 2004, Innophos purchased Rhodia’s operations unaware of the past-due fees owed.

The parties’ purchase and sale agreement provided Rhodia would be obligated to indemnify Innophos from “taxes of Mexican Subsidiaries,” and defined “taxes” as “assessments, charges, duties, levies, of other similar charges of any nature .…” The agreement further provided that Innophos would be indemnified for any “losses” arising from “the breach of any representation or warranty made in the agreement,” subject to a cap.

After receiving notice CNA was owed $130 million for water usage by Rhodia over a five year period, Innophos filed suit in the New York County Supreme Court, seeking a declaration the CNA fees were “taxes,” as defined by the parties’ agreement. Rhodia refused to pay, claiming the fees were “losses,” as defined by that same contract, and that it would only pay up to the capped amount.

The Supreme Court sided with Innophos and noted the agreement hadn’t limited “taxes” to its traditional sense. On appeal, the Appellate Division, First Department, affirmed, noting the word should be broadly construed.

When the dispute reached our state’s highest court, it also affirmed. Since the Government of Mexico was acting in its sovereign capacity when CNA assessed these fees, and because the charge was “imposed on the value of natural resources extracted from the earth,” the water-usage charges were “taxes” encompassed by the parties’ agreement.

Now that was taxing!

To download a copy of the Court of Appeals’ decision, please use this link: Innophos, Inc. v. Rhodia, S.A

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In Smalls v. AJI Industries, Inc., Markking Smalls suffered serious injuries when an automobile, in which he was a passenger, hit an AJI dumpster.

Smalls sought to recover for non-economic loss and other damages under New York’s No-Fault Law, and alleged that AJI “negligently maintained and unlawfully situated the dumpster on public roadways … without any reflection tape, cones, triangles, or other safety devices.”

When the Bronx County Supreme Court denied AJI’s motion to dismiss the case, the company appealed to the Appellate Division, First Department, which threw the case out.

Upon review, the New York State Court of Appeals reversed the AD1, since AJI hadn’t definitively shown where the dumpster was situated.

According to our state’s highest court, because the dumpster’s precise location wasn’t clear, there were unresolved questions that needed to be addressed at a formal hearing or trial.

In other words, Smalls’ case got dumped right back onto the Supreme Court.

 

 

To download a copy of the Court of Appeal’s decision, please click on the following link: Smalls v. AJI Industries, Inc.

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In the Matter of Shelton Johnson v. New York City Department of Environmental Protection (DEP), Shelton Johnson sought reinstatement and back pay from the DEP, after being terminated without a formal hearing.

Johnson, a DEP construction laborer, was arrested for stealing DVDs. After a search, police discovered a forged DEP placard and shield and Johnson eventually pled guilty to criminal possession of a forged document in the third degree.

By letter dated February 6, 2003, the DEP notified Johnson that because he pled guilty to a crime, he forfeited his employment status according to New York City Charter § 1116, which provides: “Any … employee of the city who shall willfully violate or evade any provision of law … or commit any fraud upon the city … shall be deemed guilty of a misdemeanor and … shall forfeit such office or employment.”

The New York County Supreme Court (by a Decision/Judgment dated October 9, 2003) dismissed Johnson’s lawsuit and held that his guilty plea was “tantamount to an admission that he committed a fraud upon the city,” and thus, no hearing was necessary.

On May 18, 2004, the Appellate Division, First Department, reversed and remanded the case, finding that Johnson’s conviction, “standing alone, without factual inquiry, [did] not show that petitioner perpetrated a ‘fraud upon the city,’ violated any law relating to his employment, or converted any City property to his own use within the meaning of § 1116.”

On remand, the Supreme Court ordered Johnson’s reinstatement and awarded him back pay and, on November 9, 2006, the AD1 affirmed.

When the case finally reached our state's highest court, by a decision dated February 12, 2008, the Court of Appeals also affirmed, as the record was insufficient to establish § 1116’s applicability. There was no evidence with regard to the forged DEP placard or shield which satisfied the “fraud upon the city” requirement.

With that, Shelton resumed his status as “Johnny DEP.”

To download a copy of the Court of Appeals’ decision, please use this link: Matter of Shelton Johnson v. New York City Department of Environmental Protection

To download a copy of the Appellate Division's decisions, please use this link: May 18, 2004 remand or November 9, 2006 affirmance

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Judith S. Kaye, as Chief Judge of the State of New York, has filed a lawsuit against Sheldon Silver and The New York State Assembly, Joseph L. Bruno and the New York State Senate, Governor David Paterson, and the entire State of New York, alleging that the executive and legislative branches of our government have violated the New York State Constitution's "Judicial Compensation Clause" by failing to provide the Judiciary with adequate compensation.

According to Judge Kaye's complaint (dated today, April 10, 2008), Judges haven't received a pay increase in about a decade (January 1999), while other public employees have earned raises of about 24 percent over that same time period. That, according to the complaint, has had a "disciminatory impact on the Judiciary, which cannot defend itself."

We understand the case was filed in New York County  (based on Judge Kaye's residence address) and has been assigned to Supreme Court Justice Justice Edward H. Lehner.

To download a copy of the Summons and Complaint, together with a Memorandum of Law In Support of Plaintiff's Application for a Prompt Trial, please use this link: Kaye v. Silver

Posted by Lucas A. Ferrara, Esq. at 7:50 PM | Permalink | TrackBacks (0) | Comments (20)

Typically, "time of the essence" means that a specified performance obligation must occur on or before the date specified in the parties' agreement. Without that "mumbo jumbo," the governing deadlines contained in a contract may not be "set in stone."
 
A case in point is ADC Orange, Inc. v. Coyote Acres, Inc. In that dispute, ADC agreed to buy (from Coyote) a plot of land in Orange County, New York, for $600,000.

ADC made an initial down payment of $100,000 and was to make an additional payment of $250,000 "upon the later of the preliminary approval [of the contemplated construction] … from the applicable authorities for the subdivision or December 31, 2001, but in no event later than December 31, 2001."  The $250,000 payment wasn’t made until on or about January 11, 2002.
 
After attempts to reach a settlement failed, ADC filed suit in the Orange County Supreme Court seeking "specific performance" -- an order compelling the seller to convey the property in accordance with the contract of sale’s terms. Coyote, on the other hand, alleged that ADC violated the agreement by its failure to timely remit the $250,000, and this default entitled Coyote to walk away from the deal and keep the $100,000 down payment. (Coyote also claimed that the deal ended when ADC was unable to secure final approval of the subdivision by the applicable deadlines.)
 
The Supreme Court found that Coyote improperly repudiated the contract, as there was no “time of the essence” clause, and granted ADC’s “specific performance” request.

On appeal, the Appellate Division, Second Department, found that ADC’s failure to tender payment in a timely fashion had materially breached the contract’s terms thereby allowing Coyote to cancel the contract and keep ADC’s downpayment.

On review, the New York State Court of Appeals concluded that the absence of a “time of the essence” provision implied a reasonable time for payment. Standing alone, the payment due date, without a default provision, did not afford ADC adequate notice that a delay would jeopardize the contract. Additionally, our state’s highest court found that there were questions -- or “material issues of fact” -- as to whether Coyote had intentionally frustrated ADC’s ability to perform, and remitted those issues to the Supreme Court for further review and consideration.

Get the essence of that decision? (We’re outta time!)

For a copy of the Court of Appeals’ decision, please use this link: ADC Orange, Inc. v. Coyote Acres, Inc.
 
For a copy of the Appellate Division's decision, please use this link: ADC Orange, Inc. v. Coyote Acres, Inc.

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While performing her duties as a Bellevue Hospital nurse, Helen Ornstein was stuck with a syringe that had been left by a medical intern in a patient’s hospital bed. The needle was filled with blood from one of the hospital’s AIDS patients.

Ornstein was immediately treated with anti-viral medications to reduce her chance of contracting HIV and, for two months, experienced neuropathy in her hands and feet and nausea as a side effect. She also underwent HIV testing every three months for a period of two years; all with negative results.

A year and a half after the incident occurred, Ornstein filed suit claiming “negligent infliction of emotional distress” against the New York City Health and Hospitals Corporation (NYCHHC) and the intern who had left the blood-filled needle on the hospital bed. (She alleged that as a result of the experience, she was taking anti-depressants, underwent psychiatric therapy, changed her profession, suffered a sleep disorder, and was treated for post-traumatic stress disorder.)

NYCHHC argued that anyone who tests negative for HIV six months after exposure is unable to make a viable “emotional distress” claim because, after that window period, “continuing emotional distress becomes unreasonable and, hence, uncompensable.” The New York County Supreme Court disagreed and allowed the case to proceed to trial.

On appeal, in a three-to-two decision, the Appellate Division, First Department, reversed. It believed that a six-month period applied and precluded Ornstein from presenting any evidence of damages beyond that initial “window of anxiety.”

After trial, a jury found NYCHHC and its intern liable for past pain and suffering in the amount of $330,000 and also awarded $15,000 in lost wages. Dissatisfied with that outcome, Ornstein appealed to the New York State Court of Appeals.

Our state’s highest court found that damages had been improperly restricted and clarified the precedential impact of Brown v. New York City Health and Hosps. Corp. (225 AD2d 36), a case heavily relied upon by the AD1.

In Brown, a nurse was stuck with a needle that had been used on an HIV patient. Although the nurse claimed "negligent infliction of emotional distress," she refused to undergo periodic HIV tests and sought damages for a 15-year period. The AD1 held that it was unfair for the nurse to seek such a recovery, when she could have taken reasonable steps to determine her HIV status in as little as six months, and that it was “inequitable to allow her to avoid (discovering a negative result) by refusing to be tested.”

In its analysis of that case, the Court of Appeals restricted Brown to its facts. Thus, absent an unreasonable refusal to be tested or insufficient medical evidence, damages are to be determined based on actual harm and are not governed by a rigid six-month rule. Here, Ornstein raised triable issues of fact that should have been considered at trial, including injuries suffered beyond the disputed 6-month time frame. As a result, the judgment was reversed and the case remitted to the Supreme Court for a new trial.

This time, NYCHHC got pricked … by the Court of Appeals.

To download a copy of the Court of Appeals decision, please use this link: Ornstein v. New York City Health & Hospital Corp.

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (8)

Rachel Ehrenfeld, the author of Funding Evil: How Terrorism Is Financed—and How to Stop It, filed suit against Khalid Salim A Bin Mahfouz, to prevent him from enforcing an English libel judgment in New York State.

Ehrenfeld’s book alleged that Mahfouz, a successful Saudi Arabian businessman, and his family, had provided financial support to Al Qaeda, and other Islamic terrorist groups. While the book was only released in the United States, 23 copies were sold in the United Kingdom as a result of Internet sales, and a single chapter of the book had been posted on the ABCNews.com website.

After settlement negotiations -- which sought Ehrenfeld to apologize and destroy copies of her book -- faltered, Mahfouz filed a claim under England’s Defamation Act of 1996.

Ehrenfeld chose not to appear in that case and two default judgments were entered against her and her publisher. The judgments enjoined Ehrenfeld from publishing defamatory material -- including her book -- in England and Wales, declared the “defamatory” statements false, awarded monetary damages to Mahfouz and his sons, and required Ehrenfeld to issue a letter of public apology.

Ehrenfeld later asked the United States District Court for the Southern District of New York to find the statements nonlibelous and the English judgments unenforceable in the United States. Mahfouz countered with a motion seeking dismissal of the Southern District case for lack of jurisdiction.

The District Court held that Mahfouz’s New York contacts -- which consisted of service of process for the English action, and an accessible website -- were insufficient to confer jurisdiction over his person.

On appeal, the United States Court of Appeals for the Second Circuit certified the jurisdictional question to the New York State Court of Appeals which agreed that Mahfouz had not availed himself of the privileges and benefits of New York’s laws, and, found his contacts to be incidental to the English litigation. (Mahfouz neither conducted business in New York nor invoked the protection of our state’s laws.)

Even though Ehrenfeld claimed that the English judgments affected her ability to write freely under the First Amendment, and she believed certain publishers now viewed her as a liability, our state’s highest court noted that the ripple effects of the English litigation had been caused by Ehrenfeld’s own conduct, rather than by Mahfouz’s actions.

As of result of that analysis, in a decision dated March 3, 2008, the Second Circuit affirmed the case's dismissal.

Is that cold, or what?

 

To download a copy of the Court of Appeals’ decision, please use this link: Ehrenfeld v. Bin Mahfouz

To download a copy of the Second Circuit's decision, please use this link: Ehrenfeld v. Bin Mahfouz

Continue reading "HOW CHILLING WAS THIS?" »

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (1)

A Manhattan condo dweller sued his fellow owners for $23.5 million in compensatory damages based upon "an alleged failure to make handicap accessible the residential condominium in which the disabled plaintiff and his wife" resided.

In Pelton v. 77 Park Avenue Condominium, Dean Pelton was unable to maneuver common-area steps due to muscular dystrophy, a degenerative disease. In June 2002, the condominium’s president was advised of Pelton’s physical disability and a request was made to make the building “handicap accessible.” While there was an initial period of inactivity, in late 2003, after an informal complaint was filed with the New York City Commission on Human Rights (HRC), architects were eventually retained by the building to advise of possible wheelchair-accessible modifications.

It was not until June of 2004 that the board finally advised Pelton that it had a plan to address his concerns. In the short term, to facilitate access to the stairs leading to the passenger and service elevators, the board offered to install a portable wheelchair lift which would be operated by building personnel (who were on duty 24 hours a day). Over the long-term, the building would install platform lifts to both the passenger and service elevators.

Discussions faltered when Pelton refused to sign a letter agreement consenting to the proposal. Despite this impasse, and Pelton’s filing of a lawsuit in the New York County Supreme Court, the condominium installed a portable stair climber in the building’s lobby at the cost of $13,000 and secured the vote of the building’s other unit owners to a special assessment in the amount of $130,000 to fund the renovation plan.

When the condo asked for the case's dismissal, the New York Supreme Court denied the request asserting that the condo board enjoyed no immunity for its actions since unlawful discriminatory conduct had been alleged.

On appeal, the Appellate Division, First Department, disagreed and found that considerable deference must be given to a board's decision-making process unless a shareholder can establish the existence of elements espoused by the Court of Appeals in its 2003 case of 40 W 67th St. v. Pullman. As our state's highest court noted in that opinion:

To trigger further judicial scrutiny, an aggrieved shareholder-tenant must make a showing that the board acted (1) outside the scope of its authority, (2) in a way that did not legitimately further the corporate purpose or (3) in bad faith.

Since he couldn't prove the existence of at least one of these three factors, Pelton's case could not survive. Because the building employed several measures to accommodate him -- including retaining architects, debating possible structural solutions, purchasing a temporary lift and holding a board meeting to discuss financial plans -- the the AD1 did not believe that Pelton was able to show any "bad faith" or discrimination by the board or its members. Moreover, his claim that the board employed discriminatory “stall tactics” was found to be without merit.

The AD1 was concerned that exposure to suits would discourage volunteer service on boards. In that regard, the appellate panel wrote:

Courts must hold those who would challenge the decisions of condominium and cooperative boards to the requirement of pleading with specificity claims of discriminatory conduct or wrongdoing. Otherwise, the threat of baseless litigation, with its attendant serious financial and personal burdens, would pose a formidable obstacle to those willing to volunteer their talent, experience and knowledge for the common good of their homeowner communities by serving on such a board.

The AD1 was quite accommodating, wouldn't you agree?

To download a copy of the Appellate Division's decision, please use this link: Pelton v. 77 Park Avenue Condominium

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Riverside Syndicate, Inc. v. Munroe, Syndicate filed a suit back in 2004 seeking a declaration from a judge that a 1996 settlement agreement reached with its tenants -- waiving their rent stabilization protections in exchange for allowing them to use an apartment as their second home -- violated public policy and was void.

Victoria Munroe and Eric Saltzman rented three Riverside Drive apartments which were subject to rent-stabilization. According to the 1996 agreement, the tenants would lease the combined units at a monthly rate of $2,000.00, a sum which was well above the permissible "legal rent.” However, as long as the tenants waived their rights to challenge the rent charged, Syndicate agreed that the tenants could keep the apartments, regardless of whether or not they actually lived there.

When the New York County Supreme Court denied the landlord’s request to invalidate the agreement, Syndicate appealed to the Appellate Division First Department, which reversed and found the agreement “null, void, and of no force or effect.”

Rent Stabilization Code § 2520.13 provides that, “An agreement by the tenant to waive the benefit of any provision of … this code is void, provided, however, that based upon a negotiated settlement between the parties and with the approval of … a court of competent jurisdiction … a tenant may withdraw with prejudice, any complaint pending before the DHCR.”

In view of that regulatory provision, and since no dispute had been "pending before the DHCR," the Court of Appeals agreed that the parties’ settlement was unenforceable.

Notwithstanding that unfavorable outcome, the tenants are not without a remedy. As our state’s highest court observed, “the tenants may well have a strong claim, subject to any statute of limitations defense that may exist, to recover the excess rent they paid; they may also have a strong claim to rescind the deregulation of the apartments, if that deregulation was the result of the illegal agreement.”

If nothing else, tenants must learn never to mess with the Syndicate.

To download a copy of the Court of Appeals’s decision, please use this link: Riverside Syndicate, Inc. v. Munroe

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In the Matter of Spota v. Jackson, Tina Jackson, a longtime resident of the Unkechaug Indian Nation, was at risk of losing her family residence because of her heritage -- or lack thereof.

Tina was married to George Jackson, a blood-right member of the Unkechaug tribe. Together, with their three children, the couple lived on land given to George on the Poospatuck Indian Reservation. According to tribal by-laws, Tina was permitted to “reside on the allotment by derivative right as the spouse of a member who exercised his right to reside on an allotment on the reservation.”

In 2003, Tina reported an instance of spousal abuse to the tribe, then took George to court to obtain child support, and later obtained an order of protection against him. In February of 2004, George moved out and transferred his interest in the land to his brother, Glenn. In May, the Tribal Council sent a letter to Tina declaring her an “intruder” and demanding that she vacate the property. When she refused to leave, the Council authorized the local District Attorney to begin removal proceedings.

According to the County Court, Suffolk County, because Tina was a longtime resident of the reservation and had not forced her way onto the land, she could not be considered an “intruder.” It held that Tina could continue to live on the property with her three sons, all tribe members, until the youngest son turned 21 years old -- the age at which the right of support extends in New York State.

On appeal, the Appellate Division, Second Department, affirmed.

When the dispute reached our state’s highest court, the New York State Court of Appeals determined that under New York Indian Law § 8, the County Court had no discretion to decide whether or not Tina Jackson was an intruder. As § 8 provides, an intruder is a “non-member” who “resides or settles” within the boundaries of Indian land, the only appropriate area of inquiry was whether or not the “intruder” had tribal membership.

The Court of Appeals noted that, “The tribes’ right to make internal substantive law and to determine their own membership according to such law, is diminished if county courts have the discretion to independently decide who is an ‘intruder’ on Indian lands … As there is no dispute that Tina Jackson is not a member of the Poospatuck Nation and resides on a reservation allotment, she is an ‘intruder’ within the meaning of section 8.”

Clearly, there’s no intruding in tribal affairs.

To download a copy of the Court of Appeals' decision, please use this link: Matter of Spota v. Jackson

To download a copy of the Appellate Division's decision, please use this link: Matter of Spota v. Jackson (AD2)

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (7)

New York’s highest court issued a decision which Assembly-member Dale Volker, the original sponsor of the statute, called the “last nail in the coffin” for our state’s death penalty law.

People v. Taylor involved the headline-grabbing case of John Taylor and Craig Godineax, convicted of killing five people, execution-style, in a Wendy’s restaurant back in 2000.

Death penalty advocates and opponents closely tracked this case to see if the Court of Appeals would uphold its 2004 decision in People v. LaValle, which involved a schoolteacher stabbed to death with a screwdriver after she chastised LaValle for urinating in public. In a 4-3 decision, the court hobbled the death penalty by striking down the law's “deadlock provision” while finding that it was inseverable from the statute as a whole and thus required that the law to be rewritten by the Legislature.

The “deadlock provision” required an instruction to juries -- should they deadlock over death or a life sentence without parole -- that judges were required to sentence the criminal defendant to a 20-25 year term, with the possibility of parole. And, as it did in LaValle, the Court of Appeals in Taylor found the provision to be unconstitutional “because of the risk that it might coerce jurors into giving up their conscientious beliefs in order to reach a verdict.” (The court noted that our death penalty statute was the only one in the entire country that required an instruction to the jury that, if a unanimous decision could not be reached, the judge was required to hand down a more lenient sentence.)

The nuance presented in Taylor was that trial court judge in that case had instructed the jury that if they were to reach a deadlock he would “almost certainly” sentence Taylor to 175 years in prison, thus deflating the concern that the jury would feel coerced to vote for death to avert the possibility of parole.

In its decision, the Court of Appeals rejected the trial judge’s attempt to cure the law's defect because “doing so would condone a trial court’s remaking of an unconstitutional statute into a new statute not subject to the legislative process.” The court also applied the venerable judicial doctrine of stare decisis deferring to its decision in LaValle.

In a rebuke of the court’s 3-4 decision, Judge Read -- a dissenter -- wrote, “fair-minded citizens might well be forgiven for wondering whether [this court] is simply unwilling ever to uphold a death sentence, no matter how the law is written (or may be rewritten), no matter how carefully the trial judge and the jury carry out their responsibilities.”

The New York State Legislature may also share that bewilderment for it has been unable to craft a bill correcting the law's constitutional infirmities.

Could our Assembly be deadlocked? (And, what instruction need we give them?)

To download a copy of the Court of Appeals's decision in this case, please use this link: People v. Taylor

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

Just in case you missed it, our partner Lucas A. Ferrara was in yesterday's New York Times.

In a piece, entitled "Adverse Possession: Mind Your Property," Lucas offered his insights on recent legislative developments and the state of the adverse possession law.

Here's the piece in its entirety:

 

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November 11, 2007

Adverse Possession: Mind Your Property

EARLIER this year, the New York State Legislature passed a bill that would bar a claim of adverse possession, a centuries-old doctrine that allows a person to claim title to property that he or she has used for a specific period of years, if the person making the claim had “actual knowledge” that the property was owned by someone else.

The bill was vetoed in August by Gov. Eliot Spitzer, who said that while “at first blush” the bill “would seem to be a logical improvement to the law,” in reality the change would result in “extensive litigation of virtually every adverse possession claim.”

The Legislature’s action and the governor’s veto highlighted the harsh realities of adverse possession.

“Adverse possession is a legal theory whose time has come and gone,” said Lucas A. Ferrara, a Manhattan real estate lawyer. “There is little in the law as it stands now to stop the unscrupulous from claiming title to property they know full well is not theirs. And it obviously penalizes the absentee owner.”

Under the current law, as articulated by the Court of Appeals in June 2006 in the case of Walling v. Przybylo, a claim of adverse possession can be made if an individual “openly, notoriously and exclusively” uses someone else’s property continuously for 10 years, believing he has the right to do so.

One of the main issues in the case was whether a person could assert a valid claim if he knew he did not own the property. The court ruled that even if a person knew the property he was using was not his, he could indeed make a claim of adverse possession, provided the time period and the other elements were met.

Adam Leitman Bailey, another Manhattan real estate lawyer, said that by passing its adverse possession bill, the Legislature essentially attempted to overturn the Court of Appeals decision by barring adverse possession if the adverse possessor knew the property was owned by someone else.

Terrence A. Oved, also a Manhattan lawyer, said, “This has practical and potentially devastating consequences for unsuspecting landowners.” He noted that many people who own land in rural areas rarely visit it and more rarely walk the property lines, even if they know where the lines are.

Having the land surveyed will determine the property lines, and markers like fences and “no trespassing” signs can be placed on the boundaries.

If an encroachment is discovered, one way to defeat an adverse possession claim is to give written permission to the adverse possessor to use the land. “If permission has been given, the adverse possessor cannot assert that his use of the property was hostile,” Mr. Oved said. This was one of the tests in the Court of Appeals decision.

Alternatively, he said, a landowner can demand that the encroachment be removed immediately and can sue if necessary.

Mr. Ferrara said one disturbing element of adverse possession is that the true owner pays taxes on property being used by someone else.

“It’s unfair,” he said, “and it’s un-American.”

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Well done, Lucas!

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

Lisa Steinberg died on November 4, 1987, at age 6, after receiving a blow that was “equivalent to a fall from a tall flight of stairs or third-story window.”

Lisa’s father, Joel Steinberg, was convicted of manslaughter in the first degree and a $15 million judgment was later secured against him by the administratrix of Lisa’s estate. In that lawsuit, two causes of action alleged acts of prior abuse while a third asserted that Steinberg knew of Lisa’s life-threatening injury and recklessly and dangerously failed to obtain medical treatment for her.

In reaching its decision, the New York Supreme Court invoked the legal doctrine of “collateral estoppel”  and granted relief on those three claims based on Steinberg’s manslaughter conviction. Of the $15 million awarded, $5 million was for Lisa’s pain and suffering in the hours before her death, $5 million was for pain and suffering from past abuse, and $5 million was in punitive damages.

In a 3-2 decision -- that made no attempt to disguise the repulsion for Steinberg’s insensitive submissions made to the court -- the Appellate Division, First Department, affirmed the judgment.

On appeal to the state’s highest court, the case was remitted to the Supreme Court for further proceedings.

"Collateral estoppel" requires that there be an “identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling.” In this case, while evidence of past physical abuse was presented at the criminal trial, Steinberg had not been given ample opportunity to contest that evidence, nor had reason to do so, as the past abuse was not the basis of the criminal charges against him. As a result, the Court of Appeals concluded that a new trial was warranted.

Horrific.

To view a copy of the Court of Appeals's decision, please use this link: Launders v. Steinberg 

To view our prior post on this topic, please use this link: $15M JUDGMENT AGAINST JOEL STEINBERG, STANDS

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (6)

In 21 W. 58th St. Corp. v. Foster, the landlord attempted to pursue a nonprimary residence holdover proceeding against Ronald L. Foster. After the New York County Civil Court granted Foster’s motion for summary judgment dismissing the case based on the improper service of a predicate notice, the Appellate Term, First Department, reversed and reinstated the case. According to the AT1, service was not defective because the landlord had not factored in an additional five days for mailing the document to the tenant.

In a 2004 New York State Court of Appeals's case, ATM One, LLC v. Landaverde, the landlord in that dispute had started a holdover proceeding against a tenant protected by the Emergency Tenant Protection Regulations. The regulated tenant claimed that the 10-day notice to cure which had been mailed had not afforded her enough time to effect a correction of the delineated default (due to the time it took for the notice to travel through the mail). After several appeals, the state’s highest court concluded that the holdover needed to be dismissed since the owner had failed to add five more days to the delineated curative timeframe to allow for mailing.

By contrast, Foster’s case dealt with a “Notice of Nonrenewal” -- a document which serves as a predicate to a holdover wherein it is alleged the tenant is not using the premises as his or her primary residence. Since no corrective action was required, the AT1 declined to extend the Landaverde holding to such notices.

Escargot, anyone?

For a copy of the Appellate Term’s decision, please use this link: 21 W. 58th St. Corp. v. Foster

For a copy of the Court of Appeals's decision, please use this link: ATM One, LLC v. Landaverde

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In Guishard v. General Security Insurance Company, a party in an underlying negligence lawsuit alleged that he suffered severe eye injuries while using a rivet gun to convert a van owned by Guishard into a “Mr. Softee” ice cream truck. When litigation ensued, Guishard sought a judicial determination declaring that General Security Insurance Company (GSIC) was obligated to defend and indemnify her pursuant to the terms of her insurance policy.

Although GSIC moved the Kings County Supreme Court for summary judgment in its favor -- citing a policy exclusion that denied coverage for bodily injuries arising out of the “maintenance” of any “auto” owned or operated by the insured -- the Court entered judgment in Guishard’s favor, without a written opinion.

On appeal, the Appellate Division, Second Department, affirmed after finding that GSIC had not supplied the definition of “auto” and thus had not shown that the relied upon exclusion had been stated in “clear and unmistakable language” or was applicable to the dispute.

When the case reached the New York State Court of Appeals, that court focused on the policy’s definition of the word “maintenance,” and found that the term encompassed work relating to “an intrinsic part of the mechanism of the car and its overall function,” and cited the removal of a tire from a rim as an example.

According to our state’s highest court, turning a van into a Mr. Softee truck was transformative of the auto’s function and thus did not fall within the policy’s “maintenance” definition.

Undoubtedly, mothers everywhere are clucking and wagging their fingers.

To download a copy of the Court of Appeals's decision, please use this link: Guishard v. General Security Insurance Company

To download a copy of the Appellate Division's decision, please use this link: Guishard v. General Security Insurance Company (AD)

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Nicholas Dermigny, served as Executive Vice President and Chief Operating Officer for Muriel Siebert & Co., Inc., (Siebert), which was involved in a dispute with Intuit, Inc., a financial software maker.

It was Siebert's contention that its brokerage services had not been adequately promoted to Intuit's customers as required by a "strategic alliance" agreement, and a lawsuit in the New York County Supreme Court ensued.

While that litigation was pending, Dermigny ended his association with Siebert and was contacted by Intuit's attorneys for questioning about the underlying dispute. During the course of that meeting, Dermigny was advised by Intuit's counsel to not disclose any privileged or confidential information (such as any communications involving legal strategy or other discussions had with Intuit's legal team).

When Siebert later learned of that meeting, it asked a New York County Supreme Court judge to have Intuit's attorneys disqualified -- or thrown off the case -- and that Intuit be barred from using any information secured from Dermigny during the course of that meeting.

Finding an "appearance of impropriety," based on the "possibility" that confidential information had been imparted during the course of the interview, the New York County Supreme Court granted Siebert's request. On appeal, the Appellate Division, First Department, reversed.

Based upon its review of the law, the AD1 concluded there is no legal or ethical bar against interviewing an adversary's former employee. And, since Intuit's attorneys had advised Dermigny to refrain from releasing any confidential information (a request which he honored), no impropriety or prejudice could be discerned. 

On appeal to our state's highest court, the Court of Appeals affirmed the AD1's decision. As long as counsel ensures that confidential information is not solicited from, or imparted by, the former employee, the state's highest court could identify no ethical breach or irregularity triggered by the exchange.

Seems almost intuitive, doesn't it?

For a copy of the Court of Appeals's decision, please use this link: Muriel Siebert & Co., Inc. v. Intuit Inc.

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

In People v. Nieves-Andino, the Court of Appeals allowed the introduction of police testimony which recounted the statements made by a dying man.

On November 28, 2000, Jose Millares was shot three times on a Bronx street corner. When officers arrived, they found Millares lying between two parked cars, surrounded by a crowd of onlookers.

Officer Doyle called for an ambulance, and then began to speak with Millares, who lay dying in the street. Amazingly, Millares was able to tell Doyle his name, address, phone number, and that a man named “Bori” had shot him after an argument. Meanwhile, another officer at the scene found four discharged casings from a .380 pistol.

Michael O’Carroll, Millares’s “business associate,” witnessed the murder and informed the officers that “Bori” was the alias of Juan Nieves-Andino, Millares’s former employee-turned-competitor.

Nieves-Andino was apprehended in Puerto Rico and returned to New York to face prosecution for second-degree murder. At trial, the defense objected to Officer Doyle’s recounting of Millares’s dying statements as a violation of Nieves-Andino’s Sixth Amendment right to confront his accuser. The Bronx County Supreme Court admitted the evidence as an “excited utterance,” an exception to the rule against hearsay.

After his conviction, Nieves-Andino appealed to the Appellate Division, First Department, and the Court of Appeals, which both affirmed.

The Sixth Amendment of the U.S. Constitution guarantees the accused the right “to be confronted with the witnesses against him.” This ensures that a criminal defendant will be able to cross-examine these individuals in an effort to reveal weaknesses or inconsistencies in their testimony.

In this instance, a corpse could not be cross-examined, even by the best trial attorney. Yet, notwithstanding that impediment, the United States Supreme Court -- our nation’s highest court -- has previously held that responses to police inquiries are not “testimonial” when the circumstances “objectively indicat[e] that the primary purpose of the interrogation is to enable police assistance to meet an ongoing emergency.”

Since Officer Doyle’s questioning of Millares was not in furtherance of a criminal investigation, but to assess the nature of the victim’s injuries and whether an ongoing danger existed, any responses given by Millares were “non-testimonial,” and their admission was not barred by the Confrontation Clause.

At the Court of Appeals, Judge Jones concurred with the majority’s decision, but disagreed with its reasoning. The dissenter was of the opinion that Millares’s statements should have been excluded under the Sixth Amendment. Yet, that error still would not disturb Nieves-Andino’s conviction.

Since the prosecution had established its case beyond a reasonable doubt -- by way of O’Carroll’s testimony and the corroborating autopsy evidence -- Jones was of the opinion the inclusion of Officer Doyle’s testimony was “harmless error.”

Thanks to Officer Doyle, and out state's appellate courts, a dead man was heard.

To download a copy of the Court of Appeals's decision, please use this link: People v. Nieves-Andino

Posted by Lucas A. Ferrara, Esq. at 12:30 PM | Permalink | TrackBacks (0) | Comments (0)

We received a letter from Robert M. Milner, Esq., litigation partner at Robinson Brog Leinwand Greene Genovese & Gluck P.C., in response to a recent post on "adverse possession" and the anticipated statutory changes.

In a most thoughtful analysis, Mr. Milner shared his concerns about the proposed modifications to the law  (which has made it way to Governor Spitzer) and suggests that a more "in depth study" of the governing elements and caselaw is warranted.

We concur.

In fact, we have observed in our prior posts that the proposed tweaks may be fundamentally flawed and may not achieve the result property owners were anticipating.*

Mr. Milner's letter (dated August 24, 2007) follows:

Dear Mr. Ferrara:

            I read with interest your brief article [WILL CHANGE TO ADVERSE POSSESSION LAW MAKE A DIFFERENCE?] regarding the efforts to reverse, by legislation, the Court of Appeals Decision in Walling v. Pryzbylo. As one who has frequently litigated this and other similar issues, primarily in the Second Department, I have more than a passing interest in these activities. 

            One of the cases cited in Walling was a case which I had litigated, namely Harbor Estates Limited Partnership v. May, 294 A.D.2d 399. The Harbor Estates case involved a small group of approximately 15 homes that were built on a site purchased by the developer from the City of New York. The site was part of a much larger parcel consisting of an overgrown, undeveloped and debris-ridden site which had been used as a dump by the community for many, many years. The homeowners who purchased houses in this newly developed community complained to the City concerning the fact that their backyards were invaded by rodents and when they got no response from the City after numerous attempts many if not all of the homeowners built out their rear yards, installed pools, cultivated the newly added land and enclosed the same. This situation existed for almost 15 years with the homeowners apparently believing that the City had long since abandoned the lot.  Subsequently a new developer purchased the remaining land from the City and desired to build more than 150 homes. The developer commenced legal action to eject all of the homeowners who had build out on their land from the site. The defenses interposed included claims of adverse possession. The defendant in the cited case was the first test case and he testified as to his belief that the property had been abandoned New York City property. It was this admission that was held, by the Second Department, to constitute an admission barring him from forever claiming adverse possession. When I researched the case, I believe my research reflected that the majority view in this country was the view adopted by the Court of Appeals in Walling, represented by the then prominent 3rd Dept. case, Birkholz v. Wells, 272 A.D.2d 665.

            One of the questions I argued in that case was whether or not an admission made subsequent to the running of the statutory period for adverse possession would destroy the requirement of hostility. There was authority that such an admission would not bar a finding of adverse possession. Ahl v. Jackson, 272 A.D.2d 965; City of Tonawanda v. Ellicott Creek Homeowners Association, 86 A.D.2d 118. The court, however, held that the timing of the admission was irrelevant and that the date of the acquisition of knowledge of the prior ownership was the measuring date.

            The proposed legislation would probably change the result in the Harbor Estates case, cited above, because my client could not and did not have “actual knowledge” of the prior ownership. He merely assumed that it was an abandoned City lot.

            Another interesting Second Department case which I litigated involving issues of prior ownership was Zolotov v. Toussie, 306 A.D.2d 274 where, although the issue was raised by defendant the Second Department virtually ignored the issue. The case dealt with the purchase of a residential ocean front home with a large front lawn, facing the ocean, and abutting a concrete walkway in Manhattan Beach, Brooklyn, which everyone referred to as the “Esplanade”. The property was fenced in and cultivated for a period of more than 40 years. The plaintiff acquired title only a few years before the lawsuit was brought and, by virtue of tacking, alleged to own the entire area of the lawn, right to the paved walkway. In fact, the Esplanade consisted not only of the paved walkway but the adjacent 20 feet of what was the plaintiff’s lawn area. The defendant raised the issue that by reason of a title survey and title insurance the plaintiff and his predecessors in interest had to know that the property was not owned by them. Interestingly the Esplanade, consisting of both the 20 foot concrete walkway and the 20 feet of adjacent lawn which continued similarly, for many blocks in the Manhattan Beach community was privately owned but was not taxed. The Appellate Division affirmed a finding of adverse possession in favor of the plaintiff and held merely that the plaintiff had satisfied all of the requirements. One must assume that they adopted the plaintiff’s position that once the other elements of adverse possession were proven hostility under a claim of right or title was presumed. Once again, however, I do not believe that the result would be affected if the proposed legislation passes. As you note in your article “blind indifference is encouraged by the language of the statute”.  Clearly in the Zolotov case my client had no knowledge whatsoever that his enclosed front lawn was owned by anyone else. I believe it would be highly uncommon for a residential purchaser, to review a title report and title documents prior to purchasing a home, leaving that task to his or her attorney.

            Finally, in Casini v. Sea Gate Association, 262 A.D.2d 593, the court found that my client, a homeowners association owning title to most of the bed of the streets of the community of Sea Gate was entitled to adverse possession of a piece of land at the intersection of a number of streets which allegedly had been purchased by the plaintiff at an in rem sale; the land being purchased consisting of a series of undeveloped lots plus the bed of a publicly used street in the private community and the traffic island which had been improved and enclosed. The in rem sale was apparently not the first in rem sale of the same property but the holding period in between each in rem sale was more than the statutory minimum. The issue primarily involved adverse possession of a municipally owned property held for a proprietary as opposed to governmental purposes and I was successful on that issue as well as on all other elements of proving the adverse possession claim.

            In the Casini case, an argument could have been made, but was not, that the property was known, at least constructively, to be owned by the City of New York because of the prior in rem proceedings as well as the current in rem proceedings of which the Association was purportedly given notice. The case does not obviously fit into the set of facts one normally finds in an adverse possession case but the result was well justified and equitable result since the property literally lay in the bed of an intersection of streets and the plaintiff claimed a desire to construct a residence on the traffic island itself. 

            One other matter to throw into the breach is the fact that some courts have found that inadvertent possession or possession by mistake may still support a finding of adverse possession. See, e.g., Bradt v. Giavannone, 35 A.D.2d, 322, another 3rd Dept. case. This issue, when it comes up, usually deals with the element of “hostility,” but I believe that it also bears on the knowledge of prior ownership since the element of “hostility” is frequently presumed. In any event it makes for interesting discussion.

            Even in the presence of actual knowledge perhaps esoteric title issues such as that involved in the Walling case are deserving of entirely separate treatment since it is often difficult for any homeowner to entirely evaluate his title to certain lands or boundaries which may be in dispute. Rather than the knee jerk reaction to the Walling case which resulted in the proposed legislation which you report has found such wide support would the issue not be better dealt with after sustained analysis of both traditional principles of real estate law and a careful review of the treatment afforded by other states.

            The issue is, I believe, deserving of a far greater in depth study than that which appears to have been conducted.

                                                                        Very truly yours,

                                                                        Robert M. Milner

Our thanks for your insights, Mr. Milner.

Clearly, the law needs to be sheared.

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*For our other blog posts on this topic, please use this link: Adverse Possession

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Keith Antwine was arrested for stealing a car (with two children in the back seat) and crashing into another vehicle during a getaway. Upon arriving at the precinct, Antwine complained of a toothache and hernia.

Officers escorted Antwine to St. Barnabas Hospital, where he was handcuffed to a bed. After a few moments, Antwine complained that the cuff was too tight.

Observing a visible discoloration around Antwine’s wrist, an officer inserted a key and loosened the cuff, when Antwine jolted forward and fled.

After chasing him down the hallway, the officer grabbed Antwine but he again broke free. Just as Antwine made it through the first of two sets of exit doors, the officer lunged forward and tackled him. This time, the officer was able to restrain Antwine until two doctors and another officer intervened.

Antwine was convicted of grand larceny in the fourth degree, escape in the second degree, and two counts of endangering the welfare of a child. The Appellate Division, First Department, affirmed those convictions.

On appeal to our State’s highest court, Antwine claimed that because he did not successfully cross the threshold and make it past the hospital’s exit doors, his conviction should be reduced to “attempted escape.”

According to the New York State Court of Appeals, “escape” typically means to “get away, break away, get free or get clear, with conscious purpose to evade custody,” and since Antwine broke free of the realm of custody without authorization –- forcing police to give chase and placing an officer and the public at risk –- there was sufficient evidence to support the conviction in question.

Clearly, there was no escaping that decision.

For a copy of the Court of Appeals's decision, please use this link: People v. Antwine

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In State of N.Y. ex rel. Harkavy v. Consilvio,* the New York State Court of Appeals ordered hearings to determine whether convicted sex offenders should be committed to secure psychiatric hospitals upon release from prison.

In 2006, the Court of Appeals decided a related appeal. In that case, Harkavy I, the Court concluded that convicted sex offenders had been improperly committed to psychiatric facilities after hearings conducted pursuant to Mental Hygiene Law Article 9. The state’s highest court was of the opinion that the procedural protections of Corrections Law § 402 were more appropriate.

In this more recent case, Harkavy II, a different group of sex offenders had received hearings under the same procedures found inappropriate in Harkavy I. Since that earlier appeal, however, the New York State Legislature had passed Article 10 of the Mental Hygiene Law, which was designed to address the civil commitment of sex offenders upon completion of their prison terms.

The new law provides a review procedure for inmates found by Office of Mental Health (OMH) doctors to have a predisposition to commit sex offenses and who have difficulty controlling their behavior. After reviewing the cases referred by the OMH, the Attorney General may file a “sex offender civil management petition” in Supreme or County Court. The offender is then given a “probable cause” hearing and a jury trial to determine if the offender suffers from a “mental abnormality.”

If the jury finds the offender suffers from a “mental abnormality,” the court must then decide if the offender is a “dangerous sex offender requiring confinement,” who must be placed in a secure OMH hospital, or a “sex offender requiring strict and intensive supervision,” who must be released for outpatient treatment.

Although the law was passed after these petitioners had been transferred to psychiatric facilities, the Legislature drafted the statute so that it applied to sex offenders hospitalized after September 1, 2005, pursuant to either Article 9 of the Mental Hygiene Law or Section 402 of the Correction Law. 

So, after all that, the Court of Appeals concluded that the case needed to be sent back to Supreme Court for hearings pursuant to Article 10 of the Mental Hygiene Law.

Maddening, no?

For a copy of the Court of Appeals's most recent decision, please use this link: State of N.Y. ex rel. Harkavy v. Consilvio

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* Both cases were brought by Stephen Harkavy, Deputy Director of Mental Hygiene Legal Services, on behalf of the two groups of sex offenders.

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Before a tenant will be evicted for a lease-related violation, a court will usually inquire as to whether the default was "material" or "substantial."

When a breach is found to be inconsequential or "de minimis," courts will not order an eviction. (The law disfavors forfeiture of leases based on trivial or trifling circumstances.) On the other hand, if a violation is found to be of a significant nature, a forfeiture is much more likely to ensue.

That leads us to the inevitable question: What makes a default "substantial?"

According to established precedent, terms like "material" or "substantial" don't lend themselves to a precise, all-encompassing definition. Our favorite quote on the topic can be found in the case of Park East Land Corporation v. Finkelstein, 299 N.Y. 70 (1949), wherein our state's highest court -- the New York State Court of Appeals -- noted as follows:

'Substantial' is a word of general reference which takes on color and precision from its total context. Having little if any meaning when considered in abstract or in vacuum, it must be defined with reference to the peculiar legal and factual setting in which it occurs ....

In other words, what is "substantial" will vary from case to case, depending on the underlying facts and circumstances. However, when the parties to a lease agree that certain conduct will comprise a "substantial obligation," or that misconduct may be deemed a "substantial breach," such private agreements have been honored and enforced by the courts in the absence of some statutory prohibition or affront to some public-policy consideration.
 
By way of example, in Marshall v. Ahamed, a commercial lease required the tenant to provide its landlord with "professionally prepared plans and specifications" before it engaged in any repairs or improvements to the space. In the event of tenant's noncompliance with the governing terms and conditions, the agreement further provided that such misconduct would be a "material" lease-related violation.

As luck would have it, before it even opened for business, the tenant was alleged to have violated the parties' agreement and was served with notices which ultimately resulted in the tenancy's termination. Although the tenant claimed its noncompliance wasn't "substantial," the Kings County Civil Court disagreed and awarded the landlord a judgment of possession and a money judgment in the amount of $17,505.99. On appeal, the Appellate Term, 2d and 11th Judicial Districts, affirmed. Since the tenant had agreed (in advance) that even a single violation of the lease could be deemed substantial in nature, the appellate court concluded that the tenant could be evicted for its transgressions.

"Forgive us our trespasses ....?"

 

 

(Not!)

For a copy of the Appellate Term's decision, please use this link: Marshall v. Ahamed

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Stephen Sedlock, a funeral director and scoutmaster for a local Boy Scout troop, befriended a 17-year old boy who was having such a "stained" relationship with his own stepfather that the teen eventually moved into the Sedlock home from December 2002 to July 2003.

When the kid turned 18 he filed a criminal complaint alleging that Sedlock had "inappropriately touched" him over the years.

Sedlock was accused of touching the boy's penis and kissing him on the lips. It was also alleged that when the two would "play fight," or roughhouse, Sedlock would pinch the child's penis over the latter's clothes.

When a criminal case was brought, Sedlock's counsel demanded that the prosecution provide "the precise date(s), time(s) and location(s) of the offense(s) alleged," but the best the People could do was respond with a seven month time frame: "December of 2002 and June 2003 at [defendant's home]."

Although Sedlock's counsel objected to the inadequacy of the response and its prejudicial impact on the defendant's ability to prepare a defense, the case proceeded to trial, Sedlock was convicted of "Forcible Touching under Penal Law section 130.52," and, received a one-year sentence (which was stayed pending exhaustion of all appeals.)

The case eventually found its way to the Court of Appeals which issued a decision this past week. Our state's highest court agreed that Sedlock's defense had been unfairly impacted by the lack of factual particulars.

While the prosecution need not provide a defendant with "precise" dates and times, any interval given must be sufficiently detailed (or "narrow") so as to allow the accused an opportunity to respond to the charges made. Given the victim's age and intelligence, the Court of Appeals was of the opinion that it was inexcusable for the prosecution to have failed (or refused) to supply a clearer time frame for the event(s) which led to the criminal charge and was compelled to dismiss the case in its entirety.

No merit badges will be awarded here.

For a copy of the Court of Appeal's decision, please use this link: People v. Sedlock

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Shayne, Dachs, Stanisci, Corker & Sauer -- a prominent personal injury firm -- was sued by a former client for messing up a case.

Apparently, Bernard Rudolf was hit by an automobile while crossing a Merrick, Long Island intersection. A personal-injury lawsuit was later filed, and once the trial was concluded, Rudolf's counsel asked the judge to instruct the jury on a section of the law that was not really appropriate for the case. The jury returned a verdict finding Rudolf and the driver who injured him equally negligent (apportioning 50% fault to each) and awarded Rudolf about $127,500.

Not satisfied with that result, Rudolf hired new counsel who moved for a retrial. Rudolf's attorneys argued that the wrong section of the law had been applied thus prejudicing the case's outcome. The Appellate Division, Second Department, agreed and a new trial was ordered. This time, the jury found the driver exclusively responsible for the incident and the case settled for $750,000.

Despite this substantial recovery, Rudolph later sued Shayne, Dachs, Stanisci, Corker & Sauer (his original attorneys) for malpractice alleging that as a result of that firm's error he had been forced to pay legal fees and other expenses, and, had lost some $190,000 in interest on the monies that he would have originally recovered (had the $750K been paid to him in the first instance).

The Nassau County Supreme Court responded with an award of $28,703.27 -- which solely represented the professional fees. On appeal, the AD2 reversed because in light of the $750K recovery, Rudolf had not suffered any "damages."

The New York State Court of Appeals did not concur with AD2 and determined that Rudolf had not been made "whole" by the $750K he received, since $28,703.27 had been incurred to "correct" his original counsel's error. As for the lost interest, that theory was correctly rejected by our state's highest court as "pure speculation."

But here is a quote from the decision that caught our eye:

There is no basis to presume that a difference in the instructions on determining liability would have altered the jury's calculation of damages.

If that's so, then why find the original lawyers liable for $28K in fees and expenses?

Rudolf got a second bite at the apple and luckily succeeded. (You'd think he'd count his blessings and leave well enough alone.) But what if he had achieved the same (or a worst) result? Would that have resulted in a draw?

It seems that the court compelled the original attorneys to shoulder Rudolf's costs of securing a new trial largely because they had conceded committing the error. But that should not have been an operative factor nor made a difference.

The way we calculate it, Rudolf did some $622,500 better after the second trial. That's not "damage," that's more like a windfall to us.

Talk about having your cake ....

For a copy of the the Appellate Division's decision, please use this link: Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer (AD2)

For a copy of the Court of Appeal's decision, please use this link: Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer (C/A)

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Can the owner of an unlicensed handgun, which is surrendered pursuant to a court's order of protection, invoke the Fifth Amendment?

That was the question addressed by the New York State Court of Appeals in People v. Havrish.

The Fifth Amendment to the U.S. Constitution provides that a person shall “not be compelled in any criminal case to be a witness against himself.” The Amendment allows a witness to “take the Fifth” and decline testifying in court if the testimony will be self-incriminating.

But, that privilege only extends to testimony of a person against him/herself and evidence of a “testimonial or communicative nature,” and is inapplicable to “real or physical evidence.” Thus, defendants may be compelled to submit to a fingerprinting, to measurements, to a sobriety test, to write or speak for identification, make a particular gesture, provide a handwriting sample, participate in a lineup, or display tattoos without triggering the Fifth Amendment’s protections.

In the 1976 case of Fisher v. United States, the U.S. Supreme Court applied a two-part test to ascertain whether the production of evidence is privileged under the Fifth Amendment, or if it is “real or physical evidence” admissible at trial.

First, if the evidence reveals the defendant’s “subjective knowledge or thought processes,” it is “testimonial.” To that end, a court will examine whether or not the authorities knew of the evidence's existence. If the surrender triggers an admission, then the evidence could be viewed as testimonial. 

Second, the court must determine if the evidence is likely to result in a criminal prosecution. If the chances are “merely trifling” that a criminal prosecution will ensue, no Fifth Amendment protection is triggered.

On April 8, 2005, the Delhi Town Court issued an order of protection against William Havrish in connection with a domestic violence incident in Delaware County. The order directed Havrish to stay away from his spouse and “surrender any and all firearms owned or possessed.”

Havrish immediately handed over his “long guns,” but informed officers that he left his handgun at his ex-wife’s home. The spouse informed officers that the defendant still had the handgun, and that it was unlicensed. Soon thereafter, defendant informed the police that he had found the Ruger Blackhawk .44 magnum revolver.

The police retrieved the gun from the Havrish's Schoharie County residence, confirmed that it was unlicensed, and charged Havrish in Jefferson Town Court with criminal possession of a weapon.

The Jefferson Town Court granted Havrish's motion to suppress the weapon on Fifth Amendment grounds and then dismissed the charge, because the police had no other admissible evidence. The Schoharie County Court reversed and reinstated the criminal possession charge. The New York State Court of Appeals then reversed, finding that, under Fisher, the unlicensed handgun was excludable evidence. 

First, the state's highest court concluded that “defendant’s surrender of the gun was testimonial because it revealed defendant’s subjective thought processes -- that he knowingly possessed the weapon -- and, absent this revelation, the information would not have come to the attention of the police.”

The court further determined that “[d]efendant’s surrender of the handgun was also sufficiently incriminating to give rise to Fifth Amendment protection.” Since Havrish was required to perform “virtually every element of the offense of criminal possession of a weapon” in “the presence of the police,” the likelihood of a criminal prosecution was high.

Because privilege applied, the prosecution was unable to use the weapon as evidence against Havrish at a criminal trial. And, without other evidence, the Court of Appeals was compelled to dismiss the criminal possession charge.

We dare you to take a shot at this case!

(Come on. Make our day!)

For a copy of the Court of Appeals's decision, please use this link: People v. Havrish

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

How enforceable are deed related land-use restrictions and do they run in perpetuity? Those were the questions reviewed by the New York State Court of Appeals in 328 Owners Corp. v. 330 W. 86 Oaks Corp.
 
A five-story townhouse located at 330 West 86th Street in Manhattan became property of the City of New York after an in rem tax foreclosure proceeding. At that time, the property had numerous code violations and “was in deteriorated condition and in need of rehabilitation.”

The Department of Housing Preservation and Development (HPD) labeled the property an Urban Development Action Area Project (UDAAP) because the building impeded "sound growth and development of the municipality.” (UDAAP's purpose is to incentivize owners to renovate and rehabilitate properties.)

Under the program, HPD sells the property to tenants at an appraised value, rather than at the market rate. In return, the tenants promise to remove all code violations and hazardous conditions and maintain the existing tenants’ rent for two years. If the tenants cannot or will not purchase the property, HPD then sells the property to the highest bidder.

HPD offered the occupants of 330 West 86th Street an option, through June 30, 1998, to purchase the building for $340,000, subject to City Council and mayoral approval. On June 29, 1998, the tenants accepted, and then formed 330 West 86 Oaks Corp. (Oaks Corp.) to acquire the property.

On January 26, 1999, HPD asked the City Council to make certain findings, required by law, to qualify the property as a UDAAP, and asked to Mayor to authorize the property’s disposition.

In March 1999, the Council found that the property impaired or arrested growth and development, and was thus eligible for UDAAP. The Council also approved the waiver of certain land-use review procedures by finding the project “consists solely of the rehabilitation or conservation of existing private or multiple dwellings or the construction of one to four unit dwellings without any change in land use permitted by local zoning.”

The Mayor approved the conveyance, allowing the City to sell the building to Oaks Corp., on June 22, 1999, for $340,000.

The deed included a “description of the disposition area, the City Council resolution approving the UDAAP (including the Project Summary) and the Mayoral approval,” contained “numerous references in the recitals to the property’s UDAAP designation” and to the legal restrictions that accompanied that status. Additionally, the deed recited as follows:

WHEREAS, the project to be undertaken by [Oaks Corp.] consists solely of the rehabilitation or conservation of existing private or multiple dwellings or the construction of one to four unit dwellings without any change in land use permitted by existing zoning.

The language of the deed's habendum clause was not as specific.* That clause stated that the property was subject to applicable laws, that the buyers would remedy any violations within six months, and that the rent for existing tenants would be frozen for two years.

Additionally, the habendum clause indicated that the “agreements and covenants set forth in the Deed shall run with the land” and “shall inure to the benefit of the City and shall bind and be enforceable against [Oaks Corp.] and its successors and assigns.”

Rather than address the code violations, on February 13, 2001, Oaks Corp. sold the building to 330 West 86th Street, LLC (330 West) for $1 million. (330 West allegedly planned to demolish the existing structure and erect a high-rise apartment building in its place.)

Before the sale closed, 328 Owners Corp., the owners of a neighboring structure, filed suit in New York County Supreme Court seeking a declaration that the deed “restricts the use of the land and that the new owner and any successors or assigns must act within those constraints.” (Of course, that determination would prevent the new owners from constructing a high-rise.)

The City asserted two cross claims. The first sought a declaration that the property could only be used for “conservation” or, in the alternative, for the construction of one- to four-unit multiple dwellings. The second claim sought to permanently enjoin the owner and any successors from using the premises except for those purposes.

In response to the parties' motion for summary judgment, the Supreme Court dismissed all claims against Oaks Corp. (the seller) and partially granted 328 Owners Corp.’s and the City’s motions, ruling that the property could “not be used other than for (a) rehabilitation or conservation of the existing building thereon, or (b) construction of one to four unit dwellings without any change in land use.”  While the court subsequently denied reargument, it amended its original decision to declare that the use restrictions “run with the land,” and found those restrictions applied to subsequent owners.

The Appellate Division, First Department, reversed, holding that there was no “intent by the original parties to the deed that the covenant run with the land nor did it touch and concern the land.” The New York Court of Appeals disagreed with the AD1 and reinstated the Supreme Court’s amended order and judgment.

328 Owners Corp. and the City argued that the deed as a whole evinced that the parties intended to restrict the use of the land, and that those restrictions “run with the land” and apply to subsequent owners. 330 West argued that the habendum clause, which often describes the extent of the interest conveyed, did not adequately describe any restrictions on the land. Furthermore, 330 West argued, any restrictions applied to Oaks Corp. only, and did not extend to subsequent purchasers.

The Court of Appeals rejected 330 West’s arguments. The Court noted that, “While it is true that the habendum clause is generally the best depiction of an interest conveyed, the inquiry is not that narrow.” The Court continued, “[e]very instrument creating [or] transferring ... an estate or interest in real property must be construed according to the intent of the parties, so far as such intent can be gathered from the whole instrument, and is consistent with the rules of law.”

Taking into account all the pertinent facts and circumstances, the Court concluded that the restrictions in this case limit the property’s use and “run with the land,” binding 330 West and all subsequent purchasers. Here's why:

First, the Court determined that the parties intended the covenants to “run with the land.” The references in the deed to the statutory restrictions, the language stating the covenants would run with the land, and the low purchase price, were all factors that reinforced that determination.

Second, the covenants “touched” and “concerned” the land because, under the deed, the duty to rehabilitate the building was ongoing in nature and was not extinguished when the property was transferred. Additionally, 330 West accepted title with notice of the deed's restrictions and the pending lawsuit’s allegations.

Third, the City could enforce this covenant against 330 West because there was “privity of estate,” since 330 West’s rights and interests in the property could be traced back to the City by way of the deed.

Interestingly, despite the adverse ruling, all was not lost. The court suggested that these deed restrictions would not run "in perpetuity" and that once the governing restrictions expired "by their own terms" or an owner made a special application to the court to "extinguish" them "by reason of changed conditions or other cause," a different use of the property might be realized at some point in the future.

So, as far as real estate is concerned, it looks like only "hope" (rather than deed restrictions) springs eternal.

 

 

For a copy of the Court of Appeals's decision, please use this link: 328 Owners Corp. v. 330 W. 86 Oaks Corp.

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*The habendum clause is a part of a deed that traditionally defines the extent of the interest granted. The formal parts of a deed are now not as important, and courts generally read the document as a whole.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

“It is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of commonsense justice in an evolving society.” 

The Court of Appeals recently reiterated that sentiment in Thyroff v. Nationwide Mutual Insurance Company, wherein it extended the right to use a conversion claim to recover the value of electronic data and records.

“Conversion” is an intentional act of “dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.”* In other words, if someone wrongfully takes your property, you can sue that person for its value.  In effect, it is like a “forced sale.”

Interestingly, this doctrine has had a slow and tortuous evolution. Back in the Middle Ages, (when our senior partner Danny Finkelstein was a mere youngster), a victim could assert a private claim against the thief. In some instances, when stolen goods were found in the accused’s possession, he was summarily executed, without a hearing. When trials were held, they were often conducted by “wager of battle” -- basically, a duel -- and to the victor went the spoils.** (And you thought being a litigator today was a tough way to make a living.)

It was not until the end of the 12th Century that the English Crown began conducting criminal prosecutions for theft. Victims were not thrilled with that development, since any recovered property was given to the Crown, rather than returned to the victim.

Since the 1200's, the common law has evolved to make it easier for people to recover the value of property taken illegally by another. However, these claims had been restricted to tangible personal property, which is property “capable of being identified and taken into actual possession." That made sense in the 1200's, since intangible property was not vital economically. But, as our world has become more complex, this exclusion became problematic.

In 1934, in Agar v. Orda,*** New York recognized that the value of “intangible property” could be recovered by way of a conversion claim, but only if the intangible property “merged” with tangible property. For instance, the value of the stock certificate lies not in the paper (which is relatively worthless), but in the rights the document conveys or transfers. The intangible ownership of a company “merges” into the tangible stock certificate, and that “morphing” is what allows a party to sue for the value of the stock should the certificate be stolen.

Louis Thyroff was an insurance agent for Nationwide Mutual Insurance. While he was an agent, he leased Nationwide’s computer hardware and software, including their Agency Office Automation (AOA) system, which allowed for the quick collection and dissemination of business information

Thyroff also used the AOA software for personal use and other data regarding his customers. When he was terminated as an agent, Nationwide recovered their computers and denied Thyroff access to the AOA system. He later sued to recover damages for the value of his property -- electronic data -- which existed in that system.

Thyroff filed his claim in U.S. District Court the Western District of New York, which eventually dismissed his case. On appeal, the U.S. Court of Appeals for the Second Circuit was unsure whether New York recognized a conversion claim for intangible property and certified that question to the New York State Court of Appeals.

Noting that the tort “must keep pace with the contemporary realities of widespread computer use,” our state’s high court decided that a conversion claim can apply to the Thyroff’s property. Since “society’s reliance on computers is substantial, if not essential,” there was no reason in “law or logic” to exclude electronic data from a conversion claim. As a result, since they “were indistinguishable from printed documents,” Thyroff may eventually recover damages for the value of his electronic records.

(Better late, than never.)

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*See Restatement [Second] of Torts.
**Amazingly, wager of battle was not officially abolished in England until 1818.
***264 NY 248 (1934).

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (2)

If you think landlord-tenant cases are wacky, try bringing a lawsuit against the State of New York. 

Kolnacki v. State of New York, a recent decision issued by the New York State Court of Appeals, illustrates just a few of the hurdles you can expect to encounter.

First, a little context. 

At common law, a state could act with impunity or reckless disregard of its duties or responsibilities because the doctrine of sovereign immunity shielded it from suits. Thus, someone injured by a state’s negligence was left without a legal remedy. (It’s great to be the king, ain’t it?)

Fortunately, New York State waived some of its immunity by way of a statute known as of the Court of Claims Act.* That law details the circumstances under which a claim may be brought and outlines what a plaintiff must do to successfully sue the State. For instance, in its pleadings a party must state the time and place of the accident, the nature of the claim, the injuries sustained, and the “total sum” of damages sought.

On July 8, 2000, Betty Kolnacki slipped and fell at Artpark, an outdoor theater/park in Western New York. Kolnacki sustained a knee fracture, damage to her teeth, and some cuts and bruises.  She later filed a negligence claim against New York State to recover monetary damages for her injuries. Kolnacki’s pleading did not, include a “total sum” of damages she was seeking to recover. Instead, her complaint indicated that the “[t]he full extent of claimant’s injuries are not yet known.”

While the Court of Claims found the State partially at fault, it still dismissed Kolnacki’s claim for violating Section 11(b) of the Court of Claims Act since her papers did not proffer the “total sum" of damages sought.

The Appellate Division, Fourth Department, overturned the dismissal, reasoning that since the damages were difficult for Kolnacki to determine, the stated language was sufficient. Our state’s highest court reversed the AD4 and dismissed the case.

The New York State Court of Appeals indicated that it would accept “nothing less than strict compliance with the jurisdictional requirements of the Court of Claims Act.” It described these requirements as “substantive conditions on the State’s waiver of sovereign immunity.” Should a plaintiff fail to comply, then the State remains immune and the Court of Claims “lacks jurisdiction” to hear the case.

Since the governing standards are immalleable, litigants are left with little choice but to estimate their damages and then amend their pleadings when the precise sums become known.

Excelsior?

For a copy of the Court of Appeal's decision, please use this link: Kolnacki v. State of New York

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*To access an electronic copy of the Court of Claims Act, select the statute identified with the initials CTC appearing toward the bottom of this list: New York State Laws

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

In People v. LeGrand, the Court of Appeals concluded that a trial court erred when it refused to allow expert testimony on the accuracy of eyewitness identifications.

The rules of evidence seek to ensure that whatever is presented to a jury is relevant, material, and non-prejudicial. Trial courts generally have a great deal of latitude in applying these rules because they are in the best position to evaluate what is being presented, while an appellate court's review is limited to an examination of a paper record, months or years later. Yet, despite this apparent flexibility, a lower court’s rulings on evidentiary matters may still be reversed on appeal if the trial court is perceived as having abused its discretion.   
 
In some cases, it is helpful for the jury to hear from an “expert,” or someone with special knowledge or skills “beyond the ken of the average juror.” For instance, experts often testify in medical malpractice cases, because the average juror just doesn’t know a great deal about medicine or medical procedures.

New York has adopted rules promulgated by a 1923 U.S. Court of Appeals for the District of Columbia case called Frye v. United States to determine whether expert testimony is admissible. Under Frye, an expert’s testimony will be permitted if based on science that is “sufficiently established to have gained general acceptance in the particular field in which it belongs.” When objections arise, judges will typically hold “Frye” hearings to determine the propriety of permitting the testimony.

On June 15, 1991, Joaquin Liriano was stabbed to death in Manhattan. Four witnesses to the stabbing helped police create a composite sketch of the suspect.

In 1993, Nico LeGrand was arrested for an unrelated burglary. The arresting officer believed he looked like the suspect in the 1991 homicide, but couldn’t locate any of the four witnesses. The investigation stalled.

In 1998, Mr. LeGrand was again arrested for burglary, and again the police concluded he resembled the likeness which had been sketched of a 1991 homicide suspect. This time, although the police located the four original witnesses (and also found a fifth witness), only one positively identified LeGrand as the 1991 assailant (two other witnesses were ambivalent, while the remaining two were unable to identify the supposed perpetrator).

There was no other physical evidence against the defendant other than that single witness’s identification.

During a Frye hearing held before a second homicide trial -- the first ended in a hung jury -- the defendant sought to introduce expert testimony based on research findings “regarding several factors that may influence the perception and memory of a witness and affect the reliability of eyewitness identifications: in particular, the effect of ‘weapon focus,’ the lack of correlation between witness confidence and accuracy of identification, the effect of post-event information on accuracy and confidence malleability.” 

The defense hoped that the testimony would lead jurors to doubt the ability of the witness to identify the defendant some seven years after the stabbing.

The trial court refused to allow the expert testimony because the conclusions “were not generally accepted by the relevant scientific community.” The jury later found LeGrand guilty of second-degree murder, and he was sentenced to 25 years to life in prison. The Appellate Division, First Department, affirmed the decision. Our state’s highest court reversed and ordered a new trial. The Court of Appeals held that three factors on which the expert would have testified -- correlation between confidence and accuracy of identification, the effect of post-event information on accuracy of identification, and confidence malleability -- were indeed “generally accepted by the relevant scientific community” within the meaning of Frye. (The expert would also have testified on “weapon focus” -- the idea that while witnessing a violent crime, witnesses look at the weapon, and not the face of the assailant -- but, the Court of Appeals was not convinced a scientific consensus existed for that part of the testimony, and thus, found that component inadmissible.)

Even though this testimony may pass the Frye test, it could still be deemed inadmissible for other reasons. Even if accepted by the scientific community, evidence must still be relevant, material, and non-prejudicial. A trial court must still use its discretion to determine if any scientifically accepted expert testimony satisfied those remaining obstacles.

In this case, however, our highest appellate court concluded that it was an error to preclude the expert’s testimony, since the accuracy of eyewitness testimony was vital to the defendant’s case. The expert testimony “plainly ... would have benefited the jury in evaluating the accuracy of the eyewitness identifications.”

So much for the all-seeing eye.

 

 

 

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Banks hate third-party checks and here's a case that explains why.

In B.D.G.S., Inc. v. Balio, a Washington State based corporation hired two New York gentlemen to manage a local warehouse.  Their responsibilities included finding tenants and collecting rent (which was to be forwarded to B.D.G.S.).

Over the course of the parties' relationship, it became apparent that rent payments and other proceeds had been "misappropriated" and deposited into an account held by Beechgrove Warehouse Corporation (an entity formed by the two New Yorkers). With some variations, the rent checks (payable to B.D.G.S.) were endorsed as follows:

DBGS, Inc.

Pay to the order of

Beechgrove Warehouse

For Deposit

After the discrepancies were uncovered, B.D.G.S. commenced suit to recover its monies and asserted a claim against Savings Bank of Utica (SBU) "for money had and received." Under this common-law theory, a bank is obligated to pay the proceeds of a check to the "true payee owner," and remains liable for such sums "in the absence of a valid endorsement."

In response to the lawsuit, SBU countered that state law -- the Uniform Commercial Code -- limited the bank's liability to such sums which remained under its control.* The problem with SBU's argument was that it concededly violated its own internal policy and "reasonable commercial standards" when it came to the handling of third-party checks.

After a jury trial, SBU was found liable for $1,152,933.83.  Both the Appellate Division (Fourth Department) and Court of Appeals affirmed.  As the state's highest court noted in its decision:

In this case, the record supports the affirmed findings that SBU's actions were not commercially reasonable. There was expert testimony concerning aspects of the transactions at issue that should have raised red flags for SBU. Further, there was testimony indicating that the bank did not comply with its own procedures for handling business checks. As a result, the Appellate Division properly determined that SBU did not act in accordance with reasonable commercial standards.

* * *

As noted above, section 3-419 (3) limits a depositary bank's liability on an action for money had and received only when the bank satisfies the statutory criteria — compliance with restrictive indorsements, good faith and acting in accordance with reasonable commercial standards. Since SBU did not satisfy all of the above criteria, because it did not act in conformity with reasonable commercial standards, the defense is unavailable and the bank's liability is not limited to the amount of the proceeds remaining in its possession.

Did someone yell ...

"JACKPOT!"

For a copy of the Court of Appeals's decision, please use the following link: B.D.G.S., Inc. v. Balio

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*UCC Section 3-419(3) provides as follows:

Subject to the provisions of this Act concerning restrictive indorsements a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial  standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands.

To download a copy of the statute, please use the following link (enter "UCC" and select the desired section): http://public.leginfo.state.ny.us/menugetf.cgi?COMMONQUERY=LAWS

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Festa v. New York City Dept. of Consumer Affairs, a New York County Supreme Court Judge was asked to consider whether "social dancing" comprised a form of constitutionally protected expression and whether New York City's restrictions on the licensing and location of social-dance establishments somehow violated that protection.

As we reported back in April of 2006, New York County Supreme Court Justice Michael Stallman could discern no constitutional impropriety and dismissed the dancers' case.

Last week, the Appellate Division, First Department, released its decision on the dancers' appeal, and agreed that dismissal was appropriate.  As the AD succinctly noted:

Recreational dancing is not a form of expression protected by the federal or state constitutions .... Accordingly, the Cabaret Law and attendant zoning regulations challenged by plaintiffs, are subject to rational basis review .... The legislative purposes in enacting these provisions were plainly legitimate, i.e., to protect the health, safety and general welfare of the public by limiting, inter alia, noise, congestion and various hazards in residential areas, and to protect the local retail development. It is manifest that the regulations, to the extent challenged by plaintiffs, bear the requisite rational relation to these permissible governmental objectives.

Will the dancers be sashaying to the state's highest court?

Stay tuned!

For a copy of the Appellate Division's decision in Festa v. New York City Dept. of Consumer Affairs, please use the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_01476.htm

To be directed to our prior post on this case, please use the following link: http://www.nyrealestatelawblog.com/2006/04/who_loves_a_cabaret.html#000036

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Mr and Mrs Horsford sought to recover a rent-stabilized unit for their 24-year old daughter's use.

The Horsfords were victorious after trial in the New York County Civil Court, and on appeals to the Appellate Term and Appellate Division. But the tenant was so insistent that the landlord's case had not been made (because the intended occupant -- the Horsfords's daughter -- never testified at trial), that the dispute eventually made its way to our state's highest court.

Back on December 12, 2006, we offered the following prediction:

If the law is consistently applied, our guess is that [the tenant's appeal to the Court of Appeals] should result in a "trifecta" -- yet another affirmance -- for the landlord. We do not believe there is any reason to impose additional procedural hurdles and hoops particularly when  an owner's testimony has been found to be credible and the governing standards -- of "good faith" and "genuine intention" to recapture a stabilized apartment for a family member's use as a primary residence -- have been satisfied.

As we anticipated, just a few short days ago, the New York State Court of Appeals affirmed the AD's decision.

A landlord's testimony as to the apartment's use (if found credible) is sufficient to support an owner's use claim. No testimony by the intended occupant is required.

For a copy of the Court of Appeals's decision in Horsford v. Bacott, please use the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_01426.htm

For our prior post on the Horsford case, please use the following link: http://www.nyrealestatelawblog.com/2006/12/proving_owners_use.html#000280

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

According to New York's appellate courts, the mere signing of a lease by the landlord and a tenant doesn't make the document valid or enforceable. "Something else" needs to occur.

In Dlugosz v. O'Brien, Mr. Dlugosz sought to rent a small storefront -- somewhere in Saratoga County -- from Mr. O'Brien. On Tuesday, December 14. 2004, O' Brien handed Dlugosz a one-year lease agreement which bore O'Brien's signature. That Friday, Dlugosz attempted to return the fully executed document and to tender a cash security deposit to the landlord, but was rebuffed. Supposedly, O'Brien preferred a check rather than cash. Several days later, when Dlugosz returned with a check, he was informed that O'Brien no longer wished to lease the space.

Dlugosz later filed suit in the Saratoga County Supreme Court seeking "specific peformance" -- compelling O'Brien to honor the lease agreement's terms -- together with an award of damages. While the Supreme Court dismissed the case for "lack of consideration," the Appellate Division, Third Department, affirmed the outcome for different reasons.

Citing 219 Broadway Corp. v. Alexander's, Inc., a 1979 decision by the New York State Court of Appeals, the AD concluded that "delivery" of a lease was an essential element to formalizing the landlord-tenant relationship. Here's the quote the AD lifted from the the 219 Broadway Corp. case:

"The due signature of the lease instrument is but one step in the process of conveying an interest in land. Delivery requires something more. There must be evidence of an unequivocal intent that the interest intended to be conveyed is, in fact, being conveyed. The mere signing of the instrument by parties not in the presence of each other, without more, does not evince such intent ...."

So, what's a "delivery?"

Since that term is neither precisely defined nor "controlled by fixed formalties," courts will examine the facts of each case to see whether the parties -- by their words and/or deeds -- intended to engage in a transfer of the property and establish a landlord-tenant relationship. In this particular instance, since Dlugosz could not establish an intent on behalf of the landlord to consummate the deal and transfer the property, the AD signed, sealed and delivered an unfavorable outcome.*

For a copy of the Appellate Division's decision in Dlugosz v. O'Brien, please use the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_00185.htm 

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*Interestingly, the AD was also of the opinion that Dlugosz was never given "actual physical possession" of the space, even though he had a key.  So, apparently, having a lease and a key may not be enough.

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

Michael Barton was ticketed in downtown Rochester for wading into traffic and soliciting money from passing motorists in violation of Section 44-4(H) of that city's Municipal Code.* The law's aim is to "provide for the free flow of pedestrian and vehicular traffic on the streets and sidewalks in the City," and to discourage behavior that would be "disruptive" to drivers and "divert their attention from the traffic on the street."

Mr. Barton's attorneys alleged the law was overbroad and violative of the "Free Speech Clauses of the Federal and New York State Constitutions." While a Rochester City Court judge agreed with that contention, the Monroe County Supreme Court reversed since the law is "content neutral," "narrowly tailored," and one which did not foreclose "other channels of communication."

On appeal, the New York State Court of Appeals affirmed the reversal. Our state's highest court was of the opinion that the law addressed a legitimate government interest, to wit: eliminating vehicular related distractions and promoting traffic safety and flow.  As the court observed:

In this case, the governmental interests served by section 44-4(H) ... are significant. Further, section 44-4(H) is not a blanket ban .... This provision does not prohibit requests seeking something other than a handout. Moreover, section 44-4(H) does not proscribe non-aggressive soliciting directed at pedestrians on the sidewalk; therefore, it leaves open ample alternative avenues to communicate any message of indigency or need through begging.

With the ban upheld, we wonder where Barton is now?

For a copy of the Court of Appeals's decision in People v. Barton, please use the following link: http://www.courts.state.ny.us/reporter/3dseries/2006/2006_09499.htm

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*The law provides that no "person on a sidewalk or alongside a roadway shall solicit from any occupant of a motor vehicle that is on a street or other public place," with the word "solicit" encompassing any "spoken, written, or printed word or such other acts or bodily gestures as are conducted in furtherance of the purposes of immediately obtaining money or any other thing of value."

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

When a tenant defaults in the performance of lease-related obligations, a landlord usually reserves the right to bring that tenancy to a premature end by issuing one or more notices as may be required by the governing agreement's "default" provision.

The process--also known as "exercising the conditional limitation"--typically involves two steps. A landlord must first give a "notice to cure" which affords the tenant an opportunity to correct (or diligently commence correction of) the delineated objection. Upon the lapse of that curative period, the landlord may bring the tenancy to a premature end by serving a second document, usually known as a "notice of termination."

If a tenant disputes the existence of a "default" (or otherwise objects to the propriety of the curative notice), a special injunctive remedy is available to stop (or "toll") the running of the landlord's notice until such time as a court has had an opportunity to decide the dispute on the merits.  Since a tenant's complacency or inaction could lead to a forfeiture of the lease, appellate caselaw--harking back to the New York State Court of Appeals's 1968 decision in First Natl. Stores v. Yellowstone Shopping Ctr.--commands that the tenant seek this special injunction before the cure notice expires. 

With a few exceptions, post-cure applications will be denied, as was reinforced by the outcome of the tenant's appeal in 319 Smile Corp. v. Forman Fifth, LLC.  In a decision released yesterday, the Appellate Division, First Department, concluded as follows:

The court properly found that plaintiff did not timely seek injunctive relief, since the order to show cause that brought about a temporary restraining order and tolled the cure period pending the hearing on the Yellowstone application was not obtained until after the cure period had ended and the notice of termination served ....

Bet the tenant wasn't smiling when it got that decision.

For a copy of the Appellate Division's decision in 319 Smile Corp. v. Forman Fifth, LLC, please click the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_01215.htm

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (2)

The "Women's Health and Wellness Act" (WHWA), requires health-insurance carriers to provide their insureds with an array of medical services, such as mammographies, cervical cytologies, bone density screenings. According to that same statute, if prescription drug coverage is supplied, "contraceptive drugs and devices" must be encompassed by that policy.

Interestingly, under the law, a "religious employer" may negotiate an insurance contract which excludes coverage for  "contraceptive methods that are contrary to the religious employer's religious tenets."  However, for the exemption to apply, a "religious employer" must meet each of the following elements:

• the entity's purpose is "the inculcation of religious values;"
• people sharing the identical religious tenets are employed by the entity;
• those served share the entity's religious tenets; and
• the entity is a nonprofit organization.

Ten "faith-based social service organizations" (which did not meet these criteria) filed suit alleging that the WHWA's "contraception coverage mandate" was unconstitutional.*  Among other things, the lawsuit's proponents argued that since it is their view that contraception is "sinful," they could not be compelled to finance a procedure which their tenets condemned.

Interestingly, a loophole was  available to these plaintiffs, according to the New York State Court of Appeals.  The organizations were free to deny their employees prescription drug coverage in its entirety.  As the court observed in its decision:

The burden the WHWA places on plaintiffs' religious practices is a serious one, but the WHWA does not literally compel them to purchase contraceptive coverage for their employees, in violation of their religious beliefs; it only requires that policies that provide prescription drug coverage include coverage for contraceptives. Plaintiffs are not required by law to purchase prescription drug coverage at all. They assert, unquestionably in good faith, that they feel obliged to do so because, as religious institutions, they must provide just wages and benefits to their employees. But it is surely not impossible, though it may be expensive or difficult, to compensate employees adequately without including prescription drugs in their group health care policies.

Additionally, since  people of different religious beliefs were hired by the organizations, our state's highest appellate court was of of the opinion that these employers should have anticipated compliance with "neutral regulations" designed to protect their "employees' legitimate interests in doing what their own beliefs permit."** 

Ultimately, WHWA was found to be "a neutral law of general applicability," and no constitutional infirmity could be discerned, particularly since the statute did not:

• "target" religious beliefs;
• "infringe upon or restrict practices because of their religious motivation;"
• interfere with plaintiffs' right to "communicate, or to refrain from communicating any message;" or
• "compel" or "prohibit" freedom of association. 

Without a demonstration of government's unreasonable interference with a religious practice, the Court of Appeals refused to strike the legislation, noting that citizens are required to comply with "generally applicable and neutral laws, even ones offensive to their religious tenets."***

For a copy of the Court of Appeals's decision in Catholic Charities of Diocese of Albany v. Serio, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_07517.htm

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*None of the plaintiffs satisfied the law's "religious employer" exemption since "most" acknowledged employing "nonbelievers," and all provided "social and educational services" to people who did not share the same faith.

**Interestingly, the majority suggests that the outcome of the case might have been different "if plaintiffs had chosen to hire only people who share their belief in the sinfulness of contraception."

***This outcome begs the question: Will these social-service organizations now take prophylactic measures?

Posted by Lucas A. Ferrara, Esq. at 3:25 PM | Permalink | TrackBacks (0) | Comments (0)

Failing to pay the rent on time could have dire consequences for commercial tenants even when they have never been declared in default.

According to the Appellate Division, Second Department, in Cyber Land, Inc. v. Chon Prop. Corp., a tenant's mere failure to pay rent on time could work to divest it of lease-related rights, such as a "right of first refusal" to purchase a building. In that case, the option was conditioned upon tenant "not being in default" during the lease term and, of course, this particular occupant "frequently" paid its rent late and failed to remit the full amount due to its landlord. 

When the building was later sold to a third party, the tenant filed a lawsuit in the Queens County Supreme Court seeking to enforce its right to purchase the building. The tenant claimed that its mere failure to pay the rent on time did not invalidate the option, since it was never given a formal default notice.  The tenant further asserted that any alleged violations of the agreement's terms were inconsequential.

Neither the Supreme Court nor the Appellate Division concurred with the tenant's arguments. Here's how the Appellate Division addressed the tenant's claims:

"A covenant to pay rent at a specified time ... is an essential part of the bargain as it represents the consideration to be received for permitting the tenant to remain in possession of the property of the landlord" ... Accordingly, the plaintiff's repeated breaches of the covenant to timely pay rent contained in the lease were not de minimus, but were instead breaches "of a material term of the lease" ... Notice of such default was not required ... Furthermore, while the plaintiff is correct that equity may relieve a party against a good faith, de minimus, breach that is promptly cured ... the unrefuted evidence indicates that the plaintiff has not paid the complete rent due in August 2003. Accordingly, the Supreme Court properly granted the motion of the defendants and third-party defendant for summary judgment dismissing the complaint.

How does one reconcile the outcome of this case with the recent holdings of the appellate courts of the First Department and the New York State Court of Appeals?

In decisions relating to lease defaults, these other courts appear to be suggesting a mere "default" will not trigger a tenancy's forfeiture nor support a judgment for rent, legal fees or other charges due under the agreement or accompanying guaranty.  Some formal notice (or series of notices) need first ensue. 

[See, for example, our analysis of Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC., wherein both the Appellate Division, First Department, and the Court of of Appeals refused to hold two guarantors liable for the payment of their dealership's rent notwithstanding the unambiguous language of the governing guaranty.  To review that post, please click on the following link: http://www.nyrealestatelawblog.com/2006/12/when_is_a_default_a_default.html]

Make sense of it all, if you can.  We dare you!

For a copy of the Appellate Division's decision in Cyber Land, Inc. v. Chon Prop. Corp., please click on the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_00481.htm

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

New York's "Lemon Law" compels car manufacturers to repair or replace vehicles which have warrantied defects during the first 18,000 miles or within the first two years of ownership (whichever first occurs).  If, within those parameters, there have been a "reasonable number of attempts," or the vehicle has been out-of-service for a prolonged period of time, the consumer may request a replacement vehicle or refund of the purchase price.

A consumer satisfies this "reasonable number of attempts" standard if the same defect has been subject to repair "four or more times" and "continues to exist," or if the vehicle has been out of service for a total of thirty or more days (also known as the "days-out-of-service presumption").  In response, the manufacturer may demonstrate that the defect "does not substantially impair" the car's value or that the problem was caused by "abuse, neglect or unauthorized modifications or alterations of the motor vehicle."

In Matter of DaimlerChrysler Corp. v. Spitzer, DaimlerChrysler, General Motors, and Saturn objected to the State's interpretation of the law and argued that a purchaser was required to demonstrate that the defect was not corrected after the fourth repair attempt and that the problem continued up to the time the consumer's case was heard. Luckily, the state's highest court didn't buy that analysis:

We do not read the repair presumption as requiring a consumer to establish that the vehicle defect continued to exist until the trial or hearing date. Rather, the plain language of the provision obligates a consumer to demonstrate that the vehicle was subject to repair at least four times and that the same defective condition remained unresolved after the fourth attempt. Therefore, once a consumer has met the four-repair threshold, the presumption arises regardless of whether the manufacturer later remedies the problem. After four attempts, it is presumed that the manufacturer has been given a reasonable number of opportunities to fix the vehicle. The determination of whether a reasonable number of attempts took place for a consumer to recover does not turn on whether the car was ultimately repaired. If the Legislature intended to condition recovery on such a requirement, it easily could have said so.

Clearly, the manufacturers' interpretation of the law would have crippled consumers by requiring them to keep their cars in a defective state in order to preserve their rights.  Since public safety and the interests of innocent purchasers would have not been served by such a reading of the statute, we applaud the outcome of this case.

For a copy of the Court of Appeals's decision in Matter of DaimlerChrysler Corp. v. Spitzer, please click on the following link: http://www.courts.state.ny.us/reporter/3dseries/2006/2006_09322.htm

For additional information about New York's Lemon Law, please click the following link: http://www.oag.state.ny.us/consumer/cars/newcarlemon.html

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*General Business Law § 198-a

By the way, just in case you were wondering, the Online Etymology Dictionary (OED) suggests that the term "lemon" -- normally associated with a yellowy citrus fruit -- may have derived from British slang (from around 1906) meaning "to pass off a sub-standard article as a good one."

For a link to the OED entry, please click here:  http://www.etymonline.com/index.php?term=lemon

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Here's a case that will turn your stomach.

What would you say if we told you that the New York State of Court of Appeals refused to penalize merchants  who sold "expired" foodstuffs and other aged items to unsuspecting members of the public?

Well, we didn't want to believe it either.  But, sure enough, there's actually a decision from our state's highest court, refusing to characterize the sale of outdated merchandise as a "deceptive or misleading" business practice.

In Matter of Food Parade, Inc. v. Office of Consumer Affairs of County of Nassau, Food Parade doing business as Greenfield Shoprite (Shoprite) was fined $3,600 by the Nassau County Department of Consumer Affairs for offering to sell some 144 expired products (which included vitamins, baby formula, nasal decongestant, and tanning oil). Shoprite appealed the agency's decision claiming no wrongful act had been committed--since the items were "plainly marked as outdated." The Nassau County Supreme Court agreed and canceled the agency's fine.  Incredibly, both the Appellate Division, Second Department, and the New York State Court of Appeals affirmed that outcome.

The appellate courts were of the opinion that the merchant's conduct was not a "deceptive or unconscionable trade practice," as defined by the governing Nassau County statute, with our state's highest court discounting the arguments presented by the local Department of Consumer Affairs, in part, as follows:

The agency argues that in displaying expired products for sale, the supermarket misled consumers by making an "implied representation" that the items were unexpired. That could well be true if the items were undated. Here, however, the dates were expressly represented, and a contrary conclusion as to the age of the items cannot be drawn by implication, so as to form the basis for a penalty. In short, the agency cannot ascribe to Shoprite an implied representation at odds with what undisputedly appears in writing.

While the local law may have been self-limiting in scope, we believe the courts could have relied upon state law--such as the General Business Law--which discourages "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service."

Are we to assume products are not fresh and that they are unfit for use when offered for sale by our local grocer or supermarket? Frankly, such a standard strikes us as nonsensical and works to reinforce questionable business practices.  As Judge Graffeo noted in a dissenting opinion:

Under state law, when a retailer places a product on the shelf for sale to a consumer, it impliedly warrants that the product is fit for its intended uses (see UCC 2-314[2][c]). It was therefore not irrational for the County to conclude that, when a product may not actually be fit for its intended uses because it has expired, its placement on the shelf alongside unexpired products, and without any statement alerting consumers that its fitness cannot be guaranteed, amounts to a misleading practice. A reasonable consumer would presume that a retailer would not continue to display items on its shelves that may no longer be effective, even if used appropriately.

We believe Judge Graffeo got it right.

Have you ever watched how people shop?  While most consumers don't bother looking at labels or expiration dates, some individuals--like senior citizens--have considerable difficulty reading or finding the information. And, frankly, they shouldn't have to bother. The onus should be on the merchant to ensure that products offered for sale are "fit" for consumption and may be safely utilized. Allowing the sale of expired products (without full and complete disclosures) furthers no cognizable public purpose we can identify.

By the way, what do you think the chances are that the Judges of the Court of Appeals would knowingly purchase expired medications or dine on expired foodstuffs?  

For a copy of the Court of Appeals's decision in Matter of Food Parade, Inc. v. Office of Consumer Affairs of County of Nassau, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_07601.htm

For a copy of the Appellate Division's decision in this case, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2005/2005_05300.htm

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Typically, a "default" arises upon a party's breach or noncompliance with a contractual term or condition.  And, in order to provide a corrective remedy and avoid a possible forfeiture, many agreements will usually afford the party deemed in breach with an opportunity "to cure" or correct the underlying violation.

Leases are no different.  At least so we thought until the Court of Appeals issued its decision in Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC.  In that case, Arthur and Brian Miller each agreed to be personally responsible for the payment of their auto dealership's lease-related obligations for certain Madison Avenue space.  That document provided, in part, as follows:

[I]n the event Tenant shall not have been in monetary default under the Lease at any time during the first three (3) years of the Lease, this Guaranty and Guarantor's [sic] obligations thereunder shall cease and terminate upon the third (3rd) anniversary of the Commencement Date.

On September 29, 2003, some three years and three months into its lease, the dealership stopped paying the rent and vacated the space.  The landlord later filed suit seeking damages for all rent that due for the balance of the lease term [October 2003 to June 2010], discounted for present value.

Since the parties' agreement provided that rent was due "in advance on the first day of each calendar month," and the dealership consistently paid rent late, the landlord argued that the Millers were personally liable for the sums sought.  The New York County Supreme Court responded to that argument with a dismissal of the case against the guarantors finding that the landlord had "waived" its objection to the tenant's default by repeatedly accepting the late-rent tenders "without protest and without taking any action," like issuing a default notice or otherwise declaring the tenant in default of the governing lease.  On appeal, the Appellate Division, First Department, affirmed the dismissal, noting as follows:

To determine whether the guaranty ever became effective and whether it remained in effect at the time Bentley vacated the premises, we must look to the lease to determine whether there was a "monetary default" by the tenant. If there was no "monetary default" under the lease, the condition precedent was not fulfilled and the guaranty, together with its "no waiver" provisions concerning landlord's enforcement of its rights and remedies, never had any force and effect. As previously stated, because landlord, by a course of conduct extending over a period of years, waived the tenant's late payment of rent, there was no "monetary default" by the tenant under the lease during the applicable three-year period, the guaranty neither took effect nor was extended, and the guarantors were never subject to its terms and obligations. Once waived, the default in timely payment of rent is extinguished and cannot later be revived, like a phoenix, into a material default for the purpose of extending the period of the collateral guaranty. Thus, the loss sought to be recouped in this action, resulting from a default (vacatur of the premises) that occurred three years and three months after the commencement of the lease, is not recoverable from the individual defendants.

The thrust of the AD's argument was that there should have been some formal notice that the acceptance of the late rent payments was without prejudice to the landlord's rights under the guaranty.  As the AD observed:

Having failed, over the course of three years, to give Bentley any notice that timely payment of rent would be required, landlord may not now insist that its tenant's failure to strictly comply with the timely payment condition of the lease constitutes a default.

On December 19, 2006, the state's highest court affirmed the AD's disposition of the case but applied a different -- and more troubling -- analysis.  After examining the language of the governing lease's default provision, the Court of Appeals came to the following conclusion:

In the event of a default in the payment of rent, paragraph 17 requires the landlord to notify the tenant of the default and, after receipt of the notice, the tenant will have seven days to cure the deficiency. Even if the default is not cured within seven days of the notice, the lease provides that the landlord must send another notice giving the tenant three additional days to cure, meaning that the tenant has 10 days after it receives the first notice from the landlord to remedy any deficiency relating to the payment of rent. This provision clearly distinguishes between a default in the payment of rent and other types of defaults, with the former referred to at the end of the provision as a "monetary default" under certain circumstances.

Nothing in the language of the lease suggests that rent that was paid in full each month, albeit in an untimely manner, would nonetheless fall within the category of "monetary default." To the contrary, it appears that a default in the payment of rent does not ripen into a "monetary default" until the landlord has first served a notice of default and the default has "remain[ed] uncured" for at least seven days because it is only in that context that a default in the payment of rent is characterized as a "monetary default."

A creative analysis but, in our opinion, just plain wrong.   In fact, we believe the case's outcome derives from a strained reading of the underlying lease agreement.

This language found in a lease's "default" provision is typically operative when a landlord wishes to exercise the "conditional limitation" -- that is, bring the lease to a premature end and evict a tenant from the space as a result of a breach.  That language usually does not define when a "default" has occurred.  Rather, it governs the steps that need to be taken when a landlord wishes to terminate the tenancy based on that "default."

In this particular instance, the state's highest court seems to be suggesting that -- according to its reading of the operative conditional limitation language -- the tenant was not in "default" of its obligation to pay rent unless and until one or more predicate notices issued.  That strikes us as nonsensical. 

We submit that the "default" arose upon the tenant's failure to remit rent as of the first of the month, as contractually required.  And, that occurrence should have been sufficient to trigger personal liability under the guaranty (as a result of the clear and unequivocal wording of that document).  As we have observed in our prior blog post on this topic -- the Millers knowingly and willingly agreed to an "absolute and unconditional Guaranty of payment and performance," which was enforceable "without the necessity for any suit or proceedings on Landlord's part of any kind or nature whatsoever against Tenant, without the necessity of any notice of non-payment, non-performance or non-observance (except as expressly required under the terms of this Guaranty), or ... of any other notice or demand to which the Guarantor might otherwise be entitled, all of which the Guarantor expressly waives ...."

Additionally, the guaranty specified that it would not be "terminated, affected, diminished or impaired by reason of the assertion, or the failure to assert, by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to any provisions of the Lease."

Finally, the agreement provided that the guaranty would "in no way be affected, modified or diminished by reason of ... any modification or waiver of or change in any way of the terms, covenants, conditions or provisions of the Lease by Landlord and Tenant, or by reason of any extension of time that may be granted by Landlord to Tenant, or by reason of any dealings or transaction or matter or thing occurring between Landlord and Tenant ...."

All that stuff reads pretty unambiguously to us.  No "notices" of any kind were required to issue or otherwise be given to the guarantors (under the guaranty).  Yet, the state's highest court elected to rely on the conditional-limitation language of the lease as a basis for relieving the Millers of their personal obligations.  (So much for enforcing agreements, as written.)

If the court's analysis were taken to its logical extreme, a tenant would not be in breach of a lease until such time as a predicate notice issued declaring the tenant in default.  And if that's the case, would the tenant then be entitled to yet another notice affording it an opportunity to cure or correct the default?

And, pray tell, if a tenant is never formally declared in default, when does the time start to run for statute of limitations purposes?  And, how could a "default" be "waived" by a landlord if the violation's existence has never "ripened," or otherwise been formally acknowledged?

Has our state's highest court added yet another needless layer of complication and confusion to  landlord-tenant relationships by its holding in this case?

Only time will tell.

For a copy of the Court of Appeal's decision in Madison Ave. Leasehold, LLC v. Madison Bentley Assoc. LLC, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_09502.htm

For our prior blog post on this case, please click on the following link: http://www.nyrealestatelawblog.com/2006/05/whens_a_guaranty_not_a_guarant.html

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Anybody can sue you for anything, particularly if you let them. And, according to a recent appellate case, you can even be sued by a company that no longer exists.

In Security Pacific National Bank v. Evans, a defunct bank was permitted to maintain a foreclosure proceeding against a homeowner who had defaulted on a mortgage.

How is that possible, you ask?

Well, ultimately, it all boiled down to the fact that the homeowner failed -- within the context of the case -- to timely object to the bank's status and thereby forfeited the right to question the bank's ability to bring the case.

In 1988, Tracie Evans obtained a loan from First Nationwide Bank, secured by a home mortgage on her cooperative apartment. One year later, this mortgage was assigned to the Security Pacific National Bank (Security Pacific). In 1992, Security Pacific merged with Bank of America National Trust and Savings Association (Bank of America), and Security Pacific ceased operations. After the merger, Evans defaulted on her mortgage. For some unknown reason, the foreclosure proceedings against Evans were commenced in the New York County Supreme Court by the defunct bank (rather than Bank of America). And, on July 21, 1994, the court granted Security Pacific's motion for summary judgment and entered a judgment of foreclosure against Evans.

Apparently, Evans refused to vacate the unit and a holdover proceeding in the New York County Civil Court ensued. Eventually, by stipulation of settlement, dated November 19, 1998, Evans agreed to surrender possession on April 19, 1999. Rather than leave, as represented, Evans moved the Civil Court for an order vacating the agreement on the grounds that the bank lacked the requisite legal ability or "capacity" to maintain a court case against her. When the Civil Court disagreed, Evans returned to Supreme Court and reiterated the "capacity" argument in that forum where the court was of the opinion that the defense had been waived. And, on appeal, the Appellate Division, First Department, concurred. As the AD noted:

The record, however, demonstrates that Evans waived the defense of lack of capacity. The issue of lack of capacity does not implicate the jurisdiction of the court; it is merely a ground for dismissal if timely raised as a defense ... The statute is clear that the defense of lack of capacity must be raised in a pre-answer motion to dismiss or the answer, or else it will be waived ... Here, despite the fact that the merger preceded the commencement of this action, Evans never moved to dismiss based on lack of capacity and never included such defense in her answer. Instead, she first raised the defense four years later in a related holdover proceeding commenced by plaintiff. Based on these undisputed facts, the defense was waived and she is barred from raising it in this action.

In a dissent, two Justices of the Appellate Division were of the opinion that the bank's "defunct" status, deprived the court of "subject matter jurisdiction." As the dissenters observed:

The majority's contention that the Court has jurisdiction because New York Supreme Court is of original, unlimited and unqualified jurisdiction is irrelevant to a resolution of the dispute. While it is true that New York Supreme Court has subject matter jurisdiction over foreclosure brought pursuant to the RPAPL, it is not competent to hear a suit brought by a nonexistent party, foreclosure or not, because there is no aggrieved party and thus no genuine controversy. The court has no subject matter jurisdiction where there is no genuine controversy.

We believe the majority got it right and that "subject matter jurisdiction" was not truly in controversy. (After all, the Supreme Court has the power to hear foreclosure disputes.) The issue was whether Evans had timely objected to an entity's capacity to maintain a lawsuit against her -- a waivable defense. Once waived, a litigant should not be permitted to resurrect "lost" claims or defenses in the guise of a "subject matter jurisdiction" argument. (Such an outcome would render provisions of New York Civil Practice Law and Rules -- such as, CPLR 3211 -- meaningless and ineffective.)

Hopefully, if this case makes it to the state's highest court, the Court of Appeals will afford litigants (and their counsel) some procedural certainty and affirm the AD's decision.

For a copy of the Appellate Division's decision in Security Pacific National Bank v. Evans, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_05721.htm

For our prior blog posts on "subject matter jurisdiction," please use the following links: Tenant Allowed to Challenge HPD's Decision in Housing Court, When Subject Matter Matters, Security Ain't Rent.

Posted by Daniel Finkelstein, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Many companies require their employees--particularly those who have access to "proprietary" or otherwise "sensitive" information--to sign "covenants not to compete," or CNCs. These written agreements acknowledge that the employees have been, or will be, afforded access to "business plans, computer software, confidential concepts, customer lists, data, designs, developments, discoveries, drawings, inventions, marketing plans, methods, pricing and product information, processes, programs, research, sales information, source codes, techniques, trade secrets, vendor lists, and other information (such as, the composition of compounds, formulae, molds, or other company products)" which are not publicly accessible and damaging to the company's interests, reputation, and/or profitability, if released to a competitor, the public, or otherwise used by the employees for their personal advantage or gain.

To discourage that damage--which is typically incapable of a precise determination at the time the document is signed--the agreement will usually consist of the following components:

1) the employee promises not to compete and/or to disclose the designated information;

2) for a paticular time period or term (which may not be of an unreasonable duration);

3) within a delineated geographic area (which may not be overly expansive or onerous);

4) for a certain sum payable to the employee according to the specified terms (and which monies may be forfeited in the event of a breach by the employee); and

5) subject to the availability of "injunctive relief" should the agreement be violated (that is, the employer may seek a court order directing--among other things--the return of the information or prohibiting its dissemination, implementation, or use).

As you can imagine, CNCs are "disfavored" by courts, particularly when "overly broad" or "onerous" in scope. When litigation is commenced, these documents are examined with a critical eye, and may be found unenforceable if perceived to be "oppressive" or enslaving those who have signed same. In other words, courts will give the agreement short shrift if:

it unreasonably limits an employee's ability to earn a living; and/or

the employer's conduct somehow divests the employee of a meaningful choice (such as when an employer creates a work environment intended to induce the employee to leave).

A case in point is Morris v. Schroder Capital Mgt. Intl. & Schroder Inv. Mgt. N. Am. Inc., where the New York State Court of Appeals was asked to determine whether Mr. Morris--who had been affiliated with an investment banking and asset management company, as a "Senior Vice President and head of domestic equities" encharged with overseeing the company's domestic equity research operations--was entitled to collect deferred compensation which was allegedly forfeited when he left the company to establish a "competing" hedge-fund operation.

According to the opinion, Mr. Morris claimed that his departure was "involuntary," triggered by a significant reduction in his employment-related functions and responsibilities. Among other things, Mr. Morris alleged that when the assets under his control were reduced "from approximately $7.5 billion to $1.5 billion," he was of the belief that he "was in a 'dead-end job'" and had been given "no alternative but to resign."

In a question certified to the state's highest court by a federal appellate panel (the United States Court of Appeals of the Second Circuit), the New York State Court of Appeals was asked to determine the "test" to be applied when an employee (subject to a CNC) is involuntarily forced to leave a company. The Court of Appeals concluded that a "constructive discharge test" applied and responded to the question, in pertinent part, as follows:

In cases where an employer intentionally makes the employee's work environment so intolerable that it compels him to leave, [the choice in either preserving his rights under an employment contract by not competing or losing them by engaging in competition] is essentially taken away from the employee. In those instances, an employer should not be permitted to enforce an unreasonable non-compete clause and simultaneously deny the employee his benefit under the guise of the employee choice doctrine ....

Here is how that particular test works:

Under the constructive discharge test, the actions of the employer in creating the intolerable workplace condition must be deliberate and intentional ..., and the atmosphere in the workplace must be so intolerable as to compel a reasonable person to leave ... The constructive discharge test is not met if the employee is simply dissatisfied with a change in his job assignments ....

Since it is unclear from the decision whether the reduction of equities under Morris's direct supervision adversely impacted his job title, salary, and/or seniority, it is difficult to assess--at this juncture--whether Morris forfeited his deferred compensation by engaging in a "competitive" activity or if someone will be "showing him the money" in the foreseeable future.

Fora copy of the Court of Appeals's decision in Morris v. Schroder Capital Mgt. Intl. & Schroder Inv. Mgt. N. Am. Inc. please click upon the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_08638.htm

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

According to a decision released last week by New York State's highest court, your body parts aren't worth much, particularly after you're dead.

In  Colavito v. New York Organ Donor Network, Inc., the family of Peter Lucia sought to donate his kidneys to a friend, Robert Colavito, who suffered from end-stage renal disease.  Peter's spouse, Debra Lucia, consulted with a representative of the New York Organ Donor Network (NYODN) and was advised that the kidneys were "not a perfect match but they [were] good enough."  The appropriate organ donation forms were completed and a single kidney was air-lifted (upon Peter's death) to Miami, Florida where the Colavito transplantation procedure was to take place.

Unfortunately, upon examinaton of the organ, Colavito's physicians concluded that the kidney was an unacceptable match (due to an aneurysm of the renal artery).  When those doctors called to request the second kidney, they were informed by NYODN that the organ had been allocated to another patient earlier that same day.

Colavito's estate representative later commenced a lawsuit in the United States District Court for the Eastern District of New York, alleging "fraud," "conversion," and various violations of New York Public Health Law (which governs "anatomical gifts").  The District Court dismissed the case in its entirety, finding that neither fraud nor conversion could be applied to the facts of this case.  On appeal to the United States Court of Appeals for the Second Circuit, that court agreed that a fraud claim had not been sufficiently alleged, but certified a series of "novel and important questions" to the New York State Court of Appeals.*  Chief among them was whether the intended recipient of a body part could state a cognizable claim for relief under New York law.  Ultimately, the answer was a resounding no.

"When you're dead, you're dead."

Although last week's decision didn't quite phrase it the way our subheading suggests, in effect, that was the message sent to the litigants in this case.  In paragraph after paragraph, the state's highest court repeatedly expressed its reluctance to ascribe "value" to a corpse.  Harking back to the 17th century and the writings of Sir Edward Coke--an English colonialist whose writings on the common law comprised the definitive legal authority for some three centuries--and citing to precedent dating back over 130 years, the court refused to recognize a "property right in a dead body."  Rather, family members have the limited entitlement "to possess the body for purposes of burying it, and a corresponding duty to do so."  While carve-outs (so to speak) have been established for a corpse's "unauthorized desecration" and "disposal," the court was unwilling to take a stab at additional exceptions.  As the court observed:

These decisions have in common the concept of a decent burial for an undesecrated body. We have been careful about characterizing causes of action that impose liability for violating these sensibilities. In all instances, we have disclaimed any reliance on a theory of property rights in a dead body. Later cases in New York have continued to recognize causes of action for improper autopsy or mutilation ..., but none have strayed meaningfully from the doctrine that there is no common law property right in a dead body.

Public Health Law Created No Liability

While New York's Public Health Law governs the grant of "anatomical gifts," and affords a "good-faith immunity" protection to medical professionals who participate in the process, there is arguably an exception for negligent or intentional acts or omissions found in the law.  Colavito's representative argued that the statute created a private cause of action or basis for seeking relief, while NYODN and others argued that the law was inapplicable to "donors or donees." 

Both the Second Circuit and the New York State Court of Appeals grappled with the Public Health Law's lack of clarity but, ultimately, our state's highest court skirted the interpretative dispute by finding that the intended recipient did not "need" the organ and thus failed to trigger a necessary condition precedent. In other words, although Colavito required a functioning kidney, since the organs in question were not a suitable match, no relief under this particular state law was available.

We believe the court should have directly addressed the questions presented.  Although it conceded that the precedent upon which it relied preceded the "age of transplants and other medical advances," it refused to "identify or forecast the circumstances in which someone may conceivably have actionable rights in the body or organ of a deceased person."  We can not fathom why.

Even Sir Edward Coke--an authority upon whom the court relied--is attributed with having written that, "Reason is the life of the law; nay, the common law itself is nothing else but reason ...." We humbly submit that the court's hesitance to interpret the law and confront issues of concern to a modern society flies in the face of reason.

For a copy of the Court of Appeals's decision in Colavito v. New York Organ Donor Network, Inc., please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_09320.htm

Continue reading "WHAT'S YOUR DEAD BODY WORTH?" »

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

We were quite unimpressed and displeased with the December 2006 report issued by “The Judicial Selection Task Force of the Association of the Bar of the City of New York.”  In that thirty-three page document, entitled "Recommendations on the Selection of Judges and the Improvement of the Judicial Selection System in New York State," the City Bar repeatedly opines that the electorate is “uninformed,” judges can be “bought” (or “influenced” by campaign contributors), and, that our political leaders wield a bit too much control over the selection of judicial candidates (and the election of judges). As a result, the City Bar suggests that a “commission-based appointment system” be implemented.

As the report notes:

The Task Force firmly believes that the only effective means of ensuring the uniform selection of highly qualified candidates for judicial office is to provide that those candidates will be selected by an appointing authority from among a limited number of candidates rated as “most qualified” by truly independent judicial screening commissions.  Only by doing so can all candidates compete on a level playing field, regardless of wealth or political connections.  Only then can selections be reliably made from the most qualified candidates.  And only then can we take politics out of the selection of officials whose function in our democracy is to make decisions that are, as Alexander Hamilton put it, free of the “disposition to consult popularity: so that we may truly “justify a reliance that nothing would be consulted by the Constitution and the laws.”

According to the City Bar, judicial appointments should be subject to a screening committee or “commission” comprised of some 15-21 members.  We are expected to believe that these individuals would not be motivated by financial or political self-interest (or other agenda), yet each appointee would be selected by some political entity or being. “The Chief Judge, the Governor, the presiding Justices of each Appellate Division … and the highest ranking members of each party in the Senate and in the Assembly,” would each designate an individual to serve on this commission.

Using the commission's preapproved pool of candidates, the Governor would select appointees to the Supreme Court (outside of New York City), the Court of Claims and the Appellate Divisions. The Mayor of the City of New York would appoint local Supreme Court, Family Court, Surrogate's Court, Civil Court and New York City Criminal Court judges.

How's that for transparency and ending the concentration of power in the hands of a few?

We believe it is contrary to fundamental democratic principles to deny “the people” a direct voice in selecting those who should serve as judges or seek other political office.   Nor do we believe it is appropriate to relegate the screening process to an elite group.

We refuse to accept the report’s premise that voters are incapable of discerning “intellectual capacity, integrity, fairness, independence, experience, [and] temperament,” nor subscribe to the stated belief that the electorate is “poorly informed about the qualifications of judicial candidates for office and are not well suited to evaluate the significance of those qualifications (or the lack of them).”  If we were to accept the Task Force’s position that citizens are incapable of identifying “qualified” candidates for a particular office, then all candidates for any position would arguably need to be subject to some “commission’s” imprimatur or scrutiny.  (After all, can the average voter truly appreciate the range of attributes and life-experiences required to be an effective Mayor, Governor, or President?)

The voters’ ability to make an informed choice should not be replaced or shrouded by  “clubby” secrecy of any kind, and, if ignorance or disinterest prevails, then corrective measures must be implemented on a systemic basis to energize the electorate, foster voter participation, and address any existing “disconnects" or dysfunction. 

We do not believe the rights of concerned citizens to participate actively in the democratic process should be foreclosed, particularly in the manner now being advocated by the City Bar.

To download a copy of the Task Force's report, please click on the following link:  http://www.nyrealestatelawblog.com/Blog~Judicial%20Selection%20Task%20Force%20Report-Dec.%202006.pdf

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

Claude and Daphne Horsford sought to recover a rent-stabilized unit for use by their 24-year old daughter. After a nonjury (bench) trial before a Judge of the Housing Part of the New York County Civil Court, the Horsfords were awarded the apartment based on the court's conclusion that the owners "genuinely intended" to recover the subject premises for their daughter's use.

The Appellate Term affirmed the Housing Part's judgment finding, in part, that the owners did not lack "good faith" solely because there was another available apartment in the building. And, according to that appellate court, the fact that the evidence adduced at trial deviated from the allegations that were contained in the owners' predicate notice was not fatal to the case. As the Appellate Term noted:

Absolute synchronicity between the trial evidence and the allegations set out in a predicate notice is not required.

On further appeal, the Appellate Division, First Department, was not persuaded that the proceeding's outcome was erroneous.

The tenant argued at the AD that the owners had failed to prove their case because the intended occupant (the daughter) did not testify at trial. Although two dissenters (Associate Justices Tom and Andrias) believed that, without the daughter's testimony, any evidence as to the contemplated use comprised "mere speculation," the majority correctly rejected that view.

We are advised that the tenant is pursuing an appeal to the state's highest court. If the law is consistently applied, our guess is that outcome should result in a "trifecta" -- yet another affirmance -- for the landlord. We do not believe there is any reason to impose additional procedural hurdles and hoops particularly when an owner's testimony has been found to be credible and the governing standards -- of "good faith" and "genuine intention" to recapture a stabilized apartment for a family member's use as a primary residence -- have been satisfied.

We can imagine instances when imposing the requirement of additional (cumulative) testimony by the intended occupant -- like a minor or unborn child -- would present undue hardship or effectively negate an owner's ability to commence an owner's-use case. Who would be willing to subject their children to a grueling pre-trial deposition and/or stressful cross-examination at a hearing or trial? Who would speak for the unborn?

We shudder to think of the abuses that await litigants should the Court of Appeals craft new evidentiary standards for these kind of cases and believe the court may want to leave well enough alone.

For a copy of the Appellate Division's decision in Horsford v. Bacott, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_06260.htm

For a copy of the Appellate Term's decision, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2004/2004_51399.htm

Continue reading "PROVING OWNER'S USE" »

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)

If you've ever considered becoming a judge, you may want to think twice. The campaign process is highly regulated and riddled with technicalities. It's so convoluted and complex that all judicial candidates--except those for town or village justice--are required to attend a "judicial ethics education program." The many issues addressed by the program include:

pre-candidacy activities;
endorsements by political parties, caucuses and PACS;
attendance at gatherings;
fundraising;
proper use of campaign funds;
campaign advertising; and
campaign speech.

We were recently able to secure a copy of the "Judicial Campaign Ethics Handbook," which was distributed at one of the training events.

You might be surprised by some of the content. For example, did you know that once a judge is elected, any unexpended campaign funds may be used to purchase "office equipment or furniture" (like "computers, word processors, microphones, telephone answering machines, judicial robes, carpeting, office equipment or office furniture for chambers, video equipment, etc."), and, that these items become the property of the New York State Unified Court System?

According to the Handbook, "Any items so purchased must be specified and donated [by the Judge] in writing to the local District Administrative Judge."

Anyone in the market for a used pink leather couch?

For a copy of the Judicial Campaign Ethics Handbook, please click on the following link:
Judicial Campaign Ethics Handbook

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By the way, the New York City Bar--formerly known as the "Association of the Bar of the City of New York"--is conducting a special program on Saturday, December 2, 2006, entitled "How to Become a Judge." According to promotional materials that have been distributed by the Association, more than 30 state and federal judges will be speaking about: Supreme and Civil Courts, Family and Criminal Courts, Federal Court, Housing Court, Judicial Screening Committees and Judicial Campaign Ethics. The Honorable Philip S. Straniere (Supervising Judge, Richmond County) is program chair, the Honorable Judith Kaye (Chief Judge, New York State Court of Appeals) is the scheduled keynote speaker. The cost for the entire 6 1/2 hour program (which includes lunch) is only $25 for members, $35 for non-members.

For additional information about this special event, please click on the following links: How to Become a Judge or Event Flyer

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Ever wonder what is included in your commercial or residential space when a lease uses the word "premises?" According to the State's highest court, the definition of that term will be governed by the parties' agreement.

In South Road Assoc., LLC v. International Business Machines Corp., a dispute arose as to whether the word "premises" solely encompassed the buildings' interior areas or also included the land upon which the structures had been erected.

IBM occupied several buildings in Poughkeepsie, New York, pursuant to a 1981 lease with its landlord. The agreement described the "premises" in question as follows:

That the Landlord hereby leases to the Tenant and the Tenant hereby hires and takes from the Landlord the space being more particularly shown on the attached floor plan designated Exhibit 'A' (hereinafter called the 'premises') consisting in the aggregate of 113,400 gross square feet in two buildings consisting of 113,400 gross square feet (hereinafter called the 'buildings') situated on real property (hereinafter called the 'land') located at 622 South Road (Route 9), and a Water Tower and appurtenances in the Town of Poughkeepsie, State of New York (her[e]inafter referred to as Buildings 952, 982).

During its tenancy, IBM installed an underground chemical-waste storage tank which leaked and contaminated the site's bedrock, groundwater and soil. While IBM accepted responsibility for the spill and agreed to abate the pollution, the landlord still commenced an action in the Dutchess County Supreme Court alleging IBM had breached its lease by failing to return the premises in "good order and condition."

With respect to that particular obligation, the governing agreement provided that at the end of the lease term:

[T]he Tenant will remove its goods and effects...and will (a) peaceably yield up to the Landlord the premises in good order and condition, excepting ordinary wear and tear, repairs required to be made by the Landlord, or damage, destruction or loss by fire or other casualty or by any other cause...and (b) repair all damage to the premises and the fixtures, appurtenances and equipment of the Landlord therein, and to the building, caused by the Tenant's removal of its furniture, fixtures, equipment, machinery and the like and the removal of any improvements or alterations.

When the parties moved for summary judgment--that is, a judicial decision deciding the case based solely on the papers presented by the litigants, without the need for a formal evidentiary hearing or trial--the Dutchess County Supreme Court found in the landlord's favor. The Appellate Division, Second Department, reversed concluding that the "clear and unambiguous" language of the parties' lease limited the encompassed space to the building's interior areas and could not "be construed to include the surrounding soil and groundwater." On appeal, the New York State Court of Appeals sided with the Appellate Division and concluded as follows:

Since the meaning of "premises" is clear and unambiguous in the lease, extrinsic evidence such as the conduct of the parties may not be considered. IBM's conduct--placing underground storage tanks in the surrounding land and cleaning the resulting pollution--is not sufficient to create an ambiguity in the lease where the language is clear...The contract, read as a whole, clearly and consistently uses the term "premises" to refer only to interior space and we cannot rely on extrinsic evidence to find otherwise.

Clearly, by this decision, the state's highest court is cautioning all parties to a lease to ensure that their agreements are appropriately premised.

For a copy of the Court of Appeals's decision in South Road Assoc., LLC v. International Business Machines Corp., please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2005/2005_02414.htm

For a copy of the Appellate Division's decision in this case, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2003/2003_19986.htm

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Several month ago, we analyzed a negligence claim made by Nicole Ziegelmeyer, a two-time Olympic Speed Skating medal winner. As we reported back on July 17, 2006, [Olympic Skater Denied Thrill of Victory], Ms. Ziegelmeyer was preparing for the Nagano Winter Games at a skating facility operated by the United States Olympic Committee (USOC) in Lake Placid, New York, when she fell, hit the fiberglass boards surrounding the rink, and incurred serious spinal injuries.

In her lawsuit, Ziegelmeyer claimed entitlement to compensation on the ground that the USOC--and others--had failed to properly install protective padding. However, the Green County Supreme Court did not agree and granted the USOC's motion to dismiss the skater's case, finding that Ms. Ziegelmeyer had assumed the risk of injury by engaging in the sport. After the Appellate Division, Third Department, affirmed the dismissal on appeal, Ziegelmeyer then perfected her case to the New York State Court of Appeals.

For those of you who did not catch our original post, here's how we gauged