Sneaky Sneaky

 

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Rojas v Romanoff, 2020 NY Slip Op 04237 [1st Dept. 2020]

To be sure, in the prior declaratory judgment action, in this case, for some unexplained reason, the motion court declared that plaintiff’s default meant not only that the insurer, Nationwide, was not obligated to pay no-fault benefits, but also that Nationwide was not obligated “to afford any bodily injury coverage to [plaintiff] . . . [for] personal injury stemming from the alleged September 15, 2016 accident.” The second part of that holding, however, — that Nationwide was not obligated to pay plaintiff coverage for any bodily injury damages arising from the subject accident — is irrelevant to whether claim preclusion applies to the current personal injury action.

The reason, of course, is that it was included in the proposed order [¶ 8].

3215 Denied

Here, the lower court denied the unopposed motion for a default judgment because “Here, accepting all of the facts that plaintiff asserts as true, they provide at best, some circumstantial evidence that a fraud may have occurred”.  Insurers consistently argue that circumstantial evidence is sufficient to satisfy their burden at trial, in a summary judgment motion, or in an arbitration to show that the accident was not a true accident.  In this case the Appellate Division held otherwise.  Even in an unopposed motion for a default judgment where the burden is lower and easier to satisfy, the insurer must prove that that the accident was not a true accident and not merely that they have a reason to believe it was not a true accident.

Ameriprise Ins. Co. v Kim, 2020 NY Slip Op 04286 [2d Dept. 2020]

“A plaintiff seeking leave to enter a default judgment must file proof of proper service of the summons and the complaint, the defendant’s default, and the facts constituting the claim” (Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC, 153 AD3d 606, 606; see CPLR 3215[f]). ” [A] default judgment in a declaratory judgment action will not be granted on the default and pleadings alone for it is necessary that [the plaintiff] establish a right to a declaration'” against the defendants (JBBNY, LLC v Dedvukaj, 171 AD3d 898, 902, quoting Dole Food Co., Inc. v Lincoln Gen. Ins. Co., 66 AD3d 1493, 1494; see Merchants Ins. Co. of N.H. v Long Is. Pet Cemetery, 206 AD2d 827, 828).

Here, while the plaintiff submitted proof of proper service of the summons and the complaint, the non-answering defendants’ default, and the facts constituting the plaintiff’s claim, the plaintiff’s submissions in support of the motion failed to establish its right to the declarations sought (see JBBNY, LLC v Dedvukaj, 171 AD3d at 903). As such, we agree with the Supreme Court’s determination denying that branch of the plaintiff’s motion which was for leave to enter a default judgment against the non-answering defendants.

On appearing and defaulting

Deutsche Bank Natl. Trust Co. v Hall, 2020 NY Slip Op 04292 [2d Dept. 2020]

 

As relevant here, “[a]n action is commenced by filing a summons and complaint” (CPLR 304[a]). “A plaintiff appears in an action merely by bringing it” (Siegel & Connors, NY Prac § 110 [6th ed Dec. 2019 Update]). “The defendant appears by serving an answer or a notice of appearance, or by making a motion which has the effect of extending the time to answer” (CPLR [*2]320[a]). Where, as here, service was effected pursuant to CPLR 308(2), “the [defendant’s] appearance shall be made within thirty days after service is complete” (CPLR 320[a]; see CPLR 3012[c]).

“After having been served with process, the defendant who wants to avoid a default must respond in a proper and timely manner” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:1). “Subdivision (a) of CPLR 320 specifies three ways by which the defendant can appear in the action: (1) service of an answer; (2) making a motion which has the effect of extending the time to answer; or (3) serving a notice of appearance” (id.).

“The answer, of course, is defendant’s pleading in response to a complaint” (id.see CPLR 3011, 3018). “A defendant who has defaulted in answering admits all traversable allegations in the complaint, including the basic allegation of liability” (Glenwood Mason Supply Co., Inc. v Frantellizzi, 138 AD3d 925, 926; see Rokina Opt. Co. v Camera King, 63 NY2d 728, 730; Cole-Hatchard v Eggers, 132 AD3d 718, 720).

Service of a notice of motion to dismiss a complaint pursuant to CPLR 3211(a) extends a defendant’s time to answer the complaint (see CPLR 3211[f]). Such a motion must be made “before service of the responsive pleading is required” (CPLR 3211[e]), or it is untimely (see Bennett v Hucke, 64 AD3d 529, 530).

Finally, a notice of appearance is “a simple document that notifies the plaintiff that defendant is appearing in the action” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:1). A notice of appearance “is the response generally reserved for the situation in which the plaintiff’s process consisted of a summons with notice as authorized by CPLR 305(b)” (id.). “Service of a notice of appearance will avoid a default, at least temporarily, and put the plaintiff to the task of serving a complaint within 20 days” (id.see CPLR 3012[b]). Under those circumstances, “[a]fter the complaint has been served, the defendant, within 20 days, should either serve an answer or make a motion that extends the time to answer” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:1; see CPLR 3012[a]).

A defendant’s failure to respond to a summons and complaint within the required time “amounts to what CPLR 3215 . . . calls a failure to appear” (Siegel & Connors, NY Prac § 293; see U.S. Bank N.A. v Gilchrist, 172 AD3d 1425, 1427). “When a defendant has failed to appear . . . the plaintiff may seek a default judgment against him [or her]” (CPLR 3215[a]).

“On a motion for leave to enter a default judgment against a defendant based on the failure to answer or appear, a plaintiff must submit proof of service of the summons and complaint, proof of the facts constituting the cause of action, and proof of the defendant’s default” (L & Z Masonry Corp. v Mose, 167 AD3d 728, 729; see CPLR 3215[f]; Liberty County Mut. v Avenue I Med., P.C., 129 AD3d 783, 784-785). “To defeat a facially sufficient CPLR 3215 motion, a defendant must show either that there was no default, or that [he or she] had a reasonable excuse for [his or her] delay and a potentially meritorious defense” (Liberty County Mut. v Avenue I Med., P.C., 129 AD3d at 785; see Clarke v Liberty Mut. Fire Ins. Co., 150 AD3d 1192, 1195).

In this case, the plaintiff submitted evidence which showed that Hall had been served with the summons and complaint pursuant to CPLR 308(2), and that he failed to appear or answer within the time allowed. In addition, the plaintiff submitted evidence demonstrating that it was entitled to foreclose the subject mortgage due to Hall’s default in repaying the subject loan.

In opposition to the plaintiff’s prima facie showing, Hall first contends that he did not default in appearing. In this regard, Hall asserts that he made an “informal appearance” during the course of this action and was, therefore, not in default. He contends that “even if [an] informal appearance’ is made after the expiration of the time to answer or move specified in CPLR 320(a) . . . judgment by default is precluded.” Hall’s contention is without merit.

It is true that “[i]n addition to the formal appearances listed in CPLR 320(a), the law continues to recognize the so-called informal’ appearance” (Siegel & Connors, NY Prac § 112). “It comes about when the defendant, although not having taken any of the steps that would officially constitute an appearance under CPLR 320(a), nevertheless participates in the case in some way relating to the merits” (id.).

Although “an informal appearance can prevent a finding that the defendant is in default, thereby precluding entry of a default judgment” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:4), this is only true when the participation constituting the informal appearance occurred within the time limitations imposed for making a formal appearance (see Taylor v Taylor, 64 AD2d 592, 592; see also Jeffers v Stein, 99 AD3d 970, 971; Stewart v Raymond Corp., 84 AD3d 932, 933; Parrotta v Wolgin, 245 AD2d 872, 873). Indeed, even service of a formal “notice of appearance will not protect the defendant from entry of a default judgment if, after service of the complaint, the defendant does not timely make a CPLR 3211 motion or serve an answer” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:1). Accordingly, an informal appearance, without more, does not somehow absolve a defendant from complying with the time restrictions imposed by CPLR 320(a) which govern the service of an answer or the making of a motion pursuant to CPLR 3211 (see CPLR 3215[a]; U.S. Bank N.A. v Slavinski, 78 AD3d 1167, 1167). Contrary to Hall’s contention, this Court has never held otherwise; to do so would effectively eliminate any need for compliance with the time limitations imposed by CPLR 320(a), and render those statutory provisions meaningless for all practical purposes (see City of Newburgh v 96 Broadway LLC, 72 AD3d 632, 633; Carlin v Carlin, 52 AD3d 559, 560-561; cf. CPLR 3215[a]).

Hall next contends that he successfully rebutted the plaintiff’s evidence regarding service pursuant to CPLR 308(2). However, “[a] defendant may waive the issue of lack of personal jurisdiction by appearing in an action, either formally or informally, without raising the defense of lack of personal jurisdiction in an answer or pre-answer motion to dismiss” (Cadlerock Joint Venture, L.P. v Kierstedt, 119 AD3d 627, 628; see Taveras v City of New York, 108 AD3d 614, 617). Here, as Hall himself argues, he engaged in significant activity after his statutory time to answer had expired, which amounted to an informal appearance. This activity was sufficient to warrant a finding that Hall had acknowledged the jurisdiction of the court without preserving his objection based on improper service (see Taveras v City of New York, 108 AD3d at 617-618; Finn v Church for the Art of Living, Inc., 90 AD3d 826, 827; Matter of Sessa v Board of Assessors of Town of N. Elba, 46 AD3d 1163, 1166; see also Deutsche Bank Natl. Trust Co. v Vu, 167 AD3d 844, 846; U.S. Bank N.A. v Pepe, 161 AD3d 811, 813). Accordingly, Hall waived any objection on the ground of lack of personal jurisdiction (see HSBC Bank USA, N.A. v Taub, 170 AD3d 1128, 1130).

Finally, Hall contends that the Supreme Court should have denied the plaintiff’s motion and granted his cross motion to dismiss because the plaintiff lacked standing to commence this action, the plaintiff failed to comply with RPAPL 1304, and the action was barred by the doctrine of res judicata. Hall argues that “inasmuch as [he] has neither filed a motion to dismiss under CPLR 3211(a) nor an answer, there has been no waiver of any affirmative defenses.” Again, Hall’s argument is without merit.

A motion to dismiss a complaint pursuant to CPLR 3211(a) may be based on various grounds, including, as relevant here, lack of standing, failure to comply with RPAPL 1304, or res judicata (see CPLR 3211[a][1]-[11]; Bank of N.Y. Mellon Trust Co., NA v Obadia, 176 AD3d 1020, 1021). A defendant may also choose to interpose those defenses in an answer (see generally Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, CPLR C320:1). However, a defendant’s right to interpose a defense is subject to the time limitations imposed by CPLR 320 (see e.g. U.S. Bank N.A. v Gilchrist, 172 AD3d at 1427-1428). Accordingly, where the plaintiff has demonstrated, prima facie, that a defendant is in default because he or she “failed to appear” within the meaning of CPLR 3215(a), that defendant is generally precluded from raising any nonjurisdictional defense without first rebutting the prima facie showing of default (see First Franklin Fin. Corp. v Alfau, 157 AD3d 863, 865; Nationstar Mtge., LLC v Kamil, 155 AD3d 968, 968; Fried v Jacob Holding, Inc., 110 AD3d 56, 60; cf. CPLR 5015[a]), and obtaining leave to serve a late answer (see CPLR 3012[d]). This is true, even if the nonjurisdictional defense “may be raised [*4]at any time” (Flagstar Bank, FSB v Jambelli, 140 AD3d 829, 830; see HSBC Bank USA, N.A. v Hasis, 154 AD3d 832, 834; PHH Mtge. Corp. v Celestin, 130 AD3d 703, 704), and regardless of whether it is exempt from the waiver provisions of CPLR 3211(e) (see Deutsche Bank Natl. Trust Co. v Ford, 183 AD3d 1168see also JPMorgan Chase Bank, N.A. v Carducci, 67 Misc 3d 561 [Sup Ct, Westchester County]; cf. RPAPL 1302-a). Here, the plaintiff demonstrated, prima facie, that Hall was in default for failing to appear within the meaning of CPLR 3215(a). Hall was thus required to rebut that showing and demonstrate that he should be relieved of the consequences of his default (see Gerster’s Triple E. Towing & Repair, Inc. v Pishon Trucking, LLC, 167 AD3d 1353, 1355-1356; cf. CPLR 3012[d]; 5015[a]). Hall failed to sustain this burden. Accordingly, he is precluded from raising lack of standing, failure to comply with RPAPL 1304, or res judicata as defenses to this action (see U.S. Bank N.A. v Gilchrist, 172 AD3d at 1427-1428; HSBC Bank USA, N.A. v Hasis, 154 AD3d at 834; Bank of N.Y. Mellon v Izmirligil, 144 AD3d 1067, 1069). Inasmuch as those defenses were never properly raised by Hall, the plaintiff was not required to disprove them to obtain the relief it sought in its motion (see Flagstar Bank, FSB v Jambelli, 140 AD3d at 830; U.S. Bank N.A. v Carey, 137 AD3d 894, 895-896).

Accordingly, we agree with the Supreme Court’s determination granting the plaintiff’s motion for leave to enter a default judgment against the defendants and to appoint a referee to compute the sums due and owing to the plaintiff, and denying Hall’s cross motion to dismiss the complaint insofar as asserted against him.

The bold is mine.

You can stip to whatever you want

Bermejo v New York City Health & Hosps. Corp., 2020 NY Slip Op 03212 [2d Dept. 2020]

Like any other contract, a stipulation of settlement is enforceable according to its terms, and when the terms of the stipulation are unambiguous, a court will give effect to the parties’ intent based upon the plain meaning of the words they used (see Matter of Legion of Christ, Inc. v Town of Mount Pleasant, 151 AD3d 858, 859-860; Long Is. Jr. Soccer League v Back of the Net, Ltd., 85 AD3d 737, 737-738). Among other things, a party may, by stipulation, agree to withdraw a pending request for relief (see Legion of Christ, Inc. v Town of Mount Pleasant, 151 AD3d at 859; Matter of Melanie K. [Dolores F.], 133 AD3d 756), or waive the right to pursue a specific legal remedy (see Cervera v Bressler, 126 AD3d 924, 924-925). This is precisely what occurred here.

Contrary to the appellants’ contention, neither this Court’s administrative denial of the request by the plaintiff and the appellants to withdraw the prior appeal, nor the ensuing opinion and order on the prior appeal, can be construed as invalidating or overriding in any way the terms of the stipulation of settlement. More importantly, the appellants themselves have not sought to invalidate the stipulation of settlement (see Hallock v State of New York, 64 NY2d 224, 230). Rather, they want to retain the full benefit of their financial bargain, while selectively reviving their previously waived right to seek an award of costs against the plaintiff’s counsel. This they cannot do.

The bold is mine.

Necessary parties

Lewis v Holliman, 176 AD3d 1048 [2d Dept. 2019]

However, we take judicial notice of the public land records and the record in a related appeal currently pending in this Court reflecting that, prior to the entry of the judgment, nonparty US Bank, National Association, was the mortgagee of record of a mortgage on the subject property (see Matter of Siwek v Mahoney, 39 NY2d 159, 163 n 2 [1976]; Chateau Rive Corp. v Enclave Dev. Assoc., 22 AD3d 445, 446-447 [2005]). Contrary to the plaintiff’s contention, the plaintiff was required to join US Bank, National Association, as a necessary party to this action (see CPLR 1001; Menorah Home & Hosp. for Aged & Infirm v Jelks, 61 AD3d 648, 649 [2009]). The plaintiff’s failure to do so requires that the judgment be reversed and Reeves’s motion to vacate the order dated October 15, 2015, be granted (see Menorah Home & Hosp. for Aged & Infirm v Jelks, 61 AD3d at 650).

Matter of Cabrera v City of New York Civ. Serv. Commn., 181 AD3d 540 [1st Dept. 2020]

Petitioner, in his brief, does not address the court’s dismissal of the petition for failing to join necessary parties and has thus abandoned any challenge to the court’s dismissal on that basis (see Matter of Eilenberg v City of New York, 162 AD3d 457 [1st Dept 2018]). In any event, the court properly determined that DOC was a necessary party to this proceeding, as petitioner sought relief against the DOC, and the DOC might have been inequitably affected by a judgment in the proceeding (see CPLR 1001 [a]; Matter of Centeno v City of New York, 115 AD3d 537 [1st Dept 2014]; Matter of Watkins v New York City Dept. of Educ., 48 AD3d 339, 340 [1st Dept 2008], lv denied 10 NY3d 713 [2008]).

The bold is mine.

Stipulation by email

Teixeira v Woodhaven Ctr. of Care, 173 AD3d 1108 [2d Dept. 2019]

CPLR 2104 states, in relevant part, that “[a]n agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him [or her] or his [or her] attorney or reduced to the form of an order and entered.” Furthermore, “[t]o be enforceable, a settlement agreement must set forth all material terms, and there must be [a] clear mutual accord between the parties” (Martin v Harrington, 139 AD3d 1017, 1018 [2016]; see Little v County of Nassau, 148 AD3d 797, 798 [2017]; De Well Container Shipping Corp. v Mingwei Guo, 126 AD3d 846, 847 [2015]). An email that merely confirms a purported settlement is not necessarily sufficient to bring the purported settlement into the scope of CPLR 2104 (see DeVita v Macy’s E., Inc., 36 AD3d 751, 751 [2007]). However, where “an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement” (Forcelli v Gelco Corp., 109 AD3d 244, 251 [2013]; see Kataldo v Atlantic Chevrolet Cadillac, 161 AD3d 1059, 1060 [2018]). Here, contrary to the defendant’s contention, the email exchange between counsel did not evidence a clear mutual accord, as the language used by the plaintiff’s counsel, “consider it settled,” is followed by a discussion of further occurrences necessary to finalize the agreement. Accordingly, we agree with the Supreme Court’s denial of that branch of the defendant’s motion which was pursuant to CPLR 2104 to enforce the purported settlement agreement.

Borrowing statute (and sanctions)

Errant Gene Therapeutics, LLC v Sloan-Kettering Inst. for Cancer Research, 182 AD3d 506 [1st Dept. 2020]

Contrary to Bluebird’s contention, plaintiff’s unfair competition claim is timely. Since plaintiff is a resident of Illinois and it allegedly suffered damage in Illinois, where it does business, New York’s borrowing statute applies for statute of limitations purposes (CPLR 202). Under CPLR 202, plaintiff’s unfair competition claim must be timely under the shorter of New York and Illinois’ statute of limitations for unfair competition claims. In New York, plaintiff’s unfair competition claim is subject to a six-year statute of limitations because it is based on fraud (see Mario Valente Collezioni, Ltd. v AAK Ltd., 280 F Supp 2d 244, 258 [SD NY 2003]; see generally Katz v Bach Realty, 192 AD2d 307 [1st Dept 1993]). In Illinois, plaintiff’s unfair competition claim is subject to a five-year statute of limitations and it accrues when plaintiff either knew or should have known of the existence of the right to sue (Henderson Sq. Condominium Assn. v LAB Townhomes, LLC, 2015 IL 118139, 46 NE3d 706 [2015]). Thus, under CPLR 202, Illinois’ five-year statute of limitations applies to plaintiff’s unfair competition claim. Under that statute of limitations, the unfair competition claim is timely because it accrued less than five years before plaintiff commenced the action on January 27, 2017. Initially, there is no evidence that plaintiff discovered or could have discovered that Bluebird was engaging in fraudulent behavior, allegedly aimed at destroying plaintiff and controlling the market for a gene therapy treatment, prior to January 27, 2012. Plaintiff asserts that it did not discover the facts underlying Bluebird’s alleged fraudulent behavior until documents were produced in discovery in a separate litigation in June 2016. Moreover, at the earliest, plaintiff could have discovered Bluebird’s alleged fraudulent behavior in September 2012, when Bluebird circulated a presentation it had given in which it discussed the intellectual property that plaintiff alleges it copied. Bluebird’s assertion that the claim is untimely because plaintiff knew of the facts underlying its unfair competition claim as early as 2010 and 2011 based on emails sent by plaintiff’s CEO is without merit. The emails referenced by Bluebird merely demonstrate plaintiff’s suspicion that Bluebird was acting fraudulently, not that plaintiff had discovered or could have discovered the facts underlying its claim.

The court providently exercised its discretion in denying Bluebird’s motion to hold plaintiff in contempt after a hearing (see Matter of McCormick v Axelrod, 59 NY2d 574, 583 [1983]). However, the court improvidently exercised that discretion in awarding sanctions against Bluebird, because, among other reasons, Bluebird’s contempt motion was not so clearly meritless as to be deemed frivolous, and the court failed to satisfy the procedural requirements of 22 NYCRR 130-1.2 (see Gordon Group Invs., LLC v Kugler, 127 AD3d 592, 595 [1st Dept 2015]).

The bold is mine.

On dismissals and 5019

B & H Fla. Notes LLC v Ashkenazi, 182 AD3d 525 [1st Dept. 2020]

Defendant Amit Louzon argues correctly that the court’s vacatur of its April 9, 2019 order dismissing the action with prejudice and issuance of an order dismissing the action without prejudice was procedurally improper, because the substitution of “without prejudice” for “with prejudice” is a substantive revision (see CPLR 5019 [a]; Johnson v Societe Generale S.A., 94 AD3d 663, 664 [1st Dept 2012]). However, on appeal from the judgment (which brings up for review the order [CPLR 5501]), the parties dispute whether the action should be dismissed with or without prejudice, and we find that the action was correctly dismissed without prejudice, because the dismissal is based on lack of standing, not on the merits (Landau, P.C. v LaRossa, Mitchell & Ross, 11 NY3d 8, 13-14 [2008]; Wells Fargo Bank, N.A. v Ndiaye, 146 AD3d 684 [1st Dept 2017]).

Experts and hearsay

East Fordham DE LLC v U.S. Bank N.A., 182 AD3d 521 [1st Dept. 2020]

Contrary to defendants’ contention, Supreme Court’s reliance on the Dictionary of Real Estate Appraisal was appropriate “to determine the plain and ordinary meaning of words to a contract” (Lend Lease [US] Constr. LMB Inc. v Zurich Am. Ins. Co., 136 AD3d 52, 57 [1st Dept 2015], affd 28 NY3d 675 [2017]). Further, the appraisal reports were correctly admitted into evidence, as an expert’s “opinion may be received in evidence even though some of the information on which it is based is inadmissible hearsay, if the hearsay is ‘of a kind accepted in the profession as reliable in forming a professional opinion, or if it comes from a witness subject to full cross-examination on . . . trial’ ” (Matter of Chi-Chuan Wang, 162 AD3d 447, 449 [1st Dept 2018]; see also Matter of New York State Dev. Corp. v 230 W. 41st St. Assoc. LLC, 77 AD3d 479, 480 [1st Dept 2010], lv denied 16 NY3d 703 [2011])

Bold is mine.

Article 75 standard of review

Matter of Rose Castle Redevelopment II, LLC v Franklin Realty Corp., 2020 NY Slip Op 03293 [1st Dept. 2020]

Under CPLR 7511(b)(1), “[a]n arbitration award must be upheld when the arbitrator offers even a barely colorable justification for the outcome reached” (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006] [internal quotation marks and brackets omitted]), and “an arbitrator’s award will not be vacated for errors of law and fact” (Matter of Sprinzen [Nomberg], 46 NY2d 623, 629 [1979]; see also Azrielant v Azrielant, 301 AD2d 269, 275 [1st Dept 2002], lv denied 99 NY2d 509 [2003] [“An arbitrator’s award will be confirmed if any plausible basis exists for the award”] [internal quotation marks omitted]; Johnston v Johnston, 161 AD2d 125, 128 [1st Dept 1990] [“Courts will not set aside arbitration awards even where the factual findings or the legal conclusions of the arbitrator are unsound”]).