Sumry Judments with a little RJ and JE, all in the 1st Department. One bit of EE in the 2nd.

CPLR R. 3212

Lance Intl., Inc. v First Natl. City Bank, 2011 NY Slip Op 05982 (1st Dept., 2011) 

Contrary to defendant's contention, its defense is that plaintiff lacks capacity to sue, not that the court lacks subject matter jurisdiction (see Security Pac. Natl. Bank v Evans, 31 AD3d 278, 279-280 [2006], appeal dismissed 8 NY3d 837 [2007]). Contrary to plaintiff's contention, Civil Court did not raise the issue of lack of capacity sua sponte.

While a defense that a party lacks capacity to sue (see CPLR 3211[a][3]) is waived if not raised in a pre-answer motion or in a responsive pleading (see CPLR 3211[e]), plaintiff's lack of capacity did not arise until after joinder of issue, and therefore, defendant did not waive that defense (see George Strokes Elec. & Plumbing v Dye, 240 AD2d 919, 920 [1997]).

A defendant may move for summary judgment based on an unpleaded defense (see e.g. Rogoff v San Juan Racing Assn., 54 NY2d 883, 885 [1981]). Plaintiff can hardly claim prejudice or surprise from defendant's assertion that it lacked capacity to sue. In 1995, it moved to substitute its president as the plaintiff, arguing that he was "the real party in interest by virtue of the dissolution of the corporation."

Defendant's underlying motion for summary judgment was timely (see CPLR 3212[a]). Plaintiff has supplied no proof in the record that Civil Court required defendant to file its summary judgment motion by July 21, 2008. Even if, arguendo, one judge of the Civil Court ordered defendant to file its motion by July 21, 2008, this order was superseded by the parties' October 16, 2008 stipulation, which set a briefing schedule for the motion and was so-ordered by another judge of the Civil Court.

Plaintiff's original note of issue, which was filed on October 19, 2007, "was, in effect, nullifed" (Negron v Helmsley Spear, Inc., 280 AD2d 305 [2001]) when the action was removed from the trial calendar. Therefore, the operative note of issue is the one filed on April 25, 2008 (see Williams v Peralta, 37 AD3d 712, 713 [2007]), and the motion was timely.

Montolio v Negev LLC, 2011 NY Slip Op 05985 (1st Dept., 2011)

Furthermore, although Negev's answer is contained in the record, it is verified only by counsel. The motion also is supported only by counsel's affirmation; no submission was made by anyone with personal knowledge (Lopez v Crotona Ave. Assoc., LP, 39 AD3d 388, 390 [2007]).


RJ and JD


UBS Sec. LLC v Highland Capital Mgt., L.P., 2011 NY Slip Op 05979 (1st Dept., 2011)

The parties appealed, presenting us with the question whether and to what extent the doctrine of res judicata applies to these circumstances. The doctrine dictates that, "as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action" (Gramatan Home Inv. Corp. v Lopez, 46 NY2d 48l, 485 [1979]). It used to be the rule that, even if the two actions arose out of an identical course of dealing, the second was not barred by res judicata if "the requisite elements of proof and hence the evidence necessary to sustain recovery var[ied] materially" (Smith v Kirkpatrick, 305 NY 66, 72 [1953]). However, the Court of Appeals expressly rejected that method of analysis in O'Brien v City of Syracuse (54 NY2d 353 [1981]). There it held that "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy" (54 NY2d at 357). The Court further stated: 

"[w]hen alternative theories are available to recover what is essentially the same relief for harm arising out of the same or related facts such as would constitute a single factual grouping' (Restatement, Judgments 2d, § 61 [Tent Draft No. 5]), the circumstance that the theories involve materially different elements of proof will not justify presenting the claim by two different actions" (id. at 357-358).

Notably, regarding this point, the Court stated in a footnote that, insofar as Smith (305 NY at 66) "may be to the contrary, it is overruled" (id.). Whether facts are deemed to constitute a single factual grouping for res judicata purposes "depends on how the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether . . . their treatment as a unit conforms to the parties' expectations or business understanding or usage" (Smith v Russell Sage Coll., 54 NY2d 185, 192-193 [1981] [internal quotation marks and citations omitted]).

Here, to the extent the claims against Highland in the new complaint implicate events alleged to have taken place before the filing of the original complaint, res judicata applies. That is because UBS's claims against Highland in the original action and in this action all arise out of the restructured warehousing transaction. While the claim against Highland in the original action was based on Highland's alleged obligation to indemnify UBS for actions taken by the affiliated funds, and the claims against Highland in the second action arose out of Highland's alleged manipulation of those funds, they form a single factual grouping. Both are related to the same business deal and to the diminution in the value of the securities placed with UBS as a result of that deal. Thus, the claims form a convenient trial unit. Moreover, it can hardly be said that the claims in the two actions are so unrelated that reasonable business people, not to mention the parties themselves, would have expected them to be tried separately (see Smith, 54 NY2d at 192-193). Also, we note that, when seeking permission to amend the complaint, UBS itself asserted that "the new causes of action arise out of the same or related circumstances and events as UBS's pending claims."

Further, the Court of Appeals' holding in Xiao Yang Chen v Fischer (6 NY3d 94 [2005]) [*6]does not support UBS's position. Nor does it represent a shift in res judicata jurisprudence, as UBS argues. The circumstances of this case bear no resemblance to those in Xiao Yang Chen, which involved a woman who, in a previously filed separate action, was granted a divorce on the ground of cruel and inhuman treatment. In the divorce action, the plaintiff supported her cruel and inhuman treatment claim with an allegation that her husband had slapped her, causing injury. While the divorce action was pending, the plaintiff commenced a separate personal injury action seeking damages for the intentional infliction of emotional distress and injuries arising out of the alleged assault. In finding that res judicata did not bar the personal injury action, the Court of Appeals noted that the two actions sought different types of relief and did not constitute a convenient trial unit. The Court of Appeals also noted other significant distinctions, such as the facts that divorce actions are typically decided by a judge and that attorneys in personal injury actions may be compensated by a contingency fee, and the policy consideration of expediting divorce proceedings. None of those considerations applies here, where the action seeks money damages arising only in connection with a commercial transaction. 

While we have concluded that res judicata bars the claims in this action, we still must address UBS's assertion that it would be fundamentally unfair to apply res judicata under the circumstances of this case. UBS bases this argument primarily on the contention that it would have moved to amend the complaint in the original action while that action was still in existence (i.e., before this Court dismissed it), but for the necessity that it comply with the Commercial Part rules requiring that it first seek permission in a letter. However, this argument fails because, even had they made such a motion, the ultimate result would have been the same. As evidenced by the affidavit of its former employee, UBS was aware of the facts that support the claims in this action as long ago as November 2008. That was before UBS filed the original action.

Indeed, the evidence that the former employee admits had been gathered by UBS at that time supports all the claims asserted against Highland in this action. That UBS received additional evidence in the document production that Highland made shortly before UBS sought to amend its complaint is irrelevant. The proper inquiry for res judicata purposes is when UBS could have raised a cause of action, not when it had enough evidence to prove the claim at trial (see Castellano v City of New York, 251 AD2d 194, 195 [1998], lv denied 92 NY2d 817 [1998], cert denied 526 US 1131 [1999]). In this regard, we note that, based on what it admits it knew in November 2008, UBS could have pleaded its fraud claim with the requisite particularity at that time, since the facts available would have permitted a "reasonable inference of the alleged conduct" (Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 492 [2008]). Because UBS could have asserted the instant claims in the original complaint or moved to amend well before that complaint was dismissed by this Court, we are not persuaded that the Rules of the Commercial Part affected the eventual result. Nevertheless, to the extent that the third and fourth causes of action, alleging breach of the covenant of good faith and fair dealing and fraudulent conveyance, respectively, rely on conduct alleged to have occurred after the commencement of the prior action, such claims should be allowed.

Nor do we share the motion court's concern that it is unfair to apply res judicata where Highland remains a party to the action by dint of its counterclaims. It would likewise be unjust to hold that a defendant that chooses to assert a counterclaim forfeits its right to assert the defense of res judicata with respect to the main claims. Indeed, to so hold would deal a blow to judicial economy since counterclaims are not compulsory in New York (67-25 Dartmouth St. Corp. v Syllman, 29 AD3d 888, 889 [2006]), and defendants would merely assert their own [*7]claims in separate actions to avoid the application of res judicata.

Kvest LLC v Cohen, 2011 NY Slip Op 05984 (1st Dept., 2011)

Plaintiff is not barred by the doctrine of judicial estoppel from asserting that the disclaimer is valid because it did not prevail in the declaratory judgment action (see Rothstein & Hoffman Elec. Serv., Inc. v Gong Park Realty Corp., 37 AD3d 206, 207 [2007], lv denied 8 NY3d 812 [2007]; Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168, 176 [1998], lv dismissed 92 NY2d 962 [1998]). However, contrary to plaintiff's argument, the doctrine of collateral estoppel does not bind defendants to the declaratory judgment court's determination that defendants did not timely notify the carrier of the claim letter. Defendants were not parties to that action. The doctrine of collateral estoppel is binding only upon parties or their privies who have had a full and fair opportunity to litigate issues determined in prior proceedings (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485-486 [1979]).

Defendants state in their affidavit that they mailed a copy of the claim letter to the carrier [*2]on May 6, 2004, two days after they received it from plaintiff. However, a notice of occurrence/claim form prepared by defendants on October 2, 2004 indicates that the claim had not previously been reported. This raises a triable issue of fact as to whether defendants timely notified the carrier of the claim letter. 

Contrary to defendants' assertion, the damages recoverable in this action can include plaintiff's reasonable attorneys' fees incurred in defending the carrier's declaratory judgment action in its effort to mitigate its damages (see Martini v Lafayette Studio Corp., 273 AD2d 112, 114 [2000]). On the other hand, the breach of fiduciary duty cause of action was properly dismissed as the facts establish that the parties had nothing more than a typical insurance broker-customer relationship (see e.g. Murphy v Kuhn, 90 NY2d 266, 270-271 [1997]).

Equitable estoppel

Giannetto v Knee, 82 AD3d 1043 (2nd Dept. 2011)

The Supreme Court erred, however, in granting that branch of the defendants' motion which was for summary judgment dismissing the malpractice cause of action against Knee on the basis of the statute of limitations. Although the defendants established, prima facie, that the action was commenced well beyond the 2½-year statute of limitations applicable to claims alleging dental malpractice (see CPLR 214-a), the plaintiff raised a triable issue of fact as to whether Knee should be equitably estopped from raising the defense of the statute of limitations. "Equitable estoppel is appropriate where the plaintiff is prevented from filing an action within the applicable statute of limitations due to his or her reasonable reliance on deception, fraud or misrepresentations by the defendant" (Putter v North Shore Univ. Hosp., 7 NY3d 548, 552-553 [2006]; see Simcuski v Saeli, 44 NY2d at 448-449). Whether equitable estoppel applies is generally a question of fact (see Vigliotti v North Shore Univ. Hosp., 24 AD3d 752, 755 [2005]), and a mere failure to disclose malpractice or diagnose a condition does not give rise to equitable estoppel (see Rizk v Cohen, 73 NY2d 98 [1989]; Simcuski v Saeli, 44 NY2d at 450; Reichenbaum v Cilmi, 64 AD3d 693, 695 [2009]; Bevinetto v Steven Plotnick, M.D., P.C., 51 AD3d 612, 614 [2008]; Dombroski v Samaritan Hosp., 47 AD3d 80 [2007]; Coopersmith v Gold, 172 AD2d 982, 983 [1991]). Here, the plaintiff's sworn allegations raised a triable issue of fact as to whether Knee concealed his malpractice by knowingly misrepresenting her condition and by bonding tooth number 21, a procedure that the plaintiff alleges he knew was not effective (see Vigliotti v North Shore Univ. Hosp., 24 AD3d at 755; Szajna v Rand, 131 AD2d 840, 841 [1987]). Additionally, the plaintiff raised a triable issue of fact as to whether she commenced the action within a reasonable time after her discovery of the alleged malpractice (see Edmonds v Getchonis, 150 AD2d 879, 882 [1989]).


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