CPLR 7601

Rad v IAC/InterActiveCorp, 2020 NY Slip Op 02990 [1st Dept 2020]

The court properly found that CPLR 7601 does not apply to bar plaintiffs’ claims. CPLR 7601 permits, but does not require, the commencement of a special proceeding to enforce a valuation agreement. Although plaintiffs’ claims undoubtedly relate to a dispute over the valuation process, plaintiffs are not seeking to enforce the valuation agreement and are properly seeking relief in a plenary action (see Matter of Penn Cent. Corp. [Consolidated Rail Corp.], 56 NY2d 120, 130 [1982]). In light of the foregoing, the parties’ other arguments about the application of CPLR 7601 are moot.

The motion court properly found that issues of fact exist as to whether plaintiffs acquiesced to the transaction at issue. Although plaintiff Rad’s unvested options vested immediately upon the merger, and he exercised them all, the equitable defense of acquiescence is “fact intensive, often depending . . . on an evaluation of the knowledge, intention and motivation of the acquiescing party” (Julin v Julin, 787 A2d 82, 84 [Del 2001]).

Contrary to defendants’ contention, those plaintiffs whose employment terminated prior to the merger have standing to assert merger-related claims. While they were obligated to sell their outstanding options upon leaving the company, those options were not valued until the merger.

The Decision and Order of this Court entered herein on October 29, 2019 (176 AD3d 635 [1st Dept 2019]) is hereby recalled and vacated (see M-8412 decided simultaneously herewith).

Litigation hold

China Dev. Indus. Bank v Morgan Stanley & Co. Inc., 2020 NY Slip Op 02987 [1st Dept. 2020]

Plaintiff did not impose a litigation hold until July 2010. However, the record does not support the court’s conclusion that plaintiff was obligated to preserve documents relevant to the transaction between the parties as early as October 2007. The evidence does not show that plaintiff “reasonably anticipated” litigating against defendants at that time, but shows rather that a credible probability of litigation against defendants arose only significantly later (see VOOM HD Holdings LLC v EchoStar Satellite L.L.C., 93 AD3d 33, 43 [1st Dept 2012]). Nor does the record support either the finding that plaintiff selectively preserved certain beneficial documents and recordings related to the transaction for purposes of supporting its legal claims against defendants or the finding that plaintiff refused to produce key witnesses or prevented defendants from deposing them.

Since plaintiff had no duty to preserve evidence in 2007 and reasonably implemented a litigation hold in 2010 upon notice (see The Sedona Conference, Commentary on Legal Holds, Second Ed.: The Trigger & The Process, 20 Sedona Conf J 341 [2019]; VOOM HD at 43), there is no issue regarding the destruction of records neither intentionally, willfully nor negligently. Accordingly, a spoliation sanction is not triggered and a culpable state of mind analysis is not reached.

CPLR 7502

Men Women N.Y. Model Mgt., Inc. v Elite Model Mgt. – N.Y. LLC,  2020 NY Slip Op 02984 [1st Dept. 2020]

CPLR 7502(c) authorizes courts to award provisional relief “in connection with an arbitration that is … to be commenced” where “the award to which the applicant may be entitled may be rendered ineffectual without such … relief.” However, the applicant is required to commence arbitration within 30 days of receiving the provisional relief, or else “the order granting such relief shall expire and be null and void and costs, including reasonable attorney’s fees, awarded to the respondent” (id.).

CPLR 7502(c) applies to the instant dispute because the subject provisional relief was entered in aid of arbitration. There is no independent cause of action for injunctive relief (see Talking Capital LLC v Omanoff, 169 AD3d 423, 424 [1st Dept 2019]), and it is undisputed that plaintiffs’ underlying breach of contract claim is subject to mandatory arbitration.

Although defendants’ employment agreements also provide for provisional injunctive relief, the purpose of these provisions was not to create an independent right to such relief regardless of whether plaintiffs’ underlying claims were ever actually arbitrated. Rather, the purpose of the injunctive relief clause here was to streamline the process of obtaining provisional relief in aid of arbitration by effectively conceding that the non-solicitation provisions were “reasonable and necessary” and that breach would result in “irreparable injury.”

Plaintiffs failed to demonstrate good cause to extend the time in which to commence arbitrations. Even if substitution of counsel would constitute good cause under other circumstances, it does not constitute good cause here, where the substitution came after the subject deadline had already expired and defendants had already moved to vacate. Moreover, there is no evidence in the record, such as a sworn statement from prior counsel, to support plaintiffs’ assertion that counsel believed that CPLR 7502(c) was not applicable. Nor is it clear that such a belief would have been reasonable.

The bold is mine.

Tax Estoppel

PH-105 Realty Corp v Elayaan, 2020 NY Slip Op 02971 [1st Dept. 2020]

The court improvidently exercised its discretion in failing to apply the doctrine of “tax estoppel.” Under that doctrine, defendants’ acts in filing corporate tax returns for the years 2010 through 2014, signed by defendant Elayan, which contained factual statements that plaintiff Jaber had a 75% ownership interest in Edgewater during that time period, and precludes defendants from taking a position contrary to that in this litigation (see Mahoney-Buntzman v Buntzman, 12 NY3d 415, 422 [2009]; Livathinos v Vaughan, 121 AD3d 485 [1st Dept 2014]; see also Man Choi Chiu v Chiu, 125 AD3d 824 [2d Dept 2015], lv denied 26 NY3d 905 [2015]). To the extent our decision in Matter of Bhanji v Baluch (99 AD3d 587 [1st Dept 2012]) has been interpreted as making the doctrine generally inapplicable with respect to factual statements of ownership in tax returns, we clarify that the doctrine applies where, as here, the party seeking to contradict the factual statements as to ownership in the tax returns signed the tax returns, and has failed to assert any basis for not crediting the statements (see Cusimano v Wilson, Elser, Moskowitz, Edelman & Dicker LLP, 118 AD3d 542 [1st Dept 2014]; Stevenson-Misischia v L’Isola D’Oro SRL, 85 AD3d 551 [1st Dept 2011]; see also Matter of Elmezzi, 124 AD3d 886, 887 [2d Dept 2015]).

The bold is mine.

What I’ve been reading

I’ve always been interested in legal writing or writing in general because I never liked how I wrote.  And I see so much terrible writing in legal papers.

97982739_4044056378968367_7548688619410554880_n

A few weeks ago, I picked up Quack This Way, which is an interview of David Foster Wallace, by Bryan Garner.  As a lawyer, I was familiar with Garner through his books on legal writing and a legal writing CLE I took with him years ago.  I know David Foster Wallace from reading Infinite Jest[1] years ago.  So bizarre that those two had any relationship at all.

As it turns out, David Foster Wallace wrote a review of Bryan Garner’s Dictionary of Modern American Usage, which started their relationship.  Through that relationship Garner introduced David Foster Wallace to Scalia of all people (pp 13–15, if you are interested).  And they got along.  You wouldn’t think they would.  At least I didn’t.

98154667_4067775853263086_1945768859675918336_nSo, I picked up Consider the Lobster, which has David Foster Wallace’s review of Bryan Garner’s Dictionary of Modern American usage.

 

 

Going back to the interview, it explains why so much legal writing is terrible— we want to show that we belong, that we are members of that group (“I think it often stems from insecurity and that people feel that unless they can mimic the particular jargon and style of their peers, they won’t be taken seriously, and their ideas won’t be taken seriously.“) (pp 48–49).

I also learned what a Snoot is and that I am not smart enough to be a Snoot—One of “the Few, the Proud, the More or Less Constantly Appalled at Everyone Else.”

[1] I don’t remember much about it other than that it was really long, very hard to read, and it involved tennis.

Assorted waivers

Clark v Deutsche Bank Natl. Trust Co., 2020 NY Slip Op 02456 [2d Dept. 2020]

As a threshold matter, under the circumstances of this case, the Supreme Court providently exercised its discretion in finding that the plaintiff had waived her contention that the defendants’ motion to dismiss was untimely made (see Rozz v Law Offs. of Saul Kobrick, P.C., 134 AD3d 920, 921-922; Spagnoletti v Chalfin, 131 AD3d 901, 901-902; Glass v Captain Hulbert House, 103 AD3d 607, 608). Accordingly, we agree with the court’s denial of that branch of the plaintiff’s cross motion which was for leave to enter a default judgment against Deutsche Bank.

Hui-Lin Wu v City of New York, 2020 NY Slip Op 02721 [1st Dept. 2020]

The trial court properly denied plaintiff’s motion to strike defendants’ pleadings or preclude defendants from calling witnesses on the ground of their alleged failure to provide discovery, since, by filing a note of issue, plaintiff waived her entitlement to any further discovery (see 22 NYCRR 202.21; Escourse v City of New York, 27 AD3d 319 [1st Dept 2006]; Abbott v Memorial Sloan-Kettering Cancer Ctr., 295 AD2d 136 [1st Dept 2002]). The court properly rejected plaintiff’s attempt to authenticate her medical records through the testimony of someone who merely became the records’ physical custodian after the sale of the surgical center at which they were created (see Irizarry v Lindor, 110 AD3d 846 [2d Dept 2013]). The court correctly declined to admit the officers’ disciplinary files, since plaintiff had never requested the requisite in camera review (see Civil Rights Law § 50-a[2], [3]; see also People v Gissendanner, 48 NY2d 543, 551 [1979]; Telesford v Patterson, 27 AD3d 328 [1st Dept 2006]). Nor could plaintiff show that the records were relevant, particularly since the City admitted that the officers were acting in the scope of their employment during the incident (see Cheng Feng Fong v New York City Tr. Auth., 83 AD3d 642 [2d Dept 2011]; Weinberg v Guttman Breast & Diagnostic Inst., 254 AD2d 213 [1st Dept 1998]). There is no indication in the record that plaintiff [*2]requested and was denied interested witness charges. The court properly determined that any explanation as to missing witnesses was better addressed by counsel in their summations than by a jury charge.

Wilmington Sav. Fund Socy., FSB v Chishty, 2020 NYSlipOp 00641 [2d Dept. 2020]

The defendant also waived her right to seek dismissal of the complaint insofar as asserted against her pursuant to CPLR 3215 (c) by filing two notices of appearance (see Bank of Am., N.A. v Rice, 155 AD3d 593 [2017]; Myers v Slutsky, 139 AD2d 709, 710 [1988])

Deutsche Bank Natl. Trust Co. v Abrahim, 2020 NY Slip Op 02764 [2d Dept. 2020]

Contrary to the defendant’s contention, she waived the right to seek a dismissal pursuant to CPLR 3215(c) by appearing in the action and, inter alia, engaging in motion practice as early as 2012 (see HSBC Bank USA v Lugo, 127 AD3d 502, 503; Myers v Slutsky, 139 AD2d 709, 710-711).

And, not a waiver

Wells Fargo Bank, N.A. v Martinez, 2020 NYSlipOp 01693 [1st Dept 2020]

Plaintiff’s argument that defendant waived his right to seek dismissal pursuant to section 3215 (c) because he participated in the settlement conferences is equally unavailing. Although a party may waive it rights under CPLR 3215 (c) “by serving an answer or taking any other steps which may be viewed as a formal or informal appearance” (Private Capital Group, LLC v Hosseinipour, 170 AD3d 909, 910 [2d Dept 2019] [internal quotation marks omitted]), defendant’s participation in settlement conferences did not constitute either a formal or an informal appearance “since [he] did not actively litigate the action before the Supreme Court or participate in the action on the merits” (Slone, 174 AD3d at 867).

The above bold is mine.

On mailing and service

Wilmington Sav. Fund Socy., FSB v Sheikh, 2020 NY Slip Op 02823 [2d Dept. 2020]

Here, in support of his cross motion, the defendant established that the plaintiff failed to properly serve its motion for summary judgment and for an order of reference because the plaintiff mailed the motion papers to an incorrect address for the defendant’s counsel, resulting in the defendant’s lack of notice of the motion. In opposition, the plaintiff merely speculated that the motion papers may have been forwarded to the defendant’s counsel by the U.S. Postal Service, or that counsel may have otherwise received notice of the motion. Given that defective service of the motion was established (see generally Matter of Community Hous. Improvement Program v Commissioner of Labor, 166 AD3d 1135, 1137; Jagmohan v City of New York, 14 AD3d 491, 492), the defendant was not obligated to demonstrate a reasonable excuse for the default or a potentially meritorious defense (see Wells Fargo Bank, N.A. v Whitelock, 154 AD3d 906, 907). Moreover, the failure to give the defendant timely notice of the motion deprived the Supreme Court of jurisdiction to entertain the motion and rendered the resulting order entered October 3, 2016, void (see Wells Fargo Bank, N.A. v Whitelock, 154 AD3d at 907; Nationstar Mtge., LLC v Chase, 147 AD3d 964, 965; Golden v Golden, 128 AD2d 672, 673).

Rodriguez v 60 Graham, LLC, 173 AD3d 1095 [2d Dept. 2020]

“Ordinarily, a process server’s affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service” (Wells Fargo Bank, N.A. v Leonardo, 167 AD3d 816, 817 [2018] [internal quotation marks omitted]; see Chichester v Alal-Amin Grocery & Halal Meat, 100 AD3d 820, 820 [2012]; Indymac Fed. Bank FSB v Quattrochi, 99 AD3d 763, 764 [2012]). “To be entitled to vacatur of a default judgment . . . a defendant must overcome the presumption raised by the process server’s affidavit of service” (Machovec v Svoboda, 120 AD3d 772, 773 [2014]). “A defendant’s sworn denial of receipt of service generally rebuts the presumption of proper service established by the process server’s affidavit and necessitates an evidentiary hearing; however, no hearing is required where the defendant fails to swear to specific facts to rebut the statements in the affidavit of service” (Wells Fargo Bank, N.A. v Leonardo, 167 AD3d at 817). The sworn denial of receipt of service must be a “detailed and specific contradiction” of the allegations in the process server’s affidavit (Bankers Trust Co. of Cal. v Tsoukas, 303 AD2d 343, 344 [2003]; see Scarano v Scarano, 63 AD3d 716 [2009]).

Here, City Signs relied on an affidavit of the individual allegedly served in support of its contention that there were discrepancies between her appearance and the description of her provided in the process server’s affidavit. However, the claimed discrepancies were minor and did not warrant a hearing on the issue of service (see US Bank N.A. v Cherubin, 141 AD3d 514, 515-516 [2016]; Citimortgage, Inc. v Baser, 137 AD3d 735, 736 [2016]; Indymac Fed. Bank, FSB v Hyman, 74 AD3d 751, 751 [2010]; Wells Fargo Bank, N.A. v McGloster, 48 AD3d 457 [2008]). Additionally, City Signs failed to substantiate the claimed discrepancies (see US Bank N.A. v Cherubin, 141 AD3d at 516; Indymac Fed. Bank, FSB v Hyman, 74 AD3d at 751).

Deutsche Bank Natl. Trust Co. v Dennis, 2020 NYSlipOp 02039 [2d Dept. 2020]

RPAPL 1304 provides that at least 90 days before a lender, an assignee, or a mortgage loan servicer commences an action to foreclose the mortgage on a home loan as defined in the statute, such lender, assignee, or mortgage loan servicer must give notice to the borrower. The statute provides the required content for the notice and provides that the notice must be sent by registered or certified mail and also by first-class mail to the last known address of the borrower (see RPAPL 1304 [2]). “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action” (Citibank, N.A. v Conti-Scheurer, 172 AD3d 17, 20 [2019]; see Citimortgage, Inc. v Banks, 155 AD3d 936, 936-937 [2017]; HSBC Bank USA, N.A. v Ozcan, 154 AD3d 822, 825-826 [2017]), “and the plaintiff has the burden of establishing satisfaction of this condition” (Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 106 [2011]). “By requiring the lender or mortgage loan servicer to send the RPAPL 1304 notice by registered or certified mail and also by first-class mail, the Legislature implicitly provided the means for the plaintiff to demonstrate its compliance with the statute, i.e., by proof of the requisite mailing, which can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure” (Citibank, N.A. v Conti-Scheurer, 172 AD3d at 20-21 [internal quotation marks omitted]; see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 508-509 [2015]; Bank of Am., N.A. v Bittle, 168 AD3d 656, 658 [2019]; Wells Fargo Bank, NA v Mandrin, 160 AD3d 1014, 1016 [2018]).

Here, the plaintiff failed to submit an affidavit of mailing or proof of mailing by the United States Postal Service evidencing that it properly mailed notice to the defendant pursuant to RPAPL 1304. Instead, the plaintiff relied on an affidavit of Rashad Blanchard, who was employed as a loan analyst by the parent company of the plaintiff’s loan servicer, and copies of the purported notices. The plaintiff submitted only one letter that purported to constitute the statutorily required 90-day notice of default, dated December 22, 2008. Although the letter contained the statement “sent via certified mail,” with a 20-digit number below it, no receipt or corresponding document issued by the United States Postal Service was submitted proving that the letter was actually sent by certified mail more than 90 days prior to commencement of the action. The plaintiff also failed to submit any documentary evidence that notice was sent by first-class mail. Further, Blanchard did not aver that the notice was sent in the manner required pursuant to RPAPL 1304, i.e., by certified mail and first-class mail. Moreover, since he did not aver that he personally mailed the notice, or that he was familiar with the mailing practices and procedures of American Home Mortgage Servicing, Inc., the entity that purportedly sent the notices, he did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed (see U.S. Bank N.A. v Offley, 170 AD3d 1240, 1242 [2019]; U.S. Bank N.A. v Henderson, 163 AD3d 601, 603 [2018]; Bank of Am., N.A. v Wheatley, 158 AD3d 736, 738 [2018]).

The bold is mine.

 

 

 

4518 and hearsay. You have to attach the records.

Wells Fargo Bank, N.A. v Sesey, 2020 NY Slip Op 02822 [App Div 2d 2020]

In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff submitted, inter alia, an attorney affirmation to which documents were appended purporting to be the note and an allonge. The plaintiff also submitted the affidavit of Nancy Chouanard, a vice president employed by the plaintiff. The attorney affirmation was insufficient to authenticate the documents purporting to be the note and an allonge. The Chouanard affidavit also failed to authenticate such documents. Furthermore, while Chouanard claimed that the plaintiff’s business records showed that the plaintiff received the original note endorsed to it as trustee on November 10, 2005, which would have been prior to the commencement of the Option One foreclosure action, Chouanard failed to identify what documents she relied upon to support that conclusory assertion, much less submit any properly authenticated business records. Even assuming that Chouanard’s affidavit was sufficient to establish a proper foundation for the admission of business records pursuant to CPLR 4518(a), the plaintiff failed to submit copies of the business records themselves. “[T]he business record exception to the hearsay rule applies to a writing or record’ (CPLR 4518[a]) . . . [and] it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” (Bank of N.Y. Mellon v Gordon, 171 AD3d 197, 205 [citation omitted]). “While a witness may read into the record from the contents of a document which has been admitted into evidence (see HSBC Bank USA, N.A. v Ozcan, 154 AD3d 822, 826-827), a witness’s description of a document not admitted into evidence is hearsay” (U.S. Bank N.A. v 22 S. Madison, LLC, 170 AD3d 772, 774). Thus, Chouanard’s assertions as to the contents of the records were inadmissible hearsay as the documents themselves were not submitted (see id. at 774; JPMorgan Chase Bank, N.A. v Grennan, 175 AD3d 1513, 1516). A review of records maintained in the normal course of business does not vest an affiant with personal knowledge (see JPMorgan Chase Bank, N.A. v Grennan, 175 AD3d at 1517).

Bold is mine.

Similar holdings in HSBC Bank USA, N.A. v Dubose, 175 AD3d 1270 [2d Dept. 2019], Bank of N.Y. Mellon v Gordon, 171 AD3d 197 [2d Dept. 2019], Nationstar Mtge., LLC v Tamargo, 177 AD3d 750 [2d Dept. 2019], Wells Fargo Bank, N.A. v Springer, 2020 NYSlipOp 00176 [2d Dept. 2020], Nationstar Mtge., LLC v Cavallaro, 181 AD3d 688 [2d Dept. 2020], Deutsche Bank Natl. Trust Co. v Dennis, 2020 NYSlipOp 02039 [2d Dept. 2020]

O.K. v Y.M. & Y.W.H.A. of Williamsburg, Inc., 175 AD3d 540 [2d Dept. 2020]

Here, the defendants failed to submit their certificate of incorporation. Contrary to the defendants’ contention, the computer printout they submitted in support of their motion from the website of the New York State Department of State, Division of Corporations was inadmissible, since it was not certified or authenticated, and it was not supported by a factual foundation sufficient to demonstrate its admissibility as a business record (see Werner v City of New York, 135 AD3d 740, 741 [2016]; Dyer v 930 Flushing, LLC, 118 AD3d 742, 742-743 [2014]).

 

50-h from the Court of Appeals

Colon v Martin, 2020 NY Slip Op 02681 [2020]

General Municipal Law § 50-h requires a claimant to comply with a municipality’s demand for a pre-action oral examination before commencing suit against the municipality. The novel statutory interpretation issue on this appeal is whether a claimant has the right to observe a coclaimant’s section 50-h oral examination over the municipality’s objection. We hold that section 50-h provides no such right.