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.

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.

Alternate service

Fontanez v PV Holding Corp., 2020 NY Slip Op 02173 [1st Dept. 2020]

The motion court properly determined that service upon Mr. Yu pursuant to CPLR 308(1), (2), or (4) was impracticable. Plaintiff served the summons and complaint on the Secretary of State of New York and mailed notice of this service with a copy of the pleadings to defendant Yu by registered mail to his last known address. She also hired a process server, who attempted to obtain Mr. Yu’s address through the Department of Motor Vehicles and through people search databases, including “Premium People Search” and “IRB Search.” Further, the motion court properly concluded that plaintiff’s attempts to serve through the Chinese Central Authority in accordance with the Hague convention would have been futile because she did not have defendant’s correct address (see Born To Build, LLC v Saleh, 139 AD3d 654, 656 [2d Dept 2016]). Plaintiff was not required to show due diligence to meet the impracticability threshold under CPLR 308(5) (see Franklin v Winard, 189 AD2d 717 [1st Dept 1993]).

The motion court properly directed that alternate service be made on defendant PV Holding as real party in interest, even if neither the attorney nor the insurer had knowledge of defendant’s Yu’s whereabouts (see Matter of New York City Asbestos Litig., 116 AD3d 571 [1st Dept 2014], lv dismissed 23 NY3d 1030 [2014]; Cives Steel Co. v Unit Bldrs., 262 AD2d 164 [1st Dept 1999]).

Bold is mine.

3103 proper to respond to pre-action discovery [3102(c)]

Matter of Delgrange v RealReal, Inc., 2020 NY Slip Op 02170 [1st Dept. 2020]

As a threshold matter, TRR’s motion pursuant to CPLR 3103(a) is a proper vehicle for challenging the petition brought pursuant to CPLR 3102(c) (see e.g. Liberty Imports v Bourguet, 146 AD2d 535, 537 [1st Dept 1989]). CPLR 3102(c) merely provides a device for obtaining pre-action discovery, and CPLR 3103(a) is a means for obtaining “at any time” an order “denying, limiting, conditioning or regulating the use of any disclosure device.” The fact that TRR has produced information relating to 20 of the items at issue does not moot its appeal (see Matter of Camara v Skanska, Inc., 150 AD3d 548 [1st Dept 2017]; Matter of New York City Asbestos Litig., 109 AD3d 7, 12 n 2 [1st Dept 2013], lv dismissed 22 NY3d 1016 [2013]).

In support of her application for pre-action discovery pursuant to CPLR 3102(c), petitioner demonstrated a meritorious cause of action for conversion (see Bishop v Stevenson Commons Assoc., L.P., 74 AD3d 640 [1st Dept 2010], lv denied 16 NY3d 702 [2011]; Vigilant Ins. Co. of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36, 44 [1995] [elements of conversion claim]). In an affidavit, she averred that she had a collection of thousands of articles of fashion items made by respondent Marc Jacobs International, LLC (Marc Jacobs), many of which were rare or unique; that she routinely monitored TRR’s website for other Marc Jacobs items; and that she noticed, beginning in late 2017, that items similar to hers were being posted online. Growing suspicious, she inventoried her collection and discovered that many pieces were missing that seemed to be the same as items posted on TRR’s website. Petitioner reviewed thousands of Marc Jacobs items that had been listed for sale on TRR’s website, and identified 153 items that she believed had been stolen from her collection. She then purchased several of the items, including one that had an identifying tear in it, and ascertained that they had been hers.

Petitioner also demonstrated that the discovery she seeks from TRR — the identity of the people who posted — is material and necessary to the prosecution of her posited cause of action (see Bishop, 74 AD3d at 641; see e.g. Matter of Alexander v Spanierman Gallery, LLC, 33 AD3d 411 [1st Dept 2006]; Matter of Banco de Concepcion v Manfra, Tordella & Brooke, 70 AD2d 840, 841 [1st Dept 1979], appeal dismissed 48 NY2d 655 [1979]; Matter of Cohen v Google, Inc., 25 Misc 3d 945 [Sup Ct, NY County 2009]).

Supreme Court providently exercised its discretion in shaping and executing the confidentiality order governing disclosure by TRR. The court addressed TRR’s concerns about petitioner’s contacting its customers by modifying the form to require petitioner to give TRR 24 hours’ written notice prior to any use of information disclosed under the order. The court also providently exercised its discretion in declining to restrict petitioner’s use of information disclosed under the order to conversion claims. Although petitioner does not currently posit any theory other than conversion as a basis for pre-action discovery, she is not foreclosed from developing, at some point, new viable theories for recovery, such as replevin (see e.g. Alexander, 33 AD3d at 412). There is no basis for making it impossible for her to seek recovery under any legitimate theory that may arise.

Bold is mine.

3126 and conditional orders

Mehler v Jones, 2020 NY Slip Op 02103 [1st Dept. 2020]

The motion court providently exercised its discretion in issuing a conditional order of dismissal, in light of plaintiff’s history of noncompliance with court orders requiring her to appear for a further deposition (see CPLR 3126[3]; Fish & Richardson, P.C. v Schindler, 75 AD3d 219, 220 [1st Dept 2010]).

Plaintiff contends that her behavior was neither willful nor contumacious. However, by issuing a conditional order, the court “relieve[d] [itself] of the unrewarding inquiry into whether [plaintiff’s] resistance was willful” (Board of Mgrs. of the 129 Lafayette St. Condominium v 129 Lafayette St., LLC, 103 AD3d 511, 511 [1st Dept 2013] [internal quotation marks omitted]).

On her motion to renew, plaintiff failed to submit new facts (CPLR 2221[e][2]), i.e., facts that existed but were unknown to her at the time defendants made their motions (see Matter of Naomi S. v Steven E., 147 AD3d 568 [1st Dept 2017]). Instead, she submitted facts that developed after the conditional order that decided the prior motions was issued.

Plaintiff’s proper recourse was to seek to vacate the order on the ground of excusable default, pursuant to CPLR 5015(a)(1) (see Hutchinson Burger, Inc. v Bradshaw, 149 AD3d 545, 545 [1st Dept 2017]; Country Wide Home Loans, Inc. v Dunia, 138 AD3d 533 [1st Dept 2016]). Even if we treat the motion as a motion to vacate (see CPLR 2001), we must deny it. Although plaintiff demonstrated a reasonable excuse for her failure to comply with the conditional order, she failed to demonstrate a meritorious medical malpractice claim (see Gibbs v St. Barnabas Hosp., 16 NY3d 74, 80 [2010]).

3116(a) use of transcripts

Greenman v 2451 Broadway Mkt., Inc., 2020 NY Slip Op 01962 [1st Dept. 2020]

The trial court erred in permitting defendants to use the transcripts of plaintiff’s and his nonparty wife’s depositions at trial, since the transcripts had never been served upon plaintiff and his wife in accordance with CPLR 3116(a) (Li Xian v Tat Lee Supplies Co., Inc., 170 AD3d 538 [1st Dept 2019]; Ramirez v Willow Ridge Country Club, 84 AD3d 452 [1st Dept 2011]). Defendants used the transcripts extensively, both on cross-examination and as direct evidence, and, given the centrality of the issue of credibility, the error cannot be regarded as harmless (see Rivera v New York City Tr. Auth., 54 AD3d 545, 548 [1st Dept 2008]).

The trial court further erred in permitting defense counsel to argue that the actual cause of plaintiff’s fall was the effect of the Valium he had been given earlier that day in connection with a medical visit, since no evidence had been offered as to the dose plaintiff was given, the length of time the Valium would have remained in his system after his medical procedure, or the effect the Valium would have had on his ability to ambulate at the time of his accident (see Kaminer v John Hancock Mut. Ins. Co., 199 AD2d 53 [1st Dept 1993]).