[App Div 1st Dept]

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”]).

Not so stale

Williams v New York City Hous. Auth., 2020 NY Slip Op 03063 [1st Dept. 2020]

Preliminarily, we do not reject the Ruiz notarized statement out of hand based on the perceived infirmities relied on by the motion court, such of the lack of a caption and the absence of a declaration that it was sworn to under penalty of perjury. These are technical errors that did not prejudice a substantial right of the defendants (CPLR 2001; see e.g. Moore v DL Peterson Trust, 172 AD3d 1058 [2d Dept 2019]). We similarly reject NYCHA’s position that the affidavit is “stale.” This action involves a static set of facts that have not changed since the day of the accident. The fact that the affidavit was prepared contemporaneously makes it more probative than had it been made at the time of the summary judgment motions, not less.

Misnomer 3025

Rivera v New York City Dept. of Sanitation, 2020 NY Slip Op 03085 [1st Dept. 2020]

The summons and complaint were served on Corporation Counsel for the City of New York, which answered on behalf of the City of New York. Defendant’s motion to dismiss the complaint should have been denied and plaintiff’s cross motion to amend the summons and complaint to correct the misnomer granted. The City was not prejudiced by the mis-description and was on notice that plaintiff intended to seek a judgment against it (see CPLR 305[c]; 2001; Medina v City of New York , 167 AD2d 268 [1st Dept 1990])

306-b and SOL

Fernandez v McCarthy, 2020 NY Slip Op 03079 [1st Dept. 2020]

Under the circumstances, we find that, although plaintiff delayed in seeking an extension of his time to re-serve the complaint, the motion court appropriately exercised its discretion when it extended plaintiff’s time in the interest of justice (CPLR 306-b), as plaintiff established the existence of several relevant factors weighing in favor of an extension (see Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 104-105 [2001]; Chase Home Fin. LLC v Adago, 171 AD3d 533 [1st Dept 2019]). Plaintiff’s legal malpractice claim, which would otherwise be lost due to the running of the statute of limitations, seems to be potentially meritorious, and defendants have not established that they would suffer substantial prejudice from the extension, where they had actual notice of this action and the allegations against them from early on (see Wimbledon Fin. Master Fund, Ltd. v Laslop, 169 AD3d 550 [1st Dept 2019]; Pennington v Da Nico Rest., 123 AD3d 627 [1st Dept 2014]).

Bold is mine.

Link between a cause of action and a preliminary injunction.

Davis v Influx Capital Group, LLC, 2020 NY Slip Op 03077 [1st Dept. 2020]

Both CPLR 6301 and 6312(a) require a link between a cause of action and a preliminary injunction. There is no such link in the case at bar; hence, plaintiffs’ motion should have been denied (see e.g. BSI, LLC v Toscano, 70 AD3d 741 [2d Dept 2010]).

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.