Category: [App Div 2d Dept]

Matter of Jewish Ctr. of Forest Hills W., Inc. v Goldberg, 2018 NY Slip Op 02325 [2d Dept 2018]

Pursuant to CPLR 7503(b), "a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration, may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with or that the claim sought to be arbitrated is barred by [the statute of] limitation[s]" (emphasis added). The statute requires that a party raise these threshold issues before participating in arbitration (see Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, 79; cf. CPLR 7502[b]). Consequently, a party, such as the Jewish Center, which participates in arbitration, waives the right to later object to the arbitration on the grounds that a valid agreement to arbitrate was not made or that the claim sought to be arbitrated is barred by the statute of limitations (see Matter of Silverman [Benmor Coats], 61 NY2d 299, 307; Matter of Tri State Consumer Ins. Co. v High Point Prop. & Cas. Co., 127 AD3d 980, 981; Matter of Allstate Ins. Co. v New York Petroleum Assn. Compensation Trust, 104 AD3d 682; Matter of Utica Mut. Ins. Co. v Incorporated Vil. of Floral Park, 262 AD2d 565, 566). Inasmuch as the Jewish Center argues that the arbitrator is exceeding the scope of its authority in the course of a pending arbitation, these arguments are more properly the subject of a motion to vacate an arbitration award (see CPLR 7511[b][1][iii]; Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d at 79; Matter of Silverman [Benmor Coats], 61 NY2d at 307). Accordingly, the Supreme Court properly denied the petition and dismissed the proceeding.

Compare with Donohue v Fokas, 112 AD3d 665 [2d Dept 2014] (""[T]he payment or rejection of claims is a part of the regular business of an insurance company. Consequently, reports which aid it in the process of deciding which of the two indicated actions to pursue are made in the regular course of its business. Reports prepared by insurance investigators, adjusters, or attorneys before the decision is made to pay or reject a claim are thus not privileged and are discoverable, even when those reports are mixed/multi-purpose reports, motivated in part by the potential for litigation with the insured") and  National Union Fire Ins. Co. of Pittsburgh, Pa. v TransCanada Energy USA, Inc., 114 AD3d 595 [1st Dept. 2014] ("Documents prepared in the ordinary course of an insurer's investigation of whether to pay or deny a claim are not privileged, and do not become so merely because [the] investigation was conducted by an attorney") (internal quotes omitted).

Prior Appellate history: Ural v Encompass Ins. Co. of Am., 97 AD3d 562 [2d Dept 2012]

With respect to the parties' discovery issues, CPLR 3101 (a) broadly mandates "full disclosure of all matter material and necessary in the prosecution or defense of an action." This provision is liberally interpreted in favor of disclosure (see Kavanagh v Ogden Allied Maintenance Corp., 92 NY2d 952, 954 [1998]; Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]; Matter of Skolinsky, 70 AD3d 845 [2010]; Riverside Capital Advisors v First Secured Capital Corp., 292 AD2d 515 [2002]). However, the discovery sought must be relevant to the issues at bar, with the test employed being "usefulness and reason" (Allen v Crowell-Collier Publ. Co., 21 NY2d at 406). Regarding an entire set of discovery demands which are "palpably improper in that they are overbroad, lack specificity, or seek irrelevant or confidential information, the appropriate remedy is to vacate the entire demand rather than to prune it" (Bell v Cobble Hill Health Ctr., Inc., 22 AD3d 620, 621 [2005]). "The burden of serving a proper demand is upon counsel, and it is not for the courts to correct a palpably bad one" (id. at 621 [internal quotation marks omitted]).

Here, the plaintiff's discovery demands included production of Encompass's entire claim file for the subject water damage. The plaintiff asserts that Encompass only produced part of the claim file. In response, Encompass asserts that it withheld only those parts of the claim file that were produced in anticipation of litigation and thus were protected by work product privilege (see Veras Inv. Partners, LLC v Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370 [2008]). However, the party asserting the privilege that material sought through discovery was prepared exclusively in anticipation of litigation or constitutes attorney work product bears the burden of demonstrating that the material it seeks to withhold is immune from discovery (see Koump v Smith, 25 NY2d 287, 294 [1969]) by identifying the particular material with respect to which the privilege is asserted and establishing with specificity that the material was prepared exclusively in anticipation of litigation (see Chakmakjian v NYRAC, Inc., 154 AD2d 644, 645 [1989]; Crazytown Furniture v Brooklyn Union Gas Co., 145 AD2d 402 [1988]). Here, Encompass's attorney's conclusory assertions were insufficient to satisfy this burden (see Bombard v Amica Mut. Ins. Co., 11 AD3d 647, 648 [2004]; see also Agovino v Taco Bell 5083, 225 AD2d 569 [1996]). Accordingly, the Supreme Court should have granted that branch of the plaintiff's motion which was to compel Encompass to produce the documents contained in the plaintiff's claim file to the extent of directing Encompass to provide the Supreme Court with a detailed privilege log (see CPLR 3122; Clark v Clark, 93 AD3d 812 [2012]), and the matter must be remitted to the Supreme Court, Nassau County, for an in camera review of the allegedly privileged documents.

 

Ural v Encompass Ins. Co. of Am., 2018 NY Slip Op 01350 [2d Dept 2018]

The underlying facts of this case are summarized in the decision and order of this Court on a prior appeal in this action (see Ural v Encompass Ins. Co. of Am., 97 AD3d 562). On the prior appeal, this Court reinstated the plaintiff's causes of action to recover damages for unfair trade practices under General Business Law § 349 and for violation of Insurance Law § 2601, which prohibits unfair claim settlement practices. This Court determined that the defendants Encompass Insurance Company of America and Encompass Insurance Company (hereinafter together Encompass) were required to produce the documents contained in the plaintiff's claim file to the extent of directing Encompass to provide the Supreme Court with a "detailed privilege log" of documents claimed to be exempt from disclosure based upon a privilege or as work product for litigation (Ural v Encompass Ins. Co. of Am., 97 AD3d at 567). This Court further determined that the Supreme Court properly denied that branch of the plaintiff's motion which was to compel Encompass to comply with certain discovery demands because the demands were overbroad, lacked specificity, or sought irrelevant information, but declined to grant a protective order (see CPLR 3103).

After depositions of various witnesses, the plaintiff served Encompass with a third notice for discovery and inspection which made specific references to the deposition testimony in seeking, inter alia, various documents and other material. Encompass then moved for a protective order pursuant to CPLR 3103(a) with respect to the third notice for discovery and inspection, contending that the plaintiff was attempting to obtain, in numerous instances, information and documents that the Supreme Court and this Court had deemed to be palpably improper. The plaintiff cross-moved, inter alia, pursuant to CPLR 3126(3) to strike Encompass's verified answer and for leave to enter a default judgment against it for failure to comply with the plaintiff's outstanding discovery demands in the third notice for discovery and inspection and for failure to produce for in camera inspection the "detailed privilege log" which this Court, on the prior appeal, had directed Encompass to produce.

The Supreme Court denied Encompass's motion pursuant to CPLR 3103(a) for a protective order, and granted that branch of the plaintiff's cross motion which was pursuant to CPLR 3126(3) to strike Encompass's verified answer and for leave to enter a default judgment against it to the extent of conditionally striking certain portions of the verified answer and precluding Encompass from offering certain evidence at trial if Encompass failed to comply with the plaintiff's outstanding discovery demands from his third notice for discovery and inspection and produce the detailed privilege log for in camera inspection.

Pursuant to CPLR 3103(a), the Supreme Court may issue a protective order precluding disclosure that is palpably improper in that it seeks irrelevant and/or confidential information, or is overly broad and burdensome (see Greenman-Pedersen, Inc. v Zurich Am. Ins. Co., 54 AD3d 386, 387; Gilman & Ciocia, Inc. v Walsh, 45 AD3d 531). Contrary to Encompass's contention, the plaintiff's third notice for discovery and inspection was not palpably improper or overly broad and burdensome. Unlike the first two notices for discovery and inspection, the third notice for discovery and inspection provided specific references to deposition testimony, details, and time parameters, and sought information material and necessary to the pending causes of action (see Yoshida v Hsueh-Chih Chin, 111 AD3d 704). Accordingly, Encompass's motion pursuant to CPLR 3103(a) for a protective order against the plaintiff's third notice for discovery and inspection was properly denied.

Further, the Supreme Court properly granted that branch of the plaintiff's cross motion which was for relief pursuant to CPLR 3126(3) based upon Encompass's failure to comply with the prior order of this Court directing it to produce a detailed privilege log for in camera inspection (see Morales v Zherka, 140 AD3d 836; Padovano v Teddy's Realty Assoc., Ltd., 31 AD3d 514, 515). Examination of the detailed privilege log in camera is necessary before a determination of whether certain items demanded in the third notice of discovery and inspection should in fact be disclosed. If such a log does not exist, then Encompass should so state to the Supreme Court as the reason for failing to produce it (see CPLR 3120[1][I]; Crawford v Burkey, 124 AD3d 1184; Romeo v City of New York, 261 AD2d 379; Corriel v Volkswagen of Amer., 127 AD2d 729, 731). However, if such a log does not exist, Encompass cannot claim that the items demanded were privileged.

The Supreme Court improvidently exercised its discretion in granting that branch of the plaintiff's cross motion which was for relief pursuant to CPLR 3126(3) for failure to comply with the balance of the plaintiff's third notice for discovery and inspection, as there has been no clear showing that Encompass's lack of compliance with the third notice for discovery and inspection was willful and contumacious (see Dimoulas v Roca, 120 AD3d 1293; Barnes v City of New York, 43 AD3d 1094; Patel v DeLeon, 43 AD3d 432, 432-433). The items demanded in the third notice for discovery and inspection should be produced, and sanctions pursuant to CPLR 3126 should only be considered if Encompass continues to resist disclosure.

 

Considering that this firm usually takes a "rules are rules" position in Supreme Court, its position on appeal is hard to reconcile.

Caffrey v North Arrow Abstract & Settlement Servs., Inc., 2018 NY Slip Op 01043 [2nd Dept 2018]

We address two related issues concerning subject matter jurisdiction that have not previously been addressed by our Court. The first is whether a court with subject matter jurisdiction, which pursuant to CPLR 325(d) has erroneously transferred an action to a lower court lacking subject matter jurisdiction to adjudicate the matter, may retransfer the action to itself after the lower court has already tried the matter and rendered a judgment. The second question is whether, upon a retransfer of the action to a court with subject matter jurisdiction pursuant to CPLR 325(b), the court may adopt the findings of fact and conclusions of law of the lower court and thereupon substitute the lower court's judgment with its own judgment. We answer the first question in the affirmative and the second question in the negative.

* * *

We have considered, but reject, the notion that Judge Marrazzo had "in effect" self-transferred the action back to Supreme Court for trial, rendering the trial and judgment jurisdictionally valid. The decision rendered after the trial reflected the Civil Court's index number (300061-2011) rather than the original index number of the Supreme Court (102525/09). An "in effect" retransfer at the time of trial is inconsistent with the filing of a posttrial judgment in the Civil Court, and inconsistent with Caffrey's later motion to retransfer the action to Supreme Court, which was contested by the parties and decided by the Supreme Court on its merits.

We suspect, giving the Civil Court the credit and good faith it is due, that the instant matter may have been selectively assigned to Judge Marrazzo, recognizing that the plaintiff's complaint interposed equitable causes of action and further recognizing that Judge Marrazzo had been granted Acting Supreme Court status. Yet, given the limiting language of that designation in the Administrative Order, we cannot hold that the Administrative Order cured the subject matter jurisdictional infirmity afflicting the action as a result of its erroneous transfer to the Civil Court under CPLR 325(d). Subject matter jurisdiction is a concept that is absolute—it either exists in its entirety or it does not exist at all. A defect in subject matter jurisdiction may be raised at any time by any party or by the court itself, and subject matter jurisdiction cannot be created through waiver, estoppel, laches, or consent (see Financial Indus. Regulatory Auth., Inc. v Fiero, 10 NY3d 12, 17; Matter of Rougeron, 17 NY2d 264, 271; Strunk v New York State Bd. of Elections, 126 AD3d 777, 779; Matter of Hart Family, LLC v Town of Lake George, 110 AD3d 1278, 1280; Burke v Aspland, 56 AD3d 1001, 1003; Morrison v Budget Rent A Car Sys., 230 AD2d 253, 260; Matter of Anthony J., 143 AD2d 668, 668-669). Similarly, defects in subject jurisdiction may never be waived (see Nash v Port Auth. of N.Y. & N.J., 22 NY3d 220, 229; Manhattan Telecom. Corp. v H & A Locksmith, Inc., 21 NY3d at 203; Editorial Photocolor Archives v Granger Collection, 61 NY2d 517, 523; Lacks v Lacks, 41 NY2d at 74-75). While Judge Marrazzo, by virtue of his designation as an Acting Justice of the Supreme Court, would have been authorized to preside over the trial of this matter had it been pending in the Supreme Court, the same cannot be said for the trial in the Civil Court where the Administrative Order had no administrative or substantive relevance.

Where subject matter jurisdiction is concerned, courts, including our own, may not cut corners. As a matter of both constitutional adherence and public policy, the Appellate Division must guard against courts acting outside of their subject matter jurisdiction, even if they do so unwittingly, in good faith, or in furtherance of judicial economy. Accordingly, we hold that the duties of an Acting Justice of the Supreme Court directed to matters pending in the Supreme Court [*7]operate only as to actions and proceedings pending in that particular court, and not for cases litigated elsewhere. In other words, a judge of the Civil Court with a limited Acting Supreme Court Justice designation has no authority in an action pending at the Civil Court to exceed the nonmonetary subject matter jurisdiction of that court, regardless of whatever more expansive authority he or she may possess for other assignments pending in the Supreme Court.

Further, since the Civil Court was without jurisdiction to try the instant matter, rendering the trial and judgment void, its findings of fact and conclusions of law cannot as a matter of comity, res judicata, law of the case, or otherwise, be recognized by the Supreme Court upon its CPLR 325(b) removal of the action, and cannot provide a basis for the Supreme Court judgment presently on appeal.