Appellate Division

325(d)’oh

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.

“ownership, maintenance or use”

Peter Pan Bus Lines, Inc. v Hanover Ins. Co., 2018 NY Slip Op 00467 [1st 2018]

The insurance policy issued by defendant to Peter Pan provides coverage for damages owed because of, inter alia, " bodily injury' … caused by an accident' and resulting from the ownership, maintenance or use of a covered auto.'" Regardless of whether the plaintiff in the underlying action, having arrived at her destination on a Peter Pan bus and seen the driver unloading the passengers' luggage, tripped over a suitcase while approaching her own suitcase or tripped on the curb while looking for her suitcase, her accident resulted from Peter Pan's use of the bus, a covered auto, and defendant is obligated to defend and indemnify Peter Pan in the underlying action (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714 [2007]; Axton Cross Co. v Lumbermens Mut. Cas. Co., 176 AD2d 482 [1st Dept 1991], lv dismissed 79 NY2d 822 [1991]; Cosmopolitan Mut. Ins. Co. v Baltimore & Ohio R.R. Co., 18 AD2d 460 [1st Dept 1963]).

Sufficient Start [3211(d)]

Robins v Procure Treatment Ctrs., Inc., 2018 NY Slip Op 00464 [1st Dept 2018]

Plaintiff made a "sufficient start" in establishing that New York courts have jurisdiction over PPM under CPLR 301 and 302(a)(1) to be entitled to disclosure pursuant to CPLR 3211(d) (see Peterson v Spartan Indus., 33 NY2d 463, 467 [1974]). With regard to general jurisdiction, codified in CPLR 301, it is not clear whether PPM's "affiliations with the State [New York] are so continuous and systematic as to render [it] essentially at home in the [] State" (Daimler AG v Bauman, __ US __, 134 S Ct 746, 761 [2014] [internal quotation marks omitted]). However, the record contains a State filing in which PPM identified itself as having a principal place of business in Manhattan — "tangible evidence" upon which to question PPM's claims to the contrary (see SNS Bank v Citibank, 7 AD3d 352, 354 [1st Dept 2004] [internal quotation marks omitted]).

3211(a)(8) and 3211(e)

Deutsche Bank Natl. Trust Co. v Acevedo, 2018 NY Slip Op 00407 [2d 2018]

In December 2014, more than 60 days after service of the defendant's verified answer with affirmative defenses and counterclaims, and more than 60 days after the plaintiff served the defendant with a verified reply to the counterclaims, the defendant moved to dismiss the complaint pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction based on improper service and to cancel the notice of pendency against the subject property. The plaintiff opposed the defendant's motion, arguing, among other things, that the defendant waived the defense of lack of personal jurisdiction based on improper service by failing to move for judgment on that ground within 60 days [*2]after serving the answer. This motion was marked off the calendar.

Subsequently, the defendant moved to restore his prior motion to the calendar, and thereupon, to grant the motion. The plaintiff opposed the motion, again arguing, inter alia, that the defendant waived this defense pursuant to CPLR 3211(e). The Supreme Court granted the defendant's motion. The plaintiff appeals.

Although the Supreme Court properly granted that branch of the defendant's motion which was to restore, the court should not have thereupon granted his prior motion.

"[A]n objection that the summons and complaint . . . was not properly served is waived if, having raised such an objection in a pleading, the objecting party does not move for judgment on that ground within sixty days after serving the pleading, unless the court extends the time upon the ground of undue hardship" (CPLR 3211[e]). Here, the defendant failed to move for judgment on the ground of lack of personal jurisdiction based on improper service within 60 days after his answer was served. Additionally, he failed to made an adequate showing of undue hardship that prevented the making of the motion within the requisite statutory period. Although the plaintiff, appearing by its former attorneys, wrote to the defendant's attorney, stating that the verified answer with affirmative defenses and counterclaims was rejected, this Court has indicated that a "purported rejection of the defendants' answer did not extend the 60-day time limit" (Dimond v Verdon, 5 AD3d 718, 719). Further, less than one month after the defendant's verified answer with affirmative defenses and counterclaims was served, the plaintiff's responsive pleading was served. Under these circumstances, the defendant waived his objection to personal jurisdiction based on improper service (see id. at 719; see also Warsowe Acquisition Corp. v DeNoble, 116 AD3d 949, 950; Reyes v Albertson, 62 AD3d 855, 855).

CPLR 3126

Crupi v Rashid, 2018 NY Slip Op 00406 [2d 2018]

The nature and degree of a penalty to be imposed under CPLR 3126 for discovery violations is addressed to the court's discretion (see Dimoulas v Roca, 120 AD3d 1293, 1295; Zakhidov v Boulevard Tenants Corp., 96 AD3d 737, 739). The general rule is that the court will impose a sanction commensurate with the particular disobedience it is designed to punish and go no further than that (see Zakhidov v Boulevard Tenants Corp., 96 AD3d at 739; Patrick M. Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, C3126:8). Before a court invokes the drastic remedy of striking a pleading, or even of precluding all evidence, there must be a clear showing that the failure to comply with court-ordered discovery was willful and contumacious (see Zakhidov v Boulevard Tenants Corp., 96 AD3d at 739; Cianciolo v Trism Specialized Carriers, 274 AD2d 369, 370).

Here, on this record, there is no evidence demonstrating either that the incarcerated defendant, Syed Rashid, willfully and contumaciously failed to be deposed, or that his attorney failed to secure his deposition (see Brodsky v Amber Ct. Assisted Living, LLC, 147 AD3d 810; Zakhidov v Boulevard Tenants Corp., 96 AD3d at 738; Patel v DeLeon, 43 AD3d 432, 432-433; Cianciolo v Trism Specialized Carriers, 274 AD2d at 370).

Common-interest privilege

Saint Annes Dev. Co. v Russ, 2018 NY Slip Op 00451 [2d 2018]

The common-interest privilege is an exception to the traditional rule that the presence of a third party waives the attorney-client privilege (see Hyatt v State of Cal. Franchise Tax Bd., 105 AD3d 186, 205; Aetna Cas. & Sur. Co. v Certain Underwriters at Lloyd's, London, 176 Misc 2d 605, 611 [Sup Ct, NY County], affd 263 AD2d 367; In re Quigley Co., 2009 WL 9034027, *2-3, 2009 Bankr LEXIS 1352, *7-8 [Bankr SD NY]). To fall within that exception, the privileged communication must be for the purpose of furthering a legal, as opposed to a commercial, interest common to the client and the third party (see Hyatt v State of Cal. Franchise Tax Bd., 105 AD3d at 205; Delta Fin. Corp. v Morrison, 69 AD3d 669; U.S. Bank N.A. v APP Intl. Fin. Co., 33 AD3d 430, 431). "The legal interest that those parties have in common must be identical (or nearly identical), as opposed to merely similar" (Hyatt v State of Cal. Franchise Tax Bd., 105 AD3d at 205; see United States v Doe, 429 F3d 450, 453 [3d Cir]; F.D.I.C. v Ogden Corp., 202 F3d 454, 461 [1st Cir]). Moreover, the communication must "relate to litigation, either pending or anticipated, in order for the exception to apply" (Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27 NY3d 616, 620; see Hyatt v State of Cal. Franchise Tax Bd., 105 AD3d at 205).

Cant’t hide investigation behind attorney client privilege

CPLR 3101

National Union Fire Ins. Co. of Pittsburgh, Pa. v TransCanada Energy USA, Inc., 2014 NY Slip Op 01283 [1^st Dept. 2014]

The motion court properly found that the majority of the documents sought to be withheld are not protected by the attorney-client privilege or the work product doctrine or as materials prepared in anticipation of litigation. The record shows that the insurance companies retained counsel to provide a coverage opinion, i.e. an opinion as to whether the insurance companies should pay or deny the claims. 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'" (see Brooklyn Union Gas Co. v American Home Assur. Co., 23 AD3d 190, 191 [1st Dept 2005]).

CPLR 2104

Tavolacci v Tavolacci, 2014 NY Slip Op 00986 [2nd Dept. 2014]

Contrary to the plaintiff's contentions, the record demonstrates that the parties validly entered into a comprehensive open-court stipulation (see CPLR 2104; Pretterhofer v Pretterhofer, 37 AD3d at 446; Borghoff v Borghoff, 8 AD3d 519) by which the plaintiff unequivocally, knowingly, and voluntarily agreed to be bound (see Pretterhofer v Pretterhofer, 37 AD3d at 446). Accordingly, the Supreme Court properly denied the plaintiff's motion, in effect, to vacate the stipulation of settlement and properly granted that branch of the defendant's motion which was to incorporate the stipulation of settlement into the judgment of divorce.

Emphasis mine.

a 90 day notice that wasnt

CPLR 3216

Kapnisakis v Woo, 2014 NY Slip Op 00967 [2nd Dept. 2014]

However, the defendants did not move to hold the plaintiff in default of those provisions. Moreover, the order dated August 6, 2010, was not a valid 90-day notice, since it directed the filing of a note of issue in less than 90 days (see Gladman v Messuri, 71 AD3d 827, 828). Therefore, the plaintiff's failure to file a note of issue was of no consequence.

On November 12, 2010, the action was marked "Disposed" by the clerk. Within one year, on November 10, 2011, the plaintiff moved, in effect, to restore the action to active status, and annexed to that motion his opposition papers to the defendants' motion for summary judgment. In the order appealed from, the Supreme Court denied the motion.

Since no note of issue was filed in this case, this action was not on the trial calendar, and CPLR 3404 did not apply (see Khaolaead v Leisure Video, 18 AD3d 820; Lopez v Imperial Delivery Serv., 282 AD2d 190). Accordingly, there was no basis for denying the motion to restore (see Hemberger v Jamaica Hosp., 306 AD2d 244).

The plaintiff was never adjudicated in default of the order dated August 6, 2010, and he has now complied with all binding provisions of that order, including filing papers in opposition to the defendants' motion for summary judgment. Under the particular circumstances of this case, including the current procedural posture of the action, a determination of the issues on the merits, in keeping with the strong public policy in favor of resolving cases on the merits, is warranted (see Bunch v Dollar Budget, Inc., 12 AD3d 391).

Emphasis mine.

CPLR 308

CPLR 3080

Deutsche Bank Natl. Trust Co. v Quinones, 2014 NY Slip Op 00959 [2nd Dept. 2014]

Here, the affidavit of service indicating that the respondent was served pursuant to CPLR 308(2) by delivery of the papers to a person of suitable age and discretion was insufficient on its face to establish, prima facie, that the respondent was validly served pursuant to that section. However, a second affidavit of service constituted prima facie evidence of proper service of the summons and complaint pursuant to CPLR 308(1) (see Reich v Redley, 96 AD3d 1038), and of proper service of the notice required by Real Property Actions and Proceedings Law § 1303 (see US Bank N.A. v Tate, 102 AD3d 859). The respondent's bare and unsubstantiated denial of service lacked the factual specificity and detail required to rebut the prima facie proof of proper service set forth in that affidavit of service (see ACT Props., LLC v Garcia, 102 AD3d 712, 713; Scarano v Scarano, 63 AD3d 716, 716-717).

Empahsis mine.