3001: Declaratory Judgment

CPLR § 3001 Declaratory Judgment

found an older post on it 

Big Four LLC v Bond St. Lofts Condominium, 2012 NY Slip Op 02421 1st Dept., 2012)

In August 2010, plaintiff moved for an order, pursuant to CPLR 3126(3), striking defendant's pleading, or, alternatively, to compel production of requested information under CPLR 3124.
By notice of cross motion, defendant moved for summary judgment dismissing the complaint, and for summary judgment on its counterclaim for legal fees. The court granted defendant's cross motion for summary judgment, dismissing the declaratory judgment claim on the ground that "no justiciable controversy has been presented." It dismissed the breach of contract claim on the ground that plaintiff asked for an "advisory opinion" from the board, and the board provided such opinion. The court also initially granted summary judgment to defendant on its counterclaim for legal fees, but later denied it when plaintiff moved for reargument. This appeal followed.

Supreme Court's dismissal of the first cause of action on the ground that a declaratory judgment would be merely "advisory" was an improvident exercise of its discretion. "[W]hen a party contemplates taking certain action a genuine dispute may arise before any breach or violation has occurred" (New York Pub. Interest Research Group v Carey, 42 NY2d 527, 530 [1977]). Defense counsel's November 23, 2009 letter and defendant's subsequent expression of its intent, constituted "past conduct" creating a genuine dispute for which a declaration would have had an "immediate and practical effect of influencing [the parties'] conduct" (id. at 531; see M & A Oasis v MTM Assoc., 307 AD2d 872 [2003]).

We, however, affirm the dismissal of the complaint's first cause of action for a declaratory judgment as to whether plaintiff may lease to nonparty 7-Eleven, on the ground that plaintiff conceded below that 7-Eleven is no longer interested in such a lease. Accordingly, the dispute is moot, and there is no longer a "justiciable controversy" within the meaning of CPLR 3001 (see Matter of Ideal Mut. Ins. Co., 174 AD2d 420 [1991]). Furthermore, there is no basis to find that the exception for cases where the issue presented "is likely to recur, typically evades review, and raises a substantial and novel question" is applicable (Zuckerman v Goldstein, 78 AD3d 412 [2010]) lv denied 17 NY3d 779 [2011]).

Similarly, the second cause of action – asserting a bad faith breach of contract by defendant – was properly dismissed. The defendant condominium established its prima facie entitlement to judgment as a matter of law by demonstrating that the actions it took by objecting to the proposed intended use of the commercial space by 7-Eleven were "taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" (Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 537—538 [1990] [internal quotations omitted]). Aside from some conclusory, unsupported and self-serving conjecture, plaintiff has failed to raise any triable issues regarding defendant's alleged bad faith in objecting to 7-Eleven's use of the commercial space.

BLT Steak, LLC v 57th St. Dorchester, Inc.,2012 NY Slip Op 02159 (1st Dept., 2012)

Defendant's withdrawal of the notice to cure rendered moot that branch of plaintiff's motion for declaratory relief as to the validity of the notice to cure, as there was no longer any controversy with respect to the notice (see CPLR 3001). Plaintiff's request for injunctive relief was also rendered moot by the withdrawal of the notice, because there was no longer any threat that plaintiff's leasehold would be terminated as a result of its alleged breach of the lease (see Mannis v Jillandrea Realty Co., 94 AD2d 676, 677 [1983]).

Plaintiff is not entitled to summary judgment declaring that it did not breach the parties' lease; the conflicting expert affidavits have raised issues of fact with respect to the damage to the steel and slab underlying plaintiff's kitchen. Contrary to plaintiff's contention, defendant's withdrawal of the notice to cure does not constitute an "adjudication on the merits," as it is undisputed that defendant never filed an action based on the allegations in the notice in a court of any state or the United States (CPLR 3217[c]).

The court properly dismissed plaintiff's third cause of action, for breach of the implied covenant of good faith and fair dealing and/or breach of contract. The "American rule" precludes plaintiff from recovering its attorney's fees as damages in the event it prevails on its cause of action, and plaintiff has failed to show that any exception is applicable (see Gotham Partners, L.P. v High Riv. Ltd. Partnership, 76 AD3d 203, 204 [2010], lv denied 17 NY3d 713 [2011]). Moreover, plaintiff has failed to plead any damages other than attorney's fees (see Gordon v Dino De Laurentiis Corp., 141 AD2d 435, 436 [1988]).

CPLR § 3001 Amended effective January 17th 2009

In Monday's New York Law Journal (and the online version now), Thomas F. Gleason discusses the recent amendments to CPLR § 3001 and § 3420 of the Insurance Law in his article, Loosening the Standing Barriers to Declaratory ReliefEffective January 17th, 2009 CPLR § 3001 will allow a personal injury plaintiff to "confirm that there is a fund to pay the judgment before, not after, slogging through the underlying litigation," by initiating a declaratory judgment action against the insurance company that disclaims coverage.  He eventually concludes that "restricting declaratory relief to lack of notice disclaimers seems unfair"; that it is "contrary to the basic purpose of declaratory relief."  And  ultimately, that the amendment "did not go far enough."

Below you'll find some excerpts from the article.  I've moved some of the paragraphs around because it makes more sense to me this way.  If you want to read the article in its entirety and in the right order, please click on the link above or pick up the Law Journal on Monday.

This amendment, in part, overturns the standing impediment to such
declaratory relief established by the Court of Appeals in 2004 in Lang v. Hanover Insurance Co.

The change is significant because disclaimers for lack of notice are
common under liability insurance policies. Sometimes they result from
the insured mistakenly assuming no claim will be forthcoming, or
perhaps because the insured is reluctant to communicate information
that could result in increased premiums. In either event, the insured
is courting disaster, because a failure to give the insurer notice "as
soon as practicable" of an "occurrence" that might result in liability,
is a common "condition" of coverage. The consequences of noncompliance
are severe, for both the personal injury plaintiff and the defendant.

To some extent the Lang holding is paradoxical, because the
standing requirement has been recognized to prevent courts from
transgressing upon the legislative or executive realms, or rendering
advisory opinions.  Such defects in the "case and
controversy," requirement of CPLR 3001 destroy subject matter
jurisdiction. But if the insurer has disclaimed, and the defendant is
not sufficiently wealthy to pay the entire anticipated judgment, the
highly motivated tort plaintiff may be the only party in the position
to challenge the validity of the disclaimer. The Lang case
had established that the tort plaintiff has no standing to do so, but
the legislative granting of limited relief from the standing stricture
gives us pause to wonder: Why was CPLR 3001 so limited in the first

At its core, the "case and controversy" requirement is constitutional
in nature, because it confines the proper exercise of judicial powers.
Perhaps then it may reasonably be argued that cases aggressively
limiting access to the court on grounds of standing may have overshot
the mark, while the amendment to fix the Lang problem
undershoots it. Why not let all tort plaintiffs interested enough in a
contract fight with an institutional adversary have a go at it? What is
to be gained by shutting the courthouse door? There seems to be little
risk of generalized pronouncements that affect nonparties to the
declaratory judgment litigation, as would be the case with true
advisory opinions.

The Court of Appeals in Lang noted that the carrier should
weigh the risk of the disclaimer carefully, because of a much higher
possible default liability if the disclaimer is tossed out after the
case proceeds to judgment. This should induce the insurer not to
disclaim unless they are very sure of the right to do so, but will not
address the problem of a fairly debatable disclaimer. If
there is a good reason to restrict a broader right to declaratory
relief, it does not seem to depend on the particular ground for the
disclaimer, or the assumptions by the insurer alone as to how sound
their disclaimer is.

Mr. Gleason briefly takes the reader through the legislative history of the the amendment:

As with most things legislative, this expansion of declaratory relief
under CPLR 3001 is a compromise, and the compromise bears directly on
that formerly harsh rule. In return for the partial removal of the
standing limitation recognized in Lang, the Legislature has tempered the previously clear right for a liability insurer to refuse coverage for lack of timely notice. Starting in January, the insurance company must support the disclaimer by proof that the delay was prejudicial.8


L 2008, ch 388 §4. The insurer will have the burden to prove prejudice
if the notice was provided    within two years of when required under the
policy. After two years, the burden shifts to the insured, and
prejudice is conclusively presumed after a liability determination or

I took most of the footnotes out.