Bad Faith: Consequential Damages

D.K. Prop., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., 2019 NY Slip Op 00347 [1st Dept. 2019]

A plaintiff may sue for consequential damages resulting from an insurer’s failure to provide coverage if such damages (“risks”) were foreseen or should have been foreseen when the contract was made (Bi-Economy Mkt, Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 192 [2008]). Although proof of such consequential damages will ultimately rest on what liability the insurer is found to have “assumed consciously,” or from the plaintiff’s point of view, have warranted the plaintiff to reasonably suppose the insurer assumed when the insurance contract was made, a determination of whether such damages were, in fact, forseeable should not be decided on a motion to dismiss and must await a fully developed record (see Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 [2008]; see also Bi-Economy at 192). In other words, the inquiry is not whether plaintiff will be able to establish its claim, but whether plaintiff has stated a claim.

Here, plaintiff’s allegations meet the pleading requirements of the CPLR with respect to consequential damages, whether in connection with the first cause of action or the second cause of action for breach of the covenant of good faith and fair dealing in the context of an insurance contract (id.). Contrary to defendant’s claim, there is no heightened pleading standard requiring plaintiff to explain or describe how and why the “specific” categories of consequential damages alleged were reasonable and forseeable at the time of contract. There is no heightened pleading requirement for consequential damages (Panasia Estates Inc. v Hudson Ins. Co., 68 AD3d 530, 530 [1st Dept 2009], affd 10 NY3d 200 [2008], citing Bi-Economy 10 NY3d at 192). Furthermore, an insured’s obligation to “take all reasonable steps to protect the covered property from further damage by a covered cause of loss” supports plaintiff’s allegation that some or all the alleged damages were forseeable (Benjamin Shapiro Realty Co. v Agricultural Ins. Co., 287 AD2d 389, 389-390 [1st Dept 2001]).

As noted by the Court of Appeals in Bi-Economy, a claim for breach of contract and one for bad faith handling of an insurance claim are not necessarily duplicative (id. at 191). The first and second causes of action plead different conduct by defendant and, in any event, defendant did not cross-appeal with respect to Supreme Court’s denial of its motion to dismiss the bad faith claim on the basis of duplication.

legal impossibility and injunctions

AmBase Corp. v Spruce Capital Partners LLC, 2019 NY Slip Op 00352 [1st Dept. 2019]

Insofar as plaintiffs seek a preliminary injunction, that remedy is “a legal impossibility,” and the appeal is moot (Divito v Farrell, 50 AD3d 405, 406 [1st Dept 2008]; see Currier v First Transcapital Corp., 190 AD2d 507, 508 [1st Dept 1993] [“an injunction may not issue to prohibit a fait accompli“]). The strict foreclosure that plaintiffs sought to enjoin occurred more than a year ago, in late August or early September 2017, and we denied plaintiffs’ motion for a stay, pending this appeal, of so much of the order as dissolved the TRO that had been granted (see 2018 NY Slip Op 61540[U] [Jan. 18, 2018]).

Plaintiffs’ request for a declaratory judgment is not moot, because plaintiff 111 West 57th Investment LLC (Investment) might be entitled to damages from defendant 111 W57 Mezz Investor LLC (Junior Mezz Lender) if it is judicially determined that Investment had the right to object to the strict foreclosure pursuant to Uniform Commercial Code (UCC) § 9-620(a)(2)(B) (see Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003])[FN1]. However, the complaint, as currently pleaded, mentions neither damages nor a constructive trust. Similarly, the complaint does not allege that the Spruce defendants acted in bad faith because they colluded with other defendants who are not party to this appeal or that Investment was entitled to object to the strict foreclosure under UCC 9-621(a)(1). As plaintiffs recognize, they need to replead or amend. As the order appealed from does not show that the dismissal was with prejudice, in and of itself, it does not prevent plaintiffs from moving for leave to amend or supplement the complaint.

The bold is mine.

CWCapital Cobalt VR Ltd. v CWCapital Invs. LLC, 2019 NY Slip Op 00408 [1st Dept. 2019]

The court did not abuse its discretion in denying a preliminary injunction (Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]). Plaintiff did not establish a likelihood of success on the merits, because, even without addressing the various questions surrounding plaintiff’s authority under the agreements, it did not take the requisite steps to remove and replace respondents as control class representative and special servicer under the indenture and collateral management agreement (CPLR 6301). Moreover, plaintiff has not shown that it will suffer irreparable harm absent injunctive relief, since the alleged harm would be compensable with monetary damages (id.). Finally, a balance of the equities does not weigh in plaintiff’s favor (Nobu at 839).

Not lost in translation

Watabe v Ci:Labo USA, Inc., 2019 NY Slip Op 00354 [1st Dept. 2019]

The court correctly found, upon renewal, that plaintiffs Sugioka’s and Otani’s affidavits in opposition to defendant’s motion were admissible. The fact that Sugioka and Otani, as well the other plaintiffs, testified at a deposition with the assistance of a Japanese translator does not preclude them from drafting their affidavits in English, and, accordingly, their affidavits did not need to be accompanied by an affidavit by a Japanese translator. Otani’s affidavit that was personally served on defendant was not otherwise inadmissible on the ground that it contained an electronic signature (State Technology Law § 304[2]).

3212(f)

Reid v City of New York, 2019 NY Slip Op 00178 [1st Dept 2019]

The injured plaintiff alleges that he tripped on a defect on a landing and fell down a staircase while residing in a hotel used as transitional housing for homeless families. Defendant Aguila argues it did not owe any duty of care to plaintiff because, at the time of the accident, it did not occupy, control or make special use of the premises (see Balsam v Delma Eng’g Corp., 139 AD2d 292, 296-297 [1st Dept 1988], app dismissed in part, denied in part 73 NY2d 783 [1988]). However, the evidence submitted by Aguila in support of its motion, including a contract between Aguila and the City, was insufficient to demonstrate it lacked “any authority to maintain or control the area in question, or to correct any unsafe condition” (Gibbs v Port Auth. of N.Y., 17 AD3d 252, 254 [1st Dept 2005]; cf. Jackson v Board of Educ. of City of N.Y., 30 AD3d 57, 60 [1st Dept 2006]). Although Aguila’s employee testified that co-defendant Lades Group was solely responsible for maintenance, that employee did not know who owned the premises and neither she nor the City’s witness was personally familiar with the contract, if any, under which Aguila operated at the premises at the time of the accident. Thus, Aguila failed to meet its prima facie burden on the motion for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The motion court also properly denied the motion on the alternate basis that the motion was premature because neither Aguila nor defendant City had provided full responses to discovery demands pertinent to the issues of ownership, control and maintenance of the premises (CPLR 3212[f]; Marabyan v 511 W. 179 Realty Corp., 165 AD3d 581 [1st Dept 2018]).

The bold is mine.

5015 and 22 NYCRR 202.27

Diaz v Perlson, 2019 NY Slip Op 00194 [1st Dept. 2019]

“A motion to vacate a dismissal for failure to appear at a scheduled court conference (22 NYCRR 202.27) must be supported by a showing of reasonable excuse for the failure to attend the conference and a meritorious cause of action” (Biton v Turco, 88 AD3d 519, 519 [1st Dept 2011]). Even assuming that plaintiff set forth a reasonable excuse for the failure to appear at the conference, the court providently exercised its discretion in denying the motion since plaintiff failed to show a meritorious cause of action (see e.g. Barclay v Etim, 129 AD3d 591 [1st Dept 2015], lv dismissed 28 NY3d 948 [2016]).

Thomas v Karen’s Body Beautiful LLC, 2019 NY Slip Op 00241 [1st Dept. 2019]

 We find that the motion court correctly determined that the affidavits constituted mere conclusory denials, which were insufficient to raise an issue of fact as to proper service. (Grinshpun v Borokhovich, 100 AD3d 551, 552 [1st Dept 2012], lv denied 21 NY3d 857 [2013]; Colebrooke Theat. LLP v Bibeau, 155 AD3d 581, 581 [1st Dept 2017], lv dismissed 31 NY3d 1137 [2018]; Reliable Abstract Co., LLC v 45 John Lofts, LLC, 152 AD3d 429, 429 [1st Dept 2017], lv dismissed 30 NY3d 1056 [2018]).

Join em if ya got em AND when does a day end

Matter of Stephen & Mark 53 Assoc. LLC v New York City Dept. of Envtl. Protection, 2019 NY Slip Op 00072 [1st Dept. 2019]

This Court affirms the dismissal of the proceeding on an alternative basis argued to but not reached by the motion court (see Chanin v Machcinski, 139 AD3d 490 [1st Dept 2016]). Petitioner’s failure to join as a party the condominium board, which installed the backflow prevention device in dispute, constitutes a failure to join a necessary party (see Matter of Ferrando v New York City Bd. of Stds. & Appeals, 12 AD3d 287, 288 [1st Dept 2004]). Since the applicable statutory period has expired and the condominium board can no longer be joined, and proceeding in its absence would potentially be highly prejudicial to it, the proper remedy is dismissal of the proceeding rather than joinder of the condominium board (id.; see also CPLR 1001 and 1003).

The proceeding was also properly dismissed against respondent Department of Health for the independent reason that it did not make any final determination within the meaning of article 78 (see CPLR 7801[1], 7803[3]; Matter of Best Payphones, Inc. v Department of Info. Tech. & Telecom. of City of N.Y., 5 NY3d 30, 34 [2005]).

In view of the foregoing, we need not reach the issue of whether the proceeding was timely commenced because a filing made at midnight should be considered as having been made on the day leading up to the midnight. We note, however, that there is conflicting authority regarding whether a day ends at midnight, begins at midnight, or both ends and begins at midnight, and the parties have not cited to any cases involving the precise situation at issue here.

Severed

Drir v U-9 Rest. Assoc., Inc., 2019 NY Slip Op 00079 [1st Dept. 2019]

The motion court providently exercised its discretion in severing the third-party actions, based on the record before it, which reflected that discovery in the main action was complete and discovery in the second third-party action had barely commenced, and that plaintiff would be prejudiced by a delay in further discovery due to a 180-day stay of a liquidation and/or reorganization proceeding involving the insurer for the second third-party defendants (see Golden v Moscowitz, 194 AD2d 385 [1st Dept 1993]; Weber v Baccarat, Inc., 70 AD3d 487 [1st Dept 2010]). Defendants/second third-party plaintiffs retain their right of contribution, which they can exercise, if necessary, upon resolution of the liquidation/reorganization proceeding (see Kharmah v Metropolitan Chiropractic Ctr., 288 AD2d 94 [1st Dept 2001]; Moy v St. Vincent’s Hosp. & Med. Ctr. of N.Y., 92 AD3d 651 [2d Dept 2012]).

Relation back: CPLR 203(f)

Ramirez v Elias-Tejada, 2019 NY Slip Op 00021 [1st Dept. 2019]

CPLR 203(f) is a codification of the relation back doctrine (O’Halloran v Metropolitan Transp. Authority, 154 AD3d 83, 86 [1st Dept 2017]). It provides that “[a] claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions [or] occurrences . . . to be proved pursuant to the amended pleading” (CPLR 203[f]; see also Giambrone v Kings Harbor Multicare Ctr., 104 AD3d 546, 548 [1st Dept 2013]). Application of the relation back doctrine allows a plaintiff to “correct a pleading error—by adding either a new claim or a new party—after the statutory limitations period has expired” (Buran, 87 NY2d at [*3]177). Where, as here, a plaintiff seeks to add new defendants, not just assert more claims against defendants already in the action, the following three conditions must be met before claims against one defendant may relate back to claims against another:

“(1) both claims arose out of same conduct, transaction or occurrence; (2) the new party is united in interest’ with the original defendant, and by reason of that relationship can be charged with such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits and (3) the new party knew or should have known that, but for a[] … mistake by plaintiff as to the identity of the proper parties, the action would have been brought against him as well” (id. at 178 [internal quotation marks omitted]).

***

Ramirez and Peralta failed to submit proof in admissible form entitling them to summary judgment on the threshold issue of serious injury, because the medical records they submitted were not sworn or certified (CPLR 4518[c]). In addition, their cross motion was untimely, and serious injury was not the subject of a timely motion (see Filannino v Triborough Bridge & Tunnel Auth., 34 AD3d 280, 281-282 [1st Dept 2006], appeal dismissed 9 NY3d 862 [2007]). As to liability, Ramirez and Peralta’s argument is merely that they were not culpable. Although lack of culpable conduct also was not the subject of a timely motion, and although Ramirez and Peralta are not entitled to summary judgment on the issue of defendants’ negligence, we grant these plaintiffs summary judgment on the limited issue of their lack of culpable conduct, because defendants do not dispute that as innocent passengers they were not at fault in the happening of the accident (see Oluwatayo v Dulinayan, 142 AD3d 113, 115 [1st Dept 2016]).

CPLR 202: Borrowing Statute

Soloway v Kane Kessler, PC, 2019 NY Slip Op 00026 [1st Dept. 2019]

The court correctly found the complaint time-barred under CPLR 202, New York’s “borrowing statute,” which requires a claim to be timely under both the New York limitations period and that of the jurisdiction where the claim is alleged to have arisen (Kat House Prods., LLC v Paul, Hastings, Janofsky & Walker, LLP, 71 AD3d 580 [1st Dept 2010]).

Discovery

Harris v Kay, 2019 NY Slip Op 00044 [1st Dept. 2019]

The court did not abuse its discretion in striking the complaint, given plaintiff’s repeated, willful and contumacious refusals to provide discovery and to comply with court’s orders over an approximately eight-year period (see McHugh v City of New York, 150 AD3d 561, 562 [1st Dept 2017]; Fish & Richardson, P.C. v Schindler, 75 AD3d 219, 221-222 [1st Dept 2010]; see generally Merrill Lynch, Pierce, Fenner & Smith, Inc. v Global Strat Inc., 22 NY3d 877, 880 [2013]). Even if plaintiff’s response to defendants’ first set of interrogatories could be considered “timely” pursuant to the court’s August 28, 2013 order, despite that the interrogatories were served more than six years prior, the response certainly does not “evince[] a good-faith effort to address the requests meaningfully” (Kihl v Pfeffer, 94 NY2d 118, 123 [1999]).

Brown v Montefiore Med. Ctr., 2019 NY Slip Op 00226 [1st Dept. 2019]

The court’s September 28, 2015 order was predicated on the motion and cross motion by the defendants, the underlying issues of which had already been fully resolved by the parties’ so-ordered stipulation, dated August 4, 2015, issued after a preliminary conference. At the time of the court’s September 28th conditional preclusion order, there was no motion pending, and no request for any relief from the defendants. Given the circumstances, the court should have granted plaintiff’s motion to vacate the judgment. However, this in no way condones plaintiff’s counsel’s clearly dilatory behavior, which, based on the pattern evinced by the record, was willful.

The bold is mine.

Hopkins v City of New York, 2019 NY Slip Op 00388 [1st Dept. 2019]

The parties suspended scheduling of the deposition of the City’s witness on January 14, 2014 when plaintiff withdrew its request for an EBT while other discovery disputes were resolved. Thus, the court orders prior to January 14, 2014 do not support the imposition of sanctions. We agree with Supreme Court that the City’s noncompliance with subsequent disclosure orders did not give rise to an inference of willful and contumacious conduct. Given that there does not appear to be an actual prejudice to plaintiff, the court was within its discretion to provide defendant with one additional opportunity to submit to depositions before striking its answer (Figueroa v City of New York, 129 AD3d 596, 597 [1st Dept 2015]).

We further note that at the time this motion was pending, the City offered to produce the witness at issue.

Williams v Suttle, 2019 NY Slip Op 00163 [2d Dept. 2019]

The drastic remedy of dismissing a complaint for a plaintiff’s failure to comply with court-ordered discovery is warranted where a party’s conduct is shown to be willful and contumacious (see Harris v City of New York, 117 AD3d 790; Almonte v Pichardo, 105 AD3d 687, 688; Arpino v F.J.F. & Sons Elec. Co., Inc., 102 AD3d 201, 210). The willful and contumacious character of a party’s conduct can be inferred from either (1) the repeated failure to respond to demands or comply with court-ordered discovery, without a reasonable excuse for these failures, or (2) the failure to comply with court-ordered discovery over an extended period of time (see Candela v Kantor, 154 AD3d 733, 734; Pesce v Fernandez, 144 AD3d 653, 654; Gutman v Cabrera, 121 AD3d 1042, 1043; Arpino v F.J.F. & Sons Elec. Co., Inc., 102 AD3d at 210).

Here, the willful and contumacious character of the plaintiffs’ actions can be inferred from their repeated failures to comply with the defendant’s notices to appear for depositions and the deadlines set forth in the compliance conference orders over an extended period of time (see Wolf v Flowers, 122 AD3d 728, 729; Matone v Sycamore Realty Corp., 87 AD3d 1113, 1114). Furthermore, the plaintiffs failed to provide an adequate explanation for their repeated failures to comply with court-ordered discovery. While the plaintiffs established that the medical condition of Lawrey, who is a resident of the State of Georgia, required her to avoid travel and that her deposition could be conducted via live video conferencing (see Duncan v 605 Third Ave., LLC, 49 AD3d 494, 496), they did not provide any explanation for their failure to produce Williams, a resident of Westchester County, for a deposition.

Contrary to the plaintiffs’ contention, the defendant, who had first noticed depositions after serving her answer, had priority of depositions (see CPLR 3106[a]; Scalone v Phelps Mem. Hosp. Ctr., 184 AD2d 65, 76-77), and the filing of an amended complaint did not automatically stay discovery.

In any event, when the plaintiffs failed to appear for depositions within the time specified in the conditional order of dismissal, the conditional order became absolute (see Corex-SPA v Janel Group of N.Y., Inc., 156 AD3d at 602; Wei Hong Hu v Sadiqi, 83 AD3d 820, 821; Matter of Denton v City of Mount Vernon, 30 AD3d 600). To be relieved of the adverse impact of the conditional order directing dismissal of the complaint, the plaintiffs were required to demonstrate a reasonable excuse for their failure to appear for depositions and that their cause of action was potentially meritorious (see Gibbs v St. Barnabas Hosp., 16 NY3d 74, 80; Kirkland v Fayne, 78 AD3d 660, 661; Lerner v Ayervais, 16 AD3d 382; Smith v Lefrak Org., 96 AD2d 859, affd 60 NY2d 828). The plaintiffs failed to demonstrate a reasonable excuse for their failure to appear for depositions on or before February 29, 2016.