Arbitrable and non-arbitrable claims.

Where arbitrable and non-arbitrable claims are inextricably interwoven, the court will stay the judicial proceedings pending completion of the arbitration, particularly where, as here, the determination of issues in arbitration may dispose of nonarbitrable matters. The litigation was correctly stayed as to the individual defendants, who, although nonsignatories to the arbitration agreements, were employees, partners, and agents of defendant during the relevant time period and, acting for defendant, performed services for plaintiffs.

T & M Trusteeship & Mgt. Servs. SA v. BDO USA, LLP, NY Slip Op 01494 (1st Dep't March 11, 2021)

Here is the decision.

Collateral estoppel, affidavits, and notices to admit.

The Appellate Division unanimously affirmed, with costs, the Order denying the parties' motions for summary judgment. The doctrine of collateral estoppel does not bar litigation of the issues decided in a Civil Court order and judgment entered in an earlier action between the parties since it was later vacated by the Appellate Term for lack of subject matter jurisdiction. Plaintiff failed to show prejudice arising from the motion court's acceptance of defendant's principal's corrected affidavit, originally submitted as an affirmation, pursuant to CPLR 2106. Nor can plaintiff rely on defendant's failure to respond to its notice to admit in support of its summary judgment motion because a notice to admit may not be used to request admission of material issues or ultimate or conclusory facts, or facts within the unique knowledge of other parties. Rather, a notice to admit is only properly used to eliminate from trial matters which are easily provable and about which there can be no controversy. Based on these principles, plaintiff's motion was properly denied. 

Utopia Heart Care, P.L.L.C. v. Gramercy Cardiac Diagnostic Servs., P.C., NY Slip Op 01373 (1st Dep't March 9, 2021)

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Post-judgment subpoenas.

The Appellate Division unanimously reversed, with costs, the Order which denied petitioner's motion to impose contempt sanctions personally on defendant's principal for failing to respond to post-judgment subpoenas, granted the motion, and remanded for the imposition of sanctions. This special proceeding was commenced to compel defendant to respond to an information subpoena and subpoena duces tecum. The Supreme Court found defendant in contempt due to its failure to respond, and gave defendant an opportunity to purge that contempt. On this motion, petitioner seeks an order holding both defendant and its principal in contempt for the continued failure and refusal to respond to the subpoenas. The motion court erred in failing to find the principal in contempt since he was served with the subpoenas and made assurances that defendant would comply, but has refused and failed to do so.

Matter of Goetz Fitzpatrick LLP v. OTR Media Group, Inc., NY Slip Op 01374 (1st Dep't March 9, 2021)

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Motions to reargue.

The movant may not advance a new argument in its motion for reargument. Nor is CPLR 5019(a) a proper vehicle for seeking changes to a prior order that would affect a substantial right of a party.

388 Realty Owner LLC v. Amtrust Intl. Underwriters Ltd., NY Slip Op 01350 (1st Dep't March 9, 2021)

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CPLR 2221[e].

The Appellate Division unanimously reversed, with costs, the Order which denied plaintiffs' motion for leave to renew defendant's motion for summary judgment, granted the motion, and upon renewal, denied defendant's motion for summary judgment. Decedent had applied for a term life insurance policy, stating that his "Earned Annual Income" was $50,000. Decedent left his employment during the probationary period, and died while the policy was contestable, The insurance company rescinded the policy on the ground that decedent, on his application, had made a material misrepresentation as to his income. Plaintiffs brought this breach of contract action, and defendant moved for summary judgment before the close of discovery. While defendant's fully submitted motion was pending, there were three depositions, of an underwriting controls representative, a senior technical advisor, and the agent who sold the policy to decedent. The motion court granted defendant's motion for summary judgment, and then denied plaintiffs' motion for leave to renew defendant's motion based on these subsequently held depositions. The motion court should have granted plaintiffs motion for leave to renew in order to submit these deposition transcripts. Although the term "Earned Annual Income" was unambiguous and meant actual earned income, including salary, wages, and tips, and not potential income, the new evidence by way of the deposition transcripts raises a factual issue as to whether decedent's response amounted to a material misrepresentation sufficient to void the policy.

Han v. Brighthouse Life Ins. Co. of NY, NY Slip Op 01325 (1st Dep't March 4 2021)

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Appellate practice.

This appeal from an order appointing a temporary independent Guardian for the Alleged Incapacitated Person (AIP) and vacating her power of attorney and health care proxy in favor of appellant was unanimously dismissed as moot, as the AIP died during the pendency of the appeal. Appellant argues that the adverse finding concerning his handling of the AIP's affairs will affect him in the future, but he fails to indicate how he will be adversely affected. Any issues concerning the future award of fees to the temporary guardian may be raised in the event of an appeal of that award.

Matter of Muser v. Muser, NY Slip Op 01332 (1st Dep't March 4, 2021)

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A conditional order of preclusion.

Where defendants ignored a so-ordered stipulation which was a conditional order of preclusion, they are precluded from adducing evidence at trial. The order became self-executing when defendants took no action within the 30-day time limit in which they were to provide the requested discovery or "request [an] immediate conference" to explain why they could not do so. Defendants did neither.

Papadopoulos v. Metropolitan Transp. Auth., NY Slip Op 01434 (1st Dep't March 4, 2021)

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An invalid joint tenancy.

Plaintiff is a publicly traded closed-end investment company, and the individual defendant is the founder and controlling person of defendant management companies. Plaintiff moved for partial summary judgment declaring that certain brokerage accounts were not valid joint tenancies under New York law. The Appellate Division noted that there are two key features in every joint tenancy. First, during the life of the tenancy, each tenant is entitled to one-half of the assets, even if only one tenant may have established and contributed to the asset. Second, upon the death of one of the tenants, the whole fund will vest in the surviving joint tenant. Accordingly, the Appellate Division affirmed the motion court's conclusion that a valid joint tenancy was never created, regardless of the individual defendant's professed intent, because the Participant Agreement makes it clear that the participants were not entitled to one-half the funds in the accounts. Moreover, at least one version of the Participant Agreement limited the participants' entitlement to only 5%, as opposed to 100%, of the funds in the account in the event he or she outlived the individual defendant.

Prospect Capital Corp. v. Lathen, NY Slip Op 01431 (1st De['t March 4, 2021)

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CPLR 203(d).

The parties agreed in a written stipulation that plaintiffs could discontinue their prior action without prejudice and commence a new action on the same claims, provided it was timely done within 30-days of the discontinuance. Plaintiffs satisfied the stipulation's conditions when commencing this new action, and a stipulation between parties to discontinue a prior action should be given its intended effect. Defendants are not precluded from asserting a counterclaim in this new action despite not having asserted one in the prior action, even though the statute of limitations has run. The CPLR authorizes a defendant to assert any counterclaims or defenses that may arise out of the same transactions or occurrences upon which a claim in the complaint depends, provided such counterclaim or defense serves as only a shield to the extent of the demand in the complaint, and even though the counterclaim may be time-barred. Here, plaintiffs, in their complaint, allege that defendants breached the parties' agreements for providing elevator services and equipment. "Count 1" of defendants' counterclaim sufficiently pleads a counterclaim for quasi contract based on allegations that defendants provided elevator services and materials to plaintiffs and invoiced plaintiffs for such work, but plaintiffs never made payment on such invoices. "Count 2" of the counterclaim, which alleges detrimental reliance and promissory estoppel in connection with plaintiffs' alleged promises to pay defendants for their services and materials, lacks factual allegations of a sufficiently clear and unambiguous promise, reasonable reliance by defendants on the purported promises, and injury caused by the reliance. This claim is dismissed for failure to state a claim.

Rusi Holding Corp. v. Inner City EL, NY Slip Op 01344 (1st Dep't March 4, 2021)

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The City's liability for emergency calls.

The Appellate Division unanimously affirmed the Order which granted defendant City of New York's motion to dismiss the complaint pursuant to CPLR 3211(a)(7) and 3212(a). Plaintiffs claim that the City's agent negligently chose a lower priority radio dispatch code in response to the decedent off-duty police officer's 911 call regarding a possible burglary in the house next door, and that the use of a lower priority code resulted in police arriving later than they might have if a higher priority code had been used. The City established that the defense of governmental function immunity applies in this case, as its agent's duties inherently entailed the exercise of discretion and judgment, and that the assignment of an applicable dispatch code based on the limited information provided by the decedent resulted from discretionary decision-making. The court correctly dismissed plaintiffs' General Municipal Law § 205-e claim for failure to identify noncompliance with a requirement found in a well developed body of law or regulation that imposes clear duties.

Estate of Enchautegui v. City of New York, NY Slip Op 01231 (1st Dep't March 2, 2021)

Here is the decision.

Vacatur of a default.

The Appellate Division unanimously reversed, on the law, the Order which granted defendant's motion to vacate the judgment, as defendant failed to demonstrate a reasonable excuse for its default or a meritorious defense to the action to justify vacatur. Plaintiff's service of process was deemed complete when defendant's registered agent in Delaware was served, regardless of whether it ultimately reached defendant. Moreover, the affidavit from defendant's CEO, stating that the email from the registered agent regarding service of process was sent to his "promotions" inbox, is simply insufficient to rebut the presumption of proper service. Defendant does not dispute that it breached its obligation to update its address with its registered agent, which led to its failure to receive service of process. Even if defendant's excuse were deemed reasonable, it failed to demonstrate a meritorious defense to the action. There is no evidence that defendant maintained the payments owed to plaintiff in a purported "reserve fund," or that plaintiff had knowledge of or ever agreed to the creation of such a fund. Indeed, emails from defendant's CEO to plaintiff's representatives suggest that defendant knew that it owed plaintiff the amounts sought.

Practice point: Defendant is also not entitled to relief under CPLR 317. Regardless of whether plaintiff served defendant's agent for service designated under CPLR 318, a meritorious defense is required under CPLR 317.

Salish Lodge LLC v. Gift Mgt. Inc., NY Slip Op 01239 (1st Dep't March 2, 2021)

Here is the decision.