Subject matter jurisdiction.

A party's prior appearances and execution of a stipulation in a New York court do not constitute a waiver of his subject matter jurisdiction defense, as 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.

Matter of Hook v. Snyder, NY Slip Op 02458 (1st Dep't April 22, 2021)

Here is the decision.

Dismissal of a legal malpractice claim.

The Appellate Division unanimously affirmed the Order which granted defendants' motion to dismiss the complaint. There is no basis other than speculation to support the allegation that, in the underlying action, if defendants-attorneys had served notice of entry sooner, the adverse party would not have sought leave to appeal.

Lindenwood Vil., Section C, Coop. Corp. v. Denenberg, NY Slip Op 02463 (1st Dep't April 22, 2021)

Here is the decision.

Motion to vacate dismissal denied.

The Appellate Division affirmed the Order which denied plaintiffs' motion to vacate the earlier order that dismissed the complaint due to their default in opposing defendant's CPLR 3126(3) motion to dismiss, and their numerous failures to comply with the court's discovery orders and to appear for court conferences. Plaintiffs failed to demonstrate both an excusable default and a meritorious defense, pursuant to CPLR 5015[a]. Plaintiffs gave no reasonable excuse for their failure to oppose dismissal, their longstanding pattern of noncompliance with discovery demands and multiple court orders, or their failure to appear at scheduled court conferences. When moving for vacatur, plaintiffs failed to submit medical evidence establishing that their counsel was suffering from a mental condition which would have caused such noncompliance. Plaintiffs also failed to provide sufficient evidence of the merit of the underlying claims insofar as an independent medical examination report was submitted in place of a detailed expert affidavit. Plaintiffs' subsequent medical affidavits were improperly submitted for the first time in reply. The preference for deciding cases on the merits will not justify vacating a default judgment where the moving party has failed to satisfy its burden of establishing a reasonable excuse for the default or a meritorious case.

Liparulo v. New York City Health & Hosps. Corp., NY Slip Op 02464 (1st Dep't April 22, 2021)

Here is the decision.

Summary judgment in a slip and fall action.

At the 50-h hearing regarding the fall on a stairwell, plaintiff offered no evidence of any defect, let alone notice of any defect. He contradicted this testimony with the errata sheet, in which he changed the theory from his foot "catching," presumably on some uneven surface, to his foot "slipping" on a "worn" surface. Plaintiff offered no explanation for the changes in the errata sheet, and so they are not cognizable and he is bound by his original hearing testimony, pursuant to CPLR 3116[a]. Plaintiff attempts to cure this defect by raising the same theory of slipping on a worn surface in his opposition affidavit. However, this raises only feigned issues of fact, however. Plaintiff attempts to generate issues of fact by pointing to the testimony of one of defendant's witnesses to the effect that, after the fall, the New York City Department of Buildings issued a violation and the New York City Department of Citywide Administrative Services replaced all of the steps in the subject building and improved the steps' tread and nosing. However, evidence of post-accident repairs is inadmissible and cannot be used as prior notice of a defect. The fact that the evidence of subsequent repairs might be admissible to show that defendant knew the location of the accident does not render the evidence admissible as proof of fault, nor cure the lack of any triable issue of fact on that account.

Lopez v. City of New York, NY Slip Op 02465 (1st Dep't April 22, 2021)

Here is the decision.

Appellate practice.

Defendants may not argue for the first time on appeal that they are entitled to the recklessness standard of care of Vehicle and Traffic Law § 1103(b), because the question of whether the statute is applicable to this traffic accident is not a pure question of law and depends on facts that are not in the record. 

Salodkaya v. City of New York, NY Slip Op 02478 (1st Dep't April 22, 2021)

Here is the decision.

Service of process.

The Appellate Division reversed the Order which denied defendant's motion to vacate the default judgment or to dismiss the action, and granted the motion to the extent of remanding the matter for a traverse hearing to determine whether the court had jurisdiction to render the default judgment. Defendant's sworn, nonconclusory statement and documentary evidence that the apartment at which he allegedly was served was not his actual dwelling place or usual place of abode raised an issue of fact as to whether plaintiff validly served him with process pursuant to CPLR 308(2). Accordingly, a traverse hearing should be held to determine whether defendant is entitled to relief from the judgment pursuant to CPLR 5015(a)(4).

U.S. Bank N.A. v. Abu, NY Slip Op 02480 (1st Dep't April 22, 2021)

Here is the decision.

Sanctions.

The Appellate Division determined that the trial court providently declined to award sanctions to plaintiff. Defendants' conduct during discovery in serving purportedly deficient boilerplate initial responses, later supplemented by thorough responses, did not rise to the level of frivolous conduct warranting sanctions under 22 NYCRR 130-1.1.

YRN LLC v. Migos LLC, NY Slip Op 02482 (1st Dep't April 22, 2021)

Here is the decision.

A motion to change venue.

The Appellate Division found that Supreme Court improvidently exercised its discretion in granting defendants' motion, and reversed. Defendants failed to show the existence of material witnesses who would be inconvenienced and the substance of their testimony, pursuant to CPLR 510[3]. In fact, defendants did not identify any proposed nonparty witnesses and merely claimed, without any evidentiary support, that material witnesses would be inconvenienced by having to travel to Bronx County. The presumption that a witness will be inconvenienced merely because the courthouse is in a different county is unwarranted, and while the county of occurrence is a factor to be considered, defendants still had the burden of showing the inconvenience that would be sustained by the witnesses if required to testify in Bronx County.

Tawiah v. McNiff, NY Slip Op 02374 (1st Dep't April 20, 2021)

Here is the decision.

Economic duress in contract.

The mere threat by one party to breach a contract by not delivering merchandise, though wrongful, does not, in and of itself, constitute economic duress. It must also appear that the threatened party could not obtain the goods from another source and the ordinary remedy of an action for breach of contract would be inadequate. In addition, one who seeks to recover based on economic duress must act promptly to make its claim known, and its failure to act can be viewed as a ratification of a contractual modification. Here, the court properly found that plaintiff failed to demonstrate a triable issue of fact as to why an action for breach of contract would have been inadequate at the time of the breach, and why it waited 2 ½ years to bring the action.

Gateway Overseas Inc. v. Sumec Textile & Light Indus. Co., Ltd., NY Slip Op 02342 (1st Dep't April 15, 2021)

Here is the decision.

Advance payment retainers.

Where, as here, the retainer agreement is an advance payment retainer, the attorney is permitted to put the retainer funds in his operating account.

Gaulsh v. Diefenbach PLLC, NY Slip Op 02343 (1st Dep't April 15, 2021)

Here is the decision

Sanctions.

The Appellate Division reversed the Order which sua sponte imposed sanctions in the amount of $10,000 on each of the parties, pursuant to 22 NYCRR 130-1.1. Although Supreme Court has the authority to sua sponte raise the issue of sanctions, the parties must be given a reasonable opportunity to be heard before sanctions are actually imposed. Here, the parties' appearance before the court was in connection with an application to for an interim stay of an ongoing trial based upon a disputed arbitration agreement. Supreme Court raised the issue of sanctions for the first time during that appearance. The appearance was brief and mostly related to the issue of the interim stay. While Supreme Court raised valid concerns about whether the parties were wasting valuable court time, when after multiple days of trial had been completed they put before the court a disputed agreement to arbitrate the very issues that were being addressed at trial, the parties were not given a reasonable opportunity to address the court's concerns. The Appellate Division remanded to the Supreme Court to give the parties an opportunity to be heard on the issue of sanctions.

Melohn v. Melohn, NY Slip Op 02344 (1st Dep't April 15, 2021)

Here is the decision.

Appellate practice.

There is no appeal from an order entered on default, pursuant to CPLR 5511. The proper procedure is to move to vacate the default and, if necessary, appeal from the denial of that motion 

Squitieri v. Kaufman, NY Slip Op 02350 (1st Dep't April 15, 2021)

Here is the decision.

Appellate practice.

The Appellate Division affirmed the Order which denied defendants' motion to vacate an order, on defendants' default, granting plaintiff's motion to strike their answer and counterclaims and for a default judgment as to liability on plaintiff's claims against them. Contrary to plaintiff's contention, the order denying defendants' motion to vacate the order striking defendants' answer and counterclaims and entering default judgment is appealable. Since the underlying order was decided on defendants default, that order was not itself appealable, pursuant to CPLR 5511, and the proper procedure was for defendants to move to vacate pursuant to CPLR 5015.

Yes Contr. Inc. v. CLST Enters. LLC, NY Slip Op 02351 (1st Dep't April 15, 2021)

Here is the decision.

Waiver of a defense.

Defendant did not waive his defense based on the release in the settlement agreement by failing to timely assert it, pursuant to CPLR 3211[e]), since he pleaded a defense based on contract in his answer, and a release is a contract. Plaintiffs could not be surprised or prejudiced by his assertion of the defense .

Riehm Corp. v. Brennan, NY Slip Op 02261 (1st Dep't April 13, 2021)

Here is the decision.

Arbitrability.

The Appellate Division reversed the Order granting the petition to permanently stay arbitration, denied the petition, and dismissed the proceeding. Where a contract with an arbitration provision affects interstate commerce, disputes arising thereunder are subject to the Federal Arbitration Act (FAA). Here, the surety agency agreement between corporations from different states gave rise to a finding of interstate commerce, and, therefore, was subject to the FAA. Although a New York court applying the FAA decides whether there is a valid agreement to arbitrate the particular dispute, the parties can agree to arbitrate gateway issues of arbitrability.  The contract provides that, "If a dispute or disagreement arises in connection with this Agreement, including a dispute or disagreement as to its formation or validity, such dispute or disagreement shall be submitted to arbitration." Accordingly, the matter must proceed to arbitration.

Matter of Bergassi Group LLC v. Allied World Ins. Co., NY Slip Op 02265 (1st Dep't April 13, 2021)

Here is the decision.

Stay of arbitrable and nonarbitrable matters.

Where there is a valid arbitration agreement, the court will direct the parties to arbitrate and the pending action is stayed, pursuant to to CPLR 7503(a). The arbitration itself should only be stayed when the only matter to be submitted to arbitration is clearly beyond the arbitrator's power. Where arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where.the determination of issues in arbitration may dispose of nonarbitrable matters.

Protostorm, Inc. v. Foley & Lardner LLP, NY Slip Op 02227 (1st Dep't April 8, 2021)

Here is the decision.

A motion to amend the complaint.

Where, as here, significant discovery is outstanding, the prospect of additional discovery, extended litigation, and increased exposure to liability is not prejudice sufficient to warrant denial of plaintiff's motion to amend.

St. Nicholas W. 126 L.P. v. Republic Inv. Co., LLC, NY Slip Op 02228 (1st Dep't April 8, 2021)

Here is the decision.

Violation of a court order.

A party seeking an order of contempt based on an alleged violation of a court order must establish that there was in effect a lawful order of the court, clearly expressing an unequivocal mandate.

Matter of Donique T. v. Administration for Children's Servs., NY Slip Op 02230 (1st Dep't April 8, 2021)

Here is the decision.

Pleading alter ego.

Plaintiff's allegations that defendants share offices, officers, and ownership, along with conclusory allegations of "domination," are insufficient to allege alter ego liability.

Vitamin Realty Assoc. LLC v. Time Record Stor., LLC, NY Slip Op 02231 (1st Dep't April 8, 2021)

Here is the decision.

CPLR 3126.

The motion court  is afforded broad discretion in supervising disclosure, and, on review, its determinations will not be disturbed unless that discretion clearly has been abused. Here, defendants do not point to any flaw or error in the lower court's reasoning, and so they fail to satisfy the abuse of discretion standard. In addition, the Appellate Division determined that the motion court correctly found that defendants failed to demonstrate that an order of dismissal or preclusion was warranted by the record. It is well settled that the drastic remedy of striking a party's pleading, pursuant to CPLR 3126, for failure to comply with a discovery order is appropriate only where the moving party conclusively demonstrates that the non-disclosure was willful, contumacious or due to bad faith. Even if the proffered excuse is less than compelling, there is a strong preference that matters be decided on their merits. 

Youwanes v. Steinbrech, NY Slip Op 02232 (1st Dep't April 6, 2021)

Here is the decision.

Attorney affirmations and summary judgment.

The Appellate Division unanimously affirmed the Order which denied plaintiffs' motion for summary judgment on their claims against defendants and granted defendants' cross motion for summary judgment dismissing the complaint. Defendants demonstrated by admissible evidence that plaintiffs received payments for services performed on a construction project in excess of the total amount they had invoiced, thereby shifting the burden to plaintiffs to present opposing evidence in admissible form sufficient to demonstrate the existence of a triable issue of fact. Plaintiffs' assertion that some of the payments they received were for services provided on a different project was supported only by an attorney's affirmation, which was insufficient to establish an issue of fact. Addordigly, the motion court properly concluded that defendants established their entitlement to summary judgment dismissing the complaint.

G Bldrs. LLC v. Bondex Ins. Co., NY Slip Op 02101

Here is the decision.

CPLR 3213.

In order to establish prima facie entitlement to summary judgment in lieu of a complaint, a plaintiff must show that the defendant executed a promissory note that contained an unequivocal and unconditional obligation to repay, and that the defendant failed to repay in accordance with the note's terms. Here, the note stated that defendant unconditionally promised to pay plaintiff by the maturity date in exchange for the loan, and it is undisputed that defendant defaulted. Even if the note and the parties' investment were part of the same general transaction, the fact that the investment was not profitable is not a defense to the note, nor were the note and the investment so intertwined as to warrant a stay of judgment on the note. The note was part of an arms-length investment transaction between sophisticated, counseled parties, and the language obligated the defendant in his personal capacity. The fact that the note was secured by a membership interest in a business owned by defendant does not alter its essential character as an instrument for the payment of money only, and, accordingly, is immaterial to plaintiff's right to relief pursuant to CPLR 3213.

Jimmel Yang v. Shang Dai, NY Slip Op 02125 (1st Dep't April 6, 2021)

Here is the decision.

Indemnification.

A contract assuming the duty to indemnify will be strictly construed. Here, the indemnification agreements provided for liability arising out of renovation work to be performed at the premises. The liability asserted in the main action arose prior to the start of the renovation work, and, therefore, was outside the scope of the indemnification agreements. Furthermore, a third-party claim for indemnification is insufficient where the allegations, if proven, would preclude liability on the part of the one asserting the claim for indemnification. 

GFE Jerome Ave. LLC v. Steph-Leigh Assoc., LLC, NY Slip Op 02086 (1st Dep't April 1, 2021)

Here is the decision.

Judicial review of a private university's actions.

Courts retain a restricted role in reviewing the determinations that are made by private universities. A determination to impose discipline will be disturbed only when the university acts arbitrarily and not in the exercise of its honest discretion, when it fails to abide by its own rules, or when the penalty is so excessive that one's sense of fairness is shocked. Students at private universities are not afforded the full range of due process rights unless a threshold showing of State involvement is made, a contention that was not argued by petitioners here. This restricted judicial review applies no matter what stage of the disciplinary process is being challenged. 

Matter of Storino v. New York Univ., NY Slip Op 02087 (1st Dep't April 1, 2021)

Here is the decision.

A parent corporation's liability for a subsidiary.

The Appellate Division unanimously reversed the Order which granted plaintiff's cross motion for leave to amend its complaint to assert a claim of alter ego liability against defendant TPR Holdings, LLC, and denied the cross motion. In New York, a parent corporation generally cannot be held liable for the debts of its wholly owned subsidiary, nor can it be bound by the contract of that subsidiary. There are two circumstances under which a parent will be held liable as a party to its subsidiary's contract: (1) if the parent manifests an intent to be bound by the contract; or (2) if there are the elements of a claim for piercing the corporate veil. Here, the Appellate Division found neither. An intent to be bound can be inferred from the parent's participation in the negotiations of the contract, but the amended complaint is silent on how the business relationship between plaintiff and the subsidiary defendants had evolved. It appears that TPR Holdings initially approached plaintiff about three separate credit accounts for its three subsidiaries. However, there is no allegation about who negotiated the pricing or the general terms of each transaction. Plaintiff acknowledged that the purchase orders were issued separately by the subsidiary defendants. While it appears that TPR Holdings' employees were frequently, but not always, involved in the transactions' creative aspect by approving the order designs, there is no allegation that TPR Holdings directly participated or micro-managed each transaction underlying the purchase orders or acknowledged that it was the actual party in interest. In addition, the complaint is silent on who paid for plaintiff's services. The Appellate Division also found the claim for piercing corporate veils insufficient. Even if TPR Holdings exercised complete domination of the subsidiary defendants, plaintiff failed to allege that the abuse of the corporate form was for the purpose of defrauding plaintiff and causing it an injury. Specifically, plaintiff did not allege that the subsidiary defendants were not legitimate businesses or that they were created for an improper purpose of cutting off plaintiff's ability to collect on the contract, or that corporate funds were purposefully diverted to make any of the three companies judgment proof. The allegation that TPR Holdings caused the subsidiary defendants to breach a contract is not enough to show the requisite wrongdoing.

World Wide Packaging, LLC v. Cargo Cosmetics, LLC, NY Slip Op 02088 (1st Dep't April 1, 2021)

Here is the decision.

Expert disclosures.

The court providently struck plaintiffs' expert disclosure, which failed to disclose the substance of the facts and opinions on which the expert was expected to testify, pursuant to CPLR 3101[d][1] and Rules of the Commercial Division of the Supreme Court, 13[c].

30-32 W. 31st St. LLC v. Heena Hotel, NY Slip Op 02055 (1st Dep't April 1, 2021)

Here is the decision.

Dies irae.

"Quid est veritas?"

The common interest privilege.

The privilege applies where the communication is otherwise protected under the attorney-client privilege and is in furtherance of a legal interest or strategy common to the parties asserting the privilege. The proponent bears the burden of establishing that the information sought is immune from disclosure.

Stafford v. A&E Real Estate Holdings, LLC, NY Slip Op 01956 (1st Dep't March 30, 2021)

Here is the decision.