An LLC's operating agreement and the LLC statute.

Practice point:  The Appellate Division affirmed denial of defendants' motion for summary judgment dismissing the cause of action for a declaration that plaintiff has been and continues to be a co-managing member of the LLC.

Section 7.7 of the company's operating agreement provides that in a case of fraud, misfeasance or breach of the managing member's standard of care, "the Managing Member may be removed by a vote of all of the Members." Since plaintiff, who holds a 50% member interest in the company, was not included in the vote to remove her as co-managing member, her removal did not comply with this section.

Student note:  As the operating agreement is not silent on voting issues, Limited Liability Company Law § 402(f) is not implicated and does not avail defendants.

Case:  Gibber v. Colton, NY Slip Op 05227 (1st Dep't June 30, 2016)

Tomorrow's issue: An auto accident claim dismissed.

Contracts and tort liability in favor of a third-party.

Practice point:  A contractual obligation, standing alone, will not give rise to tort liability in favor of a third party, with three exceptions:  (1) where the contracting party, in failing to exercise reasonable care in the performance of his or her duties, launches a force or instrument of harm; (2) where the plaintiff detrimentally relies on the continued performance of the contracting party's duties; and (3) where the contracting party has entirely displaced the other party's duty to maintain the premises safely.

Student note:  As part of its prima facie showing, a contracting defendant is only required to negate the applicability of the three exceptions that were expressly pleaded by the plaintiff or expressly set forth in the plaintiff's bill of particulars.

Case:  Barone v. Nickerson, NY Slip Op 05107 (2d Dep't June 29, 2016)

Here is the decision.

Monday's issue:  An LLC's operating agreement and the LLC statute.

An ineffective expert affirmation in a medical malpractice action.

Practice point:  The Appellate Division affirmed dismissal of the complaint in this action where defendant made a prima facie showing that it did not deviate from the standard of care in treating plaintiff's decedent. In support of his contention that defendants' failure to treat the decedent with the drug Eculizumab was a proximate cause of her death, plaintiff submitted an expert affirmation that fell short of establishing that Eculizumab was the standard of care for treatment of atypical hemolytic uremic syndrome (aHUS). The expert's strongest statement was that Eculizumab was "a promising new therapy for the treatment of [aHUS] [that] should have been known to her physicians and used by them."

Student note:  While the Supreme Court purportedly denied plaintiff's motion for reargument, since it addressed the merits of the motion and adhered to the original determination, the order is appealable.

Case:  Castilo v. Mt. Sinai Hosp., NY Slip Op 05074 (1st Dep't June 28, 2016)

Here is the decision.

Tomorrow's issue:  Contracts and tort liability in favor of a third-party.

CPLR 203(d) and equitable recoupment on a counterclaim.

Practice point:  Under CPLR 203(d), claims and defenses that arise out of the same transaction as a claim asserted in the complaint are not barred by the statute of limitations, even though an independent action by the defendant might have been time-barred at the time the action was commenced. This provision allows a defendant to assert an otherwise untimely claim which arose out of the same transactions alleged in the complaint, but only as a shield for recoupment purposes, and does not permit the defendant to obtain affirmative relief. Here the Appellate Division found that the defendant's counterclaim alleging legal malpractice relates to the plaintiff's performance under the same retainer agreement pursuant to which the plaintiff would recover, and therefore the counterclaim falls within the permissive ambit of CPLR 203(d).  However, the counterclaim is permitted only to the extent that it seeks to offset any award of legal fees to the plaintiff and not to the extent that it seeks affirmative relief.

Student note:  The Appellate Division affirmed dismissal of the counterclaim alleging breach of contract, as it is duplicative of the counterclaim alleging legal malpractice. This counterclaim is based on the same factual allegations that underlie the malpractice counterclaim and does not allege distinct damages.

Case:  Balanoff v. Doscher, NY Slip Op 04896 (2d Dep't June 22, 2016)

Here is the decision.

Tomorrow's issue:  An ineffective expert affirmation in a medical malpractice action.

An equitable estoppel defense.

Practice point:  The Appellate Division affirmed dismissal of the defamation claim as time-barred.  Plaintiff failed to establish that the doctrine of equitable estoppel bars defendants from asserting a statute of limitations defense to his claims. He contends that defendants' fraud and misrepresentations prevented him from discovering defendants' identity, not that he was lulled into inaction by defendants in order to allow the statute of limitations to lapse. Neither does plaintiff allege a fiduciary relationship between himself and defendants.

Student note:  The Appellate Division noted that, in any event, plaintiff's allegations that he acted diligently in bringing this action are refuted by the two open letters he published. The letters demonstrate that plaintiff had sufficient knowledge to bring an action for more than a year before he commenced this action.

Case:  Bacon v. Nygard, NY Slip Op 05028 (1st Dep't June 23, 2016)

Here is the decision.

Tomorrow's issue:  CPLR 203(d) and equitable recoupment on a counterclaim.

July 4th Weekend

A fall on a wet staircase.

Practice point:  The Appellate Division affirmed denial of defendant's summary judgment motion in this action where plaintiff alleges that, as he was returning to a show at defendant-theater after having gone outside during intermission, he slipped on a wet staircase, causing him to sustain injuries. The evidence submitted by defendant was insufficient to establish prima facie that it lacked constructive notice of the alleged water hazard. Although defendant described its general cleaning routines at the theater, it failed to offer specific evidence as to its activities on the day of the accident, including evidence indicating the last time the staircase was inspected or maintained before plaintiff fell.

Student note:  The Appellate Division noted that, in any event, in opposition, plaintiff raised an issue of fact as to notice of the alleged wet condition and whether defendant had adequate time to remedy the condition, based on his testimony that he told an usher prior to going outside of the theater at intermission that the area was wet, and when he returned 15 minutes later, he slipped and fell in the same area.

Case:  Sada v. August Wilson Theater, NY Slip Op 05024 (1st Dep't June 23, 2016)

Here is the decision.

Tuesday's issue: An equitable estoppel defense.

CPLR 308(4) and the due diligence standard.

Practice point:  Service pursuant to CPLR 308(4), which allows for affixing the summons to the door of the place of business, dwelling place, or usual place of abode, with other prerequisites, may be used only where personal service under CPLR 308(1) and (2) cannot be made with due diligence.

Student note:  "Due diligence" is not defined in the statutory framework, and the term has been interpreted and applied on a case-by-case basis.

Case:  Amtrust-NP SFR, Venture, LLC v. Emmel, NY Slip Op 04894 (2d Dep't June 23, 2016)

Here is the decision.

Tomorrow's issue:  A fall on a wet staircase.

A fall from a ladder and a Labor Law § 240(1) claim.

Practice point:  The Appellate Division rejected defendants' argument that plaintiff was required to demonstrate that the ladder was defective in order to satisfy his burden as to the Labor Law § 240(1) claim. It is sufficient for purposes of liability under section 240(1) that adequate safety devices to prevent the ladder from slipping or to protect plaintiff from falling were absent. As there is no evidence that plaintiff was a recalcitrant worker or that he was not engaged in covered activity, it is sufficient for his claim that his injuries were the direct consequence of using a ladder that did not provide adequate protection.

Student note:  It is irrelevant whether plaintiff fell because the ladder wobbled or because he dropped his wrench.  It is clear that the ladder did not prevent plaintiff from falling and there is no dispute that no safety devices, other than the ladder, were provided.

Case:  Hill v. City of New York, NY Slip Op 05019 (1st Dep't June 23, 2016)

Here is the decision.

Tomorrow's issue:  CPLR 308(4) and the due diligence standard.

Denial of a motion to renew.

Practice point:  The Appellate Division affirmed the denial of the motion, noting that movant's supporting papers were properly rejected by the motion court as they were submitted for the first time in the reply papers. In addition, movant offered no justification whatsoever as to why he did not obtain the new evidence in time to submit it in opposition to the original motion, and did not assert that he made any effort, let alone a diligent effort, to obtain this new evidence, which was readily available.

Student note:  Denial of a motion to reargue is not appealable.

Case:  Amtrust-NP SFR Venture, LLC v. Vazquez, NY Slip Op 04871 (1st Dep't June 21, 2016)

Here is the decision.

Tomorrow's issue:  A fall from a ladder and a Labor Law § 240(1) claim.

Res judicata and a judgment of foreclosure and sale.

Practice point:  A judgment of foreclosure and sale is final as to all questions at issue between the parties, and concludes all matters of defense which were or could have been litigated in the foreclosure action.

Student note:  Under the doctrine of res judicata, a final adjudication of a claim on the merits precludes relitigation of that claim and all claims arising out of the same transaction or series of transactions by a party or those in privity with a party.

Case:  Ciraldo v. JP Morgan Chase Bank, N.A., NY Slip Op. 04686 (2d Dep't June 15, 2016)

Here is the decision.

Tomorrow's issue:  Denial of a motion to renew.