Friday, May 18, 2018

MORE ON VACATING DEFAULT



Nationstar Mtge., LLC v Dekom, 2018 NY Slip Op 03533, Decided on May 16, 2018, Appellate Division, Second Department:

"We agree with the Supreme Court's rejection of the defendant's claim of lack of personal jurisdiction. A process server's affidavit of service constitutes prima facie evidence of [*2]proper service (see Summitbridge Credit Invs., LLC v Wallace, 128 AD3d 676; JPMorgan Chase Bank, N.A. v Todd, 125 AD3d 933). "Although a defendant's sworn denial of receipt of service generally rebuts the presumption of proper service established by a process server's affidavit and necessitates an evidentiary hearing, no hearing is required where the defendant fails to swear to specific facts to rebut the statements in the process server's affidavits" (Deutsche Bank Natl. Trust Co. v Quinones, 114 AD3d 719, 719 [internal quotation marks omitted]; see Bank of N.Y. v Samuels, 107 AD3d 653). Affix and mail service pursuant to CPLR 308(4) may be used only where service under CPLR 308(1) by personal delivery or CPLR 308(2) by delivery to a person of suitable age and discretion cannot be made with due diligence (see CPLR 308[4]; Deutsche Bank Natl. Trust Co. v White, 110 AD3d 759, 759-760; Estate of Waterman v Jones, 46 AD3d 63, 65).

The term "due diligence," which is not defined by statute, has been interpreted and applied on a case-by-case basis (see Estate of Waterman v Jones, 46 AD3d at 66). As a general matter, the "due diligence" requirement may be met with "a few visits on different occasions and at different times to the defendant's residence or place of business when the defendant could reasonably be expected to be found at such location at those times" (id.; see Deutsche Bank Natl. Trust Co. v White, 110 AD3d at 760). In this case, the plaintiff submitted affidavits from the process server which demonstrated that four visits were made to the defendant's residence at different times when the defendant could reasonably have been expected to be found at home. The process server also described the means she used to verify the defendant's residential address, and described her unsuccessful attempt to ascertain the defendant's place of employment. We agree with the Supreme Court that the affidavits constituted prima facie evidence that the due diligence requirement was satisfied (see JP Morgan Chase Bank, N.A. v Baldi, 128 AD3d 777, 777-778). The affidavits also constituted prima facie evidence that the process server properly affixed a copy of the summons and complaint to the door of the defendant's residence, and mailed a copy to the residence by first class mail. Contrary to the defendant's contention, he failed to rebut the presumption of proper service arising from the process server's affidavits. Further, the summons contained statutorily mandated language warning the defendant that the failure to serve an answer to the complaint may result in a default judgment and advising him to speak to an attorney (see generally RPAPL 1320).

We agree with the Supreme Court's denial of the defendant's motion, in effect, to vacate his default in answering, and his motion to vacate the default judgment and/or stay its enforcement, since he failed to proffer a reasonable excuse for his default (see Wells Fargo Bank, N.A. v Mazzara, 124 AD3d 875, 875, citing Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141). In view of the lack of a reasonable excuse, it was unnecessary for the Supreme Court to consider whether the defendant demonstrated the existence of a potentially meritorious defense (see Wells Fargo Bank, N.A. v Mazzara, 124 AD3d at 875)."

Thursday, May 17, 2018

FREE SENIOR LAW CLINIC TODAY



The next Senior Clinic is scheduled for today 9:30-11am at the Nassau County Bar Association, 15th and West Streets, Mineola, NY 11501.

I will be one of the volunteer lawyers.

Wednesday, May 16, 2018

SEEKING VISITATION WHILE INCARCERATED



Matter of Irizarry v Jorawar, 2018 NY Slip Op 03360, Decided on May 9, 2018, Appellate Division, Second Department:

"The mother and the father are the parents of two minor children. The father has been incarcerated since December 2005 for his conviction of murder in the second degree. His earliest possible parole date is in 2023. He last saw the children in 2007 or 2008, when they were both under five years old. In 2008, the mother was granted an order of protection against the father for threats he allegedly made against her by mail and telephone. Other than an exchange of correspondence between the father and the mother and children several years ago, there had been no communication between the father and the children since 2010. In 2014, the father filed a petition for visitation with the children. After a fact-finding hearing, at which the forensic evaluator, the mother, and the father testified, the Family Court determined that visitation between the father and the children was not in the children's best interests and directed, instead, that the father be permitted to send mail correspondence to the children at an address to be provided by the mother. The father appeals.

Initially, contrary to the mother's contention, the father is aggrieved by the order since it did not award him the complete relief he requested (see CPLR 5511; Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 544-545).

The Family Court properly denied that branch of the father's petition which sought in-person visitation. The paramount concern when making a visitation determination is the best interests of the children under the totality of the circumstances (see Matter of Wilson v McGlinchey, 2 NY3d 375, 380-381; Matter of Diaz v Garcia, 119 AD3d 682; Matter of Boggio v Boggio, 96 AD3d 834). "[V]isitation with a noncustodial parent is presumed to be in the best interests of a child, even when that parent is incarcerated" (Matter of Georghakis v Matarazzo, 123 AD3d 711; [*2]see Matter of Granger v Misercola, 21 NY3d 86, 90; Matter of Franklin v Richey, 57 AD3d 663, 664). That presumption may be rebutted, however, by demonstrating, by a preponderance of the evidence, that "under all the circumstances visitation would be harmful to the child's welfare, or that the right to visitation has been forfeited" (Matter of Granger v Misercola, 21 NY3d at 91). Here, there is a sound and substantial basis in the record for limiting the father's contact with the children to mail correspondence (see Matter of Granger v Misercola, 96 AD3d 1694, 1695, affd 21 NY3d 86). A preponderance of the evidence demonstrated that visitation would be harmful to the children's welfare."

Tuesday, May 15, 2018

WHAT IS A FAMILY OFFENSE?



Matter of Lashlee v Lashlee, 2018 NY Slip Op 03362, Decided on May 9, 2018, Appellate Division, Second Department:

"The parties are divorced and have two children together. In April 2016, during the pendency of the divorce action, the petitioner (hereinafter the father) commenced this family offense proceeding against the respondent (hereinafter the mother), alleging that the youngest child "came running over to him, yelling at [him], Mommy said you're nothing but a liar, you don't have a job" and, on another occasion, stated "Mommy said that you kidnapped my brother." The petition alleged, inter alia, that these acts constituted the family offenses of harassment in the first and second degrees. Thereafter, the mother moved, inter alia, pursuant to CPLR 3211(a)(7) to dismiss so much of the petition as alleged that she had committed acts constituting those two family offenses. The Family Court, inter alia, granted those branches of the motion. The father appeals.

In a family offense proceeding, the petitioner has the burden of establishing the offense by a fair preponderance of the evidence (see Family Ct Act § 832; Matter of Davis v Wright, 140 AD3d 753, 754; Matter of Frimer v Frimer, 143 AD3d 895; Matter of Jordan v Verni, 139 AD3d 1067; Matter of Ramdhanie v Ramdhanie, 129 AD3d 737). However, "[a] family offense petition may be dismissed without a hearing where the petition fails to set forth factual allegations which, if proven, would establish that the respondent has committed a qualifying family offense" (Matter of Brown-Winfield v Bailey, 143 AD3d 707, 708; see Matter of Davis v Venditto, 45 AD3d 837). "In determining a motion to dismiss a family offense petition pursuant to CPLR 3211(a)(7), the petition must be liberally construed, the facts alleged in the petition must be accepted as true, and the petitioner must be granted the benefit of every favorable inference'" (Matter of Xin Li v Ramos, 125 AD3d 681, 682, quoting Matter of Arnold v Arnold, 119 AD3d 938, 939).

Contrary to the father's contention, liberally construing the allegations of the family offense petition and giving it the benefit of every possible favorable inference, the petition failed to allege acts which, if committed by the mother, would constitute the family offenses of harassment in the first or second degree (see Family Ct Act § 812[1]; Penal Law §§ 240.25, 240.26). Accordingly, the Family Court properly granted those branches of the mother's motion which were to dismiss so much of the father's family offense petition as alleged that the mother committed acts that constituted the family offenses of harassment in the first and second degrees (see CPLR 3211[a][7]; see Leon v Martinez, 84 NY2d 83)."

Monday, May 14, 2018

DEATH OF A PARTY



American Airlines Fed. Credit Union v Costello, 2018 NY Slip Op 03335, Decided on May 9, 2018, Appellate Division, Second Department:

"The plaintiff commenced this action against, among others, the defendants Michael Costello and Susan Costello (hereinafter together the homeowners) to foreclose a mortgage. In addition to the judicial sale of the subject property, the complaint sought a deficiency judgment against the homeowners.

After the action was commenced, the defendant Michael Costello died. The plaintiff thereafter moved for summary judgment on the complaint and dismissing the affirmative defenses [*2]asserted by the homeowners in their joint answer, and for an order of reference.

.......

As a general matter, "the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a legal representative for that decedent pursuant to CPLR 1015(a)" (NYCTL 2004-A Trust v Archer, 131 AD3d 1213, 1214; see CPLR 1015, 1021; Aurora Bank FSB v Albright, 137 AD3d 1177, 1178; U.S. Bank N.A. v Esses, 132 AD3d 847, 847-848; JPMorgan Chase Bank, N.A. v Rosemberg, 90 AD3d 713, 714). "[A]ny determination rendered without such a substitution will generally be deemed a nullity" (Singer v Riskin, 32 AD3d 839, 840; see Aurora Bank FSB v Albright, 137 AD3d at 1178; NYCTL 2004-A Trust v Archer, 131 AD3d at 1214).

Here, the defendant Michael Costello died before the plaintiff's motion was made and before the orders appealed from were issued. Since a substitution had not been made, the Supreme Court should not have determined the merits of the plaintiff's motion, even to the extent that the plaintiff sought relief against the other defendants (see Aurora Bank FSB v Albright, 137 AD3d at 1178; U.S. Bank Natl. Assn. v Esses, 132 AD3d at 847-848; NYCTL 2004-A Trust v Archer, 131 AD3d at 1214; JPMorgan Chase Bank, N.A. v Rosemberg, 90 AD3d at 714). Furthermore, although this Court has recognized, under certain limited circumstances, that "where a party's demise does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution" (U.S. Bank N.A. v Esses, 132 AD3d at 848), those circumstances are not present here (see Aurora Bank FSB v Albright, 137 AD3d at 1178; U.S. Bank N. A. v Esses, 132 AD3d at 847-848; cf. HSBC Bank USA v Ungar Family Realty Corp., 111 AD3d 673, 673; Bank of N.Y. Mellon Trust Co. v Ungar Family Realty Corp., 111 AD3d 657, 658-659; DLJ Mtge. Capital, Inc. v 44 Brushy Neck, Ltd., 51 AD3d 857, 858)."

Thursday, May 10, 2018

PROVING AN ORAL LOAN AGREEMENT



Licata v Cuzzi, 2018 NY Slip Op 03348, Decided on May 9, 2018, Appellate Division, Second Department:

"The plaintiff commenced this action to recover damages for breach of contract, and moved for summary judgment on the complaint after issue was joined. In support of his motion for summary judgment, the plaintiff submitted his own affidavit in which he averred, among other things, that on November 28, 2014, he loaned the defendant the sum of $200,000 by issuing a personal check to him in that amount. He submitted a copy of a canceled check demonstrating that the check was deposited into the defendant's personal bank account. According to the parties' verbal agreement, the defendant was required to repay the loan to the plaintiff in four quarterly installments of $50,000, with the last installment due on November 28, 2015. The plaintiff averred that the defendant made the first three quarterly payments, but failed to make the last payment. The plaintiff submitted canceled checks showing that the defendant made three of the quarterly payments totaling the sum of $150,000. The plaintiff averred that, upon demand, the defendant refused to pay the last [*2]installment. The plaintiff's submission of his affidavit, along with the canceled checks, was sufficient to meet his burden of establishing his prima facie entitlement to judgment as a matter of law (see Bell v Xanthopoulos, 202 AD2d 910, 911; Costantini v Bimco Indus., 125 AD2d 531, 531).

In opposition, the defendant failed to raise a triable issue of fact. The defendant's affidavit did not rebut the plaintiff's evidence showing, inter alia, that the plaintiff loaned him the sum of $200,000, that the defendant made three of the installment payments, and that the defendant failed to make the last payment. The defendant's unsupported, vague, and conclusory allegations of alleged wrongdoing on the part of the plaintiff or a company affiliated with the plaintiff were insufficient to raise a triable issue of fact (see Griffon V, LLC v 11 E. 36th, LLC, 90 AD3d 705, 707; Jin Sheng He v Sing Huei Chang, 83 AD3d 788, 789; Ihmels v Kahn, 126 AD2d 701, 702). Moreover, given that the information necessary to oppose the motion was within the personal knowledge of the defendant, summary judgment was not premature. "The mere hope that evidence sufficient to defeat the motion might be uncovered during the discovery process is an insufficient basis for denying the motion" (Lamore v Panapoulos, 121 AD3d 863, 864; see Merchant v Greyhound Bus Lines, Inc., 45 AD3d 745, 746).

Accordingly, we agree with the Supreme Court that the plaintiff was entitled to summary judgment on the complaint."

Wednesday, May 9, 2018

UNEMPLOYMENT INSURANCE - ANOTHER MISCLASSIFICATION CASE



MATTER OF COWAN v. BIMBO FOODS BAKERIES DISTRIBUTION, INC., 2018 NY Slip Op 2229 - NY: Appellate Div., 3rd Dept. 2018:

""Whether an employment relationship exists within the meaning of the unemployment insurance law is a question of fact, no one factor is determinative and the determination of the . . . [B]oard, if supported by substantial evidence on the record as a whole, is beyond further judicial review even though there is evidence in the record that would have supported a contrary conclusion" (Matter of Concourse Ophthalmology Assoc. [Roberts], 60 NY2d 734, 736 [1983] [citations omitted]; see Matter of Empire State Towing & Recovery Assn., Inc. [Commissioner of Labor], 15 NY3d 433, 437 [2010]). "An employer-employee relationship exists when the evidence demonstrates that the [purported] employer exercises control over the results produced by claimant or the means used to achieve the results" (Matter of Hertz Corp. [Commissioner of Labor], 2 NY3d 733, 735 [2004] [citation omitted]). The control over the means employed is the more important factor to be considered (see Matter of Empire State Towing & Recovery Assn., Inc. [Commissioner of Labor], 15 NY3d at 437; Matter of Ted Is Back Corp. [Roberts], 64 NY2d 725, 726 [1984]). "All aspects of the arrangement must be examined to determine whether the degree of control and direction reserved to the [purported] employer establishes an employment relationship" (Matter of Villa Maria Inst. of Music [Ross], 54 NY2d 691, 692 [1981] [citations omitted]).

Initially, we are unpersuaded by the company's contention that the Board erred in determining that claimant was an employee as a matter of law pursuant to Labor Law § 511 (1) (b). Labor Law § 511 (1) (b) defines "[e]mployment" for unemployment insurance purposes to include "any service by a person for an employer . . . as an agent-driver or commission-driver engaged in distributing . . . bakery products." According to the company, claimant did not earn a commission but earned revenue upon selling the bakery products that he purchased at prices set by him. The record, however, supports the Board's finding that the actual relationship between the parties did not constitute that of a buyer and seller. No money was exchanged in connection with claimant's alleged purchases and, pursuant to the terms of the distribution agreement, he was credited for returned stale products. Further, any hypothetical change in pricing negotiated by claimant with customers would only have resulted in a smaller commission as calculated by a set percentage. The company also asserts that the remuneration earned by claimant was not a "commission" as defined in Labor Law § 191-a (a), but overlooks that said definition is limited to issues relating to the payment of wages under Labor Law article 6 (see Klepner v Codata Corp., 139 Misc 2d 382, 385 [1988], affd 150 AD2d 994 [1989]). In view of the foregoing, substantial evidence supports the Board's finding that claimant earned a commission and qualified as an employee under Labor Law § 511 (1) (b).

Additionally, we find that substantial evidence supports the Board's finding that the company exercised sufficient supervision, direction and control over claimant to establish an employer-employee relationship under common-law principles. The company retained numerous rights under the distribution agreement, including the right to set the price of the products sold to claimant and the right to negotiate with chain outlets to determine price and terms of sale, and it retained the authority to sell distribution rights purchased by claimant or perform his delivery obligations under certain circumstances. Claimant was further required to deliver fresh products and remove stale products in a defined area, sell any additional products provided by the company, cooperate with its marketing programs, remit settlement information to it each week, maintain certain chain outlet customers even if not profitable to him and not engage in any business activity that directly competed with the company or interfered with his obligations under the distribution agreement. In addition, claimant was interviewed by the company, relied on certain equipment and supplies provided by it, was paid on a weekly basis and was trained, instructed, supervised and monitored by a company manager regarding his deliveries. Considering the foregoing, we find no reason to disturb the Board's finding that the company exercised sufficient control over claimant and those similarly situated to establish an employer-employee relationship, despite evidence in the record that could support a contrary conclusion (see Matter of Mastroianni Bros., Inc. [Commissioner of Labor], 130 AD3d 1117, 1119 [2015]; Matter of Francis [West Sanitation Servs.-Sweeney], 246 AD2d 751, 752 [1998], lvs dismissed 92 NY2d 886 [1998], 93 NY2d 833 [1999]; Matter of Pepsi Cola Buffalo Bottling Corp. [Hartnett], 144 AD2d 220, 222 [1988]; Matter of Oakes [Stroehman Bakeries-Roberts], 137 AD2d 927, 928 [1988])."

Tuesday, May 8, 2018

ARBITRATING A DIVORCE



Zar v Yaghoobzar, 2018 NY Slip Op 03170, Decided on May 2, 2018, Appellate Division, Second Department:

"The parties were married in 1968 and have two adult children together. In April 2013, the wife, who was represented by counsel, commenced an action in Nassau County for a divorce and ancillary relief. The action was voluntarily discontinued on August 13, 2013, after the parties agreed to submit to binding arbitration before the Beit Din Tzedek Bircat Mordechai (hereinafter the Beit Din) "any matter relating to the dissolution of their marriage and divorce," including "any issues of division of property." It is undisputed that both parties participated in the arbitration, and the Beit Din thereafter issued its award on August 23, 2014.

In March 2015 the wife subsequently commenced the instant action for a divorce and ancillary relief, and the husband raised an affirmative defense asserting that the Supreme Court lacked jurisdiction based on the existence of the agreement to arbitrate and the Beit Din's award. The husband also commenced a separate proceeding pursuant to CPLR article 75 to confirm the Beit Din's award and for the entry of a judgment pursuant to CPLR 7514. The wife opposed the petition [*2]and moved to vacate the award. The wife also separately moved, inter alia, to strike the husband's affirmative defense in the divorce action. The action and proceeding were eventually joined, and each party thereafter submitted papers in support of their respective motions and in opposition to the relief sought by the other party.

By order entered July 5, 2016, the Supreme Court denied the husband's petition and, in effect, granted that branch of the wife's motion which was to vacate the Beit Din's award. The order also, in effect, granted that branch of the wife's separate motion which was to strike the husband's affirmative defense in the divorce action and directed both parties to file and exchange affidavits of net worth and retainer statements and to appear for a preliminary conference. The court determined, inter alia, that the Beit Din's award was irrational, violative of public policy, and unconscionable on its face. The husband appeals, and we reverse.

As a threshold matter, the wife's contentions that she was coerced by the husband to sign the agreement to arbitrate and that she could not understand the agreement because of her limited comprehension of English cannot be entertained, as such contentions speak to the validity of the underlying agreement to arbitrate, which, in the context of a proceeding to confirm an award, may only be challenged by "a party who neither participated in the arbitration nor was served with a notice of intention to arbitrate" (CPLR 7511[b][2][ii]). Since it is undisputed that the wife participated in the arbitration, she is precluded at this juncture from claiming that there was no valid agreement to arbitrate (see Matter of Meisels v Uhr, 79 NY2d 526, 538).

Judicial review of an arbitration award is extremely limited (see CPLR 7510, 7511; Matter of Reddy v Schaffer, 123 AD3d 935, 936). "Outside of the narrowly circumscribed exceptions of CPLR 7511, courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact'" (Dedvukaj v Parlato, 136 AD3d 733, 733-734, quoting Matter of Eastman Assoc., Inc. [Juan Ortoo Holdings, Ltd.], 90 AD3d 1284, 1284).

"An award is irrational only where there is no proof whatever to justify the award" (Matter of Reddy v Schaffer, 123 AD3d at 937). Moreover, that showing must be made by clear and convincing evidence (see Matter of County of Nassau v Civil Serv. Empls. Assn., 150 AD3d 1230). Here, the very limited record does not even reveal what evidence was submitted to the arbitrators regarding, among other things, the parties' assets and financial condition. Therefore, the Supreme Court lacked any basis upon which to conclude that the award was irrational.

"An arbitration award violates public policy only where a court can conclude, without engaging in any extended fact-finding or legal analysis, that a law prohibits the particular matters to be decided by arbitration, or where the award itself violates a well-defined constitutional, statutory, or common law of this state" (Matter of Reddy v Schaffer, 123 AD3d at 937). Here, the Supreme Court found that the award was per se violative of public policy because the arbitrator failed to apply Domestic Relations Law § 236(B) (hereinafter the Equitable Distribution Law) in deciding issues relating to maintenance and the distribution of marital assets. This was error.

The fact that parties may contractually elect to depart from the provisions of the Equitable Distribution Law (see Domestic Relations Law § 236[B][3]) supports the view that strict compliance with its terms is not mandated as a matter of New York public policy (cf. Hirsch v Hirsch, 37 NY2d 312, 315-316; Matter of Luttinger, 294 NY 855). Unlike in matters of child support, for instance, where closer scrutiny of awards for compliance with Domestic Relations Law § 240(1-b) and the best interests of the children is warranted by reason of the court's duty as parens patriae (see e.g. Matter of Goldberg v Goldberg, 124 AD3d 779, 780; Berg v Berg, 85 AD3d 952, 953), public policy does not generally preclude spouses from charting their own course with respect to financial matters affecting only themselves.

Moreover, we disagree with the Supreme Court's determination that the Beit Din's award was unconscionable on its face. Unconscionability is a doctrine grounded in contract law, which can be applied to invalidate an agreement to arbitrate (see Sablosky v Gordon Co., 73 NY2d 133, 138; Arabian v Arabian, 79 AD3d 517) or a marital agreement entered into before or during the marriage (see Domestic Relations Law § 236[B][3]). The doctrine, which requires proof of both procedural unconscionability in the formation of the contract, as well as substantive unconscionability in the terms of the contract (see generally Simar Holding Corp. v GSC, 87 AD3d [*3]688), is not a statutory ground upon which an arbitration award may be reviewed, let alone set aside (see CPLR 7511). If the arbitral procedure was tainted by corruption, fraud, or misconduct, or the partiality of an arbitrator appointed as a neutral, the proper remedy is to move to vacate the award pursuant to CPLR 7511(b)(1)(i) or (ii). Here, the wife failed to establish any such grounds to vacate the award."

Monday, May 7, 2018

FREE MORTGAGE FORECLOSURE CLINIC TODAY



I will be volunteering today at the Nassau County Bar Association's free clinic for Mortgage Foreclosure, Bankruptcy and Superstorm Sandy issues, from 3pm to 6pm.

For more information, contact Nassau County Bar Association, 15th and West Streets, Mineola, NY 11501 at (516) 747-4070

Friday, May 4, 2018

MORTGAGE FORECLOSURE - WAIVING LACK OF JURISDICTION



In this case, three years after failing to appear, defendant retains counsel but it appears that defendant, after retaining counsel, does not make a motion to vacate default and file a late answer pursuant to CPLR 3012. Only a motion to dismiss for lack of jurisdiction is made after judgment of foreclosure.

U.S. Bank N.A. v Pepe, 2018 NY Slip Op 03168, Decided on May 2, 2018, Appellate Division, Second Department:

"In November 2009, the plaintiff commenced this action against Anthony Pepe (hereinafter the defendant), among others, to foreclose a mortgage. The defendant failed to timely appear or answer the complaint. Thereafter, the Supreme Court, upon the plaintiff's motion, issued a judgment of foreclosure and sale dated October 27, 2014. In June 2015, the defendant moved, inter alia, to vacate the judgment of foreclosure and sale and to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction based on improper service. In opposition, the plaintiff argued that the defendant waived any objection to personal jurisdiction by appearing in the action. By order dated October 7, 2015, the Supreme Court referred the matter to a referee for a hearing to determine the validity of service of process. After the hearing, the referee issued a report in which she found that service was not properly made and that jurisdiction was not obtained over the defendant. The defendant moved pursuant to CPLR 4403 to confirm the referee's report, to vacate the judgment of foreclosure and sale, and to dismiss the action insofar as asserted against him for lack of personal jurisdiction. The plaintiff again argued in opposition that the defendant waived any objection to personal jurisdiction by appearing in the action. In an order dated September 7, 2016, the court granted the defendant's motion. The plaintiff appeals, and we reverse.

The filing of a notice of appearance in an action by a party's counsel serves as a waiver of any objection to personal jurisdiction in the absence of either the service of an answer which raises a jurisdictional objection, or a motion to dismiss pursuant to CPLR 3211(a)(8) for lack [*2]of personal jurisdiction (see American Home Mtge. Servicing, Inc. v Arklis, 150 AD3d 1180, 1181-1182; Countrywide Home Loans Servicing, LP v Albert, 78 AD3d 983, 984; National Loan Invs., L.P. v Piscitello, 21 AD3d 537, 537-538). Here, the defendant's counsel filed a notice of appearance dated September 4, 2012. The record does not show that the defendant asserted lack of personal jurisdiction in a responsive pleading. Moreover, the defendant did not move to dismiss the complaint for lack of personal jurisdiction until almost three years after appearing in the action, after the judgment of foreclosure and sale had been issued. Under those circumstances, the defendant waived any claim that the court lacked personal jurisdiction over him in this action (see American Home Mtge. Servicing, Inc. v Arklis, 150 AD3d at 1182)."

Thursday, May 3, 2018

NEW RULES - POST FORECLOSURE SUMMARY PROCEEDING



PLOTCH v. Dellis, 2018 NY Slip Op 28116 - NY: Appellate Term, 2nd Dept. 2018:

In Home Loan Servs., Inc. v Moskowitz (31 Misc 3d 37 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]), this court held that attaching a certified copy of the referee's deed to the notice to quit did not satisfy the requirement of RPAPL 713 (5) that the deed be exhibited to the respondent, where the notice to quit was served by conspicuous-place service. Petitioner here, in effect, asks this court to reconsider this ruling, arguing, among other things, that the exhibition requirement dates from the time that the statute required exhibition of the original deed and that, under the language subsequently added to the statute permitting exhibition of a certified copy of the deed, service of such a certified copy by means other than personal delivery should suffice.

Upon reconsideration, this court agrees with petitioner's contention. Civil Practice Act § 1411 (6) required the exhibition to the respondent of an original referee's deed, and this requirement was carried over when the Civil Practice Act provision was replaced in 1962 by RPAPL 713 (5). However, in 1976 (L 1976, ch 642), because of the difficulties attendant in exhibiting an original deed, and in response to the decision in Rome v White (82 Misc 2d 356 [Civ Ct, NY County 1975]) disallowing exhibition of a photostatic copy of the deed (see Sponsor's Mem, Bill Jacket, L 1976, ch 642), the legislature amended RPAPL 713 (5) to permit, in addition to exhibition of an original deed, exhibition of a certified copy of the deed. We are persuaded that service by means other than personal delivery of a certified copy of the deed, i.e., service of a certified copy of the deed which is left at the premises for the respondent to retain and examine, satisfies the exhibition requirement.

Wednesday, May 2, 2018

MORTGAGE FORECLOSURE - RPAPL 1304



Wells Fargo Bank, NA v Mandrin, 2018 NY Slip Op 02826, Decided on April 25, 2018, Appellate Division, Second Department:

"However, reversal is required in light of the plaintiff's failure to establish strict compliance with the 90-day notice requirement of RPAPL 1304. " [P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition'" (Wells Fargo Bank, N.A. v Trupia, 150 AD3d 1049, 1050, quoting Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 106). "The statute requires that such notice must be sent by registered or certified mail, and also by first-class mail, to the last known address of the borrower" (Wells Fargo Bank, N.A. v Trupia, 150 AD3d at 1050; see RPAPL 1304). By requiring the lender or mortgage loan servicer to send the RPAPL 1304 notice by registered or certified mail and also by first-class mail, the Legislature implicitly provided the means for the plaintiff to demonstrate its compliance with the statute, i.e., by proof of the requisite mailing (see Wells Fargo Bank, N.A. v Trupia, 150 AD3d at 1050). Proof of the requisite mailing is established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure (see M & T Bank v Joseph, 152 AD3d 579; Wells Fargo Bank, N.A. v Trupia, 150 AD3d at 1050-1051; Citibank, N.A. v Wood, 150 AD3d 813, 814; Citimortgage, Inc. v Pappas, 147 AD3d 900, 901-902; Flagstar Bank, FSB v Mendosa, 139 AD3d 898, 900).

Here, in moving for summary judgment, the plaintiff failed to submit an affidavit of service or other proof of mailing by the post office establishing that it properly served Mandrin pursuant to RPAPL 1304. The unsubstantiated and conclusory statement of a vice president of the plaintiff that a 90-day pre-foreclosure notice "was forwarded by regular and certified mail" to Mandrin "in full compliance with all requirements of RPAPL § 1304" was insufficient to establish that the notice was actually mailed to Mandrin by first-class and certified mail (see M & T Bank v Joseph, 152 AD3d 579; Wells Fargo Bank, N.A. v Trupia, 150 AD3d at 1050-1051; Citibank, N.A. v Wood, 150 AD3d at 814; Cenlar, FSB v Censor, 139 AD3d 781, 782-783). Because the plaintiff failed to satisfy its prima facie burden with respect to RPAPL 1304, that branch of its motion which was for summary judgment on the complaint insofar as asserted against Mandrin should have been denied, regardless of the sufficiency of Mandrin's opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853)."

Tuesday, May 1, 2018

FORGED SIGNATURE ON MORTGAGE?


U.S. Bank Natl. Assn. v Goldin, 2018 NY Slip Op 02825, Decided on April 25, 2018, Appellate Division, Second Department:

"Here, the plaintiff demonstrated its prima facie entitlement to judgment as a matter of law by submitting the note, the mortgage, annexed to which was a certificate of acknowledgment, and an affidavit of merit by a document control officer for the loan servicer, setting forth that the appellant defaulted on the mortgage loan by failing to make the monthly payments due on May 1, 2011, and thereafter. In opposition, however, the appellant raised a triable issue of fact as to the validity of the mortgage produced by the plaintiff and, thus, as to whether the mortgage was enforceable (see Countrywide Home Loans, Inc. v United Gen. Tit. Ins. Co., 109 AD3d 950, 952).

"A certificate of acknowledgment attached to an instrument such as a deed or a mortgage raises the presumption of due execution, which presumption . . . can be rebutted only after being weighed against any evidence adduced to show that the subject instrument was not duly executed'" (ABN AMBRO Mtge. Group, Inc. v Stephens, 91 AD3d 801, 803, quoting Son Fong Lum v Antonelli, 102 AD2d 258, 260-261, affd 64 NY2d 1158; see Kanterakis v Minos Realty I, LLC, 151 AD3d 950, 951; Tribeca Lending Corp. v Huseinovic, 151 AD3d 901, 902; Cunningham v Baldari, 100 AD3d 584, 585). Here, the appellant's submissions were sufficient to raise a triable issue of fact as to whether the mortgage was duly executed. Contrary to the appellant's contention, the unsworn letter from his forensic expert stating that, in her opinion, it was "probable" that the appellant did not sign the mortgage or the mortgage rider, was insufficient to raise a triable issue of fact as to the validity of the signatures (see Banco Popular N. Am. v Victory Taxi Mgt., 1 NY3d 381, 384). However, the appellant also submitted his detailed affidavit, along with other supporting documents, which raised a triable issue of fact as to whether the challenged signatures were forged (see Countrywide Home Loans, Inc. v Gomez, 138 AD3d 670, 671; Estaba v Estaba, 129 AD3d 601, 601; Cooper Capital Group, Ltd. v Densen, 104 AD3d 898, 898; Seaboard Surety v Earthline Corp., 262 AD2d 253, 253; Hoffman v Kraus, 260 AD2d 435, 436).

Monday, April 30, 2018

REAL ESTATE - ACTIVE CONCEALMENT & FRAUD ON LEAKS AND MOLD



Razdolskaya v Lyubarsky, 2018 NY Slip Op 02817, Decided on April 25, 2018, Appellate Division, Second Department:

"The plaintiff purchased a condominium unit from the defendants Roman Lyubarsky and Yelena Lyubarsky (hereinafter together the Lyubarskys). The plaintiff was represented by the defendant attorney Zorik Erik Ikhilov in connection with the sale. The plaintiff commenced this action against the Lyubarskys and Ikhilov after allegedly discovering that the condominium building required remediation for mold and water damage. Specifically, the plaintiff alleged that the Lyubarskys actively concealed mold and water damage in the unit's balcony, and assigned storage unit and parking space, and additionally concealed defective conditions throughout the common areas of the building. The plaintiff alleged Ikhilov committed legal malpractice in his representation of her in the transaction. In his answer, Ikhilov asserted cross claims against the Lyubarskys for contribution and common-law and contractual indemnification.

The Lyubarskys moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint and all cross claims insofar as asserted against them, and the Supreme Court denied their motion in its entirety. On their appeal, the Lyubarskys concede that the complaint states a cause of action to recover damages for fraud based upon the alleged concealment of defects in the condominium unit's balcony, and assigned storage unit and parking space. They contend, however, that the court erred in denying those branches of their motion which were to dismiss so much of the fraud cause of action as was premised upon the alleged concealment of defects in the common areas of the building, and that the court erred in denying those branches of their motion which were to dismiss Ikhilov's cross claims.

We agree with the Supreme Court's determination to deny those branches of the Lyubarskys' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss so much of the fraud cause of action as was premised upon the alleged concealment of defects in the common areas of the building. "New York adheres to the doctrine of caveat emptor and imposes no liability on a seller for failing to disclose information regarding the premises when the parties deal at arm's length, unless there is some conduct on the part of the seller which constitutes active concealment" (Simone v Homecheck Real Estate Servs., Inc., 42 AD3d 518, 520; see Radushinsky v Itskovich, 127 AD3d 838, 839). "If however, some conduct (i.e., more than mere silence) on the part of the seller rises to the level of active concealment, a seller may have a duty to disclose information concerning the property" (Hecker v Paschke, 133 AD3d 713, 716 [internal quotation marks omitted]; see Daly v Kochanowicz, 67 AD3d 78, 92). "To maintain a cause of action to recover damages for active concealment, the plaintiff must show, in effect, that the seller or the seller's agents thwarted the plaintiff's efforts to fulfill his responsibilities fixed by the doctrine of caveat emptor" (Jablonski v Rapalje, 14 AD3d 484, 485; see Perez-Faringer v Heilman, 95 AD3d 853, 854).

Here, accepting the facts alleged in the complaint as true and according the plaintiff the benefit of every possible favorable inference (see CPLR 3211[a][7]; Leon v Martinez, 84 NY2d 83, 87-88), the complaint sufficiently states a cause of action to recover damages for fraud on the theory that the Lyubarskys actively concealed defects throughout the common areas of the condominium building. The complaint alleges that the Lyubarskys took several steps to hide the existence of leaks and mold damage including, inter alia, claiming that they had lost the key to the storage area in the cellar which was assigned to the subject condominium, and removing and replacing damaged sheetrock from the cellar and the parking area. These allegations, if true, might have thwarted the plaintiff's efforts to fulfill her responsibilities imposed by the doctrine of caveat emptor with respect to the common areas of the building (see Camisa v Papaleo, 93 AD3d 623, 625; Margolin v IM Kapco, Inc., 89 AD3d 690, 692; Jablonski v Rapalje, 14 AD3d 484, 487; see also Radushinsky v Itskovich, 127 AD3d at 839). Further, in support of that branch of their motion which sought dismissal pursuant to CPLR 3211(a)(1), the Lyubarskys failed to sustain their burden of submitting documentary evidence to resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff's fraud cause of action as it related to the common areas of the building (see Leon v Martinez, 84 NY2d at 87; Camisa v Papaleo, 93 AD3d at 625)."

Friday, April 27, 2018

THREE PARTIES, THREE PARENTS



MATTER OF DAVID S. v. SAMANTHA G., 2018 NY Slip Op 28110 - NY: Family Court 2018:

"The landmark Court of Appeals case Brooke S.B. changed the legal landscape regarding the rights of a partner who is not a legal parent to seek custody and visitation. Brooke S.B. held that "where a partner shows by clear and convincing evidence that the parties agreed to conceive a child and to raise the child together, the non-biological, non-adoptive partner has standing to seek visitation and custody under Domestic Relations Law §70" (id. at 15). Domestic Relations Law §70 (a) provides:

Where a minor child is residing within this state, either parent may apply to the supreme court for a writ of habeas corpus to have such minor child brought before such court; and on the return thereof, the court, on due consideration may award the natural guardianship, charge and custody of such child to either parent for such time, under such regulations and restrictions, and with such provisions and directions, as the case may require, and may at any time thereafter vacate or modify such order. In all cases there shall be no prima facie right to the custody of the child in either parent, but the court shall determine solely what is for the best interest of the child, and what will best promote its welfare and happiness, and make award accordingly (emphasis added).

Significantly, Brooke S.B. overruled the Court's ruling in Allison D. v Virginia M. (77 NY2d 651 [1991]), which denied a partner who lacked a biological or adoptive relationship with a child the right to seek visitation under DRL §70(a), despite having an established "parental" type relationship with the child. In determining to break with precedent, the Brooke S.B. court gave primary consideration to the well-being of children being raised in nontraditional families and to how the Allison D. decision had negatively impacted those children (Brooke S.B. at 19-29). In making its ruling, the Brooke S.B. court also recognized the fundamental right of parents to control the upbringing of their children and required that the relationship between the child and the partner came into being with the consent of the legal parent (id. at 26).

In reaching its decision, the Brooke S.B. court relied heavily on the dissent of Judge Kaye in Allison D. Judge Kaye foresaw that the Allison D. ruling would "`fall [] hardest' on the millions of children raised in nontraditional families — including families headed by same-sex couples, unmarried opposite-sex couples, and stepparents" (Brooke S.B. at 20 citing Allison D., 658-660 [Kaye, J. dissenting].) "The dissent asserted that, because DRL §70 does not define `parent' — and because the statute made express reference to `the best interests of the child,' the court was free to draft a definition that accommodated the welfare of the child" (id.). The dissent criticized the majority for turning its back "on a tradition of reading section §70 so as to promote the welfare of the children" (id.).

In determining to overrule Allison D., the Brooke S.B. court also noted that legal commentators have "taken issue with Allison D. for its negative impact on children" and that "[a] growing body of social science reveals the trauma children suffer as a result of separation from a primary attachment figure — such as a de facto parent — regardless of the figure's biological or adoptive ties to the children" (id. at 25-26 [citations omitted]).

Against this backdrop, this court is now called upon to determine if the ruling in Brooke S.B. would be applicable to the situation at hand, where three — not just two — parties agreed to a preconception plan to raise a child together. It is not disputed that Ms. G. and Misters S. and T. consented to a preconception plan to establish a family where the child to be conceived would have three parents (albeit in two homes) and proceeded to effectuate that plan. The two men alternated the delivery of their sperm day by day to artificially inseminate Ms. G., and the three parties jointly announced their impending parenthood when Ms. G. became pregnant. The three parties jointly chose and paid for the midwife, were present when the child Matthew was born, and selected names for the child that recognized all three parties. The three parties agreed on a pediatrician and on a health insurance plan, and were all present at the hospital when Matthew needed hernia surgery at the age of two months. Misters S. and T. currently enjoy regular parenting time with Matthew.

The court finds that under the above circumstances where the three parties entered and followed through with a preconception plan to raise a child together in a tri-parent arrangement, the biological father's spouse has standing to seek custody and visitation as a parent pursuant to Brooke S.B. In making this decision, this court is specifically taking into consideration that the relationship between Mr. T. and Matthew came into being with the consent and blessing of the two biological parents and that both biological parents agree that Mr. T. should have standing to seek custody and visitation.

The court further finds that its ruling that Mr. T. has standing to seek custody and visitation despite the existence of two legal parents, to be consistent with the fundamental principle of Brooke S.B. — that DRL §70 must be read to effectuate the welfare and best interests of children, particularly those who are being raised in a non-traditional family structure (id. at 20). The parent-child relationships fostered by children like Matthew, who are being raised in a tri-parent arrangement, should be entitled to no less protection than children raised by two parties.["

Thursday, April 26, 2018

MARIJUANA USE AND NEGLECT



Matter of Gabriela T. (Angelina T.), 2018 NY Slip Op 02793, Decided on April 25, 2018, Appellate Division, Second Department:

"In July 2015, the Administration for Children's Services (hereinafter the petitioner) commenced related neglect proceedings against the mother, alleging that the mother neglected the subject children by, inter alia, misusing drugs. After a fact-finding hearing, the Family Court found that the petitioner failed to establish that the mother neglected the children. The court dismissed the petitions, and the petitioner appeals.

"In a neglect proceeding pursuant to Family Court Act article 10, the petitioner has the burden of proving by a preponderance of the evidence that the subject child was neglected" (Matter of Geoffrey D. [Everton D.], 158 AD3d 758, 759; see Family Ct Act § 1046[b][i]). Unlike other forms of neglect, which require a showing that a child's well-being has been impaired or is in imminent danger of becoming impaired, "proof that a person repeatedly misuses a drug . . . , to the extent that it has or would ordinarily have the effect of producing in the user thereof a substantial [*2]state of stupor, unconsciousness, intoxication, hallucination, disorientation, or incompetence, or a substantial impairment of judgment, or a substantial manifestation of irrationality, shall be prima facie evidence that a child of . . . such person is a neglected child" unless the parent is "voluntarily and regularly participating in a recognized rehabilitative program" (Family Ct Act § 1046[a][iii]; see Matter of Isiah L. [Terry C.], 154 AD3d 697, 698).

Here, the petitioner presented a prima facie case of neglect based on evidence that the mother had regularly used marijuana, which she had been advised could worsen her preexisting mental health condition (see Matter of Isiah L. [Terry C.], 154 AD3d at 698-699; Matter of Nyheem E. [Jamila G.], 134 AD3d 517, 519; Matter of Ishaq B. [Lea B.], 121 AD3d 889, 889-890; Matter of Ayana Jean L., 23 AD3d 472, 473). Therefore, neither actual impairment of the children's physical, mental, or emotional condition, nor specific risk of impairment, needed to be shown to establish that the children were neglected (see Matter of Isiah L. [Terry C.], 154 AD3d at 699; Matter of Vita C. [Oksana C.], 138 AD3d 739, 740). Since the mother failed to establish that she was voluntarily and regularly participating in a drug rehabilitative program, she failed to rebut the petitioner's prima facie evidence of neglect (see Family Ct Act § 1046[a][iii]; Matter of Nyheem E. [Jamila G.], 134 AD3d at 519)."

Wednesday, April 25, 2018

MORTGAGE FORECLOSURE - LITIGATING AGAINST THE BANK AFTER DEFAULT



In this case, a homeowner learns that the failure to timely file an answer can affect the entire process. 

Bank of N.Y. Mellon Trust Co. v Loodus, 2018 NY Slip Op 02591, Decided on April 18, 2018, Appellate Division, Second Department:

"The defendant executed a note and mortgage in the amount of $488,700. The mortgage was secured by residential property located in Ronkonkama. After the defendant defaulted on her obligations under the note and mortgage, the plaintiff commenced this action to foreclose the mortgage. The defendant failed to timely answer the complaint. On March 25, 2011, the plaintiff filed a request for judicial intervention. Thereafter, the defendant moved to compel the plaintiff to accept a late answer. The Supreme Court denied the defendant's motion, finding that she failed to establish a reasonable excuse for her default. Thereafter, the plaintiff moved, inter alia, for leave to enter a default judgment and for an order of reference. The defendant cross-moved to dismiss the complaint and, in effect, to vacate her default. In an order dated February 25, 2014, the court granted the plaintiff's motion and denied the defendant's cross motion.
Subsequently, the plaintiff moved, inter alia, to confirm a referee's report and for a judgment of foreclosure and sale. The defendant opposed the motion and cross-moved to dismiss the complaint and to vacate the referee's report. In an order dated May 4, 2016, the Supreme Court granted that branch of the plaintiff's motion which was for a judgment of foreclosure and sale, and denied the defendant's cross motion. In an order and judgment of foreclosure and sale, the court, among other things, granted that branch of the plaintiff's motion which was to confirm the referee's report and directed the foreclosure and sale of the property.
Contrary to the defendant's contentions, the Supreme Court properly granted those branches of the plaintiff's motion which were for a judgment of foreclosure and sale and to confirm the referee's report. On its initial motion, inter alia, for leave to enter a default judgment and for an order of reference, the plaintiff established its entitlement to judgment as a matter of law (see CPLR 3215[f]; HSBC Bank USA, N.A. v Simmons, 125 AD3d 930, 932). On its subsequent motion, which was, inter alia, for a judgment of foreclosure and sale and to confirm the referee's report, the plaintiff established the amount due under the note by submitting that report (see HSBC Bank USA, N.A. v Simmons, 125 AD3d at 932).
The defendant's contention that the affidavit submitted in support of the plaintiff's motion, inter alia, for a judgment of foreclosure and sale was insufficient to prove the defendant's default on the loan is without merit. As noted above, the plaintiff already established its entitlement to judgment as a matter of law on its motion for a default judgment and an order of reference (see id.).
The Supreme Court properly denied that branch of the defendant's cross motion which was to dismiss the complaint since, by virtue of having failed to vacate her default in the action, the defendant is deemed to have admitted all factual allegations contained in the complaint and all reasonable inferences that flow from them (see 425 E. 26th St. Owners Corp. v Beaton, 128 AD3d 766, 769; Mortgage Elec. Registration Sys., Inc. v Smith, 111 AD3d 804, 806). The court also properly denied that branch of the defendant's cross motion which was to vacate the referee's report (see RPAPL 1321).
The defendant's contentions regarding the plaintiff's compliance with Administrative Order 548/10 of the Chief Administrative Judge of the Courts were not raised before the Supreme Court and are, therefore, improperly raised for the first time on appeal and not properly before this Court (see Flagstar Bank, FSB v Titus, 120 AD3d 469, 470)."

Tuesday, April 24, 2018

CIVIL RIGHTS LAW SECTION 80-b



BILLITTIER v. Clark, 2014 NY Slip Op 50758 - NY: Supreme Court, Erie 2014:

"Prior to 1965, the law in New York State, referred to as the so called heart balm statute, prohibited a former fiancee from suing to recover property given in contemplation of marriage. This law was adopted primarily to prevent acrimonious lovers scorned from suing each other based on alleged alienation of affections, criminal conversation, seduction and breach of contract to marry. The lawsuits were subject to grave abuses and caused financial damage and emotional injury to many persons who were innocent of any wrong doing and were merely the victims of circumstance, Brandes, Joel S. NY Law Journal October 27, 1998 p. 1, col. 3 vol. 220. New York Civil Rights Law § 80-b became law in 1965 permitting erstwhile fiancees to recover chattel given in contemplation of marriage regardless of fault if no marriage occurs. The statute also allows for the recovery of real property and permits courts to award a lien to defendants for money expended in connection with the chattels or real property. There is a strong presumption that any gifts made during the engagement period are given solely in contemplation of marriage. This presumption is rebuttable, but clear and convincing proof is necessary to overcome it, Vasinkevich v. Elm Drugs, 208 AD2d 522 (2nd Dept. 1994) and Friedman v. Geller, 82 Misc 2d 291 (Civil Court NYC, Kings County 1975).

Most of the reported decisions on this issue in New York and nationwide recognize the unique essence and purpose of an engagement ring as being given in contemplation of marriage, Tomko, Elaine, Rights in Respect of Engagement and Courtship Presents When marriage Does Not Ensue, 44 A.L.R.5th 1 (1996) and Glassman, Adam, I Do! Or Do I?, 12 Buff. Women's L.J. 47 (2003). Therefore, fairness requires its return to the donor when no marriage occurs regardless of who is responsible for such failure, Gaden v. Gaden, 29 NY2d 80 (1971), Paulicic v. Vogtsberger, 390 PA 502, 136 A2d 127 (PA Sup. Ct. 1957, but, see, Lewis v. Permut, 66 Misc 2d 127 (Civil Court NYC, Queens County 1971), Addarich v. Ford, 35 Misc 3d 1231(A) (Sup. Ct. NYC, 2012) and Maiorana v. Rojas, 3 Misc 3d 1107 (Civil Court NYC, Kings County 2004). One common exception is where one of the parties is already married thus defeating the contemplation of a legal marriage since bigamy is illegal in New York and enforcement of § 80-b would be void as against public policy under those circumstances, Lowe v. Quinn, 27 NY2d 397 (1971) and Leemon v. Wicke, 216 AD2d 272 (2nd Dept. 1995). The result holds true even where the donee is already married, Witkowski v. Blaskiewicz, 162 Misc 2d 66 (Civil Court NYC, Queens County 1994). However, most of the reported decisions in New York reflect adherence to the legislative intent of § 80-b to restore the parties to their pre-engagement status by returning the engagement ring to its donor. This is true unless the once conditional gift is transformed into an ordinary gift, which is by definition irrevocable, that is, once given vests immediately and irrevocably in the donee, and the donor's later acts cannot revoke or retract it, 62 NY Jur § 54 (NY Jur 2nd Ed. 2014). To make a valid inter vivos gift, there must exist the intent on the part of the donor to make a present transfer delivery of the gift, either actual or constructive to the donee, and acceptance by the donee, Gruen v. Gruen, 68 NY2d 48 (1986), see, 62 NY Jur § 31 and Juliano v. Juliano, NYLJ p. 21, col. 3 (Sup. Ct. Kings Cty. 2014)."

Monday, April 23, 2018

IS IT A GIFT OR A LOAN?



JD v. AD, 2017 NY Slip Op 50261 - NY: Supreme Court, Richmond 2017:

"The essential elements of any cause of action to recover damages for a breach of contract are, (1) the existence of a contract, (2) the plaintiff's performance pursuant to the contract, (3) the defendant's breach of its contractual obligations, and (4) damages resulting from that breach. See 143 Bergen St. LLC v. Ruderman, 144 AD3d 1002 (2d Dept. 2016); See also Tudor Ins. Co. v. Unithree Inv. Corp., 137 AD3d 1259 (2d Dept. 2016). The burden of proving the existence, terms and validity of a contract rests on the party seeking to enforce it. See Amica Mut. Ins. Co. v. Kingston Oil Supply Corp. 134 AD3d 750 (2d Dept. 2015).

In contrast, a defendant attempting to establish that a particular transaction was a gift, rather than a loan, has the burden of proof to show, by clear and convincing evidence, that the transaction was made with the requisite "donative intent." See Phelps v. Phelps, 128 AD3d 1545 (4th Dept. 2015) As Defendant Husband has alluded to the Statute of Frauds, it is worth noting that certain contracts must be set forth in a writing. See General Obligations Law § 5-701; See also, Taranto v. Fritz, 83 AD2d 864 (2d Dept. 1981). However, an oral agreement may be enforceable so long as the terms are clear and definite and the conduct of the parties evinces mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms. See Kramer v. Greene, 142 AD3d 438 (1st Dept. 2016). An oral contract to repay a loan may be enforceable if the elements indicated above are met. See Alameldin v. Kings Castle Caterers, Inc., 53 AD3d 514 (2d Dept. 2008); See also King Serv. v. O'Brien, 206 AD2d 728 (3rd Dept. 1994).

Decision


Defendant Wife concedes that she and her Husband borrowed the money from her father. While this is not conclusive proof as to Husband, it is some evidence of the existence of a loan. Wife credibly testified that she and Husband were well aware that this loan had to be repaid in full within six months of the closing of the Amboy Road property. Her testimony, like the testimony of Plaintiff and J.C., was credible. Wife claims that Husband's claim that this money was a gift (notwithstanding the markings on each check indicating it was a loan) is in furtherance of a scorched earth litigation strategy against her and her family. Wife and Plaintiff also credibly testified that Husband agreed to repay Plaintiff the $280,000 only if Wife gave up custody of the two subject children in the underlying divorce case.

Beyond the admissions of Wife, this Court finds that Plaintiff has independently established the necessary elements of his breach of contract cause of action. Here, the contract at issue was oral in nature. Plaintiff credibly testified that he provided his daughter and son in law the combined sum of $280,000 on the condition that it be paid back within six months of the closing, without interest. While the terms of the contract were agreed to between the parties orally, both of the checks at issue clearly indicated that the amounts provided were "loans." (See Pl. Exs. 1;3). Plaintiff further established that Defendant Husband's conduct evidenced that he understood the terms, as Husband sent two text messages to Defendant Wife indicating that he knew that the amount was borrowed, and had to be paid back within six months. (See Pl. Exs. 5;6). See Burnside v. Foglia, 208 AD2d 1085 (3rd Dept. 1994). Accordingly, this Court finds that Plaintiff has established the existence of a contract by a preponderance of the evidence. See Van Wie Chevrolet, Inc. v. General Motors, LLC 145 AD3d 1 (4th Dept. 2016).

In opposition, Husband argues that the transaction at issue was actually a gift from Plaintiff to his daughter, as opposed to a loan. However, this Court finds Husband's testimony in support of this defense to be patently unbelievable, particularly in light of his own text admissions. Indeed, when asked why he would believe this money was a $280,000 gift when, in fact each check had the word "loan" written on them, he could offer no explanation other than to suggest that Plaintiff had given his daughter gifts in the past. As Husband has failed to provide any evidence of donative intent on the part of Plaintiff, his defense must fail. See In re Estate of MacGregor, 119 AD2d 909 (3rd Dept. 1986); See also Phelps v. Phelps, 128 AD3d 1545 (4th Dept. 2015). Accordingly, after listing to the testimony and considering the evidence at trial, this Court finds that the $280,000 given by Plaintiff to defendants was a loan, and not a gift as claimed by Husband.

The second element of a breach of contract action is not in dispute as both Defendants admit that they received the two checks totaling $280,000 that were deposited into their joint account. Accordingly, Plaintiff fulfilled his end of the contract by providing the funds. Plaintiff further established that the defendants herein breached the contract when they did not repay the sums loaned within the six month time period allotted, or upon his subsequent demand for repayment. Finally, the Court finds that the Plaintiff sustained damages as he has not recovered any of the amount that he loaned the parties.

Defendant Husband argues, in the alternative, that even if this Court were to find that the $280,000 given by Plaintiff to the defendants was a loan, that loan would be unenforceable under the Statute of Frauds. (Gen. Obl. Law Sec. 5-701(a). That statute provides, inter alia, that an agreement, is void unless it is reduced to a writing if by its terms it is not capable of being performed within one year's time. See General Obligations Law § 5-701(a).

Defendant Husband's reliance on the Statute of Frauds is wholly unpersuasive. First, and foremost this affirmative defense was not asserted in his Verified Answer (Pl. Ex. 8) and is therefore unavailable to him. See Ryan v. Kellogg Partners Institutional Servs., 79 AD3d 447 (1st Dept. 2010). Nor has the defendant made an application to amend his answer. See Zito v. County of Suffolk, 81 AD3d 722 (2d Dept. 2011). Moreover, even if this defense was properly before this Court (which it is not), it would not prevent Plaintiff's recovery here. The credible testimony of Plaintiff and Wife coupled with Husband's own text admissions confirm that the he and Wife had six months in which to repay the debt. As this debt was payable within one year, this statute would not apply even if it were properly plead. See Weksler v. Weksler, 140 AD3d 491 (1st Dept. 2016).

Husband next argues that if this Court finds that these funds constituted a loan, then it was a loan made only to Wife for which he bears no legal responsibility. This argument is equally unpersuasive. First, the Court credits Plaintiff's testimony that the loan was intended for the defendants as Husband and Wife. In fact, the loan benefitted Husband more than Wife, as it was intended to purchase property to house his electrical business. Moreover, as this loan was given during the defendant's marriage, and it obviously benefited both defendants, it constitutes marital debt that should be shared by the parties. See Gillman v. Gillman, 139 AD3d 667 (2d Dep't. 2016)."