ALTERNATIVE DISPUTE RESOLUTION SERVICES

 

RIGHT TO TERMINATE FOR FRUSTRATION OF PURPOSE?

Banco Santander (Brasil) S.A. v. American Airlines Inc.; Date filed: 2021-10-15; Court: U.S. District Court for the Eastern District of New York, U.S. - EDNY;  Judge: District Judge Rachel Kovner; Case Number: 20-CV-3098:

"Banco Santander (Brasil), S.A. ("Banco Santander") offers a credit card co-branded with American Airlines, Inc. Cardholders earn miles in American Airlines' frequent-flier program through their purchases. Banco Santander, in turn, pays the airline for those miles. Under the parties' agreement, the bank must buy a minimum number of miles each year, regardless of how many miles cardholders earn through their spending.

When the COVID-19 pandemic struck, American Airlines temporarily suspended flights between Brazil and the United States. Banco Santander then sought to terminate the parties' agreement. After the airline disputed the bank's right to terminate, the bank filed this lawsuit. Banco Santander argues that it was entitled to terminate the parties' contract based on a clause permitting such termination if the airline failed to perform or delayed performance under the contract for more than 90 days due to a force majeure event. In the alternative, the bank argues that it is excused from further performance based on the common-law doctrine of frustration of purpose.

American Airlines has moved to dismiss the complaint. The motion is granted in part. Banco Santander is not entitled to terminate the agreement under the force majeure termination provision because American Airlines has not failed to perform or delayed its performance under the contract. But Banco Santander's allegation that unforeseeable consequences of the COVID-19 pandemic rendered the contract essentially worthless to the bank states a claim for frustration of purpose that is adequate to survive the airline's motion to dismiss.

BACKGROUND

The following facts come from the complaint, incorporated documents, documents integral to the complaint, and documents amenable to judicial notice. The allegations in the complaint are "accept[ed] as true" on a motion to dismiss. Hamilton v. Westchester Cnty., 3 F.4th 86, 90-91 (2d Cir. 2021) (quoting Dane v. UnitedHealthcare Ins. Co., 974 F.3d 183, 188) (2d Cir. 2020)).

A. Factual Background

1. The Parties' Agreement

Banco Santander is a Brazilian bank. See Compl. ¶ 6 (Dkt. #1). American Airlines is an U.S. airline. See id. ¶ 7. In 2016, Banco Santander and American Airlines entered into a ten-year agreement that authorizes Banco Santander to offer a co-branded credit card. See AAdvantage Program Participation Agreement Ex. A, § 3.1 (Dkt. #22-1) ("Participation Agreement").

Banco Santander offers, issues, and administers the card. See id. §§ 3.1-3.2. The bank identifies its cardholders to American Airlines, see id. §§ 6.1, 8.1, which enrolls these cardholders in its "AAdvantage" rewards program, see id. § 6.1. When the cardholders make purchases, Banco Santander awards them AAdvantage miles. See id. §§ 9.1-9.2, 9.5. These miles can be redeemed for flights on American Airlines, as well as for other goods and services. Compl. ¶ 6. The bank pays the airline for every mile awarded. See Participation Agreement § 12.1.

The parties' contract includes a revenue guarantee for the airline. Under that provision, Banco Santander agreed to purchase a minimum number of reward miles every year—no matter how many miles its cardholders earn. See id. § 13.1. The minimum number of miles escalates over the life of the agreement, as does the rate per mile that the bank must pay. See Compl. ¶¶ 19-20.

American Airlines is obligated to sell AAdvantage miles to Banco Santander at specified rates. Participation Agreement § 6.8. But the agreement specifies that American Airlines "shall not be deemed to have made any representation, warranty or covenant or have assumed any obligation or indemnification to [Banco] under this Agreement with respect to flight activity, including any suspension, reduction or termination of flights by an [American Airlines] carrier." Ibid.

The parties' contract permits Banco Santander to terminate the agreement under certain conditions. The bank may end the agreement "by providing written notice to American [Airlines]" if "pursuant to Section 23 American [Airlines] delays performance or fails to perform due to a Force Majeure Event, and such delay continues for a period of ninety (90) days." Id. § 20.4.5. Section 23, in turn, defines a "Force Majeure Event" as "any act of God, war, strike, labor dispute, work stoppage, fire, act of government, act or attempted act of terrorism or any other cause, whether similar or dissimilar, beyond the control of that Party, including, with respect to American, and without limitation, any incident, accident or hijacking or attempted hijacking involving any aircraft of American or any of its Affiliates or any other airline carrier." Id. § 23; see id. § 1.

Banco Santander may also terminate the agreement if American Airlines' market share in Brazil drops significantly. In particular, a provision entitled "Cessation of Services" allows Banco Santander to terminate the agreement upon timely written notice "[i]f American's Market Share during . . . a calendar year is reduced by 50% or more relative to the 2016 calendar year." Id. § 20.4.6. The agreement defines "Market Share" as "available seats on flights operated by American between Brazil and the United States divided by the sum of available seats on Delta [Airlines], United [Airlines,] and American [Airlines] between Brazil and the United States as reported by Diio," which tracks flight frequencies. Id. § 1 ("Market Share").

2. The COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. See Compl. ¶ 23. Two days later, the United States declared a national emergency. Ibid. The following week, the Department of State advised American citizens "to avoid all international travel due to the global impact of COVID-19." Id. ¶ 24.

Brazilian states began to issue shelter-in-place orders by late March. Id. ¶ 26. By May, several Brazilian cities had instituted total lockdowns. Id. ¶ 27. On May 24, 2020, as Brazil's COVID-19 outbreak grew, President Donald J. Trump suspended entry into the United States for "all aliens who were physically present within the Federative Republic of Brazil during the 14-day period preceding their entry or attempted entry into the United States." Id. ¶ 28.

American Airlines has acknowledged in public filings that the COVID-19 pandemic has led to an "unprecedented," id. ¶ 30, and "precipitous" decline in the demand for air travel, id. ¶ 31. The airline took "aggressive actions" in response. Id. ¶ 30. It has significantly reducing flight capacity, ibid., and beginning on March 29, 2020, it temporarily suspended all flights between Brazil and the United States see id. ¶ 29.

3. Banco Santander's Termination Letter

Ninety-two days after American Airlines suspended flights between Brazil and the United States, Banco Santander sent a letter to the airline purporting to terminate the parties' agreement. See Pl.'s Ltr. Re: AAdvantage Program Participation Agreement Ex. B (Dkt. #1-4). The letter contended that the bank had the right to terminate based on the force majeure termination provision governing situations in which the airline failed to perform or delayed performance under the contract for at least 90 days. That provision was triggered, the bank wrote, because "American stopped air travel between the United States and Brazil . . . due to the low demand caused by the ongoing COVID-19 global pandemic" and had "not resumed flights between the two countries for over 90 days." Id. at 1.

American Airlines disputed the bank's right to terminate the agreement. See Def.'s Ltr. Re: AAdvantage Program Participation Agreement Ex. 1 (Dkt. #23-3). It argued that American Airlines "has neither delayed nor failed to perform . . . any of its obligations" under the agreement. Id. at 1.

B. Procedural History

Banco Santander filed this action on July 10, 2020, to resolve the dispute between the parties. See Compl. at 16. The first count in the complaint requests a declaratory judgment "that the Agreement has been terminated effective June 29, 2020"—i.e., 90 days after American's last flight between the United States and Brazil—"pursuant to the force majeure termination provision of the Agreement." Id. ¶ 44.

The second count requests, in the alternative, a declaratory judgment that Santander is excused from further performance under the common-law doctrine of frustration of purpose. Id. ¶¶ 45-54. This portion of the complaint alleges that "[a]t the time the parties negotiated and entered into the Agreement, the parties did not foresee that a pandemic would disrupt all air travel worldwide and lead American Airlines to cease air travel between the United States and Brazil." Id. ¶ 46. It alleges that the cessation of flights "destroyed the underlying reason for" the bank "to continue performing the Agreement." Id. ¶ 47. Further, it alleges, the "significant decrease in the demand for air travel for an indeterminate amount of time" has rendered the miles "significantly less desirable to Brazilian cardholders than before the COVID-19 pandemic." Id. ¶ 49. It contends that even after flights resumed, "the effects of the COVID-19 pandemic likely will continue to have a fundamental impact on the desirability of air travel between the United States and Brazil for the foreseeable future." Ibid. And it asserts that "continuing to perform the Agreement will cause [the bank] to incur millions of dollars in losses by purchasing AAdvantage Miles that are effectively valueless." Id. ¶ 48.

American Airlines has moved to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Def.'s Notice of Mot. at 1 (Dkt. #23). As to the first count, the airline argues that the force majeure termination provision does not apply because the airline did not "delay[ ] performance or fail[ ] to perform" any contractual obligation when it suspended service. See Mem. in Supp. of Def. American Airlines, Inc.'s Mot. to Dismiss Pl.'s Compl. at 1-2 (Dkt. #23-1) ("Def.'s Mem. in Supp.") (brackets in original). As to the second count, the airline argues that the agreement was not frustrated by an unforeseeable event because the agreement "expressly contemplate[d] the possibility that American [would] suspend, reduce, or terminate flights to Brazil." Id. at 2-3.

STANDARD OF REVIEW

In a declaratory judgment action, as in any other, a complaint must allege "enough facts to state a claim to relief that is plausible on its face" in order to survive a motion to dismiss. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A complaint is properly dismissed where, as a matter of law, "the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Id. at 558. A court must "construe all reasonable inferences that can be drawn from the complaint in the light most favorable to the plaintiff." Lynch v. City of New York, 952 F.3d 67, 75 (2d Cir. 2020).

DISCUSSION

American Airlines' motion to dismiss is granted in part. The first count of the complaint is dismissed because Banco Santander has failed to state a claim under the contract's force majeure termination provision. That provision applies only if American Airlines "delays performance or fails to perform due to a Force Majeure Event." Participation Agreement § 20.4.5. The bank has not alleged that the airline delayed performance or failed to perform because contrary to the bank's arguments, maintaining flight service between the United States and Brazil is not among the airline's contractual duties.

The second count of the complaint survives because Banco Santander has adequately pleaded that the COVID-19 pandemic was an unforeseen event whose impact on air travel has rendered the parties' contract essentially valueless to the bank. American Airlines argues that this claim should be dismissed because the parties' contract shows the parties foresaw the possibility that American would suspend flights between the United States and Brazil and allocated that risk to the bank. But Banco Santander has adequately alleged that the worldwide disruption of the airline industry and the decline in demand for air travel—rather than simply American Airlines' suspension of flights—are what made the agreement valueless. Banco Santander's frustration-of-purpose argument is thus not properly dismissed based on the airline's foreseeability argument.

I. Banco Santander is not entitled to terminate the agreement under the force majeure termination provision.

Banco Santander has not stated a claim that it is entitled to terminate the agreement pursuant to the force majeure termination provision. Under New York law, which the parties agree governs, an agreement is "enforced according to the plain meaning of its terms" if the agreement is "complete, clear, and unambiguous on its face." Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (quoting Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 170 (N.Y. 2002)). A contractual claim that is unambiguously foreclosed by the parties' agreement may be disposed of through a motion to dismiss. Edwards v. Sequoia Fund, Inc., 938 F.3d 8, 13 (2d Cir. 2019).

Here, the parties' contract unambiguously forecloses the bank's claim that the airline triggered the force majeure termination provision through a suspension of flights. That termination provision applies only if American Airlines "delays performance or fails to perform due to a Force Majeure Event" for at least 90 days. Participation Agreement § 20.4.5. Banco Santander does not suggest that flying between Brazil and the United States is among the duties the contract expressly requires the airline to perform. Instead, the bank argues that the contract implicitly requires American Airlines to continue flights. But this argument runs aground on the contract's disclaimer of any such obligation. The contract flatly states that the airline "shall not be deemed to have made any representation, warranty or covenant or to have assumed any obligation . . . to the Bank under this Agreement with respect to flight activity, including any suspension, reduction or termination of flights by an AA Carrier." Id. § 6.8. This broad and unequivocal statement foreswearing obligations "with respect to flight activity" makes clear that the airline has not undertaken any obligation to continue flights between the United States and Brazil.

Banco Santander's alternative reading of this disclaimer provision is unpersuasive. The bank contends that the provision merely permits American Airlines to change its "mix of flight routes over time" by adding or subtracting individual flights or routes. Opp'n to Def.'s Mot. to Dismiss the Compl. at 14 (Dkt. #26) ("Pl.'s Opp'n). In contrast, the bank contends, the provision does not bear on whether the airline may "cease[ ] to fly between the United States and Brazil altogether, or substantially constrict[ ] service for an indeterminate period." Ibid. But that is not a tenable reading. An obligation to maintain flights between the United States and Brazil would obviously be an "obligation . . . with respect to flight activity." And the agreement disclaims any obligation "with respect to flight activity," including any suspension or termination of flights— not just obligations concerning individual flights or routes.

The contract's explicit renunciation of flight obligations forecloses Banco Santander's argument for an implied contract term. A court "may supply a missing term in a contract"— "extremely reluctant[ly]"—only if "the contract is ambiguous." In re World Trade Ctr. Disaster Site Litig., 754 F.3d 114, 123-24 (2d Cir. 2014). Here, the parties unambiguously stated that American Airlines airline had not assumed any duty to fly. Accordingly, this contractual claim cannot get off the ground. The first count of Banco Santander's complaint is dismissed.

II. Banco Santander has stated a claim based on frustration of purpose.

American Airlines' motion to dismiss the second count of Banco Santander's complaint is denied. The bank has adequately pleaded frustration of purpose. The frustration-of-purpose doctrine permits a party to stop performing under a contract when a "wholly unforeseeable event renders the contract valueless" to that party. Axginc Corp. v. Plaza Automall, Ltd., 759 F. App'x 26, 29 (2d Cir. 2018) (summary order) (quoting United States v. Gen. Douglas MacArthur Senior Vill., Inc., 508 F.2d 377, 381 (2d Cir. 1974)); cf. PPF Safeguard, LLC v. BCR Safeguard Holding, LLC, 85 A.D.3d 506, 508 (N.Y. App. Div. 2011) (frustration of purpose applies when "a change in circumstances makes one party's performance virtually worthless to the other, frustrating his purpose in making the contract") (quoting Restatement (Second) of Contracts § 265 cmt. a (Am. L. Inst. 1981)).

Banco Santander adequately pleads such frustration. The bank alleges that the COVID-19 pandemic was an event unforeseen by the parties that both "disrupt[ed] all air travel worldwide and le[d] American Airlines to cease all air travel between the United States and Brazil." Compl. ¶ 46. It alleges that the pandemic had a "fundamental" impact on the desirability of air travel between the United States and Brazil, id. ¶ 32, because it led to government travel restrictions, id. ¶¶ 27-28, reductions in airline capacity, id. ¶ 33, and "a general reluctance to travel," id. ¶ 32. Indeed, the bank notes that American Airlines itself has acknowledged that the pandemic created an "unprecedented" and "precipitous" decline in the demand for air travel. Id. ¶ 31. The bank alleges that the consequences of an unforeseeable global pandemic have rendered the contract valueless to the bank. Id. ¶¶ 47-49.

Contrary to the airline's arguments, this claim cannot be dismissed at the very outset of the case on foreseeability grounds. Determinations of foreseeability turn on the "[a]pplication of a legal standard to facts." United States v. Ekwunoh, 12 F.3d 368, 372 (2d Cir. 1993) (Newman, J., concurring). Accordingly, foreseeability may be determined as "a question of law" only when the facts bearing on foreseeability "are not in genuine dispute." Wilson v. Glenro, Inc., 524 F. App'x 739, 740 (2d Cir. 2013) (summary order). Here, the airline does not argue that the COVID-19 pandemic was foreseeable. But it contends that the parties' contractual disclaimer of flight obligations establishes that the parties foresaw and accounted for the risk that the airline might suspend flights between the United States and Brazil. That argument fails to justify dismissal at this stage because, fairly read, the complaint argues that a confluence of factors stemming from the COVID-19 pandemic rendered the contract valueless—including not just the suspension of flights, Compl. ¶¶ 47-48, but also a broader decimation of air-travel demand, id. ¶ 49. Even if one link in the chain of events on which the bank relies was foreseen by the parties—the suspension of flights—it would be inappropriate to dismiss a frustration-of-purpose claim that also relies in substantial in part on other, assertedly unprecedented events. Cf. Matter of Fontana D'Oro Foods, Inc., 472 N.Y.S.2d 528, 532-33 (N.Y. Sup. Ct. 1983) (concluding that frustration of purpose excused a party from completing the purchase of a business when a fire had destroyed the business's warehouse and inventory, and an insurer refused to pay the resulting claim, because even though "the parties anticipated the possibility that a fire could destroy the[ ] warehouse," "[w]hat could not have been foreseen[ ] was the possibility . . . that the insurance carrier would withhold payment of the corporation's [insurance] claim"), rev'd on other grounds, 107 A.D.2d 808 (N.Y. App. Div. 1985), reversal upheld on still other grounds, 482 N.E.2d 1216 (N.Y. 1985). Accordingly, the terms of the agreement do "not resolve the parties' factual dispute regarding the foreseeability of the Covid pandemic at this early stage of the litigation to warrant dismissal [of] [p]laintiff's frustration of purpose cause of action as a matter of law." 1877 Webster Ave. Inc. v. Tremont Ctr., LLC, 148 N.Y.S.3d 332, 338 (N.Y. Sup. Ct. 2021).

At oral argument on the motion to dismiss, American Airlines attacked a separate aspect of Banco Santander's frustration-of-purpose claim: the bank's assertion that the contract has been rendered valueless. The airline argues that, at the very least, the bank receives some valuable benefits under the contract because its customers obtain miles that can be redeemed for air travel and for certain other purchases. See Tr. of Oral Arg. 34-37 (Aug. 19, 2021). That argument has intuitive appeal. But an assessment of whether frequent flier miles are currently "effectively valueless," Compl. ¶ 48, require at least some evidence. And in any event, a contention "raised for the first time at oral argument" comes too late to support a motion to dismiss. Gao v. Barr, 968 F.3d 137, 141 n.1 (2d Cir. 2020).

CONCLUSION

American Airlines' motion to dismiss is granted in part and denied in part. The first count of the complaint is dismissed with prejudice. Given the terms of the parties' contract, any amendment to that claim would be futile. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000). The second count of the complaint survives.

SO ORDERED."

WHEN A JUDGE RECUSES

Signed into law in December 2020 was new Judiciary Law Section 9:

"§ 9. Recusal; reason.

Any judge who recuses himself or herself from sitting in or taking any part in the decision of an action, claim, matter, motion or proceeding shall provide the reason for such recusal in writing or on the record; provided, however, that no judge shall be required to provide a reason for such recusal when the reason may result in embarrassment, or is of a personal nature, affecting the judge or a person related to the judge within the sixth degree by consanguinity or affinity."

According to the Senate:

"Judicial recusal is an important mechanism to safeguard the perception
of judicial integrity. A judge must currently disqualify themselves from
presiding over a matter when they doubt their ability to preside impar-
tially. Currently, judges also have total discretion to recuse them-
selves without giving a reason. Yet without written order specifically
justifying the recusal, it is difficult to tell whether the disquali-
fication was really necessary. Such is the instance on Long Island where
three judges recused themselves, in a short period of time, from presid-
ing over litigation between the Town of Hempstead and Double Eagle Golf.
None have cited specific reasons for recusal.  Due to this, concerns
have been raised as to whether the justification for their recusal was
legitimate.

This legislation would require a judge to give a written reason or one
on the record when he or she decides to recuse himself or herself.  This
new requirement will help improve the transparency of the judicial deci-
sion-making process. However, the legislation recognizes also recognizes
there are times when a judge must recuse themselves due to a personal
nature that would be either embarrassing to reveal or would be a breach
of privacy, in which an exemption is included in certain circumstances."

COVID, PARENTING AND VACCINE

C.B. v D.B., 2021 NY Slip Op 21268, Decided on October 7, 2021, Supreme Court, New York County. Cooper, J. :

"Throughout most of modern medical history, the advent of a vaccine was almost universally embraced as a means of protecting ourselves and our children from deadly or debilitating disease. In my lifetime, I need only think of how polio was eradicated in this country [*2]as a result of the vaccine first developed by Jonas Salk, with other diseases, such as measles, rubella, and diphtheria, having been similarly eliminated.

Then came COVID-19. Fortunately, most people, heeding expert medical opinion, have availed themselves of vaccines that promise not only to protect them and others from the ravages of COVID-19, but ultimately to completely vanquish the virus. Unfortunately, and to my mind, incomprehensibly, a sizeable minority, seizing upon misinformation, conspiracy theories, and muddled notions of "individual liberty," have refused all entreaties to be vaccinated.

In this ongoing divorce case involving a three-year-old child, the issue of COVID-19 vaccination is now before me. The issue is not one of whether the child should be vaccinated; she is still too young to receive any of the vaccines. Nor is it one of whether I can require an adult to be vaccinated; to do so would stretch the authority of a matrimonial court to unprecedented lengths. Instead, the issue is whether the plaintiff-mother, who has de facto custody of the child and is fully responsible for her care and upbringing, can condition the defendant-father's access with the child, which is limited and supervised, on defendant and his supervisor being vaccinated, or at the very least, submitting to a testing regimen prior to each of the access periods.

BACKGROUND

The parties were married in 2015, and their child, a daughter, was born in 2018. After intense marital discord, plaintiff commenced this action for divorce in September of 2019. Since that time, the high-conflict nature of this action has only increased. Plaintiff, recounting defendant's history of substance abuse and untreated mental health issues, as well as the significant periods where he had not seen the child at all, sought to have defendant's access subject to supervision. Sharing plaintiff's concerns for the child's safety and well-being while in defendant's care, I directed, by an order dated May 13, 2021, that his parental access be supervised by Comprehensive Family Services, an independent parenting services agency. I later modified the order to permit supervision by defendant's parents.

Although there has yet to be a final determination as to custody, plaintiff is the residential parent, with the child living exclusively with her in Manhattan, where the parties lived prior to their separation in 2019 and where the child attends preschool. Defendant lives with his parents on Long Island. His parenting time with his daughter is limited to daytime access every other weekend and continues to be supervised by his parents, mainly his mother. The child is represented by a Guardian ad Litem (the "GAL") appointed by the court.

On September 2, 2021, plaintiff, joined by the GAL, made an emergency oral application for defendant and any supervisor utilized for defendant's access to be vaccinated against COVID-19. On that date, I issued a Temporary Restraining Order (TRO) suspending defendant's in-person access on an interim basis until he was vaccinated. Plaintiff, as directed, subsequently brought a formal motion by Order to Show Cause seeking the same relief, with defendant having submitted his affidavit and his attorney's affirmation in opposition, and the GAL having submitted an affirmation in support.

I heard oral argument on the motion virtually on September 15, 2021. At argument, both plaintiff and the GAL stipulated on the record that, in lieu of defendant showing proof of his being vaccinated, they would accept his agreeing to a regular protocol of COVID-19 testing as a condition for the resumption of in-person parenting time. Defendant, for reasons that seemed more connected to his animosity to plaintiff than anything else, refused this reasonable proposal.

Following the argument, I continued the TRO but amended it to provide that defendant's [*3]in-person access with the child would remain suspended until he and any approved supervisor either received a first dose of a COVID-19 vaccine or submitted to a COVID-19 testing regimen that included a PCR test once per week and a COVID-19 antigen test (AKA "rapid test") within 24 hours of any in-person visit. As with the original TRO, defendant was to continue to have liberal virtual and telephone access.

DISCUSSION

It is well-established that there is a "rebuttable presumption that visitation by a noncustodial parent is in the child's best interest and should be denied only in exceptional circumstances" where "compelling reasons and substantial evidence show that visitation would be detrimental to the child" (Matter of Josephine F. v Rodney W., 168 AD3d 486 at 486 [1st Dept 2019]) or is otherwise "inimical to the welfare of the child" (Matter of Granger v Misercola, 21 NY3d 86, 90 [2013]). Further, "[t]he paramount concern when making a parental access determination is the best interests of the child, under the totality of the circumstances" (Marino v Marino, 183 AD3d 813, 816 [2d Dept 2020], quoting Matter of Velasquez v Kattau, 167 AD3d 912, 913 [2d Dept 2018]).

Here, in-person parental access by defendant is not in the child's best interests, and there are exceptional circumstances that support its suspension. The danger of voluntarily remaining unvaccinated during access with a child while the COVID-19 virus remains a threat to children's health and safety cannot be understated. Although some children infected with the virus experience mild symptoms, others are subject to serious illness and long-term health effects. Children under the age of 12 have not yet been approved to receive COVID-19 vaccines, so they are dependent upon the vaccination and health status of the adults around them. The danger extends beyond this child and includes a risk of serious infection to any person with whom the child comes into contact, including plaintiff, the child's classmates, and their families.

New York is transitioning towards a "new normal" where citizens are taking precautions to balance staying safe from COVID-19 and its variants alongside the desire to return to some semblance of regular life. The widespread availability of three different no-cost COVID-19 vaccines, with their continued, proven efficacy in preventing the spread of the virus and the development of serious symptoms in those who contract it, has resulted in the expectation that one must be vaccinated in order to participate meaningfully in everyday society. As of August 17, 2021, New York City requires everyone over the age of 12 to provide proof of vaccination to enter bars, restaurants, indoor entertainment, and gyms. New York City public employees, public school teachers, police officers, health care workers, and others are being required to be vaccinated in order to continue their employment. The Federal Government has mandated proof of vaccination or a recent negative COVID-19 test policy for workplaces with over 100 employees, and the same or both is required to travel to many foreign countries. Unvaccinated individuals can even be precluded from serving on juries before the U.S. Federal Court. And as of the last few weeks, the New York's Unified Court system is mandating vaccination for all court employees, including judges, clerks, and court officers, with those qualifying for a narrow range of exemptions required to submit to weekly testing.

Most relevant to this case, the child's preschool requires that teachers, staff, and any parent who participates in pick-ups or drop-offs or is otherwise involved in any school activity all be vaccinated. Defendant professes to love his daughter with all his being, and he asserts that he wants nothing more than to play an active and meaningful role in her life, which, presumably, would include dropping her off and picking her up from school and being part of her school [*4]community. Nevertheless, he adamantly refuses to do what his daughter's schoolmates' parents have all been required to do—be vaccinated.

Defendant's arguments against vaccination are unconvincing. In response to plaintiff's emergency oral application on September 2, 2021, defendant stated that because he already had COVID-19, he believed he carries sufficient antibodies to the virus. To this end, he asserted he would consult with his doctor and provide expert medical opinion as to if he should receive the vaccine, and if so, when. In his affidavit in opposition, however, defendant abandoned that argument and seemingly never consulted with a medical professional about being vaccinated. Instead, he adopted the novel position that his "religious beliefs as a Roman Catholic" precluded him from receiving the vaccine. This justification rings hollow given that Pope Francis, the head of the Catholic Church, is vaccinated and has encouraged Catholics everywhere to be vaccinated for "the common good." Defendant also sought to depict any vaccination requirement as an unreasonable intrusion on his rights as an American citizen. In doing so, he failed to recognize that those rights are not absolute but are subject to his duty as a citizen to other citizens and his duty as a parent to his child.

It is not necessary to more fully address defendant's reasons for not being vaccinated, be they medical, religious, or constitutional. This is because he was offered an alternative to vaccination: submit to regular COVID-19 testing. When presented with this option, defendant rejected it outright unless the plaintiff was subject to the same testing regimen. Given that plaintiff is fully vaccinated, and she has daily in-person contact with the child as her full-time residential parent, it is apparent that defendant's ultimatum was motivated by a desire to burden the plaintiff as opposed to a commitment to keeping his child safe.

In suspending defendant's in-person access on an interim basis, I am, of course, cognizant of the pronouncement of our Court of Appeals in S.L. v. J.R., 27 NY3d 558 (2016) that even temporary custody determinations should generally be made only after a plenary hearing. The Court recognized, however, that the "'general' right to a hearing is not an absolute one" (id. at 563). There are multiple reasons here not to deprive plaintiff and the GAL of the relief they seek without having to wait weeks or months for a plenary hearing. These include the exigency of the circumstances with the risk of imminent harm to the child, the already extensive experience I have with the parties and my familiarity with their issues involving defendant's parental access, and the fact that, by necessity, matrimonial courts routinely determine temporary access schedules—unlike determining custody—on motion papers and argument alone.

CONCLUSION

In the final analysis, the fundamental question in this dispute between the child's two parents is this: What matters more to each of them, his or her own interests or those of their child? On one hand, there is the defendant-father, who is unable to offer any reasonable, let alone compelling, reason why he should not be vaccinated or even undergo testing, resisting both simply because he sees it as his "right" to do so. On the other hand, there is the plaintiff-mother, who is fully vaccinated and observant of COVID-19 protocols, seeking the imposition of reasonable conditions on defendant's access not because it somehow benefits her, but because it serves to protect the health, safety, and well-being of the child.

Inasmuch as I find that requiring defendant and anyone regularly supervising his access to be vaccinated against COVID-19 or else undergo regular testing to be in the child's best interests, plaintiff's motion is granted. Accordingly, defendant's in-person parental access with the child is suspended until such time as he complies with the terms of the amended Temporary [*5]Restraining Order. Defendant shall continue to enjoy liberal virtual and telephone access with the child."

THIS DAY IN LAW

New York's first-ever televised murder trial was People v. Joel Steinberg and the murder trial began on this day October 25, 1988.

ALTERNATIVE DISPUTE RESOLUTION SERVICES

 

A PROPERTY DISPUTE OVER AN EASEMENT RESOLVED THROUGH CONTRACT INTREPRETATION

Friends of Wickers Cr. Archeological Site, Inc. v Landing on the Water at Dobbs Ferry Homeowners Assn., Inc., 2021 NY Slip Op 05548, Decided on October 13, 2021, Appellate Division, Second Department:

"In November 2000, the plaintiff entered into a stipulation with the defendant's predecessor in interest, Summit Landing, LLC (hereinafter Summit), to settle an action commenced by Summit against, among others, the plaintiff. Pursuant to the stipulation, Summit agreed to provide permanent public access to certain tracts of land, which it then owned. In this action, the plaintiff alleges that the defendant breached the terms of the stipulation by locking a gate on a footbridge on the subject property, blocking access to a parcel of real property located on the Hudson River that is part of a walking easement in favor of the Village of Dobbs Ferry.

The Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint and, in effect, declaring that the stipulation does not prevent the defendant from locking a gate on the footbridge during daylight hours and otherwise unreasonably blocking public access across the footbridge, and properly granted the plaintiff's motion for summary [*2]judgment on the complaint and, in effect, declaring that the stipulation prevents the defendant from locking a gate on the footbridge during daylight hours and otherwise unreasonably blocking public access across the footbridge. The plaintiff established its prima facie entitlement to judgment as a matter of law by demonstrating that the defendant's actions breached the stipulation, which required the defendant to maintain the footbridge in furtherance of the walking easement.

Although the stipulation contemplated the creation of a walking easement in favor of the general public, and not only the residents of the Village, that did not relieve the defendant of the obligation to maintain the footbridge in furtherance of the easement. A contract should be construed so as to give full meaning and effect to its material provisions (see Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46; McQuade v McQuade, 67 AD3d 867, 869). A reading of the contract should not render any portion meaningless, and the contract should be read as a whole, with every part interpreted with reference to the whole. If possible, the contract will be interpreted as to give effect to its general purpose (see Beal Sav. Bank v Sommer, 8 NY3d 318, 324-325; Wilson v PBM, LLC, 193 AD3d 22).

Here, to interpret the provision regarding the walking easement as being applicable to the defendant only if the walking easement created was in favor of the general public would render that provision meaningless. Such an interpretation would mean that the defendant was not required to provide access over the footbridge even to residents of the Village, who are undisputedly entitled to access the waterfront parcel pursuant to the terms of the easement. That provision of the stipulation is interpreted to give effect to its general purpose of ensuring that the defendant provides access to the easement area via the footbridge, as part of the settlement of the litigation between Summit and the plaintiff. The Supreme Court correctly determined that the defendant's actions in locking the gate on the footbridge, preventing Village residents from accessing the waterfront parcel, were in violation of the defendant's acknowledged obligation to maintain the footbridge in furtherance of the walking easement.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the stipulation prevents the defendant from locking a gate on the footbridge during daylight hours and otherwise unreasonably blocking public access across the footbridge (see Lanza v Wagner, 11 NY3d 317, 334)."

CONSENT TO SERVICE NOT CONSENT TO JURISDICTION

Aybar v. Aybar, 2021 NY Slip Op 5393 - NY: Court of Appeals 2021:

"The Business Corporation Law requires foreign corporations seeking authorization to do business in New York to register with the New York Secretary of State and designate an in-state agent for service of process. The question before us on this appeal is whether a foreign corporation consents to the exercise of general jurisdiction by New York courts by registering to do business here and designating a local agent for service of process. We conclude that a foreign corporation's compliance with the relevant statutory provisions constitutes consent to accept service of process in New York; that compliance does not constitute consent to general jurisdiction in New York courts."

THE MAIN DEFENSE TO A DISCRIMINATION CLAIM

Although there can be exceptions to this rule, if an employee is terminated solely for cause, it is not discrimination. For a discrimination claim, there must be another motivating factor which is discriminatory.

Hutting v Independent Living, Inc., 2021 NY Slip Op 05551, Decided on October 13, 2021, Appellate Division, Second Department:

"In 2015, the plaintiff commenced this action against the defendant, his former employer, to recover, inter alia, damages for employment discrimination on the basis of sexual orientation and retaliation. The plaintiff amended the complaint in September 2016. Thereafter, the defendant moved for summary judgment dismissing the amended complaint. In an order dated July 20, 2017, the Supreme Court, inter alia, granted those branches of the defendant's motion which were for summary judgment dismissing the causes of action alleging employment discrimination on the basis of sexual orientation in violation of Title VII of the Civil Rights Act of 1964 (hereinafter Title VII) and Executive Law § 296, and the cause of action alleging retaliation under the Family and Medical Leave Act of 1993 (hereinafter FMLA) § 2615. The plaintiff appeals.

The Supreme Court properly granted those branches of the defendant's motion which were for summary judgment dismissing the causes of action alleging employment discrimination on the basis of sexual orientation in violation of Title VII and Executive Law § 296. Title VII's prohibition against sex discrimination encompasses discrimination based on sexual orientation (see Bostock v Clayton Cty., ___ US ___, ___, 140 S Ct 1731, 1737). The standards for establishing unlawful discrimination under Executive Law § 296 are the same as those governing cases under Title VII (see Forrest v Jewish Guild for the Blind, 3 NY3d 295, 305 n 3; see also Rainer N. Mittl, Ophthalmologist, P.C. v New York State Div. of Human Rights, 100 NY2d 326, 330). To establish [*2]entitlement to summary judgment in a case alleging employment discrimination on the basis of sexual orientation in violation of Title VII and Executive Law § 296, a defendant must demonstrate either the plaintiff's failure to establish every element of intentional discrimination, or, having offered legitimate, nondiscriminatory reasons for the challenged actions, the absence of a material issue of fact as to whether the defendant's explanations were pretextual (see Forrest v Jewish Guild for the Blind, 3 NY3d at 305; Bilitch v New York City Health & Hosps. Corp., 194 AD3d 999, 1004).

Here, the defendant met its prima facie burden by proffering legitimate, nondiscriminatory reasons for its termination of the plaintiff's employment and demonstrating the absence of material issues of fact as to whether its explanations were pretextual (see Forrest v Jewish Guild for the Blind, 3 NY3d at 305; Keceli v Yonkers Racing Corp., 155 AD3d 1014, 1016). In support of its motion, the defendant submitted evidence that the plaintiff's employment was terminated for his admitted failure to follow agency procedures regarding use of agency vehicles and submission of vouchers for expenses. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the plaintiff's sexual orientation was a motivating factor in the defendant's decision to terminate his employment (see 42 USC 2000e-2[m]; Keceli v Yonkers Racing Corp., 155 AD3d at 1016).

The Supreme Court also properly granted that branch of the defendant's motion which was for summary judgment dismissing the cause of action alleging retaliation under the FMLA. Here, contrary to the plaintiff's contention, the defendant submitted evidence demonstrating, prima facie, that the plaintiff did not suffer any adverse employment action upon his return from FMLA leave, as the change in his supervisor was contemplated before he took such leave and he did not experience any change in salary or benefits (see Sosa v New York City Dept. of Educ., 819 Fed Appx 30, 34 [2d Cir]; see also Keceli v Yonkers Racing Corp., 155 AD3d at 1016). In opposition, the plaintiff failed to raise a triable issue of fact."

A FAMILY BUSINESS DISPUTE

Harounian v Harounian, 2021 NY Slip Op 05550, Decided on October 13, 2021, Appellate Division, Second Department:

"The complaint in this action alleges that the plaintiff, Jacob Harounian (hereinafter Jacob), owned and operated a rug business called J. Harounian Oriental Rug Center (hereinafter JHORC). Jacob eventually asked his son, the defendant Mark Harounian (hereinafter Mark), to help him run JHORC. Jacob thereafter gave Mark a 40% ownership interest in JHORC. In addition, Jacob formed a partnership with Mark and Mark's two sisters called JAM Realty Co. (hereinafter JAM Realty) to take title to certain property located on 25th Street in Manhattan. Jacob had a 76% ownership interest in JAM Realty, while Mark's two sisters had 5% each, and Mark had 14% (10% plus a 4% "equity kicker") in light of the active role Mark would be taking in JAM Realty. Jacob, Mark, and Mark's two sisters (hereinafter collectively the family) decided to purchase and manage investment properties in Manhattan. JAM Realty purchased two more buildings, and then the family formed another partnership called United Nationwide Realty. The ownership interests in United Nationwide Realty were divided as follows: (1) Jacob 40%, (2) Mark's sisters 14% each, and (3) Mark 32% (28% plus a 4% "equity kicker"). Mark eventually converted JAM Realty to a limited liability company called Jam Realty NYC, LLC, and formed three new limited liability companies, [*2]United Flatiron, LLC, United Seed, LLC, and United Square, LLC (hereinafter collectively with Jam Realty NYC, LLC, the JAM LLCs), to own the three properties formerly owned by JAM Realty. Mark converted United Nationwide Realty to a limited liability company called United Nationwide Realty, LLC.

Over the course of the next several years, the family formed multiple companies to acquire a number of properties, including United Hay, LLC, 3M Properties, LLC, United West, LLC, United Chelsea, LLC, United Village, LLC, and United East, LLC (hereinafter collectively with United Nationwide Realty, LLC, the United LLCs). The family acquired a building located on 32nd Street for use as a showroom for the rug business and as the business headquarters (hereinafter the family headquarters), using funds from JAM Realty for the purchase and renovation of the building. It was agreed that Mark or an entity owned by Mark would take title to the family headquarters and hold the family's interests therein in trust for the family. The ownership interests would be divided as follows: (1) Jacob 40%, (2) Mark's sisters 14% each, and (3) Mark 32% (28% plus a 4% "equity kicker"). In addition to showroom and office space, the building also had a living space for Jacob.

Jacob commenced the instant action asserting 13 causes of action, including to recover damages for breach of fiduciary duty and unjust enrichment, and for an accounting and injunctive relief. The complaint alleged, among other things, that Mark amended the operating agreements or had new operating agreements drafted to reduce or eliminate Jacob's ownership interests in JAM Realty, United Nationwide Realty, and the United LLCs, and to permit payment of "reasonable compensation" to Mark for managing the JAM LLCs and the United LLCs. The complaint further alleged that Mark caused the family headquarters to be vacated, including, but not limited to, the rug showroom and Jacob's living space. The defendants and nominal defendants moved, inter alia, to dismiss the complaint pursuant to CPLR 3211(a)(1), (4), (5), (7), 1001(a), and 3016(b). Jacob opposed the motion. The Supreme Court denied the motion. The defendants and nominal defendants appeal.

"[M]embers of a limited liability company (LLC) may bring derivative suits on the LLC's behalf" (Tzolis v Wolff, 10 NY3d 100, 102). In a derivative suit, "[t]he remedy sought is for wrong done to the corporation; the primary cause of action belongs to the corporation; [and] recovery must enure to the benefit of the corporation" (Isaac v Marcus, 258 NY 257, 264; see Marx v Akers, 88 NY2d 189, 193). In the context of a corporation, "the standing of the shareholder is based on the fact that . . . he [or she] is defending his [or her] own interests as well as those of the corporation" (Tenney v Rosenthal, 6 NY2d 204, 211). "Where the plaintiff voluntarily disposes of the stock, his [or her] rights as a shareholder cease, and his [or her] interest in the litigation is terminated. Being a stranger to the corporation, the former stockowner lacks standing to institute or continue the suit" (Independent Inv. Protective League v Time, Inc., 50 NY2d 259, 263-264 [citations omitted]; see Tenney v Rosenthal, 6 NY2d at 211). The same is true of a limited liability company. "In order to maintain a derivative cause of action, a plaintiff must be a member of the LLC" (Jacobs v Cartalemi, 156 AD3d 605, 607).

"To succeed on a motion to dismiss pursuant to CPLR 3211(a)(1), the documentary evidence that forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (Teitler v Pollack & Sons, 288 AD2d 302, 302; see Leon v Martinez, 84 NY2d 83, 87-88). Here, the United LLCs' operating agreements conclusively establish that Jacob is not a member of the United LLCs. As a nonmember of the United LLCs, Jacob lacks standing to bring derivative causes of action on their behalf (cf. Tzolis v Wolff, 10 NY3d 100). Accordingly, the Supreme Court should have granted those branches of the motion of the defendants and nominal defendants which were pursuant to CPLR 3211(a)(1) to dismiss the third, fifth, and seventh causes of action alleging derivative causes of action.

"To prevail on a cause of action for an accounting, in addition to being a shareholder, a party must show that he or she demanded an accounting and that the demand was refused by the corporation, or that such demand would have been futile" (World Ambulette Transp., Inc. v Lee, 161 AD3d 1028, 1032; see Matter of Gross v Gross, 38 AD3d 893).

On a motion to dismiss pursuant to CPLR 3211(a)(7), the court must accept the facts [*3]alleged in the complaint as true and determine whether those facts state a cause of action (see Leon v Martinez, 84 NY2d at 87-88; Guggenheimer v Ginzburg, 43 NY2d 268, 275). Pursuant to the JAM LLCs' operating agreements, members are entitled to inspect the JAM LLCs' books and records for the immediately preceding three-year fiscal period upon 10 days' written notice. Here, the complaint fails to allege that Jacob made a demand to inspect the books and records of the JAM LLCs, and that Mark refused his demand, or that such demand would have been futile. Additionally, the thirteenth cause of action, which is a derivative cause of action for an injunction, is vague in that it fails to indicate upon which limited liability companies the cause of action is being litigated, and fails to specify the conduct which it seeks to enjoin. Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(7) to dismiss the sixth cause of action, which was for an accounting with respect to the JAM LLCs, and the thirteenth cause of action.

The usual elements of a constructive trust are (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment (see O'Brien v Dalessandro, 43 AD3d 1123). However, these factors should be applied flexibly (see Simonds v Simonds, 45 NY2d 233, 241). These factors serve only as a guideline, and a constructive trust may still be imposed even if all four elements are not established (see Tyree v Henn, 109 AD3d 906). "The ultimate purpose of a constructive trust is to prevent unjust enrichment and, thus, a constructive trust may be imposed 'when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'" (Cruz v McAneney, 31 AD3d 54, 58-59, quoting Sharp v Kosmalski, 40 NY2d 119, 121 [internal quotation marks omitted]). Here, the complaint does not allege that Jacob provided any personal funds or made any personal guarantees towards the purchase or renovation of the property on 32nd Street (cf. Quadrozzi v Estate of Quadrozzi, 99 AD3d 688). Furthermore, the complaint does not allege that Jacob made any transfer of property in reliance upon a promise by Mark. Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(7) to dismiss the eighth cause of action, seeking to impose a constructive trust.

The eleventh cause of action sought a judgment declaring that Jacob is a 40% owner of the JAM LLCs and United Nationwide Realty, LLC. The complaint alleges that Mark "unilaterally" converted JAM Realty and United Nationwide Realty into limited liability companies, and "unilaterally" and "without any authority whatsoever" filed paperwork reducing Jacob's 40% ownership interests therein to 28%. However, Jacob executed operating agreements which expressly stated that his ownership interest in each resulting limited liability company was 28%. "[A] contract is to be construed in accordance with the parties' intent, which is generally discerned from the four corners of the document itself. Consequently, 'a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms'" (MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 645, quoting Greenfield v Philles Records, 98 NY2d 562, 569). The language in the operating agreements was sufficient to place Jacob on notice that his ownership interests would be reduced from 40% to 28% (see Snyder v Voris, Martini & Moore, LLC, 52 AD3d 811). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1), in effect, for a judgment declaring that Jacob is not a 40% owner of the JAM LLCs or United Nationwide Realty, LLC.

The complaint also alleges that Mark falsely or mistakenly reported capital distributions to the Internal Revenue Service over the course of four years. The operating agreements for the JAM LLCs and the United LLCs provide that for any intentional misconduct by a manager of the limited liability companies, the sole remedy is money damages. Thus, pursuant to the operating agreements, Jacob would not be entitled to injunctive relief. "The words and phrases used in an agreement must be given their plain meaning so as to define the rights of the parties" (Matter of Bokor v Markel, 104 AD3d 683, 683 [internal quotation marks omitted]). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1) to dismiss the twelfth cause of action, seeking a mandatory injunction.

Finally, the operating agreements prohibited Jacob from seeking punitive damages in this action (see Matter of Bokor v Markel, 104 AD3d 683). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1) to strike the demand for punitive damages.

The defendants and nominal defendants' remaining contentions are without merit.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that Jacob is not a 40% owner of the JAM LLCs or United Nationwide Realty, LLC (see Lanza v Wagner, 11 NY2d 317)."

THIS DAY IN LAW

 

The National Historic Preservation Act. On October 15, 1966, in continuation of the Progressive Era’s commitment to preservation, Congress enacted the National Historic Preservation Act (NHPA) to safeguard historic properties and other national treasures. 

ALTERNATIVE DISPUTE RESOLUTION SERVICES

 

RESTORED TO OCCUPY A BASEMENT APARTMENT

In this case, the court did not address the issue of whether or not this basement apartment was legal and safe to inhabit.

Howard v Grant 2021 NY Slip Op 50938(U) Decided on August 27, 2021 Civil Court Of The City Of New York, Bronx County Black, J.:

"BACKGROUND AND PROCEDURAL HISTORY

Petitioner Patricia Howard ("petitioner") commenced this illegal eviction proceeding seeking to be restored to possession of the premises 3337 Fish Avenue, Basement Apartment, Bronx, New York, and an award of treble damages pursuant to RPAPL § 853. Petitioner alleged that on or about February 12, 2021, respondent landlord Aletha Grant ("respondent" or "respondent landlord") illegally evicted her from the subject premises, where she had resided since March 2020. Respondent did not appear on the original court date, and upon petitioner's submission of appropriate proof of service of the papers commencing this proceeding, the court scheduled inquest and mailed notice of that date to respondent. Following inquest on April 9, 2021 the court entered a judgment in favor of petitioner. This proceeding now comes before the court on respondent Grant's motion for vacatur of the default judgment entered against her pursuant to CPLR § 5015(a)(1).

Respondent submitted a sworn affidavit in support of her Order to Show Cause in which she asserts that she was not served with the relevant court papers sent by petitioner and that she did not receive the postcards sent by the court, to inform her of the pendency of the proceeding and the court date. Respondent further asserted that petitioner abandoned the apartment in early January 2021, that respondent changed the locks at the premises to secure her property, and that in February 2021 the police asked petitioner to leave the premises because petitioner could not provide proof that she resided at the premises. Finally, respondent asserts that she never changed the locks on petitioner's apartment. On the return date of the motion respondent informed the court that she had installed a new tenant at the premises and that he had been residing at the premises for some time.

Petitioner thereafter submitted opposition and a cross-motion to join the occupant as a respondent-party in this proceeding, among other relief. Petitioner seeks to enforce the judgment and order already issued against respondent landlord. In addition, petitioner seeks a judgment of possession against respondent Rivers, and issuance of a warrant of eviction against him. The court granted that branch of petitioner's cross-motion which sought to join Rashawn Rivers as a party. Following conference, an evidentiary hearing on the motion proceeded with all parties represented by counsel. For the reasons stated below, the court denies respondent landlord's motion, declines to vacate the order issued on default and grants the balance of petitioner's cross-motion to the extent stated below.

RESPONDENT-LANDLORD'S EVIDENCE

Respondent Aletha Grant, also known as Aletha Lenora or "Nora" Grant, or Aletha Alberga, testified that she resides at the subject building, 3337 Fish Avenue, Bronx, New York, which she owns. Ms. Grant stated that the deed for the building lists the property as a two-family house, with one unit on the first floor and another unit on the second floor; however, respondent uses the building as a three-unit building, utilizing the basement as a separate rental unit. Respondent herself resides on the first floor and rents out the basement and the second floor.

Respondent testified that she rented the basement unit to petitioner in or about March 2020. Respondent testified that she did not provide petitioner with a written lease at that time, explaining that she does not consider herself a landlord of the de facto multiple dwelling, and that she does not usually provide leases or rent receipts to her tenants. Respondent also testified that she was unaware of the legal requirement to register multiple dwellings with the New York City Department of Housing and Preservation Development.

Respondent testified that she and petitioner entered into a verbal rental agreement for a month-to-month tenancy at $1,100 per month. Petitioner is a senior citizen and respondent had surmised that petitioner's maturity [*2]would make her a more reliable and reasonable tenant. Respondent stated that she made clear to petitioner at the start of the arrangement that she would be requiring access to the basement unit, which contains the electrical and boiler systems for the building. The entrance to the basement area is located at the side of the house in the driveway, through the side door leading down under the first floor. Respondent testified that on at least three occasions she required access to the basement area due to outages caused by electrical system overload, in June 2020, August 2020, and January 2021.

In June 2020, after the lights in the building shorted out, respondent called petitioner to let her know she would require access to the basement. Respondent testified that she also knocked on the basement door, waited approximately an hour, and then knocked again, but receiving no response respondent entered the basement. As respondent entered the premises, she encountered petitioner exiting her bedroom. Respondent testified that petitioner called the police to report respondent's intrusion into the unit. A similar incident occurred in August 2020 when respondent accessed the basement due to another electrical outage reported by the upstairs tenant.

Respondent testified that over time her relationship with petitioner deteriorated. Unlike the tenant on the second floor, petitioner began demanding rent receipts. Then, petitioner began falling behind on paying her rent. Respondent tried to contact petitioner via text message regarding the rent due in June 2020. When petitioner did not respond, respondent commenced a holdover eviction proceeding against petitioner in October 2020, under L & T Index No. 17309/20. That proceeding is still pending and respondent's contact information listing the subject building remained unchanged. Ultimately, petitioner represented to respondent that she would be looking for a new apartment. Respondent alleges that petitioner and petitioner's daughter threatened her, and that she no longer felt safe staying at the premises. Respondent stated that she temporarily relocated to 1232 Wheeler Avenue Bronx, New York to stay with a friend, on an unspecified date. Respondent testified that during the period when she did not regularly occupy her unit at the subject building, she periodically returned to the building, perhaps once or twice each month but she did not regularly check the mail at her home, because she had arranged for all her bills to be paid online, not by mail. She began the process of returning to fully re-occupy her unit at the subject building sometime in March or possibly April 2021.

Respondent testified that she received none of the notices about this case and that she only learned about this proceeding after the court had rendered its decision in favor of petitioner. Respondent initially could not recall how or when she came into possession of the court's order, indicating that it might have been taped to the door of the building or passed to her by one of her tenants in either April or May of 2021.

Respondent stated that in or around the second or third week of January 2021, the second-floor tenant reported that the lights inside her unit had gone out. Respondent went to the building to address the issue. Upon entering the basement, respondent found the basement unit vacant, and the door ajar. Respondent stated that she saw no furniture, clothing, or other personal items inside the apartment. Although she had not communicated with her tenant since approximately August 2020, respondent testified that she assumed petitioner had moved out of the apartment. Respondent testified that she made no attempt to contact petitioner to confirm that she had permanently vacated the unit. Respondent stated that she was "glad to have the basement empty of Ms. Howard." Respondent did not receive any communication from petitioner that the tenant had moved from the subject premises and acknowledged that petitioner never submitted a formal surrender of her tenancy. Respondent then recruited a friend to put a temporary lock on the basement apartment.

Shortly thereafter, on February 3, 2021, respondent leased the basement to respondent Rashawn Rivers, the current occupant of the unit. Departing from her usual procedure of not issuing written leases to her tenants, respondent testified that she and Mr. Rivers executed a written one-year lease for the apartment. Petitioner signed that lease using her married name, Aletha Alberga. Respondent testified that she collected a security deposit and the first month's rent from Mr. Rivers when they signed the lease. Respondent testified that she was present at the subject premises on February 13, 2021, to address a leak reported by one of her tenants. While petitioner specifically recalled [*3]going to the subject building to address a leak on the date, she did not recall whether she saw petitioner or the police at the premises on that day. Respondent also asserted that in February 2021 the police refused to help petitioner and directed petitioner to leave the apartment because petitioner could not produce proof that she resided at the premises. Respondent did not explain how she acquired this information regarding petitioner's interaction with the police in February 2021.

RESPONDENT RIVERS' EVIDENCE

Occupant Rashawn Rivers testified that he currently resides at 3337 Fish Avenue, Basement Apartment, Bronx, New York and submitted a copy of his lease. Rivers Exh. A. Mr. Rivers testified that he had been homeless for some months prior to moving into the subject premises, that he learned about the apartment from family members who live on the same street as the subject building and that the apartment is affordable and conveniently located. Mr. Rivers testified that the apartment was completely empty on February 3, 2021 when he was at the subject premises signing the lease for the unit. Mr. Rivers stated that he had never met petitioner before this court proceeding.

PETITIONER'S EVIDENCE

Petitioner testified that in February 2020 she moved to the subject premises after making an agreement with respondent to pay $1,100 per month for the basement apartment and tendering to respondent $1,100 as a security deposit. She initially tendered rent payments in cash directly to respondent, but around May 2020 she began paying her rent by money orders. Petitioner testified that she had continuously resided at the subject premises and paid for cable service in her apartment. On or about October 1, 2020, petitioner received court papers concerning a landlord-tenant holdover eviction proceeding commenced by Aletha Grant naming petitioner herein as the respondent therein, under index number L & T 17308/20. Petitioner's Exhibit 5. Ms. Howard went to Bronx Housing Court to answer that petition and was informed by the court staff that due to the COVID-19 pandemic the proceeding was stayed until further notice. Petitioner never subsequently received any notice requiring her to return to court, or any other notice regarding any eviction proceeding. This court takes judicial notice of the case summary for index number L & T 17308/20, and notes that no warrant of eviction has been issued in that proceeding.

Petitioner testified that on February 12, 2021, she left her apartment between noon and one o'clock in the afternoon and returned at around six-thirty in the evening. As she approached the subject building petitioner saw a padlock on the gate to the property. Petitioner did not have a key to that lock and could not enter the property. She got the attention of a passing police car and sought the officers' assistance. The officers spoke with a woman in the subject building who was unknown to petitioner and who represented herself to be a visitor. Petitioner was able to gain entrance to the yard of the property but was unable to gain access to her apartment because her key to her front door lock no longer worked to open the door. Petitioner realized that the lock had been changed.

The next day, February 13, 2021, petitioner returned to the subject premises with a police escort and was able to enter her apartment with the assistance of the police officer. Once inside the premises, petitioner observed the woman from the day before, as well as respondent landlord handling a box of petitioner's belongings. When questioned by the officer, respondent denied knowing petitioner, but later informed the police officer that petitioner's belongings were in a storage unit and provided the officer a receipt for the storage unit. The officer accompanied petitioner to the storage unit, where she was able to identify and retrieve some of her belongings.

Coral Hanson, petitioner's friend of ten years, testified in support of petitioner. Ms. Hanson testified that on February 5, 2021, she visited petitioner at the subject premises at approximately six o'clock in the evening, when she stopped by to return money she had borrowed from petitioner. When she arrived at the subject building, Ms. Hanson called petitioner, who came outside and let her into her basement apartment. Ms. Hanson described the location of the apartment in relation to the rest of the building and her recollection of petitioner's furniture inside the unit. She recalled visiting with petitioner for about half an hour on that occasion and that she saw no one else at the subject premises that evening.

APPLICABLE LAW AND ANALYSIS

A party seeking to vacate a default judgment pursuant to CPLR § 5015(a) must demonstrate both a reasonable excuse for the default, and a meritorious defense to the underlying proceeding. Leader v Parkside Group, 174 AD3d 420 (1st Dept 2019). "The preference for deciding cases on the merits does not justify vacating a default judgment where the moving party fails to satisfy the two-prong test of showing a reasonable excuse for the default and a meritorious defense." Id. at 421. The reasonableness of the excuse is a determination within the sound discretion of the court. GMAC Mtge. LLC v Guccione, 127 AD3d 1136 (2nd Dept 2015), citing, Walker v Mohammed, 90 AD3d 1034 (2nd Dept 2011); Luisa v Zakir, 72 Misc 3d 138(A) (App Term, 2nd Dept 2021).

Respondent Grant asserts that she received neither the papers commencing this illegal eviction proceeding, nor the court's mailed notification of the date set for inquest. The proceeding was initially calendared for March 31, 2021, on which date respondent failed to appear. Petitioner submitted proof of timely service upon respondent at the subject building by certified mail, return receipt requested, and by regular mail with certificate of mailing, as required by the terms of the order to show cause. Upon proof of proper service, the proceeding was adjourned for inquest to April 9, 2021, and postcards were mailed by the court clerk to the subject address to inform respondent of the court date. When respondent defaulted for the second time, the court held inquest and based upon the credible evidence, the court awarded a judgment to petitioner.

Respondent's testimony at the hearing was often vague, evasive and/or contradictory. Respondent testified that she did not receive notice of this illegal eviction proceeding prior to the issuance of the default judgment against her, stating that she had been absent from the premises during the relevant period and that during that period and perhaps thereafter she did not regularly check her mail. However, respondent also testified that she began moving back to her residence at the subject building sometime during March 2020, around the time that petitioner commenced this proceeding. As the landlord of the subject building respondent would have been obliged to remain apprised of any pertinent information or notice related to her landlord-tenant relationships, and respondent did not indicate any issues with her mail delivery or access other than her own self-imposed absence for unspecified periods. It remains unclear how respondent came into possession of the court's default order against her. Although respondent could not recall seeing petitioner or police officers at the premises on February 13, 2021, respondent recounted that the police refused to assist petitioner at the subject premises in February 2021.

Based upon the lack of logic of her testimony and respondent's general demeanor during the hearing the court finds respondent not credible, and that respondent failed to demonstrate a reasonable excuse for her default in this proceeding. See Thattil v Mondesir, 275 AD2d 408 (2d Dept 2000) (defendant's conclusory allegations that he did not receive the summons and complaint did not constitute a reasonable excuse for his default); see also Brosnan v Behette, 186 AD2d 165 (2d Dept 1992), and Luisa v Zakir, supra.

As respondent did not show a reasonable excuse for her default, the court need not reach the issue of whether petitioner presents a meritorious defense to the proceeding. However, the court notes that even had respondent been able to demonstrate a reasonable excuse for her default, respondent does not present a meritorious defense. Specifically, respondent asserts that petitioner abandoned the subject premises. To prevail in this defense, respondent must establish that two facts exist concurrently: (1) an intention to abandon or relinquish, and (2) some overt act or some failure to act which carries the implication that the tenant or occupant neither claims nor retains any interest in the subject matter of the abandonment. The burden of proving an abandonment or surrender is on the party seeking to establish it or relying upon such abandonment or surrender. Sam & Mary Housing Corp. v. Jo/Sal Market Corp., 100 AD2d 901 (2nd Dept. 1984); Hui Zhen Wei v 259 East Broadway Associates LLC, 57 Misc 3d 136(A) (App Term, 1st Dept 2017); Ahmed v. Chelsea Highline Hotel, 49 Misc 3d 139(A) (App Term, 1st Dept. 2015); Hip Hop Fries Inc. v. Gibbins Realty Corp., 13 Misc 3d 128(A) (App Term, 1st Dept. 2006); Johnson v. Manning, NYLJ, November 16, 1988, at 21, col.2, (App Term, 1st Dept). Where the tenant or legal occupant claims that she is moving out of the apartment but fails to return the keys to the premises and fails to provide a signed surrender [*4]statement or agreement "the prudent course of action is for the landlord to commence summary dispossess proceedings." See Scherer, Residential Landlord-Tenant Law In New York, § 2:129, 2019-2020 Edition.

Here, respondent presented no proof to substantiate her presumption that petitioner abandoned the subject premises and there is currently pending the holdover proceeding commenced by respondent against petitioner, which proceeding has been stayed as a result of the eviction moratorium caused by the COVID-19 pandemic. Respondent acknowledges the absence of a formal surrender or any other communication between the parties to confirm that petitioner relinquished possession of the subject premises. The only indicia of abandonment offered by respondent consists solely of her testimony that she found the subject premises vacant and empty in late January 2021, which testimony the court does not credit. By respondent's own admission, she made no effort to contact petitioner and within days thereafter she entered into a lease agreement with a new tenant.

While the third-party respondent, occupant Rashawn Rivers, corroborates respondent-landlord's account that the apartment was vacant and devoid of any personal possessions on February 3, 2021, almost ten days before the lockout alleged by petitioner took place, the court is skeptical of his timeline. The court also notes that respondent Grant's order to show cause to vacate the default order against her, including the attorney affirmation and petitioner's annexed affidavit, while quite detailed, makes no mention at all of Mr. Rivers or any alleged intervening tenancy at the subject premises. It seems unlikely that a landlord who has already installed a new tenant at the premises would entirely omit that fact from their motion papers where the clear goal was to prevent petitioner's restoration to the premises.

While the court may be sympathetic to the current occupant's predicament, at the time that respondent allegedly rented the subject premises to Mr. Rivers, petitioner remained the tenant of the unit. In weighing petitioner's and respondent-occupant's claims to possession, petitioner clearly presents a superior claim. See S.W.S. Realty Co. v. Geandomenico, 126 Misc 2d 769, 773 (Civ Ct, New York County, 1984) (finding that the equity of restoring to possession an illegally-evicted long-term tenant outweighed the rights of an intervening occupant based on the principle qui prior est tempore, potior est jure, "between equal equities, his whose equity is first in time is strongest in right. Thus, in a contest between equities or interests in property, the rule to be applied primarily is that, other things being equal, the interest which is shown to have been earlier in time is entitled to prevail over the other" citing 20 NY Jur, Equity § 120). Additionally, the court notes that the intervening occupant was at the premises for a brief period and became aware of the challenge to his occupancy soon thereafter. See Pomeroy Co v Thompson, 5 Misc 3d 51 (App Term, 1st Dept 2004).

Here, petitioner presents a superior claim to possession both at law and in equity. Where, as here, respondent-landlord did not properly evict petitioner, petitioner's leasehold continued despite the wrongful dispossession, and thus respondent landlord had no leasehold to convey to Mr. Rivers. As petitioner held the leasehold to the subject premises and respondent landlord had no leasehold to convey to Mr. Rivers, the court should not even have to balance the equities, as long as petitioner moved promptly to be restored to the subject premises, which she did. If the court must balance the equities, however, that balancing clearly favors petitioner. Ms. Howard is a 71-year-old woman who has been a tenant at the subject premises for a year prior to being ousted from possession by respondent Grant. Mr. Rivers assumed occupancy of the premises only recently and was made aware of the possible impact of this proceeding to his continued occupancy shortly after his purported tenancy commenced. The court is sympathetic to the difficulty Mr. Rivers has encountered and may again encounter in finding suitable housing and makes its determination without prejudice to any claim for damages Mr. Rivers may present against respondent Grant.

CONCLUSION

Based on the foregoing, respondent's motion to vacate the default judgment entered on April 9, 2021 is denied and respondent is directed to restore petitioner to possession forthwith. Petitioner's cross-motion for a judgment of possession against respondent occupant Rivers is granted and the warrant may issue forthwith against both respondents. However, in the interest of justice, execution of the warrant as against respondent Rivers is stayed [*5]10 days from the date of this order.

This constitutes the decision and order of the court."

FAMILY LAW - NEGLECT & ABUSE

Matter of Madeleine B. (Peter B.); 2021 NY Slip Op 05332; Decided on October 6, 2021; Appellate Division, Second Department:

"In related proceedings pursuant to Family Court Act article 10, the father appeals from (1) an order of fact-finding of the Family Court, Richmond County (Gregory L. Gliedman, J.), dated July 31, 2019, and (2) an order of disposition of the same court dated August 29, 2019. The order of fact-finding, after a fact-finding hearing, found that the father neglected the child Madeleine B. and derivatively neglected the child Christian B. The order of disposition, upon the order of fact-finding and after a dispositional hearing, inter alia, released the children to the custody of the mother with supervision by the petitioner for a period of 12 months and directed the father to cooperate with the petitioner's supervision during that period.

ORDERED that the appeal from the order of fact-finding is dismissed, without costs or disbursements, as that order was superseded by the order of disposition and is brought up for review on the appeal from the order of disposition; and it is further,

ORDERED that the appeal from so much of the order of disposition as released the children to the custody of the mother with supervision by the petitioner for a period of 12 months and directed the father to cooperate with the petitioner's supervision during that period is dismissed as academic, without costs or disbursements; and it is further,

ORDERED that the order of disposition is affirmed insofar as reviewed, without costs or disbursements.

The appeal from so much of the order of disposition as released the subject children to the custody of the mother with supervision by the petitioner for a period of 12 months and directed the father to cooperate with the petitioner's supervision during that period must be dismissed as academic, as the period of supervision has expired (see Matter of Kyanna T. [Winston R.], 99 AD3d 1011, 1013). The findings of neglect and derivative neglect, however, constitute a permanent and significant stigma which might indirectly affect the father's status in future proceedings. Therefore, the appeal from the portion of the order of disposition that brings up for review the findings of neglect and derivative neglect is not academic (see id. at 1013).

The petitioner commenced these related proceedings pursuant to Family Court Act article 10, alleging that the mother and the father neglected the subject children, Madeleine B. and Christian B. At the fact-finding hearing, evidence was adduced demonstrating that on January 21, 2018, the father, while in an intoxicated state, perpetrated acts of domestic violence against the mother while the children were present in the home and Madeleine witnessed the father choking the mother. Madeleine was crying and urinated on herself. Evidence was also adduced at the hearing that the father was intoxicated during an earlier incident of domestic violence involving the mother. After the hearing, the Family Court found that the father neglected Madeleine and derivatively neglected Christian.

"At a fact-finding hearing in a neglect proceeding pursuant to Family Court Act article 10, a petitioner has the burden of proving by a preponderance of the evidence that the subject child was neglected" (Matter of Kenya R. [Edmindo R.], 129 AD3d 978, 979 [internal quotation marks omitted]; see Family Ct Act § 1046[b][i]). In making a finding of neglect, "[t]he Family Court's assessment of the credibility of witnesses is entitled to considerable deference" (Matter of Laila S. W. [Loren S.], 144 AD3d 694, 695 [internal quotation marks omitted]). There is no basis in the record here to disturb the Family Court's determination of the factual issues.

Family Court Act § 1046(a)(iii) provides that an agency establishes a prima facie case of neglect where it presents "proof that a person repeatedly misuses . . . alcoholic beverages, to the extent that it has or would ordinarily have the effect of producing in the user thereof a substantial state of . . . intoxication." In cases where this presumption is triggered, the agency is not required to establish that the child suffered actual harm or was at imminent risk of harm (see Matter of Nasiim W. [Keala M.], 88 AD3d 452, 453; Matter of Arthur S. [Rose S.], 68 AD3d 1123, 1124). Further, "[e]ven a single act of domestic violence, either in the presence of a child or within the hearing of a child, may be sufficient for a neglect finding" (Matter of Jermaine T. [Jairam T.], 193 AD3d 943, 945). Accordingly, the father's neglect of Madeleine was established.

To determine whether derivative neglect is present, the evidence of abuse or neglect of one child must indicate a fundamental defect in the parent's understanding of the duties of parenthood (see Matter of Jelani B., 54 AD3d 1032, 1033). Here, a derivative finding of neglect as to Christian was warranted since the father committed acts of domestic violence while Christian was in the home (see Matter of Monica C.M. [Arnold A.], 107 AD3d 996, 997), thereby evincing a flawed understanding of his duties as a parent (see Matter of Harmonee B. [Roy B.], 161 AD3d 852).

The father's remaining contentions are without merit."