RENT ABATEMENT - MICE & MOLD

Rogers Plaza LLC v. Sam, Date filed: 2022-03-22, Court: Civil Court, Kings, Judge: Judge Nicholas Moyne, Case Number: CV-032597-18KI:

"Defendant Sam contends that the warranty of habitability was breached. Mr. Sam testified to an infestation of vermin — mice and cockroaches — as well as the existence of mold and peeling paint. The plaintiff made unsuccessful attempts to get rid of the vermin in June and August of 2017 (Tr at p. 23-24, 46). Photos of the apartment substantiated the defendant’s claims that the warranty of habitability was breached. “The obligation of the tenant to pay rent is dependent upon the landlord’s satisfactory maintenance of the premises in habitable condition” (Park W. Mgt. Corp. v. Mitchell, 47 NY2d 316, 327 [1979]; cert denied 444 US 992 [1979]).

Furthermore, the breach of the warranty of habitability entitles the defendants to a partial rent abatement (see 501 New York LLC v. Anekwe, 14 Misc 3d 129(A) [App Term 2d Dept 2006] [40 percent rent abatement for vermin infestation and other violations]; see also Morrisania Apartments, LLC v. Rivera, 57 Misc 3d 141(A) [App Term 1st Dept 2017]). “In ascertaining damages, the finder of fact must weigh the severity of the violation and duration of the conditions giving rise to the breach as well as the effectiveness of steps taken by the landlord to abate those conditions” (Park W. Mgt. Corp., supra at 329). Here the conditions existed from at least June of 2017 and persisted until the defendants surrendered the apartment. The landlord’s attempts to remedy the situation were admittedly unsuccessful. The conditions were severe — the apartment was infested with rodents, cockroaches, and had mold, all of which are harmful to the health of the occupants. These conditions ultimately resulted in the defendants vacating the property. Accordingly, the defendants are entitled to a rent abatement of 30 percent of the rent for each of the months of July, August, September, October, and November of 2017. As the defendants paid the full rent for July and August, they are entitled to a credit in the amount of the abatement for each of those months — an overpayment of $645 per month. For the months of September, October, and November 2017, the petitioner is only entitled to rent at the discounted rate of $1505 per month."

PANDEMIC AND FORCE MAJEURE AS SEEN BY THE SECOND CIRCUIT

Simply stated, according to the Second Circuit, "the COVID-19 pandemic and government shut-down orders are exactly the sort of events that fall within the force majeure clause as events "beyond [the] reasonable control" of either party, App'x at 60 ¶ 12(a), and likewise qualify as events that "frustrate[] expectations" as to how business operates, see Kel Kim, 70 N.Y.2d at 903."

JN CONTEMPORARY ART LLC v. PHILLIPS AUCTIONEERS LLC, Court of Appeals, 2nd Circuit 2022:

"Phillips Auctioneers LLC invoked the force majeure clause to terminate its agreement to sell a Rudolf Stingel painting on behalf of JN Contemporary Art LLC, citing the COVID-19 pandemic and state government orders requiring nonessential businesses to cease in-person operations. JN sued for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, and equitable estoppel. Phillips moved to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The United States District Court for the Southern District of New York (Cote, J.) granted the motion, concluding that the pandemic constituted "a circumstance beyond the parties' reasonable control," as contemplated by their agreement. On de novo review, we affirm.

BACKGROUND

JN buys, sells, and exhibits works of art. Phillips is an auction house that takes works of art on consignment for auction. In June 2019, JN and Phillips entered into two agreements. The first (the "Basquiat Agreement") required JN to bid £3,000,000 for Untitled, by Jean-Michel Basquiat (the "Basquiat Painting") when Phillips auctioned it during its 20th Century & Contemporary Art Evening Sale scheduled to take place in London in June 2019. Phillips agreed to pay JN a financing fee of 20 percent of the sale amount above £3,000,000. The Basquiat Agreement was "[c]onditional upon signature by [JN] of the Consignment Agreement with Guarantee of Minimum Price in respect of the work by Rudolf Stingel, Untitled, 2009 . . . and conditional upon the [Basquiat Painting] being offered for sale with a commitment by Phillips to pay the Seller a Guaranteed Minimum[.]" App'x at 50.

On the same day, the parties entered into the second agreement (the "Stingel Agreement"), which required JN to consign to Phillips Untitled, 2009, a painting by Rudolph Stingel (the "Stingel Painting"), with a guaranteed minimum amount of $5,000,000 to be paid to JN. The Stingel Agreement stipulated that the painting was to be "offered for sale in New York in [Phillips's] major spring 2020 evening auction of 20th Century & Contemporary Art currently scheduled for May 2020" (the "New York Auction"). App'x at 56.

The Stingel Agreement contained a force majeure clause:

In the event that the auction is postponed for circumstances beyond our or your reasonable control, including, without limitation, as a result of natural disaster, fire, flood, general strike, war, armed conflict, terrorist attack or nuclear or chemical contamination, we may terminate this Agreement with immediate effect. In such event, our obligation to make payment of the Guaranteed Minimum shall be null and void and we shall have no other liability to you.

App'x at 60 ¶ 12(a). The Stingel Agreement also allowed Phillips "the sole right in our reasonable discretion, and as we deem appropriate: (i) to select, change or reschedule the place, date and time for the auction but any change to a later date than May 2020 would be subject to [JN's] prior written consent[.]" App'x at 56.

Both parties performed as required by the Basquiat Agreement. JN obtained a $5,000,000 loan from Muses Funding I LLC secured by the Stingel Painting. In December 2019, JN, Phillips, and Muses entered into an amendment to the Stingel Agreement that memorialized the Muses lien (the "Security Amendment"). The Security Amendment required the Stingel Painting to be sold "during the 20th Century & Contemporary Art—NY Auction to be held by Phillips in New York in May 2020." App'x at 67 ¶ 1(c).

In March 2020, in response to the COVID-19 pandemic, then-New York Governor Andrew Cuomo issued a series of executive orders that eventually banned nearly all nonessential in-person business activities, including art exhibitions and auctions. Phillips posted a public announcement on its website on March 14 stating:

As more of our community of staff, clients and partners becomes affected by the spread of the Coronavirus, we have decided to postpone all of our sales and events in the Americas, Europe and Asia. . . . Our upcoming 20th Century & Contemporary Art sales in New York will be held the week of 22 June 2020, consolidating New York and London sales into one week of auctions.

App'x at 114 (bolding in original). An event entitled "20TH CENTURY AND CONTEMPORARY ART EVENING SALE, NEW YORK AUCTION," was eventually held on July 2, 2020, using a remote format.

On June 1, 2020, Phillips terminated the Stingel Agreement via electronic message:

As you are well aware, due to the COVID-19 pandemic, since mid-March 2020 the New York State and New York City governments placed severe restrictions upon on all non-essential business activities. Certain government orders were invoked that applied to and continue to apply to Phillips' business activities.

Due to these circumstances and the continuing government orders, we have been prevented from holding the Auction and have had no choice but to postpone the Auction beyond its planned May 2020 date.

We are hereby giving you notice with immediate effect that: (1) Phillips is invoking its right to terminate the [Stingel Agreement]; (2) Phillips' obligation to make payment of the Guaranteed Minimum to you for the Property is null and void; and (3) Phillips shall have no liability to you for such actions that [are] required under applicable governing law.

Our rights to act are as mutually agreed by you and us and are clearly set out in [the termination clause of the Stingel Agreement] . . . .

App'x at 118. This notice was also mailed to JN on June 2, 2020.

JN sued Phillips on June 8, 2020, and on the same day moved for a preliminary injunction and temporary restraining order to compel Phillips to offer the Stingel Painting at its next auction. On July 15, the district court denied the motion for a temporary restraining order. JN Contemporary Art LLC v. Phillips Auctioneers LLC, 472 F. Supp. 3d 88, 89 (S.D.N.Y. 2020). Phillips moved to dismiss, JN filed a second amended complaint, and Phillips again moved to dismiss. The district court granted the motion. JN Contemporary Art LLC v. Phillips Auctioneers LLC, 507 F. Supp. 3d 490 (S.D.N.Y. 2020). Principally, the district court concluded that the COVID-19 pandemic fell within the Stingel Agreement's force majeure clause, and thus there was no breach of the agreement. This appeal followed.

DISCUSSION

We review de novo a district court's Rule 12(b)(6) dismissal. Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016). So long as an agreement is "complete, clear and unambiguous on its face," under New York law it is "enforced according to the plain meaning of its terms." Eternity Glob. Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (internal quotation marks omitted). Contractual claims unambiguously barred by an agreement between the parties may be determined on a motion to dismiss. Edwards v. Sequoia Fund, Inc., 938 F.3d 8, 13 (2d Cir. 2019).

I. Force Majeure

JN first argues that because the Stingel Agreement did not specifically require Phillips to auction off the Stingel Painting live at the New York Auction in May 2020, Phillips should have held the auction in another format, or delayed it to some point in the future. We disagree. The Stingel Agreement provided that the Stingel Painting "shall be offered for sale in New York at our major spring 2020 evening auction of 20th Century & Contemporary Art currently scheduled for May 2020." App'x at 56 ¶ 6(a). As JN itself alleged, the New York Auction is a well-known event in the industry, taking place takes place annually in May. The language of the agreement is unambiguous: it obligated Phillips to auction the Stingel Painting for at least the Guaranteed Minimum at the May 2020 New York Auction. Nothing in the agreement obligated Phillips to sell the Stingel Painting at a different auction, at a later time, or via different format. It is true, as JN argues, that Phillips could have chosen to offer some sort of alternative performance, but that is not the same as the Stingel Agreement requiring Phillips to provide anything other than the bargained-for performance. See, e.g., Harriscom Svenska, AB v. Harris Corp., 3 F.3d 576, 580 (2d Cir. 1993) (noting that when defendant was excused from performance by force majeure, defendant was not required to "provide substitute performance."). The Stingel Agreement contains no such requirement.

We turn, then, to the issue of whether Phillips properly terminated the Stingel Agreement. A force majeure clause's primary purpose is to "relieve a party from its contractual duties when its performance has been prevented by a force beyond its control or when the purpose of the contract has been frustrated." Phillips Puerto Rico Core, Inc. v. Tradax Petroleum, Ltd., 782 F.2d 314, 319 (2d Cir. 1985). "[W]hen the parties have themselves defined the contours of force majeure in their agreement, those contours dictate the application, effect, and scope of force majeure." Constellation Energy Servs. of N.Y., Inc. v. New Water St. Corp., 46 N.Y.S.3d 25, 27 (1st Dep't 2017) (alteration in original) (internal quotation marks omitted).

The force majeure clause here provided in relevant part that "[i]n the event that the auction is postponed for circumstances beyond our or your reasonable control, including, without limitation, as a result of natural disaster, fire, flood, general strike, war, armed conflict, terrorist attack or nuclear or chemical contamination, we may terminate this Agreement with immediate effect." App'x at 60 ¶ 12(a). The district court found that "[i]t cannot be seriously disputed that the COVID-19 pandemic is a natural disaster." JN Contemporary, 507 F. Supp. 3d at 501. JN argues that whether COVID-19 is a naturally occurring virus or one created by man is unsettled, such that the district court erred in deeming the pandemic a natural disaster as a matter of law. Instead, JN contends, it is an open question of material fact, and that JN is entitled to discovery as to "whether COVID-19 escaped from one of two labs in Wuhan working on coronaviruses or whether such labs [] genetically engineer[ed]" the COVID-19 virus. Appellant's Br. at 30. JN also argues that "[n]atural disasters are localized events resulting from natural processes of the earth—i.e., hurricanes, tsunamis, earthquakes, tornadoes and other geological processes—that generally are geographically contained and relatively short in duration." Appellant's Br. at 33.

We need not address these arguments to decide this appeal. We hold that the COVID-19 pandemic and the orders issued by New York's governor that restricted how nonessential businesses could conduct their affairs during the pandemic, constituted "circumstances beyond our or your reasonable control," App'x at 60 ¶ 12(a). Thus, we affirm the district court's dismissal of the second amended complaint on that ground without resolving the question of whether COVID-19 is a natural disaster within the meaning of the force majeure clause. See Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 405 (2d Cir. 2006) ("[W]e are free to affirm a decision on any grounds supported in the record . . . .").

New York law requires courts to construe force majeure clauses narrowly, so that "only if the force majeure clause specifically includes the event that actually prevents a party's performance will that party be excused." Kel Kim Corp. v. Cent. Mkts., Inc., 70 N.Y.2d 900, 902-03 (1987). A narrow construction also applies when the force majeure clause contains a "catchall," such as "or other similar causes beyond the control of such party," cabining the meaning to "things of the same kind or nature as the particular matters mentioned." Id. at 903; see also Team Mktg. USA Corp. v. Power Pact, LLC, 839 N.Y.S.2d 242, 246 (3d Dep't 2007) ("When the event that prevents performance is not enumerated, but the clause contains an expansive catchall phrase in addition to specific events, the precept of ejusdem generis as a construction guide is appropriate . . . ." (internal quotation marks omitted)).

Here, the COVID-19 pandemic, coupled with the state government's orders restricting the activities of nonessential businesses, constitute an occurrence beyond the parties' reasonable control, allowing Phillips to end the Stingel Agreement. The pandemic and government shutdown orders are the same type of events listed in the force majeure clause, which include, "without limitation," natural disaster, terrorist attack, and nuclear or chemical contamination. App'x at 60 ¶ 12(a). Each of the enumerated events are of a type that cause large-scale societal disruptions, are beyond the parties' control, and are not due to the parties' fault or negligence. By contrast, JN's argument would render meaningless both the catchall phrase and the force majeure clause's explicit statement that the non-exhaustive list of events following the catchall phrase did not limit it. See App'x at 60 ¶ 12(a). This would violate the principle of New York contract law that any interpretation "that has the effect of rendering at least one clause superfluous or meaningless . . . is not preferred and will be avoided if possible." Galli v. Metz, 973 F.2d 145, 149 (2d Cir. 1992) (internal quotation marks omitted).

This reading is consistent with the approach the New York Court of Appeals took in Kel Kim. Kel Kim operated a roller skating rink in leased premises. Kel Kim, 70 N.Y.2d at 901. The lease required Kel Kim to secure a certain amount of liability insurance. Id. Kel Kim maintained the necessary insurance for six years, but was unable to renew the policy, or obtain new coverage, because of a crisis in the insurance business. Id. Kel Kim sued, seeking a declaratory judgment to avoid eviction. Id. Kel Kim argued in relevant part that its performance was excused by the force majeure provision in the lease agreement, which provided:

If either party to this Lease shall be delayed or prevented from the performance of any obligation through no fault of their own by reason of labor disputes, inability to procure materials, failure of utility service, restrictive governmental laws or regulations, riots, insurrection, war, adverse weather, Acts of God, or other similar causes beyond the control of such party, the performance of such obligation shall be excused for the period of the delay.

70 N.Y.2d at 902 n.*. The New York Court of Appeals determined that the force majeure provision did not apply because the event that prevented Kel Kim's performance under the contract was neither specifically included in the force majeure provision nor generally included within the provision's catchall phrase, "or other similar causes beyond the control of such party." Id. at 902-03. The court explained that the event (the inability of Kel Kim to procure and maintain liability insurance) was of a different kind and nature from the particular events listed in the force majeure provision, such that it could not be considered a "similar cause." Id. at 903. The events listed "pertain to a party's ability to conduct day-to-day commercial operations on the premises," and the Court of Appeals rejected Kel Kim's argument that "a failure to procure and maintain insurance" fell within those parameters. Id. Rather, the court held, "the requirement that specified amounts of public liability insurance at all times be maintained goes not to frustrated expectations in day-to-day commercial operations on the premises—such as interruptions in the availability of labor, materials and utility services—but to the bargained-for protection of the landlord's unrelated economic interests where the tenant chooses to continue operating a public roller skating rink on the premises." Id.

In contrast, here the COVID-19 pandemic and government shut-down orders are exactly the sort of events that fall within the force majeure clause as events "beyond [the] reasonable control" of either party, App'x at 60 ¶ 12(a), and likewise qualify as events that "frustrate[] expectations" as to how business operates, see Kel Kim, 70 N.Y.2d at 903.

II. Consent

JN also argues that Phillips was in breach of the Stingel Agreement before it terminated because it "fail[ed] to obtain JN's prior written consent to reschedule" the New York Auction. Appellant's Br. at 10. JN notes that Phillips postponed the New York Auction on March 14—before the order prohibiting gatherings of 50 or more people issued on March 16. Because it predated the March 16 order, JN argues, Phillips' decision to postpone was discretionary, and required JN's consent. We disagree. The decision to postpone was dictated by the pandemic and executive orders issued in response to the pandemic, and thus fell within the force majeure clause. See, e.g., Melendez v. City of New York, 16 F.4th 992, 997 (2d Cir. 2021) (". . . New York State was hit early and hard by the pandemic. By the end of March 2020, the state had become the nation's pandemic epicenter, reporting approximately one third of infection cases nationwide, with New York City alone then accounting for one quarter of the country's virus-related deaths."). As explained in Melendez:

In an effort to control the pandemic within New York, the state legislature, on March 3, 2020, granted then-Governor Andrew M. Cuomo broad authority to "issue any directive during a state disaster emergency" that he deemed "necessary to cope with the disaster," and expanded his existing authority temporarily to suspend "any statute, local law, ordinance, or orders, rules or regulations." Four days later, the Governor declared the COVID-19 pandemic a state disaster emergency, and proceeded, over the next weeks and months, to issue more than seventy executive orders to address the crisis.

Id. at 998-99 (citations omitted).

Nor are we troubled that Phillips's decision to postpone preceded the particular executive order closing nonessential businesses by two days. From March 7 onward the governor issued a series of executive orders imposing restrictions on nonessential businesses and gatherings that became stricter as time went on, and were repeatedly extended. See, e.g., 9 NYCRR 8.202.3, 8.202.14, 8.202.18, and 8.202.31; see also Melendez, 16 F.4th at 999 ("Certain orders issued between March 16 and 19, 2020, closed or severely limited the in-person operation of large numbers of New York businesses. These shut-down orders were repeatedly extended and modified over the following months." (citations omitted)). Thus, even assuming arguendo that the March 14 postponement was discretionary, by March 16 it would have been illegal for Phillips to hold the New York Auction. There was every indication that the restrictions would remain in effect for the foreseeable future, and indeed, the orders were still in effect during May 2020. As Phillips was barred by executive order from conducting the auction as called for in the agreement two days after its allegedly discretionary decision to postpone, any harm resulting from the alleged breach was de minimis and cannot support a claim for breach of contract. See generally Restoration Realty Corp. v. Robero, 58 N.Y.2d 1089, 1091 (1983) (rejecting allegations of breach of contract where "the allegations are de minimis in nature and the plaintiff has failed to show any prejudice resulting from the . . . alleged breach"); Milan Music, Inc. v. Emmel Commc'ns Booking, Inc., 829 N.Y.S.2d 485 (1st Dep't 2007) ("Without a clear demonstration of damages, there can be no claim for breach of contract.").

Finally, we conclude, as the district court did, that JN fails to raise a question of material fact on the issue of whether Phillips's decision to invoke the force majeure clause was pretextual. JN Contemporary, 507 F. Supp. 3d at 504. As the district court aptly held, because Phillips properly "exercise[d] its contractual right to terminate the Stingel Agreement, its motives for doing so are irrelevant." Id.; see also Big Apple Car, Inc. v. City of New York, 611 N.Y.S.2d 533, 534 (1st Dep't 1994) (holding that where party terminates contract "in accordance with the express provisions of" a termination clause, no "court inquiry into whether the termination was activated by an ulterior motive" is merited).

III. The Basquiat Agreement

JN also argues that the district court erred in dismissing its claim for breach of the Basquiat Agreement because that agreement operated in tandem with the Stingel Agreement: JN guaranteed the sale of the Basquiat Painting while Phillips guaranteed the sale of the Stingel Agreement. By breaching the Stingel Agreement, JN argues, Phillips also breached the Basquiat Agreement.

In relevant part, the Basquiat Agreement states:

Conditional upon signature by you of the Consignment Agreement with Guarantee of Minimum Price in respect of the work by Rudolph Stingel, Untitled, 2009 . . . and conditional upon the above mentioned Property being offered for sale with a commitment by Phillips to pay the Seller a Guaranteed Minimum you have agreed that you will provide a third-party guarantee obligation (`Guarantee Obligation') as follows . . . .

App'x at 50. Both agreements contained integration clauses.

"Whether the parties intended to treat both agreements as mutually dependent contracts, the breach of one undoing the obligations under the other, is a question of fact. In determining whether contracts are separable or entire, the primary standard is the intent manifested, viewed in the surrounding circumstances." Rudman v. Cowles Commc'ns, 30 N.Y.2d 1, 13 (1972). "Under New York law, the fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent." Eternity Glob. Master Fund, 375 F.3d at 177 (internal quotation marks and brackets omitted).

The plain language of the Basquiat Agreement makes clear that under that agreement, Phillips was obligated only to sell the Basquiat Painting and JN was required only to enter into the Stingel Agreement. The Basquiat Agreement was fully performed: JN signed the Stingel Agreement, and Phillips auctioned off the Basquiat Painting and paid the seller a guaranteed sum. The Basquiat Agreement is completely silent as to any obligation Phillips had pursuant to the Stingel Agreement. If the parties intended to enter into a "trade," as JN argues, that is not reflected in the agreements' unambiguous language. As "there was no language of condition" making the full performance of the Stingel Agreement part of the performance of the Basquiat Agreement, the district court properly dismissed the claim as a matter of law. Schron v. Troutman Saunders LLP, 945 N.Y.S.2d 25, 29 (1st Dep't 2012). The only link between the two was the obligation of JN to enter into the Stingel Agreement. See, e.g., Rudman, 30 N.Y.2d at 13 ("[W]hen two parties have made two separate contracts it is more likely that promises made in one are not conditional on performances required by the other.") (internal quotation marks omitted)). If the parties wished to condition performance of one agreement on the performance of the other, the agreements could have been so drafted. Compare Applehead Pictures LLC v. Perelman, 913 N.Y.S.2d 165, 189 (1st Dep't 2010) ("Manifestly, one agreement may follow from and even have as its raison d'etre another and yet be independently enforceable." (internal quotation marks omitted)), with Movado Grp., Inc. v. Mozaffarian, 938 N.Y.S.2d 27, 28 (1st Dep't 2012) ("[T]he terms and conditions of the extrinsic document were incorporated into the credit agreement, and [] defendants[] acknowledged receipt and agreed to be bound by the same. The credit agreement, which identified the terms and conditions as those contained on each invoice, was sufficient to put defendants on notice that there was an additional document of legal import to the contract they were executing.").

Moreover, each agreement contained an integration clause—further evidence drawn from the agreements' four corners that the two are not interdependent. And the integration clauses "bar the use of parol evidence of the parties' intent and of any other agreements or understandings." Schron, 945 N.Y.S.2d at 29; see also id. ("[Where] there was absolutely no language of condition making the funding of the loan an express condition precedent to the right to exercise the $100 million option . . . the parol evidence rule precluded the use of extrinsic evidence to show the claimed interdependence."). Finally, even assuming the Basquiat Agreement required Phillips to fully perform the Stingel Agreement, Phillips' proper invocation of the force majeure clause excused its performance.

IV. Remaining Issues

JN also challenges the district court's dismissal of its implied covenant claim. Under New York law, "implicit in every contract is a covenant of good faith and fair dealing . . . which encompasses any promises that a reasonable promisee would understand to be included." Spinelli v. Nat'l Football League, 903 F.3d 185, 205 (2d Cir. 2018) (internal quotation marks omitted). The implied covenant of good faith and fair dealing includes a promise that "neither party to a contract shall do anything that has the effect of destroying or injuring the right of the other party to receive the fruits of the contract, or to violate the party's presumed intentions or reasonable expectations." Id. (internal quotation marks and brackets omitted). A claim for violation of the covenant survives a motion to dismiss only if it is based on allegations different from those underlying the breach of contract claim, and the relief sought is not intrinsically tied to the damages that flow from the breach of contract. See Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002) (applying New York law). The district court correctly dismissed this claim as duplicative. Even accepting JN's arguments that it set out a different factual basis for this claim than the factual basis set out in its breach of contract claim, the damages sought for both claims would be the same: compensation for the lost sale.

Nor are we persuaded that the district court erred in dismissing JN's claims that Phillips acted in bad faith. JN argues that its implied covenant claim took in "the full context of Phillips' bad faith actions surrounding its unlawful termination decision." Appellant's Br. at 48. At bottom, regardless of whether it was pretextual or not, Phillips exercised its negotiated right to terminate under the force majeure clause. See 23 Williston on Contracts § 63:22 (4th ed. 2021) ("[T]here can be no breach of the implied promise or covenant of good faith and fair dealing where the contract expressly permits the actions being challenged, and the defendant acts in accordance with the express terms of the contract.").

Finally, JN argues that it properly stated a claim for breach of fiduciary duty based on the theory that Phillips owed JN a duty of loyalty by virtue of the consignment arrangement. Like the claim for breach of the implied covenant, the breach of fiduciary duty claim fails as a matter of law because Phillips properly terminated the contract. See Marc Jancou Fine Art Ltd. v. Sotheby's Inc., 967 N.Y.S.2d 649 (1st Dep't 2013) ("The consignment agreement between plaintiff and Sotheby's permitted Sotheby's to withdraw the artwork owned by plaintiff from auction if Sotheby's had any doubt, in its sole judgment, as to the work's `attribution,'" such that Sotheby's acted within its rights in withdrawing the art from auction when the artist claimed her reputation would be harmed if the work were offered for auction after being restored.).

CONCLUSION

For the reasons given above, the judgment is affirmed."

EMPLOYEE OR INDEPENDENT CONTRACTOR?

MATTER OF CAVLAK v. LANGUAGE SERVICES ASSOCIATES, INC., 2022 NY Slip Op 705 - NY: Appellate Div., 3rd Dept. 2022"

"Language Services Associates, Inc. (hereinafter LSA) provides language interpretation and document translation services. Claimant, a Turkish-English interpreter and translator, began working for LSA in October 2013. She later filed an application for unemployment insurance benefits in May 2017, citing a lack of work. The Department of Labor issued initial determinations finding that claimant was an employee of LSA, rather than an independent contractor, and that LSA was thus liable for unemployment insurance contributions based upon remuneration paid to claimant and others similarly situated. Various proceedings ensued and, following multiple hearings, an Administrative Law Judge sustained the initial determinations through March 8, 2018, finding, among other things, that claimant's formation of a corporation on that date rendered her an independent contractor thereafter. Upon LSA's application, and following a review of the record, the Unemployment Insurance Appeal Board, in two identical decisions filed May 19, 2020, adopted the Administrative Law Judge's determination concerning claimant's status as an employee but reversed the finding that such status ended on March 8, 2018. This appeal by LSA followed.

We affirm. "Whether an employer-employee relationship exists is a factual determination for the Board, and its decision will be upheld if supported by substantial evidence" (Matter of Aleksanian [Corporate Transp. Group, Ltd.-Commissioner of Labor], 180 AD3d 1307, 1308 [2020] [internal quotation marks and citations omitted]; see Matter of Sischo [Safeguard Props. LLC-Commissioner of Labor], 180 AD3d 1112, 1112-1113 [2020], lv denied 35 NY3d 915 [2020]). This is so "even though there [may be] evidence in the record that would have supported a contrary conclusion" (Matter of Thorndike [Penn Mut. Life Ins. Co.-Commissioner of Labor], 185 AD3d 1255, 1256 [2020] [internal quotation marks and citations omitted], lv dismissed 37 NY3d 1090 [2021]). Whether an employer-employee relationship exists may rest on "evidence show[ing] that the [purported] employer exercises control over the results produced or the means used to achieve the results[;] [h]owever, control over the means is the more important factor to be considered" (Matter of Empire State Towing & Recovery Assn., Inc. [Commissioner of Labor], 15 NY3d 433, 437 [2010] [internal quotation marks and citations omitted]; see Matter of Thorndike [Penn Mut. Life Ins. Co.-Commissioner of Labor], 185 AD3d at 1256).

The record reflects that LSA actively advertises available interpreter/translator opportunities and uses various channels to recruit qualified individuals. As part of LSA's recruitment process , claimant underwent a thorough review and verification of her qualifications. Claimant also executed a standard written one-year, renewable agreement with LSA requiring her to adhere to applicable industry standards and government imposed and industry recognized "code[s] of conduct, rules, laws, standards, practices, or procedures" in her completion of work assignments for LSA. The agreement further required claimant to complete her assignments in conformity with LSA clients' lawful requests and that she adhere to LSA's privacy and nondisclosure and document retention policies. She was not, however, prohibited from working for other entities.

Upon a client's request for interpreting or translation services, which would be made to LSA directly, LSA, through its own software program or call-center staff, would identify and contact interpreters appropriate for the service requested. Although claimant was free to accept or reject an offered assignment without penalty, the record reflects that LSA nevertheless tracks an interpreter's acceptance rate and will contact the interpreter if assignments are consistently rejected. Once an assignment is accepted, however, LSA provides any necessary details and requirements to the interpreter and may contact an interpreter on behalf of a client to check on his or her status. Further, LSA monitors client complaints and, depending on the language, an interpreter's work product, and it may discharge an interpreter upon a "very serious breach" of the written agreement or if a client reports a significant issue. The written agreement further provides that claimant was not permitted to delegate or subcontract her assignments without prior notice to LSA. In such an event, the agreement permitted claimant to find a substitute on her own, but her choice was nevertheless governed by LSA's qualification standards. Alternatively, LSA would find a substitute on claimant's behalf.

Claimant was paid for her work by LSA directly based upon an agreed-upon rate. She was not required to submit invoices for her completed work, as LSA's own software system is able to track an interpreter's time spent on interpretations and word-count produced for document translations as part of the payment calculation. Although on March 8, 2018 claimant formed a corporation, Asil Translation, Inc., and LSA entered into an agreement with said corporation in December 2018, LSA did not produce any evidence of payments to the corporate entity. In view of the foregoing, although record evidence could support a contrary result, we find that substantial evidence supports the Board's determinations that an employer-employee relationship existed (see Matter of Bin Yuan [Legal Interpreting Servs., Inc.-Commissioner of Labor], 140 AD3d 1550, 1551 [2016], lv dismissed 29 NY3d 968 [2017]; Matter of Soo Tsui [Language Servs. Assoc., Inc.-Commissioner of Labor], 135 AD3d 1098, 1099 [2016]; compare Matter of Eiber Translations, Inc. [Commissioner of Labor], 143 AD3d 1080, 1081-1082 [2016]). Moreover, contrary to LSA's contention, we discern no inconsistency between the Board's determinations and the Department of Labor's relevant guidelines regarding the existence of an employment relationship, as "no single factor is determinative" and the facts of this case are consistent with "the well-established common-law tests of master and servant" (Matter of Soo Tsui [Language Servs. Assoc., Inc.-Commissioner of Labor], 135 AD3d at 1100; see New York State Department of Labor, Guidelines for Determining Worker Status: Translating and Interpreting Industry, https://dol.ny.gov/system/files/documents/2021/02/ia318.20.pdf). We similarly reject LSA's contention that the Board improperly held that its determinations as to the existence of an employment relationship applied to all other similarly situated interpreters and translators, as the factual circumstances surrounding another individual's employment relationship may be addressed in a separate proceeding (see Labor Law § 620[1][b]; Matter of Sischo [Safeguard Props. LLC-Commissioner of Labor], 180 AD3d at 1114).

LSA's further contention that claimant is not eligible for unemployment benefits because she was not totally unemployed was not raised at the administrative proceedings and, thus, is not properly before us (see Matter of Vargas v Hampton Inn 35th St., 189 AD3d 1857, 1858 [2020]; Matter of Rabess [Commissioner of Labor], 104 AD3d 988, 989 [2013]; Matter of Ours [Commissioner of Labor], 268 AD2d 669, 669 [2000]). To the extent that LSA's remaining claims are properly before us, we have considered them and find them to be without merit (see Matter of Martell [Hearst Corp.-Commissioner of Labor], 179 AD3d 1227, 1228 [2020])."

SPECIAL PROCEEDING FOR CERTAIN NEIGHBOR DISPUTES

MATTER OF PANASIA ESTATE, INC. v. 29 W. 19 CONDOMINIUM, 2022 NY Slip Op 975 - NY: Appellate Div., 1st Dept. 2022:

"These appeals stem from a proceeding pursuant to Real Property Actions and Proceedings Law (RPAPL) § 881 for a license to enter adjoining property. Petitioner Panasia Estate, Inc. is the owner of the building located at 33 West 19th Street in Manhattan. Respondent 29 West 19 Condominium (29 Condominium) is an unincorporated association that operates the condominium building that abuts petitioner's building to the east and has six unit owners and a ground floor commercial space. Respondents Lauren Cipicchio and Daniel Daly are the owners of the penthouse unit in the 29 Condominium building, whose unit includes 1,730 square feet of terrace space, including a rooftop terrace abutting petitioner's building. Respondent MKF Realty is the owner of the building abutting petitioner's property to the west, which consists of five apartments and a ground floor commercial space. All three buildings are six stories tall.

Petitioner seeks to improve its property by the addition of two stories containing 15,000 square feet of commercial office space, which will take up to three years to construct. In connection with its planned improvements, petitioner sought access to respondents' adjoining properties to perform a pre-construction survey and install overhead protection , roof protection, and flashing on respondents' properties and an outrigger and netting system above portions of the properties to protect the properties.

After negotiations over a license to enter and engineering and attorneys' fees stalled, petitioner commenced this proceeding. After conducting a hearing, the court issued the order under review, which granted petitioner a license to conduct a pre-construction survey and install the overhead and roof protections, flashing, and outrigger and netting system, and to swing scaffolding. The court ordered petitioner, inter alia, to pay a monthly license fee of $3,000 to Daly and Cippichio, increasing to $4,000 after 12 months and $7,000 after 24 months, for interference with the use of their terrace; a monthly license fee of $1,000 to the nonparty first-floor unit owner of the 29 Condominium, increasing to $1,250 after 12 months and $2,000 after 24 months, for interference with the use of his terrace; and a monthly license fee of $1,200 to MKF, increasing to $1,600 after 12 months and $3,200 after 24 months, to be split among three residential tenants with roof access and the commercial tenant; to reimburse the 29 Condominium and Daly and Cipicchio $10,000 for attorneys' fees and $3,500 for engineering fees and MKF $15,278.36 for attorneys' fees and $40,500 for engineering fees; to post a bond in the amount of $1,000,000; and to provide proof that respondents have been added as additional insureds on "the relevant insurance policy."

Petitioner appeals from the order to the extent it ordered petitioner to pay monthly license fees and respondent's engineering and attorneys' fees in connection with the license and to post a bond in the amount of $1,000,000.

Respondents 29 Condominium and Daly and Cipicchio appeal from the orders to the extent the motion court declined to order a term for the license, to order petitioner to pay the professional fees they incurred in connection with the license, to refer the matter for a hearing on their attorneys' fees, to grant 29 Condominium a license fee, and to specify terms of the insurance that petitioner was required to procure.

Petitioner contends that RPAPL 881 does not authorize awards of license fees, attorneys' fees, or engineering or other design professional fees. We disagree.

RPAPL 881 provides:

"When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry" (emphasis added).

Petitioner argues that the statutory authority to issue a license "upon such terms as justice requires" cannot be interpreted to authorize license fees, counsel fees, or other professional fees not explicitly authorized, because the statute specifically provides for liability for "actual damages" only. Petitioner contends that absence from the statute's legislative history of any mention of a monetary remedy other than actual damages is consistent with the American rule that parties to bear their own litigation expenses, since there is no fee-shifting provision in the statute.

Petitioner also maintains that public policy requires that RPAPL 881 be interpreted thus so that landowners will be encouraged to improve their properties without fear of being extorted by their neighbors.

These arguments are unavailing. What petitioner seeks is essentially to compel respondents to grant it a license on its own terms. However, as we have recognized, because "[t]he respondent to an 881 petition has not sought out the intrusion and does not derive any benefit from it. . . [e]quity requires that the owner compelled to grant access should not have to bear any costs resulting from the access" (DDG Warren LLC v Assouline Ritz 1, LLC, 138 AD3d 539, 540 [1st Dept 2016] [internal quotation marks omitted]; see Matter of Van Dorn Holdings, LLC v 152 W. 58th Owners Corp., 149 AD3d 518 [1st Dept 2017]). Thus, the grant of licenses pursuant to RPAPL 881 often warrants the award of contemporaneous license fees (DDG Warren, 138 AD3d at 540). Contrary to petitioner's contention that a license fee constitutes a windfall unless there are some actual damages, such as lost business, we have found that a license fee is warranted "where the granted license will entail substantial interference with the use and enjoyment of the neighboring property during the [license] period, thus decreasing the value of the property during that time" (DDG Warren, 138 AD3d at 540; see e.g. Matter of New York Pub. Lib. v Condominium Bd. of the Fifth Ave. Tower, 170 AD3d 544, 545 [1st Dept 2019]).

Similarly, a compulsory licensor should be entitled to reasonable attorneys' and engineering fees because:

"[a] property owner compelled to grant a license should not be put in a position of either having to incur the costs of a design professional to ensure petitioner's work will not endanger his property or having to grant access without being able to conduct a meaningful review of petitioner's plans" (Van Dorn Holdings, 149 AD3d at 519 [internal quotation marks omitted]).

Nevertheless, petitioner contends that this Court's jurisprudence granting fees as a condition of a license pursuant to RPAPL 881 has been wrongly decided because we did not undertake an analysis applying the American rule in the context of an RPAPL 881 proceeding. This argument is unavailing. The American rule deals with attorneys' fees only, not license fees or other professional fees. In any event, petitioner's reliance on the American rule is misplaced. Where the respondent in an RPAPL 881 proceeding has not refused access but rather seeks reasonable terms for access, attorneys' fees, including those incurred in opposing the petition, are not an incident of litigation but rather part of the process of negotiating a license agreement (Matter of North 7-8 Invs., LLC v Newgarden, 43 Misc 3d 623, 631 [Sup Ct, Kings County 2014]).

Unlike in other types of litigation, respondents in a special proceeding pursuant to RPAPL 881 are not accused of any wrongful conduct but are haled into court by a petitioner seeking access to their properties solely for its own benefit. That access can be extremely invasive: RPAPL 881 is designed to strike a balance between the petitioner's interest in improving its property and the harm to the adjoining property owner's enjoyment of its property.

Petitioner further contends that Supreme Court abused its discretion in granting MKF engineering fees of $40,500 as anticipated in a proposal from its engineer and that the amount was unreasonable. Because no evidentiary basis exists for granting the anticipated fees (MKF $40,500 in engineering fees and the 29 Condominium respondents $10,000 in attorneys' fees and $3,500 in engineering fees), we vacate those awards and grant MKF reimbursement for engineering fees it incurs in connection with petitioner's license, in an amount to be determined, and the 29 Condominium respondents reimbursement for engineering and attorneys' fees they incur in connection with petitioner's license, in an amount to be determined.^[1]

Insofar as the purpose of a license fee is to compensate for loss of enjoyment and diminution in value due to loss of use, the license fee escalations imposed on petitioner appear to be punitive and, therefore, unwarranted.

We further modify to order that the license is granted for a period of 24 months and to direct petitioner to timely commence the project and proceed diligently, and we remand to Supreme Court to specify the applicable insurance, including policy limits, that petitioner is required to procure in favor of respondents.

Accordingly, the order of the Supreme Court, New York County (Eileen A. Rakower, J.), entered January 15, 2020, which, inter alia, granted petitioner a license pursuant to Real Property Actions and Proceedings Law § 881 to enter respondents' properties to conduct a pre-construction survey and install certain protections; ordered petitioner to post a bond in the amount of $1,000,000 and to provide proof that respondents have been added as additional insureds under the terms of the relevant insurance policy; ordered petitioner to pay monthly license fees to respondent MKF Realty Corp., the individual respondents Lauren Cipicchio and Daniel Day, and the owner of the first-floor terrace in the building located at 29 West 19th Street, New York, NY; ordered petitioner to pay MKF engineering fees of $40,500; and ordered petitioner to pay respondent 29 West 19 Condominium and the individual respondents (together, the 29 Condominium respondents) $10,000 in attorneys' fees and $3,500 in engineering fees, should be modified, on the law and the facts and in the exercise of discretion, to limit the license period to 24 months and to direct petitioner to timely commence the project and proceed diligently; to vacate the escalation of the license fees after 12 and 24 months, the grant to MKF of engineering fees of $40,500, and the grant to the 29 Condominium respondents of engineering fees of $3,500 and attorneys' fees of $10,000; to grant MKF and the 29 Condominium respondents reimbursement for engineering fees they incur in connection with petitioner's license, in amounts to be determined; to grant the 29 Condominium respondents attorneys' fees they incur in connection with petitioner's license, in an amount to be determined; and to remand to Supreme Court to specify the applicable insurance, including policy limits, that petitioner is required to procure in favor of respondents, and otherwise affirmed, without costs. The order, same court and Justice, entered September 29, 2020, insofar as it denied petitioner's motion for renewal, should be affirmed, and appeal therefrom insofar as it denied reargument dismissed, without costs, as taken from a nonappealable order.

Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered January 15, 2020, which, inter alia, granted petitioner a license pursuant to Real Property Actions and Proceedings Law, affirmed, without costs. The order, same court and Justice, entered September 29, 2020, insofar as it denied petitioner's motion for renewal, affirmed and appeal therefrom insofar as it denied reargument dismissed, without costs, as taken from a nonappealable order.

All concur.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

[1] As MKF acknowledges, Supreme Court subsequently vacated the award of engineering fees and ordered petitioner to pay engineering costs "as the services are needed, rendered and for which they are paid.""

A MASSACHUSETTS CASE - TERMINATION OF PARENTAL RIGHTS

 

IN RE ADOPTION OF GHITA, Mass: Appeals Court 2022:

"By the Court (Neyman, Ditkoff & Hand, JJ.^[12])

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).

The mother appeals from a decree issued by a Juvenile Court judge terminating her parental rights to her daughter pursuant to G. L. c. 119, § 26, and G. L. c. 210, § 3.^[2] We conclude that the trial judge properly found that the Department of Children and Families (DCF) made reasonable efforts toward reunification. Further concluding that the mother had adequate representation and that the DCF attorney did not have a disqualifying conflict of interest, we affirm.

1. Background.

a. Pretrial activity.

The mother has a long history with DCF. We, however, largely limit our discussion to the events since the birth of the child in November 2018. One day after the child was born, a hospital social worker called DCF to report possible neglect of the child after the mother tested positive for marijuana^[3] and refused to provide her home address to the hospital. Two social workers responded, but the mother refused to let them in to see her.^[4] The nurse supervisor tried to explain to the mother that the social workers just wanted to talk with the mother about her plan for the baby, but the mother began yelling and swearing and told the nurse supervisor that she would assault the social workers if they entered the hospital room.

Subsequently, the mother packed up her belongings, tore up the child's birth certificate, pulled the IV out of her own arm, kissed the child on the head, and left the hospital without the child and against medical advice. DCF assumed custody of the child and, upon her discharge from the hospital, placed her in a foster home. The child has lived in the same preadoptive foster home without disruption since her initial placement.

The mother first visited the child on December 13, 2018. The mother appropriately soothed the child, changed her diaper without issue, and was affectionate, providing a blanket as a gift after the visit. DCF offered the mother nearly weekly visits, but the mother attended subsequent visits only sporadically. When the mother attended visits, she had appropriate interactions and was nurturing, but her ability to respond to the child's needs was minimal.

On March 15, 2020, DCF closed its offices because of the COVID-19 pandemic. From March to July 2020, the mother was offered weekly video or phone visits with the child, but she refused them.^[5] On July 15, 2020, DCF reopened its offices. The social worker offered the mother in-person visits, with COVID-19 protocols requiring the mother to call the social worker the morning of each visit to confirm that she had no COVID-19 symptoms, to wear a face mask the entire visit, and not to share snacks with the child.^[6] The mother did not attend any of the six visits offered biweekly between DCF's reopening and the trial. As of the trial, the last time the mother had visited the child, either in person or virtually, was March 2, 2020.

DCF assigned the mother eleven action plan tasks that have remained largely unchanged since the child's birth. The tasks include individual therapy, an anger management course, medical and psychological evaluations, weekly visits with the child, and finding stable housing. Since the child's birth, the mother has struggled with inadequately treated mental health issues and housing instability.

When the child was born, the mother denied that she was currently receiving mental health services. The mother has been diagnosed with mood and personality disorder, borderline personality disorder, posttraumatic stress disorder, and bipolar disorder, and has a history of trauma and domestic violence. Although she was previously prescribed Wellbutrin and Adderall, there is no evidence that the mother has taken either medication since the child's birth. On December 12, 2018, the mother rejected DCF's recommendation that she attend treatment and therapy. The mother became angry when social workers attempted to discuss mental health services with her. The mother told the social worker that she was seeing a therapist after the child's birth, but the mother never provided a release for the therapist's records, and the social worker was unable to confirm that the mother was seeing the therapist.

The mother has consistently refused to give DCF her address. During 2018 and 2019, DCF attempted to schedule several home visits with the mother, but she did not keep any of the scheduled visits. Specifically, in December 2018, DCF attempted to schedule a home visit, but the mother kept indicating that she needed to check with the father then never followed up with DCF. She refused to give DCF access for a home visit, saying it was none of DCF's business. In January 2019, the mother reported that she was living with the father, despite having told her social worker that she no longer lived there, but she refused to disclose the address to DCF.^[7]

In February 2019, the father alleged that the mother tried to hurt herself with a knife and then swung it at him when he tried to retrieve it. The father obtained an abuse prevention order against the mother. That same month, the mother was admitted to a psychiatric facility after she cut herself and then attempted suicide after being goaded by the father.

Sometime before February 28, 2019, the mother reported that she was no longer living with the father and had moved in with a friend. The mother did not disclose this friend's address to DCF, and the mother was asked to leave the friend's house sometime before July 2019 because of the friend's involvement in a probate matter.

In October 2019, the mother was "couch surfing." In July 2020, the mother reported that she had found housing with three roommates and told her social worker that she had been living there for over a year but refused to provide her address.^[8]

DCF has attempted to engage the mother in her action plan. Sometime before November 2019, a social worker offered to go over the mother's action plan with her, but she refused. Between November 2018 and November 2019, the mother was provided a copy of her action plan at least twice.

In November 2019, DCF assigned a new social worker to the mother. The mother told the social worker that she was not interested in receiving services or getting referrals because she did not need them. The new social worker never made any referrals for the mother, but the social worker told the mother that, if she wanted services, then the social worker would readily make referrals for the action plan items. Specifically, the social worker would have referred the mother to individual therapy, medication maintenance, a psychological evaluation, an anger management course, and parenting classes. In May 2020, the mother asked for information about anger management classes in the area, and the social worker provided the information and a copy of the mother's action plan to her.^[9] The mother never made DCF aware of her participation in any anger management classes.

With the exception of attending some visits with the child, the mother has not engaged on any of the action items in her plan, nor has she signed any releases for DCF. The mother's refusal to engage in services is consistent with her previous involvement with DCF.

b. Trial.

On October 14, 2020, the judge held a best interests hearing.^[10] The mother was not present. Counsel for the mother informed the judge that the mother was outside the court house. Counsel indicated that he had spoken with the mother at 6:30 A.M. that morning and had spent two hours per day for the three prior days texting and speaking over the phone with the mother. Around 9 A.M. on the morning of trial, the mother sent the trial counsel a list of questions she wanted counsel to ask. The mother expressed anxiety about what she believed was going to happen at trial.

The judge offered that the mother could attend by telephone, and the mother's counsel told the judge that the mother had already refused his suggestion that she attend by telephone, but that he would like to try again. The judge decided to deal with preliminary matters to give the mother more time to appear.

After preliminary matters were complete, the judge gave the mother's counsel an opportunity to go talk with her and see if she was willing to participate in person or by telephone. The judge noted that the parties "have worked very hard to accommodate Mother's mental health needs, her anxiety."

The mother's counsel told the judge that he spoke to the mother for about five minutes, and the mother represented that she was not in a mental state fit to come into the court room. Her counsel reported that he asked the mother what she wanted him to report to the judge on her behalf, and counsel told the judge that the mother said, "[S]he does not have adequate legal representation. DCF has not given her the referrals she needs, and that she believes DCF counsel has a conflict of interest because [DCF counsel has] represented [DCF] in all her cases." The mother's counsel did not formally move to continue the trial.

The DCF attorney asked the judge to draw a negative inference from the mother's absence from court, and the mother's counsel countered that the mother was "under no mental condition to come to court." The judge ultimately "drew a negative inference from her failure to appear that if she had appeared, she would have no evidence to counter [DCF]'s evidence."^[11]

The judge found the mother unfit and terminated her parental rights to the child. This appeal followed.

2. Standard of review.

On review of a judge's decision to terminate parental rights, we give substantial deference to the trial judge's decision, and "reverse only where the findings of fact are clearly erroneous or where there is a clear error of law or abuse of discretion." Adoption of Ilona, 459 Mass. 53, 59 (2011). "A finding is clearly erroneous when there is no evidence to support it, or when, `although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Adoption of Talik, 92 Mass. App. Ct. 367, 370 (2017), quoting Custody of Eleanor, 414 Mass. 795, 799 (1993). An abuse of discretion exists where the reviewing court concludes that "the judge made a `clear error of judgment . . . such that the decision falls outside the range of reasonable alternatives.'" Commonwealth v. Wood, 90 Mass. App. Ct. 271, 275 (2016), quoting L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014).

3. Reasonable efforts.

"Before seeking to terminate parental rights, [DCF] must make `reasonable efforts' aimed at restoring the child to the care of the natural parents." Adoption of Ilona, 459 Mass. at 60, quoting Adoption of Lenore, 55 Mass. App. Ct. 275, 278 (2002). This duty to make reasonable efforts, however, presumes the mother's fulfillment of her own responsibilities, including action plan compliance and maintaining meaningful contact with DCF. See Adoption of Eduardo, 57 Mass. App. Ct. 278, 282 (2003) ("Because the mother failed to make use of the services offered to strengthen and then reunify her family and denied her mental health needs by refusing both evaluation and treatment, she cannot successfully argue that [DCF's] reasonable efforts failed to accommodate properly her mental health needs or to strengthen her family"). Despite this requirement, "even where [DCF] has failed to meet this obligation, a trial judge must still rule in the child's best interest." Adoption of West, 97 Mass. App. Ct. 238, 242 (2020), quoting Adoption of Ilona, supra at 61.

Here, the mother rejected DCF referrals, was not compliant with her action plans, and failed to provide DCF with important information. The mother refused treatment and therapy on December 12, 2018, told a social worker that she did not need services or referrals on or after November 2019, and became angry when social workers attempted to discuss mental health services with her. The mother requested information on anger management classes once, but she did not provide DCF any reason to believe she attended the class. The social worker would have referred the mother to individual therapy, medication maintenance, a psychological evaluation, an anger management course, and parenting classes if the mother had been willing to take referrals.

During 2018 and 2019, DCF attempted to schedule several home visits with the mother, but she did not keep any of the scheduled visits. Before November 2019, a social worker offered to go over the action plan with the mother, but she refused. The mother was provided a copy of her action plan at least twice. The mother never signed any releases for DCF. Accordingly, the judge reasonably found that DCF met its obligation to make reasonable efforts to restore the child to the care of the mother under the circumstances.

4. Representation.

"A parent facing termination of parental rights is entitled to the effective assistance of counsel." Adoption of Ulrich, 94 Mass. App. Ct. 668, 672 (2019). In assessing whether a parent received effective assistance of counsel, "[f]irst, we look to determine whether the `behavior of counsel [fell] measurably below that which might be expected from an ordinary fallible lawyer' and, if so, we further inquire `whether [counsel's conduct] has likely deprived the [parent] of an otherwise available, substantial ground of defence.'" Adoption of Yvette (No. 1), 71 Mass. App. Ct. 327, 345 (2008), quoting Care & Protection of Stephen, 401 Mass. 144, 149 (1987).

Here, the mother has not shown any deficiency in her counsel's performance. The mother's counsel was in regular contact with her before and during the trial. When the mother did not appear at the trial, her counsel explained to the judge that the mother was outside and did not feel that she was in a mental state fit to come into the court room. Counsel suggested to the mother that she could attend by telephone, and, when the mother declined, counsel raised the mother's three issues on her behalf.

The mother's counsel appropriately opposed the judge's decision to draw a negative inference from the mother's absence, explaining that the mother was "under no mental condition to come to court." Although counsel did not formally move to continue the trial, the judge had already expressed that the parties had "worked very hard to accommodate Mother's mental health needs, her anxiety."

Because counsel's performance did not fall measurably below that which might be expected of an ordinary fallible lawyer, we need not assess whether counsel deprived the mother of any substantial ground of defense. We note, however, that the mother has not argued that she had any substantial ground of defense that was not presented to the judge, and no such ground is apparent from the record.

5. Conflict of interest by DCF attorney.

The mother argues that the DCF attorney had a conflict of interest because she had represented DCF in other cases against the mother. Generally, an attorney is disqualified from representing a party when the attorney has previously represented an adverse party on a similar or related issue. See Commonwealth v. Colon, 408 Mass. 419, 431 (1990) ("Generally, conflicts on the part of a district attorney arise when the prosecutor formerly was employed by the defendant or when the prosecutor's freedom from private influence is in question"). Similarly, a DCF attorney may be disqualified if that attorney or her colleagues have a personal stake in the outcome of the proceedings. See Adoption of Natasha, 53 Mass. App. Ct. 441, 442, 449 (2001) (local Department of Social Services office had conflict of interest when supervisor from that office was proposed adoptive parent of child). But see Adoption of Eduardo, 57 Mass. App. Ct. at 280-281 (Department of Social Services was rightfully not disqualified as petitioner even though mother had separate suit against department because judge was aware of other suit and there was no showing that department acted with bias against mother).

Here, the DCF attorney had never represented the mother, and there is no indication that the attorney or her colleagues had any personal stake in the litigation. The information that the DCF attorney had acquired from representing DCF in other cases was not disqualifying. Such information, in fact, is admissible. See Adoption of Luc, 484 Mass. 139, 145 (2020). There is no basis to disqualify a DCF attorney merely because she previously represented DCF in proceedings against the mother. Indeed, even a judge will not be disqualified merely based on the judge's previous judicial involvement in proceedings against a parent. See Care & Protection of Martha, 407 Mass. 319, 329 (1990) (judge may preside over termination hearing even if judge also presided over removal hearing); Adoption of Gabrielle, 39 Mass. App. Ct. 484, 486 (1995) ("Even knowledge of damaging information against a party does not disqualify a judge from continuing to sit on a case"). Accord Commonwealth v. Adkinson, 442 Mass. 410, 415 (2004). Accordingly, we discern no abuse of discretion in the trial judge's decision to terminate the mother's parental rights.

Decree affirmed.

[1] A pseudonym.

[12] The panelists are listed in order of seniority.

[2] The judge also terminated the parental rights of the father. He did not appeal.

[3] Shortly after birth, the child tested negative for marijuana.

[4] Earlier, the mother had indicated she would not speak to social workers because they would take the child away. To the social workers, the mother expressed that she was tired and wanted to relax.

[5] The mother indicated that she did not want people listening to her conversations with the child and did not think phone calls were meaningful because the child was too young to speak.

[6] The social worker asked the mother if she would be willing to wear a gown over her clothes during visits but did not require this.

[7] The mother claimed that she was not on the father's lease, so visits or mail from DCF could cause the father to lose his apartment.

[8] The mother indicated that she did not want DCF to ruin her roommates' lives.

[9] At the mother's request, the social worker also provided a copy of the action plan to the mother's counsel.

[10] On the motion of the mother's counsel, the judge held the hearing in person.

[11] Although the mother did not raise this issue on appeal, this negative inference is inconsistent with the judge's finding that the "Mother's mental health issues prevented her from entering the courthouse and participating in this trial." See Adoption of Talik, 92 Mass. App. Ct. 367, 372 (2017), quoting Singh v. Capuano, 468 Mass. 328, 334 (2014) (in deciding whether to draw adverse inference, judge "is to consider whether such an inference is `fair and reasonable based on all the circumstances and evidence before' her"). We see no prejudice, however, in light of the substantial evidence of the mother's parental unfitness. See Adoption of Luc, 484 Mass. 139, 148 (2020) ("We need not decide whether the judge erred in admitting . . . documents because, even assuming error, there was no resulting prejudice").?

ATTORNEY V. ATTORNEY

R.W.H. v. J.R.L., Date filed: 2022-02-17, Court: Supreme Court, Richmond, Judge: Justice Ralph Porzio,  Case Number: 151726/2021:

"PROCEDURAL HISTORY

Plaintiff R.W.H. (hereinafter “Plaintiff”) and Defendant J.R.L. (hereinafter “Defendant”) are attorneys located in Staten Island, New York. The Defendant represented Plaintiff’s former client, “R.V.,” in her fee arbitration dispute against the Plaintiff in the Richmond County Fee Arbitration Program.

On February 24, 2021, Defendant sent a letter to the Fee Arbitration Program Chairman regarding his theory of the case. On May 4, 2021, the Plaintiff responded to that letter, however, Defendant was not copied on same. During the fee arbitration hearing on August 23, 2021, the fee arbitrator provided a copy of the May 4, 2021 letter to the Defendant and asked Defendant to respond, which he did in writing on the same date. Plaintiff claims that Defendant’s response letter of August 23, 2021 contained a defamatory statement, specifically, “this is not a ‘disgorgement’ of fees properly earned, but an effort to reclaim money embezzled, or stolen, by R.W.H.” See Defendant’s August 23, 2021 letter to the fee arbitrator, Motion Exhibit C.

Plaintiff brought this action for defamation by the filing of a Summons and Complaint on September 14, 2021. The instant motion to dismiss was filed on October 15, 2021. After a full briefing of the motion and oral arguments on December 3, 2021 and January 5, 2022, the Court orally granted the Defendant’s motion to dismiss.

DECISION

“Upon a motion to dismiss a complaint pursuant to CPLR 3211, a court must take the allegations in the complaint as true and resolve all inferences in favor of the plaintiff.” Morris v. Gianelli, 71 AD3df 965. 967 [2d Dept 2010]. A motion to dismiss should be granted where the Complaint fails to “contain allegations concerning each of the material elements necessary to sustain recovery under a viable legal theory.” Matlin Patterson ATA Holdings LLC v. Fed. Express Corp., 87 AD3d 836, 839 (1st Dept. 2011).

There is no dispute between the parties that the Defendant made the following statement by letter on August 23, 2021, “this is not a ‘disgorgement’ of fees properly earned, but an effort to reclaim money embezzled, or stolen, by R.W.H.” The question for this Court is first, whether the pleading contains a cognizable cause of action and second, whether Defendant has put forward documentary evidence sufficient to dispose of the claim.

CPLR 3211(a)(7) provides that “A party may move for judgment dismissing one or more causes of action asserted against him on the ground that…the pleading fails to state a cause of action.” The Court will consider “whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail.” Guggenheimer v. Ginzburg, 43 NY2d 268, 275 (1977). Dismissal pursuant to CPLR 3211(a)(7) is warranted if the evidentiary proof disproves an essential allegation of the complaint, even if the allegations of the complaint, standing alone, could withstand a motion to dismiss for failure to state a cause of action. Korinsky v. Rose, 120 AD3d 1307, 1308 (2d Dept. 2014). Courts have repeatedly granted motions to dismiss where the factual allegations in the claim were merely conclusory and speculative in nature and not supported by any specific facts.” See Residents for a More Beautiful Port Washington, Inc. v. Town of North Hempstead, 153 AD2d 727 [2d Dept. 1989]; Stoianoff v. Gahona, 248 AD2d 525 [2d Dept. 1998].

To succeed on a motion to dismiss pursuant to CPLR 3211(1), the documentary evidence submitted that forms the basis of the defense must resolve all factual issues and definitively dispose of the plaintiff’s claims. 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002). A motion to dismiss pursuant to CPLR 3211(1) may be appropriately granted only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law. McCully v. Jersey Partners, Inc., 60 AD3d 562 [1st Dept. 2009].

The elements for a cause of action for defamation are a false statement that tends to expose a person to public contempt, hatred, ridicule, aversion or disgrace; published without privileges or authorization to a third party; amounting to fault as judged by, at a minimum a negligence standard; and either causing special harm or constituting defamation per se. Greenberg v. Spitzer, 155 AD3d 27 (2d Dept. 2017). Defamation claims are subject to the heightened pleading requirement of CPLR 3016(a) which requires that “the particular words complained of shall be set forth in the complaint…” New York favors the dismissal of defamation claims where the Plaintiff has failed to allege specific facts and has made only conclusory allegations of malice. See Harm v. Lawson, 70 AD3d 640 (2d Dept. 2010).

A statement is defamatory per se if it (1) charges the plaintiff with a serious crime; (2) tends to injure the plaintiff in his or her trade, business or profession; (3) imputes to the plaintiff a loathsome disease; or (4) imputes unchastity to a woman. Lieberman v. Gelstein, 80 NY2d 429 (1992). Defamation per se requires that the defendant’s statements have hurt plaintiff’s trade, business, or profession and further prove that the defamation is of a kind incompatible with his business, trade or profession. The words alleged to constitute the defamation must be construed in the context of the entire statement “and if not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction.” Dillon v. City of NY 261 AD3d 34, 38 [1st Dept. 1999].

The letter written by the Defendant charged the Plaintiff with a serious crime, specifically the crimes of theft and/or embezzlement. The Defendant claims as defenses that the statement was not false, that it was his opinion, and that did not expose the Plaintiff to any contempt or harm. He further claimed that the statement was made during an adversarial quasi-judicial proceeding, which is privileged and therefore immune from suit.

The Court finds that there is a potential cognizable cause of action for defamation per se, based upon the Defendant’s charge that the Plaintiff committed a serious crime. This Court will not address the Defendant’s defenses of truth, opinion or whether the Plaintiff suffered harm, however, will address the relevant issue of privilege.

Here, the Complaint concedes, “In New York State, legal fee arbitration is a quasi-judicial proceeding process and is an alternative to litigation.” It is well-established that “statements made by parties, attorneys, and witnesses in the course of a judicial or quasi-judicial proceeding are absolutely privileged, notwithstanding the motive with which they are made, so long as they are material and pertinent to the issue to be resolved in the proceeding.” Kilkenny v. Law Off. Of Cushner & Garvey, LLP, 76 AD3d 512 [2d Dept. 2010]. The Court of Appeals has stated, that “the absolute privilege against defamation applied to communications in certain administrative proceedings is not a license to destroy a person’s character by means of false, defamatory statements.” Stega v. New York Downtown, 31 NY3d 661 (2018).

The Plaintiff states in his Complaint that 22 NYCRR §137 “excludes the consideration of claims in legal fee arbitration involving substantial legal questions, including attorney malpractice or misconduct, which would obviously include alleged attorney criminal misconduct.” The letter itself, as well as the Complaint, is documentary evidence in this case and there is no question of fact that the letter was submitted at the request of the arbitrator during the course of the fee arbitration. Pursuant to 22 NYCRR 137.7(d), “The client may then present his or her account of the services rendered and time expended.” It was the position of the client, by counsel, that the Plaintiff in this matter retained a fee that he was not entitled to and speculated as to what happened to that fee. Though the Court finds the accusation made by the Defendant in the letter dated August 23, 2021 to be inappropriate, the Court does not find the statement to be actionable, as it is absolutely privileged because it was material to the issue of fees to be resolved in the quasi-judicial arbitration proceeding. See Wiener v. Weintraub, 22 NY2d 330 [1968].

CONCLUSION

Statements made during judicial and quasi-judicial proceedings, including a fee arbitration, are privileged. This Court finds the Defendant’s allegations of embezzlement or theft, though inappropriate, were material to the fee dispute and exhibited a zealous advocacy by the Defendant on behalf of his client in an adversarial proceeding.

As a result of the foregoing, the Defendant’s motion to dismiss is hereby granted pursuant to CPLR 3211(a)(1). This constitutes the Decision and Order of this Court."