NASSAU COUNTY COURTS

NEW YORK'S PROTECTION AGAINST SEXUAL HARASSMENT

On April 12, Governor Cuomo signed into law the 2019 New York State Budget, updating the State’s sexual harassment laws. An overview of the new laws can be found at this link:

https://www.ny.gov/programs/combating-sexual-harassment-workplace

FORECLOSURE - STANDING CAN STILL BE AN ISSUE REQUIRING A TRIAL

Bayview Loan Servicing, LLC, 2018 NY Slip Op 08006, Decided on November 21, 2018, Appellate Division, Second Department:

"In December 2006, the defendants Carol A. Kelly and Thomas E. Kelly (hereinafter together the defendants) executed a note in favor of Tribeca Lending Corporation (hereinafter [*2]Tribeca Lending), as well as a mortgage on certain residential property. In 2011, the plaintiff's predecessor, Wells Fargo Bank, N.A. (hereinafter Wells Fargo) commenced an action to foreclose the mortgage (hereinafter the prior action). Attached to the complaint in the prior action was a copy of the note, which did not contain any endorsements or allonges. Wells Fargo subsequently moved, inter alia, for summary judgment on the complaint, and the defendants opposed the motion, arguing, among other things, that Wells Fargo lacked standing. In an order dated January 17, 2013, the Supreme Court denied Wells Fargo's motion on the ground that Wells Fargo failed to establish its standing. The court also searched the record and awarded the defendants summary judgment dismissing the complaint on the ground that Wells Fargo lacked standing.

By assignment of mortgage dated February 28, 2014, Wells Fargo assigned its purported interest in the mortgage and the underlying debt to the plaintiff. In or about March 2015, the plaintiff commenced this action against the defendants, among others, to foreclose the mortgage. Attached to the complaint in this action was a copy of the note, which contained an endorsement from Wells Fargo to the plaintiff. The next page was an allonge from Tribeca Lending, endorsing the note in blank. In their answer, the defendants raised lack of standing as an affirmative defense. The plaintiff subsequently assigned the mortgage and the note to the nonparty, Kondaur Capital Corporation (hereinafter Kondaur). Kondaur moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer and affirmative defenses, and for an order of reference. In an order dated November 15, 2016, the Supreme Court granted Kondaur's motion. Thereafter, upon the order, the court entered an order and judgment of foreclosure and sale dated July 7, 2017, inter alia, in favor of Kondaur and against the defendants, directing the foreclosure sale of the property. The defendants appeal.

Where, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief (see Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683, 684; Deutsche Bank Trust Co. Ams. v Vitellas, 131 AD3d 52, 59; Nationstar Mtge., LLC v Catizone, 127 AD3d 1151, 1152). A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that it was the holder or assignee of the underlying note at the time the action was commenced (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362; HSBC Bank USA, N.A. v Spitzer, 131 AD3d 1206, 1207).

Here, triable issues of fact exist as to whether the plaintiff was the holder of the note at the time the action was commenced. A "promissory note [is] a negotiable instrument within the meaning of the Uniform Commercial Code" (Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674; see UCC 3-104[2][d]; US Bank, N.A. v Zwisler, 147 AD3d 804, 806). A "holder" is "the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession" (UCC 1-201[b][21]; see UCC 3-301). Where an instrument is endorsed in blank, it may be negotiated by delivery (see UCC 3-202[1]; 3-204[2]).

In the present case, there is a triable issue of fact as to whether the note was properly endorsed in blank by an allonge "so firmly affixed thereto as to become a part thereof" when it came into the possession of Wells Fargo, which later endorsed the note to the plaintiff (UCC 3-202[2]; HSBC Bank USA, N. A. v Roumiantseva, 130 AD3d 983, 985). In the prior action, the copy of the note that was attached to the complaint did not contain any endorsements or allonges. The allonge submitted in this action, containing the blank endorsement from Tribeca Lending, was never produced in the prior action, even when the issue of the lack of endorsement of the note was raised by the defendants in the prior action. Further, in the copy of the note produced in this action, the allonge with the blank endorsement from Tribeca Lending appears after the allonge endorsing the note from Wells Fargo to the plaintiff. The allonge also has certain physical attributes inconsistent with the copy of the note to which it was purportedly firmly affixed. Contrary to Kondaur's contention, an affidavit submitted by the plaintiff's vice president, Robert G. Hall, was unavailing, as it only concerned the later endorsement from Wells Fargo to the plaintiff, not the blank endorsement from Tribeca Lending.

Under these circumstances, those branches of Kondaur's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer [*3]and affirmative defenses, and for an order of reference should have been denied."

STANDARDS OF REVIEW OF ADMINISTRATIVE HEARINGS

MATTER OF HAUG v. STATE UNIVERSITY OF NEW YORK AT POTSDAM, 2018 NY Slip Op 6964 - NY: Court of Appeals 2018:

"This article 78 proceeding was transferred to the Appellate Division to address, inter alia, petitioner's challenge to respondents' determination that he violated their code of student conduct (CPLR 7803 [4]; 7804 [g]). The court concluded that respondents' determination was not supported by substantial evidence. We disagree.

Upon judicial review, the Appellate Division must accord deference to the findings of the administrative decision-maker. As we said in Matter of Pell, "neither the Appellate Division nor the Court of Appeals has power to upset the determination of an administrative tribunal on a question of fact; * * * the courts have no right to review the facts generally as to weight of evidence, beyond seeing to it that there is substantial evidence" (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 230 [1974] [internal quotation marks and citation omitted]).

"We emphasize that [t]he substantial evidence standard is a minimal standard" (Matter of FMC Corp. v Unmack, 92 NY2d 179, 188 [1998]). It is "less than a preponderance of the evidence'" (Matter of Kelly v DiNapoli, 30 NY3d 674, 684 [2018], quoting Matter of Ridge Rd. Fire Dist. v Schiano, 16 NY3d 494, 499 [2011]), and "demands only that a given inference is reasonable and plausible, not necessarily the most probable" (Matter of Ridge Rd., 16 NY3d at 499 [internal quotation marks and citations omitted]). Stated differently, "[r]ationality is what is reviewed under the substantial evidence rule" (Matter of Pell, 34 NY2d at 231); substantial evidence is "such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact" (300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176, 180 [1978]). Where substantial evidence exists, the reviewing court may not substitute its judgment for that of the agency, even if the court would have decided the matter differently (see Toys "R" Us v Silva, 89 NY2d 411, 423 [1996]; Matter of Axel v Duffy-Mott Co., 47 NY2d 1, 6 [1979]).

"[O]ften there is substantial evidence on both sides of an issue disputed before an administrative agency" (Matter of Marine Holdings, LLC v New York City Commn. on Human Rights, 31 NY3d 1045, 1047 [2018] [internal quotation marks and citation omitted]). Where substantial evidence exists to support a decision being reviewed by the courts, the determination must be sustained, "irrespective of whether a similar quantum of evidence is available to support other varying conclusions" (Matter of Collins v Codd, 38 NY2d 269, 270 [1976]; 300 Gramatan Ave., 45 NY2d at 180-181). Moreover, hearsay is admissible as competent evidence in an administrative proceeding, and if sufficiently relevant and probative may constitute substantial evidence even if contradicted by live testimony on credibility grounds (see Matter of Gray v Adduci, 73 NY2d 741, 742 [1988]; Matter of National Basketball Assn. v New York State Div. of Human Rights, 68 NY2d 644, 646 [1986]; People ex rel. Vega v Smith, 66 NY2d 130, 139 [1985]; Matter of Malacarne v City of Yonkers Parking Auth., 41 NY2d 189, 193 [1976]).

Contrary to petitioner's argument, the hearsay evidence proffered at the administrative hearing, along with petitioner's testimony, provides substantial evidence in support of the finding that he violated respondents' code of conduct. The hearing board also could have reasonably interpreted some of petitioner's conceded behavior as consciousness of guilt and concluded that his version of the events was not credible. Ultimately, it was the province of the hearing board to resolve any conflicts in the evidence and make credibility determinations. The Appellate Division improperly engaged in a re-weighing of the evidence when it substituted its own factual findings for those of respondents (see Pell, 37 NY2d at 230)."

HAPPY THANKSGIVING

CHILD CUSTODY - STAGE MOM LOSES CUSTODY

Reilly v Hager-Reilly, 2018 NY Slip Op 07767, Decided on November 14, 2018, Appellate Division, Second Department:

"Here, the Supreme Court's determination that the child's best interests would be served by awarding sole legal and residential custody to the plaintiff has a sound and substantial basis in the record and will not be disturbed. Further, the court's determination that awarding the defendant supervised parental access with the child would be in the child's best interests has a sound and substantial basis in the record and, likewise, will not be disturbed.

There was evidence in the record of, among other things, the defendant's interference with the child's relationship with the plaintiff, as well as the defendant's lack of appropriate judgment in many of her decisions regarding the child, including allowing the defendant's obsession with the child's acting career to take precedence over the child's attendance at school, causing the child to miss a significant number of days at school, despite indications that the child was struggling in various areas of her education. Additionally, in a one-year period, the defendant called the police a dozen times regarding the plaintiff, without sufficient reason, often while the child was present, one of those times being while the child was at an award ceremony at a sibling's school. Moreover, the psychiatric evaluation of the defendant revealed that the defendant acts erratically, in ways affecting her ability to competently parent the child, that she is "decompensating," and that while she suffers from mental illness, she rejects treatment."

TODAY - FORECLOSURE CLINIC

Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents and any notices and legal documents received connection with any missed payment. Attorneys fluent in other languages are available upon request when reserving. All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola twice a month. Call for next scheduled clinic.

AND MORE ON ILLEGAL APARTMENTS

This was decided on July 12, 2018 - Hayes v. Ramsey, 2018 NY Slip Op 51114 - NY: Appellate Term, 2nd Dept. 2018:

"Insofar as is relevant to this appeal, plaintiff commenced this small claims action to recover, among other things, the sum of $300, representing her security deposit, and $1,200, representing eight weeks of rent which she had paid to defendant for the time in which she had lived in the apartment. Defendant counterclaimed to recover the total sum of $2,680, representing alleged rent arrears and cable bills, but, at trial, she stated that she was withdrawing her counterclaim. Following a nonjury trial, the District Court awarded plaintiff the principal sum of $1,500 and dismissed defendant's counterclaim.

In a small claims action, our review is limited to a determination of whether "substantial justice has . . . been done between the parties according to the rules and principles of substantive law" (UDCA 1807; see UDCA 1804; Ross v Friedman, 269 AD2d 584 [2000]; Williams v Roper, 269 AD2d 125, 126 [2000]). The determination of a trier of fact as to issues of credibility is given substantial deference, as a trial court's opportunity to observe and evaluate the testimony and demeanor of the witnesses affords it a better perspective from which to assess their credibility (see Vizzari v State of New York, 184 AD2d 564 [1992]; Kincade v Kincade, 178 AD2d 510, 511 [1991]). This deference applies with greater force to judgments rendered in the Small Claims Part of the court (see Williams v Roper, 269 AD2d at 126).

A security deposit is presumed to remain the property of the tenant (see General Obligations Law § 7-103 [1]) and must be returned at the conclusion of the tenancy (see Cruz v Diamond, 6 Misc 3d 134[A], 2005 NY Slip Op 50187[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2005]). However, at the trial, plaintiff gave her current address as the premises which she rented from defendant. Consequently, it was error for the District Court to include the $300 security deposit in its award in favor of plaintiff, as plaintiff failed to establish that her tenancy had ended.

The District Court also erred when it included in its award to plaintiff the sum of $1,200, apparently representing eight weeks of rent. The fact that an apartment is rented without a permit does not preclude the recovery of rent, absent a statutory bar to such recovery (see Madden v Juillet, 46 Misc 3d 146[A], 2015 NY Slip Op 50214[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2015]; Sinclair v Ramnarace, 36 Misc 3d 150[A], 2012 NY Slip Op 51671[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2012]; Corbin v Briley, 192 Misc 2d 503, 504 [App Term, 2d Dept, 9th & 10th Jud Dists 2002]). We note that, even where there is a statutory proscription against the recovery of rent by a landlord (see e.g. Multiple Dwelling Law § 325 [2]), rent that was voluntarily paid is not recoverable by a tenant, despite the premises' illegal status (see Candela v Fried, 3 Misc 3d 136[A], 2004 NY Slip Op 50508[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2004] [rents voluntarily paid for period of noncompliance cannot be recovered]; see also Ovalles v Mayer Garage Corp., 8 Misc 3d 137[A], 2005 NY Slip Op 51261[U], *1 [App Term, 1st Dept, 2005] [a tenant cannot "recoup rents already paid"]).

Defendant's contention on appeal that the District Court should have found in her favor on her counterclaim lacks merit as, at trial, she stated that she was withdrawing her counterclaim.
In view of the foregoing, we are of the opinion that the judgment failed to provide the parties with substantial justice according to the rules and principles of substantive law (see UDCA 1804, 1807; Ross v Friedman, 269 AD2d 584; Williams v Roper, 269 AD2d 125, 126)."

FREE SENIOR LAW CLINIC TODAY

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

I will be one of the volunteer lawyers.

DELAY IN SERVING DEFENDANT

Wells Fargo Bank, NA v Barrella, 2018 NY Slip Op 07486, Decided on November 7, 2018, Appellate Division, Second Department:

On November 24, 2009, the plaintiff's former counsel, Steven J. Baum, P.C., commenced this residential foreclosure action by filing the summons and complaint with the Westchester County Clerk. In February 2012, the plaintiff retained new counsel, who discovered that the plaintiff's former counsel had failed to serve, among others, the defendant Joseph N. Barrella (hereinafter Joseph), as administrator, heir, and distributee of Anastasia Barrella, the surviving spouse of Joseph A. Barrella.

On June 22, 2015, approximately 5½ years after commencing the action, the plaintiff effectuated personal service upon Joseph by serving a person of suitable age and discretion at his actual place of business. On or about January 8, 2016, more than six months after serving Joseph [*2]and after the expiration of the statute of limitations, the plaintiff moved, inter alia, pursuant to CPLR 306-b to extend, nunc pro tunc, its time to serve Joseph. Joseph, together with the defendants Russell Barrella (hereinafter Russell), as heir and distributee of Anastasia Barrella, and Gail Fatato, as heir and distributee of Anastasia Barrella (hereinafter collectively the defendants), opposed the motion and cross-moved pursuant to CPLR 306-b to dismiss the complaint insofar as asserted against them. The Supreme Court, relying upon CPLR 306-b's interest of justice provision, granted that branch of the plaintiff's motion which was to extend its time to serve Joseph and denied the defendants' cross motion. The defendants appeal and we modify.

As relevant here, CPLR 306-b provides that "[s]ervice of the summons and complaint . . . shall be made within one hundred twenty days after the commencement of the action." Further, "[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service." " Good cause' and interest of justice' are two separate and independent statutory standards" (Bumpus v New York City Tr. Auth., 66 AD3d 26, 31; see Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 104). "To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service" (Bumpus v New York City Tr. Auth., 66 AD3d at 31-32; see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106). "If good cause for an extension is not established, courts must consider the interest of justice' standard of CPLR 306-b" (Bumpus v New York City Tr. Auth., 66 AD3d at 32), which "requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105). "Unlike an extension request premised on good cause, a plaintiff [seeking an extension in the interest of justice] need not establish reasonably diligent efforts at service as a threshold matter" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105). "However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the statute of limitations, the potentially meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106; see Moundrakis v Dellis, 96 AD3d 1026, 1027; Bumpus v New York City Tr. Auth., 66 AD3d at 32). "No one factor is determinative—the calculus of the court's decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 106).

Here, the Supreme Court improvidently exercised its discretion in granting that branch of the plaintiff's motion which was to extend its time to serve Joseph. The plaintiff failed to establish that it exercised reasonably diligent efforts in attempting to effect proper service of process upon Joseph and, thus, failed to show good cause (see Hobbins v North Star Orthopedics, PLLC, 148 AD3d 784, 787-788; Loza v Alluri, 94 AD3d 824, 825). Further, the plaintiff failed to establish that an extension of time was warranted in the interest of justice (see Hobbins v N. Star Orthopedics, PLLC, 148 AD3d at 787-788; Loza v Alluri, 94 AD3d at 825). Where the plaintiff's delay in serving a defendant is protracted, and the defendant has no notice of the action for a protracted period of time, an inference of substantial prejudice arises (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107; see also Ludemann v Maisel, 292 AD2d 428). The plaintiff failed to rebut the inference of substantial prejudice that arose due to its protracted delay in serving Joseph, as it failed to come forward with any proof that Joseph had notice of this action prior to being served more than 5½ years after the action was commenced (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107; Ludemann v Maisel, 292 AD2d 428; cf. Jhang v Nassau Univ. Med. Ctr., 140 AD3d 1018, 1019-1020). Moreover, the plaintiff failed to explain its more than six-month delay in moving for relief pursuant to CPLR 306-b after it effectuated service upon Joseph (see Redman v South Is. Orthopaedic Group, P.C., 78 AD3d 1147, 1148; cf. Fernandez v Morales Bros. Realty, Inc., 110 AD3d 676, 677). Under theses circumstances, the plaintiff failed to establish its entitlement to an extension of time to serve Joseph under the interest of justice standard (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107), and its motion should have been denied."

CAN YOU SERVE SUMMONS BY EMAIL?

255 HUGUENOT ST. CORP. v. RWECHUNGURA, 2018 NY Slip Op 51446 - NY: Appellate Term, 2nd Dept. October 11, 2018:

"It should be noted that landlord had the option to pursue an alternative method of service (see City of New York v Clark, 234 AD2d 120 [1996]; see also CPLR 308 [5]) and that "both New York courts and federal courts have, upon application by plaintiffs, authorized e-mail service of process as an appropriate alternative method when the statutory methods have proven ineffective" (Alfred E. Mann Living Trust v ETIRC Aviation S.A.R.L., 78 AD3d 137, 141-142 [2010]). Where the parties had been communicating via email between the United States and a foreign country, it has been held that it was proper to permit the use of email as an alternative method of service (see Safadjou v Mohammadi, 105 AD3d 1423, 1424 [2013] [involving CPLR 308 [5])."

DIVORCE - DEFENSE TO CONTEMPT MOTION

Lueker v Lueker, 2018 NY Slip Op 07421, Decided on November 7, 2018, Appellate Division, Second Department:

"In an order dated July 19, 2013 (hereinafter the July 2013 order), the Supreme Court granted the defendant's motion to require the plaintiff to post a bond in the amount of $150,000, as security for the payment of the parties' daughter's private school tuition, to ensure his compliance with the parties' judgment of divorce. The July 2013 order was later modified by this Court, and the provision thereof requiring the plaintiff to post a bond was deleted (see Lueker v Lueker, 132 AD3d 739, 741). However, before this Court modified the July 2013 order, the Supreme Court, in the order now appealed from, granted that branch of the defendant's motion which was to hold the plaintiff in contempt of court for failing to comply with the order by not posting the bond.

The order appealed from, holding the father in contempt for failing to comply with the July 2013 order by not posting a bond, is not subject to reversal based on this Court's modification of the July 2013 order by deleting the requirement that the plaintiff post a bond, as "[o]bedience to a lawful order of the court is required even if the order is thereafter held erroneous or improvidently made or granted by the court under misapprehension or mistake" (Department of Hous. Preserv. & Dev. of City of New York v Mill Riv. Realty, 169 AD2d 665, 670, affd 82 NY2d 794 [internal quotation marks omitted]; see Matter of Saffra v Rockwood Park Jewish Ctr., 249 AD2d 480). Moreover, this Court's modification of the July 2013 order "does not render the instant appeal academic, since a party may be adjudicated in contempt of a court mandate which is later overturned on appeal" (Matter of Village of Chestnut Ridge v Town of Ramapo, 99 AD3d 928, 930).

Nevertheless, we reverse the order appealed from, since, in response to the defendant's showing that she was prejudiced by the plaintiff's knowing disobedience of a lawful order of the court which expressed an unequivocal mandate, the plaintiff proffered credible evidence of his inability to obtain the required bond. Inability to comply with an order is a defense to both civil and criminal contempt (see El-Dehdan v El-Dehdan, 26 NY3d 19, 35; Matter of Powers v [*2]Powers, 86 NY2d 63, 70; Gomes v Gomes, 106 AD3d 868, 869; Yeager v Yaeger, 38 AD3d 534; Ferraro v Ferraro, 272 AD2d 510, 512)."

ACTION TO QUIET TITLE NOT AVAILABLE AFTER JUDGMENT OF FORECLOSURE SALE

Archibald v Wells Fargo Bank, N.A., 2018 NY Slip Op 07404, Decided on November 7, 2018, Appellate Division, Second Department:

"In August 2008, Wells Fargo Bank, N.A. (hereinafter Wells Fargo), commenced an action against Emanuel Archibald and Yvonne Moody, among others, to foreclose a mortgage on residential property located in Highland Mills (hereinafter the premises). In an order dated June 29, 2015, the Supreme Court granted Wells Fargo's motion, inter alia, for summary judgment on the complaint, and this Court affirmed the order insofar as appealed from (see Wells Fargo Bank, N.A. v Archibald, 150 AD3d 937). Thereafter, in September 2015, Archibald commenced this action, inter alia, pursuant to RPAPL article 15 to quiet title to the premises. Archibald alleged in the complaint, among other things, that, in February 2008, he and Moody validly rescinded the mortgage loan pursuant to the Federal Truth in Lending Act (15 USC § 1601 et seq.; hereinafter TILA). Wells Fargo moved pursuant to CPLR 3211(a) to dismiss the complaint on the ground, inter alia, that the action was barred by the doctrine of res judicata. The Supreme Court granted Wells Fargo's motion. Archibald appeals from so much of the order as granted Wells Fargo's motion.

" A judgment of foreclosure and sale is final as to all questions at issue between the parties, and concludes all matters of defense which were or could have been litigated in the foreclosure action'" (Tromba v Eastern Fed. Sav. Bank, FSB, 148 AD3d 753, 754, quoting Ciraldo v JP Morgan Chase Bank, N.A.,140 AD3d 912, 913).

Here, all of the causes of action asserted in the complaint involve issues that either were raised, or could have been raised, in the foreclosure action. Accordingly, we agree with the determination of the Supreme Court granting Wells Fargo's motion to dismiss the complaint on the ground that the action was barred by the doctrine of res judicata (see CPLR 3211[a][5]; Mazzurco v Astoria Fed. Sav. & Loan Assn., 157 AD3d at 944; Osborne v Rossrock Fund II, L.P., 82 AD3d 727, 728)."

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UNLICENSED SUBCONTRACTORS

Kristeel, Inc. v Seaview Dev. Corp., 2018 NY Slip Op 07296, Decided on October 31, 2018, Appellate Division, Second Department:

"On October 3, 2014, the plaintiff, a steel subcontractor, entered into a contract with the defendant Seaview Development Corp. (hereinafter Seaview), a general contractor, to furnish work, labor, services, and materials for the improvement of certain residential property located in the Town of East Hampton, owned by the defendant 14 Fieldview, LLC. According to the plaintiff, although it performed the work, Seaview failed to pay the full contract price. The plaintiff filed a mechanic's lien against the property and commenced this action to recover the balances it claimed it was owed and to foreclose on the mechanic's lien. The defendants moved pursuant to, inter alia, CPLR 3211(a)(7) to dismiss the complaint and to vacate the mechanic's lien, asserting that, since the plaintiff lacked a home improvement contracting license to perform the work on the property, it could not enforce the contract. Additionally, the defendants contended that, since the plaintiff was unlicensed, the subject mechanic's lien was invalid on its face and should, therefore, be vacated. The Supreme Court denied the defendants' motion, and the defendants appeal.

"Pursuant to CPLR 3015(e), a complaint that seeks to recover damages for breach of a home improvement contract or to recover in quantum meruit for home improvement services is subject to dismissal under CPLR 3211(a)(7) if it does not allege compliance with the licensing requirement" (ENKO Constr. Corp. v Aronshtein, 89 AD3d 676, 677; see Holistic Homes, LLC v Greenfield, 138 AD3d 689, 690; Westchester Stone, Sand & Gravel v Marcella, 262 AD2d 403, 404). Moreover, a home improvement contractor who fails to possess and plead possession of a valid license as required by relevant laws may not commence an action to foreclose a mechanic's lien (see Nicotra v Manger, 64 AD3d 547).

Here, the complaint did not allege that the plaintiff was duly licensed in the Town of East Hampton at the time the services were rendered (see Town Code of the Town of East Hampton [hereinafter Town Code] § 156-4). Moreover, in opposition to the defendants' motion, the plaintiff did not dispute that it did not possess the necessary license. The plaintiff's contention that the work it performed was not for home improvement but, rather, was for the construction of a new home for which a home improvement contracting license was not necessary, is without merit. The Town Code defines "home improvement" as including, inter alia, "[n]ew home construction" (Town Code § 156-3). Moreover, contrary to the plaintiff's contention, the defendants are entitled to the protection of CPLR 3015(e) and the applicable licensing requirements (see Town Code §§ 156-2, 156-3; Lorenzo Marble & Tile v Meves, 236 AD2d 448, 449). Accordingly, the Supreme Court should have granted the defendants' motion (see Holistic Homes, LLC v Greenfield, 138 AD3d at 690; ENKO Constr. Corp. v Aronshtein, 89 AD3d at 678; Nicotra v Manger, 64 AD3d at 548; Flax v Hommel, 40 AD3d 809, 810; Lorenzo Marble & Tile v Meves, 236 AD2d at 449)."

RECOVERING LEGAL FEES - PART 137

Zisholtz & Zisholtz, LLP v Mandel, 2018 NY Slip Op 07349, Decided on October 31, 2018, Appellate Division, Second Department:

"On the merits, in light of the absence of an enforceable agreement to settle this action, the Supreme Court should have granted the cross motion to dismiss the complaint pursuant to CPLR 3211(a)(7). "A plaintiff's failure to provide the defendant with written notice of his or her right to elect to submit the fee dispute to arbitration, and the failure to allege in the complaint that the defendant received such notice and did not file a timely request for arbitration, or that fee dispute arbitration is inapplicable to the matter for specified reasons, requires dismissal of the complaint" (Pascazi Law Offs., PLLC v Pioneer Natural Pools, Inc., 136 AD3d 878, 878-879; see Gary Friedman, P.C. v O'Neill, 115 AD3d 792, 793; Herrick v Lyon, 7 AD3d 571). Here, the complaint fails to allege either compliance with the notice requirements of 22 NYCRR 137.6(a)(1), or that the matter is not covered by the Fee Dispute Resolution Program (22 NYCRR part 137) for one or more reasons specified in 22 NYCRR 137.1 (see Pascazi Law Offs., PLLC v Pioneer Natural Pools, Inc., 136 AD3d at 879; Kerner and Kerner v Dunham, 46 AD3d 372). However, under the circumstances of this case, the dismissal is without prejudice to the commencement of a new action by the plaintiff, if it be so advised, following its compliance with the notice and arbitration requirements of 22 NYCRR part 137 (see Pascazi Law Offs., PLLC v Pioneer Natural Pools, Inc., 136 AD3d at 879)."

SPECIFIC PERFORMANCE ON SALE OF HOME - SELLER IS DECEASED

Caldara v Monti, 2018 NY Slip Op 07283, Decided on October 31, 2018, Appellate Division, Second Department:

"On January 14, 2015, the plaintiff commenced an action against Robert Monti (hereinafter the decedent) for specific performance of a written contract which the plaintiff alleged was entered into by the parties on August 2, 2013 (hereinafter the prior action). The plaintiff alleged that, pursuant to the written contract, the decedent agreed to sell an undeveloped parcel of land located in Hauppauge (hereinafter the subject property) to the plaintiff for the sum of $150,000. On January 15, 2015, the plaintiff, unaware that the decedent had died on May 16, 2014, filed a notice of pendency of the prior action against the subject property (hereinafter the 2015 notice of pendency). Subsequently, on October 29, 2015, the defendant Alice M. Monti, as executrix of the decedent's estate (hereinafter the executrix), sold the subject property to the defendants Sergio Lobato and Silvia Lobato (hereinafter together the Lobatos).

At some point in time, the plaintiff learned of the death of the decedent and thereafter commenced this action in January 2016 against the executrix and the Lobatos and filed another notice of pendency against the property. The Lobatos moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them and to cancel the notices of pendency. The executrix separately moved pursuant to CPLR 3211(a)(1), (7), and (8) to dismiss the complaint insofar as asserted against her. The Supreme Court, inter alia, granted the Lobatos' motion and granted those branches of the executrix's motion which were to dismiss the first cause of action, [*2]seeking specific performance of the contract, and the fourth cause of action, seeking rescission of the deed conveying the subject property to the Lobatos, insofar as asserted against her. The plaintiff appeals.

We agree with the Supreme Court that, accepting the facts as alleged in the complaint as true and according the plaintiff the benefit of every possible favorable inference, the complaint failed to state a cause of action for either specific performance or rescission of the deed (see Rojas v Paine, 101 AD3d 843, 846; see also Acocella v Bank of N.Y. Mellon, 127 AD3d 891, 892-893). The prior action and the 2015 notice of pendency were legal nullities because of the decedent's death in 2014 (see Marte v Graber, 58 AD3d 1). Thus, the Lobatos were bona fide purchasers for value of the subject property since neither the prior action nor the 2015 notice of pendency provided the Lobatos with "knowledge of facts that would lead a reasonably prudent purchaser to make inquiry" (Berger v Polizzotto, 148 AD2d 651, 652, quoting Morrocoy Mar. v Altengarten, 120 AD2d 500, 500 [internal quotation marks omitted]; see Chiulli v Reiter, 173 AD2d 672, 673; Skoler v Rimberg, 20 AD2d 580, 581)."

FORECLOSURE RESCUE SCAM ALLEGED

Ortiz v Silver Invs., 2018 NY Slip Op 07135, Decided on October 24, 2018, Appellate Division, Second Department:

"The plaintiff allegedly was the victim of a foreclosure rescue scam whereby the defendant Silver Investors and its principal, the defendant Henry Walters (hereinafter together the Silver defendants), fraudulently induced the plaintiff to convey title to his property in foreclosure to Silver Investors by promising to allow the plaintiff to repurchase the original property at a more favorable interest rate. When the plaintiff became aware of an allegedly forged contract for the sale of the property, he consulted an attorney, and commenced this action to cancel the deed and to set aside the conveyance. The Silver defendants moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them. The Supreme Court, inter alia, denied the Silver defendants' motion.

"A deed based on forgery or obtained by false pretenses is void ab initio, and a mortgage based on such a deed is likewise invalid" (Cruz v Cruz, 37 AD3d 754, 754; see ABN AMRO Mtge. Group, Inc. v Stephens, 91 AD3d 801, 803; First Natl. Bank of Nev. v Williams, 74 AD3d 740, 742; GMAC Mtge. Corp. v Chan, 56 AD3d 521, 522). "If a document purportedly conveying a property interest is void, it conveys nothing, and a subsequent bona fide purchaser or bona fide encumbrancer for value receives nothing" (ABN AMRO Mtge. Group, Inc. v Stephens, 91 AD3d at 803; see Marden v Dorthy, 160 NY 39, 48; Solar Line, Universal Great Bhd., Inc. v Prado, 100 AD3d 862, 863-864; First Natl. Bank of Nev. v Williams, 74 AD3d at 741).

Deeming the allegations in the complaint as true and affording the plaintiff the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88), the complaint adequately states a cause of action to cancel the deed and set aside the conveyance. Although the [*2]complaint purports to set forth additional causes of action for "violation of the statute of frauds," "violation of New York Real Property Law § 265," "fraud," "civil conspiracy to commit fraud," and "unjust enrichment," the complaint does not demand damages under these theories, and therefore, there is no reason to consider the legal viability of these theories.

Contrary to the Silver defendants' contention, they did not demonstrate that the doctrine of "unclean hands" bars the plaintiff from seeking equitable relief. A party seeking an equitable remedy must not have "unclean hands" (Kopsidas v Krokos, 294 AD2d 406, 407). The doctrine of unclean hands applies when the offending party "is guilty of immoral, unconscionable conduct" directly related to the subject matter in litigation and which conduct injured the party seeking to invoke the doctrine (Columbo v Columbo, 50 AD3d 617, 619 [internal quotation marks omitted]; see National Distillers & Chem. Corp. v Seyopp Corp., 17 NY2d 12, 15-16; Lucia v Goldman, 145 AD3d 767, 769; Jiles v Archer, 116 AD3d 664, 666; Jara v Strong Steel Door, Inc., 58 AD3d 600). Here, the complaint alleges that the plaintiff, a vulnerable and unsophisticated homeowner facing foreclosure, was the victim of a foreclosure rescue scam, from which he was trying to extricate himself. The documentary evidence submitted by the Silver defendants in support of their motion failed to conclusively establish that any agreement between the parties was illegal and unenforceable (see CPLR 3211[a][1]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326). Moreover, the documentary evidence failed to conclusively establish that the Silver defendants were injured by the plaintiff's alleged participation in the scheme, as the Silver defendants received the deed to the plaintiff's property (see Jiles v Archer, 116 AD3d at 666)."

COURT OF APPEALS RULES ON CREDIT CARD "SURCHARGES"

EXPRESSIONS HAIR DESIGN, ET AL., Respondents, v. ERIC T. SCHNEIDERMAN, & ET AL., Appellants.,  2018 NY Slip Op 07037 ,No. 100. Court of Appeals of New York. Decided October 23, 2018:

"General Business Law (GBL) section 518 states: "No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means." Few statutes have provoked such diverse interpretations. Our task is to answer a certified question from the United States Court of Appeals for the Second Circuit concerning the meaning of the statute: "Does a merchant comply with New York's General Business Law § 518 so long as the merchant posts the total dollars and cents price charged to credit-card users?" The parties agree that GBL § 518 permits differential pricing, in which a merchant offers discounts to customers who pay by cash, so that customers pay a higher price, for the same item, if they use a credit card, than they would if they paid cash. What the statute prohibits is a more difficult inquiry. For the reasons explained below, we answer the Second Circuit's question in the affirmative.

……..

Plaintiffs are five merchants who allege that they wish to engage in differential pricing and to inform customers of their practice by stating the cash price in dollars and cents and the credit card price as a percentage or dollars-and-cents amount, reflecting only the additional charge for credit card purchases and not the total dollars-and-cents price for such purchases. The point is best illustrated by examples. Plaintiffs wish to tell their customers, for example, that "a haircut costs $10.00, and if you pay with a credit card you will pay 3% extra" or "a haircut costs $10.00, and if you pay with a credit card you will pay an additional 30 cents."^[1] This practice, "listing one price and a separate surcharge amount," has been described as "a single-sticker regime" (Expressions Hair Design v Schneiderman, ___ US ___, ___, 137 S Ct 1144, 1151 [2017]) or a "single-sticker-price scheme" (Expressions Hair Design v Schneiderman, 877 F3d 99, 101 [2d Cir 2017]), and we refer to it similarly. The merchants have challenged GBL § 518 as a violation of their First Amendment rights, to the extent that it allows them to charge credit card users higher prices but prohibits them from describing the price difference as they wish.^[2]

………

[S}o long as the total dollars-and-cents price charged for credit card purchases is posted, nothing in GBL § 518 prohibits merchants from explaining the difference in price as a "surcharge" attributable to credit card transaction fees they must bear^[5] . Of course, once price is communicated in the manner required by GBL § 518, the merchant does not "impose a surcharge" within the meaning of the statute. However, imposing a surcharge (as defined by the statute) and using the word "surcharge" are two different things. There is nothing in the legislative history of GBL § 518 or of the federal statute on which it was based to suggest that a merchant could not use the word "surcharge" — or words such as "additional fee" or "extra cost" — to communicate to customers that the credit card price is higher than the cash price. By disclosing the total dollars-and-cents price charged to credit card users, a merchant complies with the statute. The process by which the merchant characterizes the higher amount is irrelevant to the statutory requirement. In short, merchants are free to call the price differential anything they wish without fear of prosecution under the statute.

VI.

For the above reasons, we conclude that a merchant complies with GBL § 518 if and only if the merchant posts the total dollars-and-cents price charged to credit card users. In that circumstance, consumers see the highest possible price they must pay for credit card use and the legislative concerns about luring or misleading customers by use of a low price available only for cash purchases are alleviated. To be clear, plaintiffs' proposed single-sticker pricing scheme — which does not express the total dollars-and-cents credit card price and instead requires consumers to engage in an arithmetical calculation, in order to figure it out — is prohibited by the statute."