MEDIATION & ARBITRATION

 

A BILL NOT YET SIGNED - CO-OPS AND THE 2019 ACT

Does the 2019 Housing Stability Act apply to co-op leases? And what about when a co-op owner subleases his unit with Board approval?

Although this bill was passed by both the New York State Assembly and Senate, as of yet, it has not yet been signed by the governor, having just been delivered on December 10:

"BILL NUMBER: S5105C

SPONSOR: LIU
 
TITLE OF BILL:

An act to amend the general obligations law, the real property law, and
the real property actions and proceedings law, in relation to excluding
tenant-shareholders in cooperative housing corporations from certain
housing provisions

 
JUSTIFICATION:

The Housing Stability and Tenant Protection Act of 2019 was a landmark
bill in protecting tenant rights. However, several provisions of the
bill were unclear regarding its application to shareholder-tenants who
òutilize their cooperative as their residence. This bill adds clarifying
language and exempts these homeowner shareholder-tenants from those
provisions that would have a negative impact to their homeownership.

 
LEGISLATIVE HISTORY:

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to actions and
proceedings commenced on or after such effective date."

NEGLECT CASE AND THE NON-RESPONDENT PARENT

Matter of John A. v. Jane A., Date filed: 2021-12-02, Court: Family Court, Clinton, Judge: Judge Timothy Lawliss

DECISION 

On April 30, 2021, Respondent Jane A. gave birth to a boy named John. On that same date while the child was still in the hospital, with the consent of Ms. A., the Clinton County Department of Social Services (“CCDSS”) removed John from Ms. A.’s care without a court order. On May 3, 2021, the CCDSS filed a neglect petition pursuant to Article 10 of the Family Court Act against Ms. A. concerning John. At the time of the filing, John did not have a legally established father. On May 4, 2021, the Court issued an Order on Application for Temporary Removal of Child (After Petition Filed) which, among other things, temporarily removed the child from the child’s home and placed the child with the CCDSS. On June 8, 2021, upon Ms. A.’s admissions and consent, the Court issued an order finding that John was a neglected child, as that term is defined by Family Court Act §1012(f)(i)(B). On that same date, upon the consent of all parties, including Ms. A., the Court issued an Order of Disposition which continued John’s placement with the CCDSS until the completion of a permanency hearing scheduled for October 26, 2021. A week before the scheduled permanency hearing, this Court [Asadourian, Support Magistrate] issued an Order of Filiation establishing Robert B. as John’s father. The scheduled October 26, 2021 permanency hearing was then adjourned to give Mr. B. proper notice of the hearing and to allow Mr. B. time to arrange for counsel. To date, Mr. B. has not filed a petition pursuant to Article 6 of the Family Court Act seeking permanent custody of the subject child.

At the conclusion of the permanency hearing, the Department of Social Services, Ms. A. and the Attorney for the Child advocated for continued placement of the child with the Commissioner. Mr. B. requested that the child be released to his care. The threshold question presented to the Court is what legal standard applies to a non-respondent parent’s request for release under Article 10-A of the Family Court Act.

“In 2015 the Legislature enacted sweeping new provisions granting non-respondent parents a new set of rights, striking a new balance between respondent and non-respondent parents.” Merril Sobie, Supplementary Practice Commentaries, McKinney’s Cons Laws of NY, Book 29A, Family Court Act §1054, 2021 Pocket Part at 40-41. These amendments to Family Court Act Article 10 have been characterized as a non-respondent’s “bill of rights.” See Merril Sobie, Supplementary Practice Commentaries, McKinney’s Cons Laws of NY, Book 29A, Family Court Act §1052, 2021 Pocket Part at 25. Among other things, Family Court Act §§1035(d), 1052(a)(ii), and 1054 were amended to authorize the dispositional alternative of a release of the subject child to a non-respondent parent.

The Court notes that Family Court Act Article 10-A was not similarly amended as referenced above. The word “release” or the phrase “release to a non-respondent parent” does not appear anywhere in Family Court Act §1089, the primary section governing permanency hearings. However, because permanency hearings have been held to constitute “phases” of the dispositional proceedings, the dispositional option of a release to a non-respondent parent must be a valid disposition at a permanency hearing. See In re Demetria FF., 140 AD3d 1388, 1390 [3d Dept 2016], quoting Merril Sobie, Practice Commentaries, McKinney’s Cons Laws of NY, Book 29A, Family Court Act §1086 at 199-200, (“there is no final disposition until permanency has been ordered” [emphasis in original]); see also Merril Sobie, Supplementary Practice Commentaries, McKinney’s Cons Laws of NY, Book 29A, Family Court Act §1089, 2021 Pocket Part at 149, (“[i]n recent years non-respondent parents have been granted greatly expanded rights…[t]he newly endowed rights may come into play in Section 1089 permanency hearings”).

In Matter of Elizabetta C., 60 Misc 3d 603 [Fam Ct, Clinton County, June 19, 2018], this Court was faced with the same question of what standard to apply when a non-respondent parent seeks release of a child as a dispositional option. This Court, in grappling with how to treat the non-respondent parent, stated:

[I]t is a fundamental principle of New York law that a parent has a claim of custody to his child superior to that of all others unless it is established that he is unfit to assume his parental duties or some other type of extraordinary circumstances exist. (Matter of Jamie J. [Michelle E.C.], 30 NY3d 275 [2017]; Matter of Bennett v. Jeffreys, 40 NY2d 543 [1976]; Matter of Perry v. Perry, 160 AD3d 1144 [3d Dept 2018]; Matter of Nevaeh MM. [Sheri MM. --- Charles MM.], 158 AD3d 1001 [3d Dept 2018]; Matter of Connie VV. v. Cheryl XX., 156 AD3d 1147 [3d Dept 2017].) This overriding principle of law has been controlling in a number of contexts. (See Matter of Jamie J., 30 NY3d at 279 [Family Court Act article 10-A permanency hearing]; Matter of Suarez v. Williams, 26 NY3d 440 [2015] [non-parent custody action]; Matter of Michael B., 80 NY2d 299 [1992] [custody of a child voluntary placed, but not freed]; Matter of Connie VV. v. Cheryl XX., 156 AD3d at 1148 [3d Dept 2017] [non-parent custody action]; Matter of Devon EE. [Evelyn EE.], 125 AD3d 1136 [3d Dept 2015] [combined Family Court Act article 6 and Family Court Act article 10 dispositional hearing]; Matter of James NN. v. Cortland County Dept. of Social Servs., 90 AD3d 1096 [3d Dept 2011] [Family Court Act article 10 non-respondent parent custody action for child in foster care]; Matter of Kevin C., 288 AD2d 311 [2d Dept 2001] [Family Court Act article 10 disposition].) Parents who are fit to raise their child are constitutionally entitled to do so. (Matter of Jamie J., 30 NY3d at 280; Matter of Bennett v. Jeffreys, 40 NY2d at 545-546; Matter of Nevaeh MM., 158 AD3d at 1002-1003; Matter of McBride v. Springsteen-El, 106 AD3d 1402 [3d Dept 2013]; Matter of Marx v. Tucker, 36 AD3d 1125 [3d Dept 2007]; Matter of Dayshaun W. [Jasmine G.], 133 AD3d 1347 [4th Dept 2015].)

Matter of Elizabetta C., 60 Misc 3d at 606. Based upon the foregoing, this Court held as follows:

Given a fit parent’s constitutional right to raise their children, the court holds, that once a parent intervenes in an article 10 action, the court may not place the child without the intervening parent’s consent, unless the party advocating placement demonstrates that the intervening parent is unfit to provide proper care for the child or that some other type of extraordinary circumstances exist.

Id. at 606-607.

There has been precious little guidance from appellate courts regarding release to a nonrespondent parent.1 In fact, there was no appellate guidance until June 9, 2021, when the Second Department decided Matter of Sabrina M.A. (Yana A.-Marcus S.), 195 AD3d 709, [2d Dept 2021]. In that case, the non-respondent father appealed from a permanency hearing order which continued the subject child’s placement, arguing that “there was no showing that he is unfit or other extraordinary circumstances and the court should have immediately released the child to his case.” Id. at 709. The Second Department explicitly rejected this argument, stating that “[c]ontrary to the father’s contention, the Family Court was not required to find the existence of extraordinary circumstances necessary to permanently deprive a parent of custody.” Id., citing Matter of Eric W. (Tyisha W.), 110 AD3d 1000, 1001 [2013]. Instead, pursuant to Family Court Act §1089(d), the Court held that the “best interests” of the child standard is applicable to the father’s request for a release of the subject child and that the non-respondent’s fitness would be a “primary factor” among others. Id.

This Court has searched Third Department for cases on point, but has found none. In accordance with the doctrine of stare decisis, a Family Courts is “bound to apply the law as promulgated by the Appellate division in its own Department, [and] where the issue has not been addressed within that Department, the [Family Court] is obligated to follow the precedent set by the Appellate Division of another Department until its home Department or the Court of Appeals pronounces a contrary rule.” Maple Med., LLP v. Scott, 191 AD3d 81, 90 [2d Dept 2020]. Thus, because the Third Department has not addressed the issue, this Court is bound to apply the law as espoused by the Second Department in Matter of Sabrina M.A., and thus shall apply a simple “best interests” standard to the facts of the present case.

Before doing so, the Court respectfully asserts that the Matter of Sabrina M.A. should be reconsidered. First, it should be emphasized that the Court is not selecting between two parents, but rather the Court is selecting between the State and a parent. As outlined in Matter of Elizabetta C., a number of courts have held in a number of circumstances that a parent has a claim of custody to his or her child superior to that of all others unless it is established that he or she is unfit or some other type of extraordinary circumstances exist. Second, the Matter of Eric W. was the only authority the Second Department cited in support of its holding in the Matter of Sabrina M.A. The Matter of Eric W. was decided two years before the 2015 Amendments to Article 10 of the Family Court Act were enacted which granted non-respondent parents a new set of rights. Third, the Second Department in both the Matter of Sabrina M.A. and the Matter of Eric W. failed to directly address the non-respondent parent’s constitutional rights when the State seeks to intervene in the parent-child relationship. Certainly, the statute should be construed, if possible, to avoid infringements upon a non-respondent parent’s constitutional rights.

This distinction is far from academic. This case turns on which standard applies. The Court shall issue a Permanency Hearing Order consistent with this Decision.

Dated: Dated: December 2, 2021

Footnotes

1. Since 2015 there have been cases that touch on the issue of a release to a non-respondent parent; however, these cases, for various reasons, do not explicitly address the standard the Court must apply to a non-respondent parent's request for release. For instance, In Matter of Henry B.,180 AD3d 667 [2d Dept 2020], the Court upheld a challenged release to a non-respondent father as valid because the respondent mother's appeal was dismissed as academic upon the expiration of the order releasing the child. Id. at 668. Similarly, although the Third Department, in Matter of Mariah K. dealt fairly extensively with the dispositional option of release to a non-respondent parent, the focus of the Court was largely upon the interplay between the mutually exclusive dispositional options of a grant of custody to the non-respondent parent or a release of the child to the non-respondent parent, and what benefits there were to ordering a release of the child to the non-respondent under the Family Court Act Article 10 proceeding as opposed to a permanent grant of custody under Family Court Act Article 6. See Matter of Mariah K., 165 AD3d 1379 [3d Dept 2018].

NEIGHBOR DISPUTES - TREE DAMAGE

Zaremba v. Stanco, Date filed: 2021-12-02, Court: District Court, Nassau, Judge: Judge Gary Carlton, Case Number: SC-000516/21OB:

"The Plaintiffs have brought this action for the property damage and tree removal costs caused by defendant’s tree which fell on their property.

FINDING OF FACTS

The subject tree was hanging over the plaintiffs’ property. The plaintiffs put the defendant on written notice of their concern about the tree.

The plaintiffs were given the opportunity to prove that the subject tree was decayed or defective, but have failed to do so.

APPLICABLE LAW

There is a large class of cases, in which injury is suffered by a party, where the law gives no redress. If a tree growing upon the land of one is blown down upon the premises of another, and in its fall injures his shrubbery, or his house, or his person, he has no redress against him upon whose land the tree grew, Sheldon v. Sherman, 42 N.Y. 484, 486, (1870).

The exception to that general rule of law is when a defendant has been put on notice of the subject tree being on the neighboring property and that the subject tree is defective or diseased. It is plaintiff’s burden to prove this. Cicio v. Pollack, 51 Misc. 3d 131A, 36 N.Y.S.3d 46 (Appellate Term 1st Dept.2016).

No evidence has been produced that the tree was defective, only the allegation that the defendant was put on actual notice that the subject tree will cause harm, McKeever v. City of Rye, 35 Misc. 3d 1208(A), 1208A, 950 N.Y.S.2d 724, (City Court of Rye 2012).

There is no claim that the defendant caused the tree to fall on plaintiffs’ property. There is no claim that the manifestation of decay was readily observable.

Absent said proof the defendant did not have a duty to take reasonable steps to prevent any potential harm that may have occurred to the plaintiffs on this property as a result of the tree falling on their property, Golan v. Astuto, 242 A.D.2d 669, 662 N.Y.S.2d 576 (2nd Dept. 1990).

Absent a duty, there is no liability."

REMOTE DEPOSITIONS IN COMMERCIAL DIVISION CASES EFFECTIVE DECEMBER 15

Commercial Division Rule 37: Remote Depositions - the Commercial Division of the New York state court system has adopted a rule that allows parties to consent to video-conferenced remote depositions or, if consent can’t be reached, for either party to show good cause to the judge why remote depositions should be ordered.

FROM NASSAU LAWYER - DECEMBER 2021

 

IDENTITY THEFT IS NOW ELDER ABUSE

Earlier this week, Governor Kathy Hochul signed legislation (S.1560/A.1994) 

into law to protect seniors from fraudulent use of personal information 

by authorizing support services on identity theft through non-profit agencies and 

law enforcement. The legislation allows the Office of the Aging and law enforcement 

to recognize identity theft as one of the many forms of elder abuse and take 

appropriate action to help seniors.  

SUMMARY OF PROVISIONS:

The bill adds a definition of "elder abuse and exploitation" to subdivi-
sion 1 of section 209 of the elder law and incorporates identity theft
in the list of eligible support services through the naturally occurring

retirement communities (NORCS) programs.

The bill amends section 214-c of the executive law to provide that iden-
tity theft shall be one of the many forms of elder abuse that the Office
of the Aging and the state police address in their educational materials
for police officers' use when encountering such abuse.

The bill amends subdivision e of section 21-201of the administrative
code of the city of New York to add identity theft to the definition of
elder abuse.

 
JUSTIFICATION:

The unlawful use of an individual's personal identification information
such as social security number, driver's license information, or bank
and credit card account can result in terrible consequences lasting
years. In its worst form it can leave the older victim bankrupt and
without assets in their retirement. The Federal Trade Commission (FTC)
estimates that as many as 9 million American adults have their identi-
ties stolen each year. The crime takes many forms and may go undetected
for long periods; it often is not discovered until a review of a credit
card statement or receipt of notice for charges not made-or worse, until
the person is contacted by a debt collector. (Source: Federal Trade
Commission, NYS Attorney General's Office).

While older adults are not the exclusive targets of identity theft, they
can be especially susceptible to victimization as they often need to
share their personal information with caregivers, medical providers'
offices, government agencies, and over the internet. The impact of iden-
tity theft can be devastating for older adult victims who are unable to
restore stolen funds through employment. A recent study by the Office of
Children and Family Services found that the cost of financial exploita-
tion of adults in New York is over $1 billion dollars yet state law does
not currently include identity theft in the definition of "elder abuse".
With this legislation our aging support services groups and our law
enforcement teams will be able to use available resources to help
seniors, the fastest growing sector of our population, from identity
theft in its many forms.

HOMEOWNERS AT RISK - APPLICATIONS BEGIN JANUARY 3

"The New York State Homeowner Assistance Fund (NYS HAF) is a federally funded program dedicated to assisting homeowners who are at risk of default, foreclosure or displacement as result of a financial hardship caused by the COVID-19 pandemic.

NYS HAF expects to receive significantly more applications than can be funded by the program. Applications will be processed in the order they were received. Application submission does not guarantee you will receive financial assistance."

Go to https://www.nyhomeownerfund.org/  

AMAZON LIABILITY FOR THIRD PARTY DEFECTIVE PRODUCTS IS LIMITED...CURRENTLY

Wallace v. TRI-STATE ASSEMBLY, LLC, 2021 NY Slip Op 6664 - NY: Appellate Div., 1st Dept. 2021:

"Plaintiff sustained injuries when the handlebars of an electric bicycle his father purchased for him through Amazon.com loosened while he was riding it and caused him to fall. Nonparty Eshion, a China based company, listed the bicycle for sale on Amazon.com. At the time of purchase, plaintiff's father also elected to buy a service option to have the bicycle assembled. Former codefendant Tri-State Assembly (Tri-State), which offers its services for sale on Amazon.com and is an Amazon approved service provider, assembled it.^[1] Tri-State was uninsured at the time it provided assembly services to plaintiff.

Insofar as relevant to this appeal, plaintiff asserted claims against defendants, Amazon.com, LLC and Amazon.com.DEDC, LLC (together, Amazon) for negligence and breach of the implied warranties of fitness and merchantability. Plaintiff alleged that Amazon and its agents were careless and negligent in the assembly and sale of the bicycle; in assembling, distributing and selling a product unfit for public use; and in making, assembling, distributing and selling a product that collapsed under normal use.

Supreme Court granted Amazon's motion for summary judgment dismissing the complaint. For the reasons stated below, we affirm.

The Uniform Commercial Code clearly provides that implied warranties only extend to sellers (see UCC 2-314 [1]; 2-315; see also Philadelphia Indem. Ins. Co. v Amazon.com, Inc., 425 F Supp 3d 158, 165 [ED NY 2019] [applying New York law]). Plaintiff's breach of warranty claim fails because Amazon submitted sufficient documentary evidence and unrefuted affidavits from its representatives to establish prima facie that it did not sell, manufacture, distribute or assemble the bicycle.

The supporting affidavits indicate that, pursuant to contract, third-party sellers such as Eshion are responsible for all aspects of their sales, such as setting a price, describing the product being sold, and offering any warranties. In this case, Eshion sold the bicycle and shipped it directly to plaintiff. At no time was the bicycle ever in Amazon's possession or control, nor did it ever obtain title to the bicycle (see UCC 2-106 [1]). Further, when placing orders all Amazon.com users agree to its Conditions of Use, wherein Amazon disclaims all warranties for products sold by third-party sellers.

In opposition, plaintiff failed to raise an issue of fact. His objection to the admissibility of Amazon's supporting affidavits was raised for the first time on appeal and therefore is unpreserved for appellate review (see Shinn v Catanzaro, 1 AD3d 195, 198 [1st Dept 2003]). In any event, the lack of a certificate of conformity pursuant to CPLR 2309(c) is not fatal, as the oath was duly given (see Matapos Tech. Ltd v Compania Andina de Comercio Ltda, 68 AD3d 672, 673 [1st Dept 2009]).

Moreover, Amazon did not impliedly warrant the assembly service Tri-State offered for sale. Plaintiff improperly alleged for the first time in opposition to summary judgment that issues of fact existed as to whether Amazon properly vetted Tri-State to ensure its competency and that it maintained insurance as required by agreement between Amazon and Tri-State. Despite not being a party to that agreement, plaintiff argued that Amazon breached its duty to obtain proof of insurance from Tri-State and thus provided him with third-party services from an uninsured vendor. The motion court properly declined to entertain this newly alleged theory of liability for which plaintiff offered no supporting authority.

This Court similarly declines plaintiff's invitation to fashion an equitable remedy effectively extending implied warranties to nonsellers because he has no other means of recovery. In support, plaintiff cites to Bolger v Amazon.com, LLC (53 Cal App 5th 431, 438 [Ct App, 4th Dist 2020]). There, the California Court of Appeal reversed an award of summary judgment to Amazon finding that Amazon could be held strictly liable for defective products third-party vendors sell on its website. Its holding rested on the notion that under the circumstances presented, Amazon was a pivotal part of the distribution chain that brought the product at issue to the plaintiff consumer.

Plaintiff's reliance on Bolger is misplaced. First, Bolger involved a strict products liability claim, which plaintiff does not allege. Further, Bolger is distinguishable because the California Court of Appeal sustained the lower court's dismissal of the plaintiff's breach of implied warranty claim, which was unchallenged on appeal (53 Cal App 5th at 462 n 12).

In Eberhart v Amazon.com, Inc. (325 F Supp 3d 393, 399-400 [SD NY 2018]), the US District Court for the Southern District of New York cited state and federal case law from around the country and noted "an emerging consensus against. . . holding Amazon strictly liable for defective products sold on its website." Subsequently, in Philadelphia Indem. Ins. Co. v Amazon.com, Inc., the US District Court for the Eastern District of New York described "the issue of whether Amazon can be held strictly liable for defects in the products that consumers purchase from third-party vendors through Amazon's online marketplace" as "a developing area of law" (425 F Supp 3d at 162-163). The court noted that "[w]hile many courts that initially considered the issue found in Amazon's favor, some more recent cases have reached different results, with appeals on a few of these cases still pending" (id. at 163).

Nonetheless, the Eastern and Southern District Courts of New York did not expand the chain of liability. Rather, both applied New York law and found that Amazon could not be held liable under the theories of strict products liability or breach of warranty. In support, these two federal courts cited Spallholtz v Hampton C.F. Corp. (294 AD2d 424, 424 [2d Dept 2002], lv denied 98 NY2d 611 [2002]), for the well-settled legal principle that liability may not be imposed for breach of warranty or strict products liability upon a party that is outside the manufacturing, selling, or distribution chain (see Philadelphia Indem., 425 F Supp 3d at 165 [internal quotation marks omitted]; Eberhart, 325 F Supp 3d at 397 n 3). Central to both courts' analyses was the undisputed fact that at no time did Amazon ever obtain title to the products in question and, rather than being viewed as a distributor, "Amazon is better characterized as a provider of services" (Eberhart, 325 F Supp 3d at 399; see Philadelphia Indem., 425 F Supp 3d at 163).

Against this backdrop, there is simply no authority that would enable this Court to create a remedy based upon equitable principles as plaintiff urges. To do so would unjustifiably contradict settled New York law limiting liability for breach of warranty to sellers and parties within the manufacturing, selling, or distribution chain. Amazon is neither, as it merely provided the website plaintiff's father used to purchase the bicycle from an independent third-party seller and have it assembled by an independent third-party assembler."

CHILD CUSTODY AND COVID - HOME SCHOOL OR PUBLIC SCHOOL

DRD v. JDD, 2021 NY Slip Op 21300 - NY: Supreme Court, Monroe 2021;

"In this matter, the Court must decide, in a contested divorce action, whether to issue a temporary order requiring the children to attend the public schools rather than be home schooled.

The father alleges that the children were enrolled in the public schools for the start of the 2021-2022 school year. The father appeared at the school on the first day and could not find his children. He was told that his wife had informed the District that neither of the children would attend school that year. As it turns out, the mother had informed the school district that she would home school the children and, thus, they did not attend school on the first day and have not since that date. Importantly, the father never agreed to have his wife home school the children and there is no evidence before this Court that the mother notified the father that she was home schooling the children this academic year or consulted with the father before implementing this choice.^[1] After the father learned of the children's absence from school, he brought an order to show cause to require the children to be enrolled immediately in the public schools. The mother filed papers in opposition.

The father has joint custodial rights in his children via a prior family court order. The father acknowledges that his older daughter struggled with remote learning in the prior year. His younger daughter has some health issues — a heart murmur and asthma — but neither ailment would preclude that younger child from attending the public schools. The mother lists no income but food stamps in her statement of net worth and there is no evidence of any employment. There is no evidence that she had a college degree or any experience as a teacher. She offered no evidence of any educational training.

The mother asserts, without any evidence, that mask wearing — required in the public schools — is unhealthy. The mother claims that mandatory vaccinations are against her religious beliefs but she offers no evidence that supports that conclusion. The mother reaches the conclusion that "home schooling offers what a public school cannot." The father opposes the home schooling, arguing that the program utilized by the mother for home schooling "provides shortcuts for parents who do not want to set up actual lesson plans for their home schooled children."

Importantly, the family court order granted the couple joint custody rights, which means that in the absence of parental agreement on home schooling, this Court must decide whether home schooling is in the children's best interests. When faced with this choice, the Court notes the court-appointed attorney for the two young children advocates returning them to the public schools. The younger daughter, in particular, wishes to return to the public schools, a position supported by the AFC. The AFC, in a written analysis forwarded to the Court and counsel, remains concerned that the children have told her that they had no written assignments, testing or required reading as part of the mother's home school requirements. In addition, there is no evidence of any oversight by the school district which approved the home schooling for these children. Given these deficiencies, the father is concerned that his children will fall behind academically.

This Court acknowledges that in the wake of the pandemic in New York, remote education through the internet was necessitated and the issue of "return to school" with attendant masking, social distancing and other requirements caused confusion and concern among parents and students. During the year when in-person public schools were unavailable, many children — and their parents — grew accustomed to learning at home, although the instruction was often broadcast by the school districts and curriculum and evaluation methods were overseen by the local districts. However, the Fall 2021 school year began in this couple's local school district with in-classroom instruction, subject to certain health-related requirements. At this stage of this proceeding, the Court must, in the context of a temporary order, determine, based on the available evidence, whether the children's best interests are served by continued home schooling — over the father's objection — or a return to the public schools — over the mother's objection.

Initially, the New York courts have made it clear that modifying a child's education plan without consultation and approval of a joint custodial parent can be a factor in changing or awarding custody. See Frawley v. Salvatore, 58 AD3d 678 (2d Dept 2009) (parent's decision to withdraw the subject children from school for home schooling as a factor in modifying custody); Matter of Michael B. v. Dolores C., 113 AD3d 517 (1st Dept 2014)(removing a child from school without consulting with the other parent violated joint custodial rights).

New York has a longstanding commitment to quality education for all students. The Education Law requires that children attend upon full-time instruction (Education Law § 3205[1][a]) at a public school or elsewhere (Education Law § 3204[2][I]) but the education must be "at least substantially equivalent to the instruction given to minors of like age and attainments at the public school of the city or district where the minor resides." The Family Court Act also requires parents to provide a child with an adequate education. Family Ct Act § 1012[f][I][A]; see Family Ct Act § 1046[b][I]. Matter of Isaac V. D. L. R. (Maria D. L. R.), 174 AD3d 622 (2d Dept 2019). While home schooling is permitted subject to approval by the local school district, the essential issue in the context of a temporary order in a divorce proceeding is whether the facts of the home schooling in this instance, overseen by this mother, are in the children's best interests. In that regard, the skills of the parent-instructor play a role. See Matter of Blerim M. v. Racquel M., 94 AD3d 562 (21st Dept 2012)(the court held that the mother's surreptitious home-schooling of the children, over the father's objections, despite being completely unqualified to do so was a factor in changing custody). As another court suggested, this Court should be especially attentive to the skills of the parent seeking to home school the children. The Appellate Division in Matter of Sloand v. Sloand, 30 AD3d 784, 786 (3d Dept 2006) noted with respect to a mother seeking to home school her children:

the mother is not able to sufficiently foster the child's intellectual development (citations omitted). Among other things, contrary to recommendations made by the child's teacher and principal, the mother intends to home school the child although she lacks teaching experience, has not had full-time employment since 1993, and has failed to respect the child's educational requirements, such as regular and punctual attendance

Id. See also Piazza v. Piazza, 2002 NY Misc. LEXIS 911 (Fam. Ct. Oswego Cty 2002)(mother seeking to home school never submitted any evidence to indicate the child's home school performance, nor did she present any home school curriculum used to instruct the child and therefore the child's best interests supported continued attendance at public schools).

The need for a competent educator to handle home schooling, even in the early grades, is well documented:

It seems almost axiomatic that — except in cases of exceptionally well-qualified parent-teachers and/or exceptionally able students — the day eventually and inevitably arrives when substantially equivalent home instruction can no longer be provided or maintained. Most parents simply cannot teach, nor can most students effectively teach themselves, advanced English or history, much less the intricacies of algebra, geometry, biology, chemistry, and physics.

In re Adam D., 132 Misc 2d 797 (Fam. Ct. Schoharie Cty 186). A further analysis of home schooling when a parent is not competent to teach is found in Matter of Bottorff v Bottorff, 2018 NY Misc. LEXIS 11094 (Fam. Ct. Oneida Cty 2018), aff'd 177 AD3d 1343 (4th Dept 2019). The Family Court there found:

. . . no proof as to the quality of the education that the mother was provid[ing]. The mother believed the children struggle with crowded spaces and in group settings, yet seemed content on not providing the children with avenues for socialization. The Court finds the earlier the children obtain sustained competent education, treatment and socialization the better; that developmental challenges, such as having difficulty in group settings, will only exasperate and become more pronounced as the children age into teenagers and beyond if not adequately addressed now. Moreover, based on the current dynamics between the parties and the children, the Court finds that allowing the mother to home school the children would excise the father from the children's education and further deteriorate the father's relationship with the children. As a result, the Court finds that it is not in the children's best interest to be home schooled.

Id at 19. The socialization benefits of public schooling have also been recognized. Matter of Wilson v Hendrickson, 88 AD3d 1092 (3d Dept 2011)(when enrolled in a pre-k school program, the child is able to make friends and interact with children her own age as factor supporting engaging in public school opportunities rather than staying at home).

In this matter, the children are young and, from one perspective, the educational requirements may be minor — simple reading, word recognition, arithmetic, phonetics, and introduction to science. But, these early instructional steps are the building blocks for advanced educational attainment and must be mastered to move into more intricate and advanced subject matter. Failure to master the building blocks may inhibit educational success at the higher levels and bred student frustration, distress and failure. Falling academically behind is a risk that children should avoid at all ages and conscientious parents, committed to their children's best interests, should not permit it to happen. In addition, the socialization benefits of public schools — interactions with friends and peers, exposure to other student from different backgrounds — are well-known. Finally, participation in school activities, sports and extracurriculars can be critically important in child development. In the papers before this Court, there is no evidence advanced by the mother that the daughters are obtaining age appropriate schooling or instruction or that the mother has the pedagogical competence to instruct the children. There is no evidence that the children have participated in school activities or extracurriculars or even been given the opportunity to do so. The mother's justifications for avoiding the public schools — that vaccinations are against her religious beliefs and "testing at school is medically inappropriate" — are offered without any evidence. The mother's claims that there are medical challenges for her daughters that might be impacted by attending the public schools lack any evidentiary support as well. Finally, as noted earlier, the father's custodial rights, established in a family court order, were violated when the mother unilaterally decided to home school the children. While she may have invited consultation about the children's schooling in a text to the father before the public schools started, she never indicated that she intended to home school the children, depriving the father of any input on that specific choice.

At this stage in this divorce action, the Court grants a temporary order requiring that the children be immediately enrolled in the appropriate public school, as participation in the public schools is, based on the evidence before this Court, in the children's best interests. The matter of best interests on a permanent basis remains to be decided after a hearing on all the issues raised in this divorce.^[2]

SUBMIT ORDER ON NOTICE NYCRR 202.48

[1] The mother, in her responding papers, offers two text messages sent to the father before school started. In one, dated August 3, 2021 (before school started), she states that there are "serious things to be discussed" regarding school for the children. There is nothing in the text that suggests the children will be home schooled. The mother also attached a series of texts which indicate she sought greater communication with the father which, she contends, never materialized. She sent a text to the father, after school started, and said that the children were being home schooled.

[2] If, at the conclusion of this proceeding, the proof establishes that home schooling would be in the best interests of these children, the Court can restore the home schooling that the mother seeks. In the meantime, the school district can evaluate the children's age and grade-appropriate educational attainment and insure that their skills match the district's and the state's requirements."

PIERCING THE CORPORATE VEIL

WEST HOUSTON PROP., LLC v. NEW YORK PILATES NYC, LLC, 2021 NY Slip Op 32150 - NY: Supreme Court October 21, 2021:

"The plaintiff landlord in this breach of contract action seeks to recover unpaid rent under a commercial lease agreement with defendant New York Pilates NYC, LLC (Pilates NYC). The plaintiff also seeks to recover against all other defendants on a corporate veil-piercing theory and under the New York State Debtor and Creditor Law (Debtor and Creditor Law). The defendants now move pursuant to CPLR 3211(a)(7) to dismiss the second, third, fourth, and fifth causes of action of the complaint. The plaintiff opposes the motion. For the following reasons, the motion is granted.

When assessing the adequacy of a pleading in the context of a motion to dismiss under CPLR 3211(a)(7), the court's role is "to determine whether [the] pleadings state a cause of action." 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 151-152 (2002). To determine whether a claim adequately states a cause of action, the court must "liberally construe" it, accept the facts alleged in it as true, accord it "the benefit of every possible favorable inference" (id. at 152: see Romanello v Intesa Sanpaolo, S.p.A., 22 NY3d 881 [2013]; Simkin v Blank, 19 NY3d 46 [2012]), and determine only whether the facts, as alleged, fit within any cognizable legal theory. See Hurrell-Harring v State of New York, 15 NY3d 8 (2010); Leon v Martinez, 84 NY2d 83 (1994). "The motion must be denied if from the pleading's four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law." 511 W. 232nd Owners Corp. v Jennifer Realty Co., supra, at 152 (internal quotation marks omitted); see Leon v Martinez, supra; Guggenheimer v Ginzburg, 43 NY2d 268 (1977).

The complaint avers that the plaintiff and Pilates NYC entered into a commercial lease dated March 22, 2018, for a term ending on March 31, 2028. The lease obligated Pilates NYC to pay rent, additional rent, and other fees to the plaintiff on or before the first day of each month of the lease term. However, Pilates NYC failed to make payments in the sum of $258,078.84 from March 1, 2020, through November 1, 2020. The first cause of action, sounding in breach of contract, seeks to recover unpaid rent as against Pilates NYC. The second cause of action seeks to recover unpaid rent as against all defendants other than Pilates NYC by piercing the corporate veil. The third and fourth causes of action seek to recover unpaid rent as against all defendants by voiding any conveyances and/or transfers of the assets of defendant Pilates NYC to the other defendants under Debtor and Creditor Law §§ 274, 275, and 276. The fifth cause of action, sounding in unjust enrichment, likewise seeks to recover unpaid rent as against all defendants.

Ordinarily, a corporation exists independently of its owners, as a separate legal entity, and its owners are not liable for the actions of the corporation. See Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135 (1993). The doctrine of piercing the corporate veil is a limitation to this rule, "typically employed by a third party seeking to go behind the corporate existence in order to circumvent the limited liability of the owners and to hold them liable for some underlying corporate obligation." Id. "Piercing the corporate veil requires a showing that (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury." Ciavarella v Zagaglia, 132 AD3d 608, 608-609 (1st Dept. 2015) (quotation and citation omitted); see also Fantazia Int'l Corp. v CPL Furs New York, Inc., 67 AD3d 511 (1st Dept. 2009). "[U]ndercapitalization of a corporation and the corporation's owner's personal use of corporate funds, which results in the corporation's being unable to pay a judgment, constitute wrongdoing and injury sufficient to satisfy the second prong of [Matter of Morris v New York State Dept. of Taxation & Fin., supra.]" Ciavarella v Zagaglia, supra at 609. However, a simple breach of contract, without more, does not constitute a fraud or wrong warranting the piercing of the corporate veil. See Skanska USA Bldg., Inc. v Atalntic Yards B2 Owner LLC, 146 AD3d 1 (1st Dept. 2016); Bonacasa Realty Co., LLC v Salvatore, 109 AD3d 946 (2nd Dept. 2013); Treeline Mineola, LLC v. Berg, 21 AD3d 1028 (2nd Dept. 2005).

The complaint's second cause of action alleges, "[u]pon information and belief," (1) that all the other defendants dominated and controlled defendant Pilates NYC "so that Pilates NYC had no separate mind, will or existence of its own" and was the "mere alter ego of all of the other defendants." Further, the complaint states that Pilates NYC "did not comply with the standard company formalities required of a limited liability company," that the property of Pilates NYC was "used by the individual and company defendants as if it were their own," and that all defendants "shared, commingled and intermingled the same property including the name and goodwill of the business, the same employees and customers and the same offices and trade fixtures, furniture and equipment and the same website, customer lists, appointment schedules etc."

The foregoing allegations are insufficient to state a cause of action for alter ego liability. To begin, they are "wholly conclusory and consist of no more than a recitation of the elements of the claim, `upon information and belief.'" 501 Fifth Ave. Co. LLC v Alvona LLC, 110 AD3d 494, 494 (1st Dept. 2013); see Board of Managers of Gansevoort Condominium v 325 West 13th, LLC, 121 AD3d 554 (1st Dept. 2014). Moreover, the complaint, even as supplemented by the plaintiff's submissions in opposition to the instant motion, "is devoid of any allegations as to how [all other defendants] used their domination of [Pilates NYC] to commit a wrong against the plaintiff[]." TMCC, Inc. v Jennifer Convertibles, Inc., 176 AD3d 1135, 1136 (2nd Dept. 2019); see Cornwall Management Ltd. v Kambolin, 140 AD3d 507 (1st Dept. 2016). The plaintiff has offered no specific facts as to what the other defendants did and how they allegedly controlled Pilates NYC, or as to the other defendants' actual personal gain and possession of money or assets in which the plaintiff had an interest. See Suverant LLC v Brainchild, Inc., 191 AD3d 513 (1st Dept. 2021); Arben Corp. v Durastone, LLC, 186 AD3d 599 (2nd Dept. 2020). Instead, the plaintiff relies on the bare observation that the Pilates NYC website and social media platforms show it has studios in several locations and offers members the ability to use one or all of its locations. "[T]he failure to allege any fraud or unjust conduct is fatal" to the second cause of action, especially where Pilates NYC performed for two years under the subject lease and, after missing payment for nine months, has apparently continued to perform under the lease. 501 Fifth Ave. Co. LLC v Alvona LLC, supra at 494. Accordingly, the second cause of action is dismissed.

With respect to the third and fourth causes of action, the court initially notes that the complaint, though filed on December 22, 2020, cites to outdated sections of the Debtor and Creditor Law that existed prior to the enactment of amendments effective on April 4, 2020. While the plaintiff cites to Debtor and Creditor Law § 276 under the third cause of action of the complaint, it appears that the plaintiff actually intended to state a claim pursuant to current Debtor and Creditor Law § 273(a)(1), which provides that "[a] transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation ... with actual intent to hinder, delay or defraud any creditor of the debtor." Where a plaintiff seeks to void a transfer pursuant to this provision, fraudulent intent must be pleaded with particularity. See CPLR 3016(b); RTN Networks LLC v Telco Group, Inc., 126 AD3d 477 (1St Dept. 2015) (addressing analogous provision of prior version of Debtor and Creditor Law); see also Carlyle LLC v Quik Park 1633 Garage LLC, 160 AD3d 476 (1st Dept. 2018) (addressing analogous provision of prior version of Debtor and Creditor Law).

The third cause of action avers "[u]pon information and belief" that Pilates NYC "with the intent and purpose to hinder, delay and defraud its creditors and in particular the plaintiff, caused the transfer and conveyance of its assets, including but not limited to customers, the name and good will of the business, accounts receivables, membership fees, trade fixtures, equipment and furniture, without any consideration being paid or such assets," and that such transfer rendered Pilates NYC insolvent. Again, the plaintiff's allegations are wholly conclusory and merely recite the elements of an intentional fraudulent conveyance claim. They fail to plead with particularity the defendants' intent to defraud and, inasmuch as they are pleaded upon information and belief, fail to reveal the basis for the plaintiff's claims. See Brennan v 3250 Rawlins Avenue Partners, LLC, 171 AD3d 603 (1st Dept. 2019); RTN Networks LLC v Telco Group, Inc., supra. The third cause of action is dismissed.

While the plaintiff cites to Debtor and Creditor Law §§ 274 and 275 under the fourth cause of action of the complaint, it appears that the plaintiff intended to state a claim pursuant to current Debtor and Creditor Law § 273(a)(2). That statute provides that a transfer made or obligation incurred by a debtor is voidable as to a present or future creditor if the debtor made the transfer or incurred the obligation ... without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

(ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.

Since Debtor and Creditor Law § 273(a)(2) is not based in actual fraud, the heightened pleading requirements of CPLR 3016(b) do not apply.

Nonetheless, the fourth cause of action fails even under ordinary pleading standards. The complaint contains a perfunctory recitation of the elements of a constructive fraud claim pursuant to Debtor and Creditor Law § 273(a)(2) but does not plead a single fact identifying any conveyance from Pilates NYC to another defendant. Nor does the plaintiff identify the source of his belief that Pilates NYC transferred its assets without fair consideration. For these reasons, the fourth cause of action is subject to dismissal. See RTN Networks, LLC v Telco Group, Inc., supra (addressing analogous provisions of prior version of Debtor and Creditor Law).

Finally, the fifth cause of action, sounding in unjust enrichment, must be dismissed as against Pilates NYC because there is a valid lease governing the subject matter between the plaintiff and Pilates NYC. See Suverant LLC v Brainchild, Inc., supra. Additionally, the fifth cause of action must be dismissed as against all remaining defendants because the complaint contains no allegations of a "relationship between the parties that could have caused reliance or inducement" that is not "too attenuated." Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 517 (2012)."

A HEARING ON HARDSHIP DECLARATION

Russo v. Kiefer, 2021 NY Slip Op 21285 - NY: Newburgh Town Justice Court 2021:

"On October 7, 2021, a hearing was held in reference to this summary proceeding to determine the validity of the Declaration of COVID Hardship submitted by each respondent. Petitioner was represented by Oliver Budde, Esq. Respondents appeared pro se and each testified on his or her own behalf.

Each respondent testified at the hearing as follows:

RESPONDENT MELANIE KIEFER

Melanie Kiefer testified that neither she nor any member of her household suffered medically from COVID. In September, 2019 following the termination of her cleaning business that ended in August, 2019, she applied for Social Security disability caused by non-COVID illness and her lack of income was exacerbated by her providing care to her elderly grandparents.

Notwithstanding her testimony concerning diminished income, Ms. Kiefer admitted that she recently settled a medical malpractice lawsuit commenced in Ulster County Supreme Court and received the sum of $389,000.00, presently a liquid asset.

RESPONDENT DAVID KIEFER

David Kiefer testified that he is employed as a full-time electrician, works 40 hours per week and earns approximately $800.00 per week.

RESPONDENT WILLIAM WOLF

William Wolfe testified that he is a tree surgeon and, since 2020, as a result of the COVID shutdowns, his income came to a halt. Nothing was presented by him, either documentary evidence or otherwise, to support his conclusory claim that he had no income in and since 2020. Nor did respondent testify or show proof that he or his family applied for or received cash assistance, assistance from the supplemental nutrition assistance program, supplemental social security, income from New York State Disability, income from the home energy assistance program, income from unemployment insurance or benefits under State and Federal law or any other public or private funds. The court notes that on September 27, 2021, it sent a letter to all respondents advising them that the above-described income would be considered relevant evidence.

WILLIAM WOLF, JR.

William Wolfe Jr., testified that he worked for his father in the tree surgeon business and has had no work since 2020. Nothing was presented by him, either documentary evidence or otherwise, to support his conclusory claim that he had no income since March, 2020. Nor did respondent testify or show proof that he or his family applied for or received cash assistance, assistance from the supplemental nutrition assistance program, supplemental social security, income from New York State Disability, income from the home energy assistance program, income from unemployment insurance or benefits under State and Federal law or any other public or private funds. The court notes that on September 27, 2021, it sent a letter to all respondents advising them that the above-described income would be considered relevant evidence.

It should be noted that the health of each respondent was not affected by the COVID pandemic. Even if it was established that respondents, WOLF, may have suffered loss in income as an indirect result of COVID, it is undisputed that respondent, MELANIE A. KIEFER, received $389,000 as settlement of a lawsuit and has the financial ability to pay the rent due and/or the cost of moving. She also has the joint and severable obligation, as a joint tenant, to pay the entire rent due. Accordingly, no financial hardship has been shown by respondents' household as a result of COVID.

Based on the foregoing, the court finds that the COVID Hardship Declaration is invalid and, as such, the proceeding may proceed without further stay.

The matter is scheduled for trial to be held on November 4, 2021 at 11:00 A.M., or as soon thereafter as the matter may be heard."

ADVERSE POSSESSION AND A MOTION TO DISMISS

Halo v Schmidt, 2021 NY Slip Op 06609, Decided on November 24, 2021, Appellate Division, Second Department:

"The plaintiff and the defendant own adjacent parcels of real property in New City. In 2018, the plaintiff allegedly learned that his driveway encroached on the defendant's property and commenced the instant action, inter alia, in effect, for a judgment declaring that he owns the contested portion of the driveway by adverse possession. The defendant moved, among other things, pursuant to CPLR 3211(a)(7) to dismiss the complaint. By order entered May 24, 2019, the Supreme Court, inter alia, denied that branch of the defendant's motion. The defendant appeals.

"The sole consideration in determining a pre-answer motion to dismiss a declaratory judgment action is 'whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration'" (M.H. Mandelbaum Orthotic & Prosthetic Servs., Inc. v Werner, 126 AD3d 857, 858, quoting Minovici v Belkin BV, 109 AD3d 520, 524). Further, "where, as here, evidentiary material is submitted and considered on a motion pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and the motion should not be granted unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it" (Matter of Chet's Garage, Inc. v Village of Goshen, 161 AD3d 727, 731).

Here, the complaint alleged that the plaintiff's predecessor adversely possessed the subject property for more than 10 years prior to the commencement of this action, potentially implicating both the prior and current versions of RPAPL 522(1) (see Houdeck Real Estate Co., LLC v Bayport Postal Realty, LLC, 180 AD3d 761, 762; Hodges v Beattie, 68 AD3d 1597, 1598-1599). Accepting the facts alleged in the complaint as true and according the plaintiff the benefit of every possible inference (see Leon v Martinez, 84 NY2d 83, 87), even under the current version of the RPAPL, we cannot say as a matter of law that the plaintiff does not have a cause of action for adverse possession (see Maya's Black Cr., LLC v Angelo Balbo Realty Corp., 82 AD3d 1175, 1177). The evidentiary materials submitted by the defendant in support of his motion do not, as a matter of [*2]law, resolve the parties' factual disputes such that it can be said that the allegations in the complaint as to the cause of action for adverse possession are not facts at all (see Mazzei v Metropolitan Transp. Auth., 164 AD3d 1227, 1228)."

LITIGATION OVER FUNERAL AND BURIAL

First Presbyt. Church of Monroe v Vays, 2021 NY Slip Op 06606, Decided on November 24, 2021, Appellate Division, Second Department:

"The First Presbyterian Church of Monroe (hereinafter the Church) is a religious corporation that owns and operates the Seamanville Cemetery located in Monroe. In October 2014, in connection with the recent death of their son, Boris Vays and Praskovya Vays (hereinafter together the Vayses) were approached by Thomas Sullivan, who was employed by Smith, Seaman & Quackenbush, Inc. (hereinafter SSQI), as its funeral director. The Vayses hired SSQI to provide funeral arrangements and burial services. Among other expenses, the Vayses paid SSQI the sum of $3,600 to purchase three burial plots in the Church's cemetery. On October 31, 2014, the Vayses' son was buried. By deed dated November 2, 2014, the Church conveyed the burial plots to Boris Vays. The deed provided that the conveyance was "for human burial purposes only; subject to each and every rule and regulation in respect to the use of said cemetery which has been, or which may hereafter be, made by the Board of Trustees of said corporation and posted in its office, to which rules and regulations the grantee assents as though made part hereof, as covenants running with the land."

In 2016, the Church commenced this action against the Vayses, inter alia, to recover damages for breach of the foregoing covenant in the deed, alleging, among other things, that the Vayses violated its rules and regulations for the use of the cemetery by erecting a monument that exceeded its prescribed height limitation, and by placing artificial adornments, plants, and brick edging on or around the plots. The Church also sought a judgment declaraing that the covenants had been so breached and injunctive relief related thereto.

The Vayses asserted various counterclaims and thereafter commenced a third-party action against SSQI and Sullivan (hereinafter together the third-party defendants), seeking, in the first third-party cause of action, damages for breach of contract relating to a casket they purchased, and in the fourth third-party cause of action, damages for violations of General Business Law § 349.

Prior to discovery, the Church moved for summary judgment on the complaint and separately moved for summary judgment dismissing the Vayses' counterclaims. The third-party defendants moved pursuant to CPLR 3211(a)(7) to dismiss the third-party complaint. In an order and interlocutory judgment dated March 21, 2018, the Supreme Court, inter alia, granted those branches of the Church's motion which were for summary judgment on the first and second causes of action; granted, in part, that branch of the Church's motion which was for summary judgment on the third cause of action; declared that the covenants had been violated and that the Church had the right to remove the monument, adornments, certain plants, and a portion of the brick edging; and granted related injunctive relief. In an order dated March 21, 2018, the court, among other things, granted those branches of the Church's motion which were for summary judgment dismissing the Vayses' first through seventh and tenth counterclaims, and granted, in part, those branches of the Church's motion which were for summary judgment dismissing the Vayses' eighth and eleventh counterclaims. In a second order dated March 21, 2018, the court, inter alia, granted those branches of the third-party defendants' motion which were pursuant to CPLR 3211(a)(7) to dismiss the first and fourth third-party causes of action. The Vayses appeal from all three papers.

The Supreme Court erred in granting those branches of the Church's motion which were for summary judgment on the first and second causes of action, granting, in part, that branch of the Church's motion which was for summary judgment on the third cause of action, granting those branches of the Church's separate motion which were for summary judgment dismissing the first through seventh and tenth counterclaims, and granting, in part, those branches of the Church's separate motion which were for summary judgment dismissing the eight and eleventh counterclaims. At this pre-discovery stage of the action, triable issues of fact remained, including as to whether the Vayses' installations on the burial plots violated rules and regulations of the Church to which the Vayses were subject, whether the Church waived any such violation of the rules with respect to the [*2]monument by pre-approving the Vayses' monument design, and whether Sullivan was either an actual or apparent agent of the Church. "The court's function on a motion for summary judgment is 'to determine whether material factual issues exist, not to resolve such issues'" (Ruiz v Griffin, 71 AD3d 1112, 1115, quoting Lopez v Beltre, 59 AD3d 683, 685).

The Supreme Court also erred in granting those branches of the third-party defendants' motion which were pursuant to CPLR 3211(a)(7) to dismiss the first and fourth third-party causes of action. Those third-party causes of action alleged that the Vayses paid $14,025 for a particular casket, but that their son was buried in a different casket, valued at only $3,000. In support of the motion to dismiss, Sullivan averred in an affidavit that the Vayses' son was interred in the casket chosen by the Vayses. This averment did not show that "a material fact as claimed by the pleader to be one is not a fact at all" or otherwise conclusively demonstrate that the Vayses had no cause of action (Francisco v Kiara Foods, Inc., 197 AD3d 563, 564 [internal quotation marks omitted]; see Sokol v Leader, 74 AD3d 1180, 1181-1182). Accordingly, those branches of the third-party defendants' motion which were pursuant to CPLR 3211(a)(7) to dismiss the first and fourth third-party causes of action should have been denied."

NEW YORK WHISTLEBLOWER PROTECTION EXPANDING

On October 28, 2021, New York Governor Kathy Hochul signed this legislation enhancing the protections available to individuals who claim retaliation for reporting alleged employer wrongdoing: (S.4394A/A.5144A) amending NY Labor Law Section 740 (Section 740), which prohibits retaliation by employers against whistleblowers. It is effective 90 days after the Governor’s signature.

As per the Senate bill:

"SUMMARY OF PROVISIONS:

Section 1 of this bill amends the definition of "employee" to include
former employees and independent contractors; clarifies that the defi-
nition of "law, rule, or regulation" has included executive orders as
well as judicial or administrative decisions; clarifies the definition
of a "public body;" expands the definition of a retaliatory action to
include actions or threats to take actions that would adversely impact a
former employee's current or future employment and contacting or threats
to contact immigration authorities; provides protection to employees
whether or not they were acting within the scope of their job duties;
provides protection for employees who disclose or threaten to disclose
to a supervisor or to a public body an activity, policy or practice of
the employer that the employee reasonably believes is in violation of

law, rule or regulation or that the employee reasonably believes poses a
substantial and specific danger to the public health or safety; provides
exceptions for which employer notification is not required; extends the
statute of limitations to two years; provides the right of parties to a
jury trial; permits courts to order the relief of front pay, a civil
penalty, and the payment of punitive damages; and requires employers to
publish a notification of rights under section 740 of the Labor Law.

Section 2 of this bill requires health care employers to publish a
notification of rights under section 741 of the Labor Law and makes a
technical amendment.

Section 3 of this bill is the effective date.

 
JUSTIFICATION:

Labor Law Section 740, the state "whistleblower" law protecting private
employees, has long been restrictive. Current law provides that an
employee is only protected if they disclose to a supervisor or public
body an unlawful activity, policy, or practice of the employer that
creates and presents a substantial danger to the public health or safe-
ty, or that which constitutes health care fraud. Thus, an employee
reporting any myriad of illegal activities that do not directly affect
public health or safety, from sexual harassment to tax evasion, may be
at risk for being retaliated against by their employer with no
protection in law.

In addition, courts have held that for private employees, Labor Law 740
requires proof of an actual violation of law in order to sustain a cause
of action.

The above restrictions creates a discrepancy with how private employees
are treated in comparison to public employees, since Civil Service Law
75-b protects disclosure of "improper governmental actions" - or an
action in violation of any federal, state, local law, rule, or regu-
lation - where there is a reasonable belief of such action. Such
protections for public employees have been in place since 1986.
This bill corrects the above discrepancies by providing employees
protection for "blowing the whistle" on an activity, policy or practice
of the employer that the employee reasonably believes is in violation of
law, rule or regulation or that the employee reasonably believes poses a
substantial and specific danger to the public health or safety.

This bill further protects former employees, as an employer can continue
to retaliate against a whistleblower by harming them in their current or
future employment prospects, such as by attempting to blacklist someone
from the industry.

This bill also makes unlawful retaliation causes of action available to
independent contractors. The importance of this aspect of the bill has
been highlighted by workplace health and safety concerns during the
COVID-19 pandemic as well as the ongoing misclassification of employees
as independent contractors. This bill would ensure that these workers
have the ability to bring an action alleging wrongful retaliation as a
result of their whistleblowing activities.

The bill also permits the recovery of punitive damages if the employer
was found to violate the anti-retaliation law in a "malicious or wanton"
manner. This is consistent with existing law, which permits a court to
award punitive damages for only the most egregious types of conduct.

However, where such conduct occurs in the employment setting, there is
no reason not to afford victims with the same relief which is afforded
to the victims of such conduct in non-employment settings."

MEDIATION & ARBITRATION

 

BE THANKFUL THIS HOLIDAY - IT'S THE LAW

 

THE EFFECT OF A FAILURE TO RECORD A SATISFACTION OF MORTGAGE AND SEEKING CLASS ACTION RELIEF

New York State Real Property Actions and Proceedings Law (“RPAPL”) § 1921 and New York Real Property Law (“RPL”) § 275. RPAPL § 1921 and RPL § 275 both require a mortgagee to execute a satisfaction of mortgage and arrange to have the satisfaction recorded within 30 days. Failure of the mortgagee to do so entitles the borrower to a penalty based on when the satisfaction was recorded.

The penalty was sought to be enforced in a class action. Maddox v. BANK OF NY MELLON TR. CO., NA, Court of Appeals, 2nd Circuit 2021:

"The Bank of New York Mellon Trust Company ("BNY Mellon" or "the Bank") appeals from an order of the United States District Court for the Western District of New York (Arcara, J.) denying its motion for judgment on the pleadings. The district court held that plaintiffs Sandra Maddox and Tometta Maddox Holley (the "Maddoxes") have Article III standing to seek statutory damages from the Bank for its violation of New York's mortgage-satisfaction-recording statutes (the "statutes"). N.Y. Real P. Law ("R.P.L.") § 275; N.Y. Real P. Actions & Proc. L. ("R.P.A.P.L.") § 1921. These statutes require mortgage lenders to record satisfactions of mortgage (also known as "certificates of discharge") within thirty days of the borrower's repayment; a failure to record renders the lender "liable to the mortgagor" for escalating statutory damages in amounts dependent on the delay in the ultimate filing. Here, the Bank did not record the satisfaction of the Maddoxes' mortgage, in an amount of over $50,000, until almost one year after full payment was received—nearly eleven months later than the law allows. For the filing of a satisfaction over ninety days after discharge, the lender becomes liable to the mortgagor for $1,500. R.P.L. § 275(1); R.P.A.P.L. § 1921(1). The Maddoxes sued to collect that penalty and to represent a putative class of similarly wronged borrowers.

The district court certified for interlocutory appeal the question whether the Maddoxes have Article III standing to sue the Bank for the statutory damages and other relief. Our initial opinion on this appeal, Maddox v. Bank of N.Y. Mellon Tr. Co., N.A., 997 F.3d 436 (2d Cir. 2021), was the subject of a motion for rehearing in light of the intervening authority of TransUnion LLC v. Ramirez, — U.S. —, 141 S. Ct. 2190 (2021). After briefing on the impact of TransUnion, we grant the motion for rehearing and issue the instant opinion.

We now hold that the Maddoxes' allegations fail to support Article III standing, and that they may not pursue their claims for the statutory penalties imposed by the New York Legislature in federal court.

Accordingly, we vacate the district court's order denying BNY Mellon's motion for judgment on the pleadings and remand with instructions that the case be dismissed.

BACKGROUND

I. The complaint's allegations.

The Maddoxes' complaint alleges the following facts, which we accept as true for purposes of this appeal. See Lynch v. City of New York, 952 F.3d 67, 74-75 (2d Cir. 2020).

On October 6, 2000, sisters Sandra Maddox and Tometta Maddox Holley entered into a mortgage loan with Aegis Mortgage Corporation (the "Loan"). The mortgage and assignment were recorded with the Erie County Clerk's Office. The mortgage encumbered the Maddoxes' property at 149 Hampshire Street, Buffalo, New York 14213 (the "Property"). The Loan was later assigned to BNY Mellon. In September 2014, the Maddoxes sold the Property to individuals who are not parties to this suit.

On or about October 5, 2014, the Loan was fully paid and the debt discharged. However, BNY Mellon failed to file a satisfaction of mortgage with the Erie County Clerk's Office until nearly one year later on September 22, 2015.

BNY Mellon's failure to record the discharge within thirty days of payment violated New York's mortgage-satisfaction-recording statutes, which require that the mortgage lender present a certificate of discharge to the county clerk for filing within thirty days of the full repayment of the debt. See R.P.L. § 275(1) (requiring timely presentation of certificate and imposing monetary penalties for noncompliance); R.P.A.P.L. § 1921(1) (same).

II. Procedural history.

On December 15, 2015, approximately three months after BNY Mellon had recorded the satisfaction, the Maddoxes brought a class action suit against BNY Mellon for violation of New York's mortgage-satisfaction-recording statutes.

In late 2016, after the Supreme Court issued its decision Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), BNY Mellon moved to dismiss on the pleadings for lack of standing. It argued—among other things—that the Maddoxes lack Article III standing because they "suffered no actual damages in relation to the alleged failure to record the satisfaction" and therefore "failed to plead a concrete harm" under Spokeo. Maddox v. Bank of N.Y. Mellon Tr. Co., No. 15-cv-01053, 2017 WL 449962, at *2 (W.D.N.Y. Jan. 30, 2017) (Report and Recommendation ("R&R")) (quoting Bank's Memorandum). The Bank did not dispute that the discharge was untimely filed.^[1]

The Maddoxes countered that the Bank's eleven months of noncompliance impaired access to accurate financial information about them in the interval and created a false impression adverse to their credit status. The Maddoxes argued that the right to be free of these harms was recognized by the state legislature, that the harms bear a strong relationship to harms traditionally actionable at common law, and that the violations caused substantive harms and otherwise created concrete injuries that endow them with standing to seek remedies in federal court. The Maddoxes further argued that the Bank's period of noncompliance subjected them to a sufficiently real risk of other concrete and particularized harms—failure to obtain financing for other properties and damage to personal credit, for example—and that those risks also gave rise to an injury in fact supporting their Article III standing to sue. Finally, in conjunction with their opposition to the Bank's motion, the Maddoxes submitted an affidavit made by Tometta Maddox Holley attesting to her loss of time, her legal expenses, and her emotional trauma occasioned by the belated filing, which she learned about some time before the satisfaction was finally filed. Her attestations were not alleged in the complaint.

A magistrate judge issued a Report and Recommendation suggesting that the district court deny the motion to dismiss. R&R, 2017 WL 449962, at *4. The district court accepted the recommendation and denied BNY Mellon's motion for judgment on the pleadings. Maddox v. Bank of N.Y. Mellon Tr. Co., No. 15-cv-01053, 2018 WL 3544943, at *2 (W.D.N.Y. July 24, 2018). It held that the Bank's violation was a "procedural violation" that satisfied the injury-in-fact requirement for Article III standing because the Bank's violation of the statutes created a "material risk of harm" to them. Id. (internal quotation marks omitted). The district court reasoned that failure to timely record a mortgage satisfaction could cloud title to real property, inhibit sale of the property, and affect a mortgagor's credit.

At the same time, the district court took note of the Eleventh Circuit's contrary decision in Nicklaw v. Citimortgage, Inc., 839 F.3d 998 (11th Cir. 2016), reh'g en banc denied, 855 F.3d 1265 (2017), and a footnote in our decision in Strubel v. Comenity Bank, 842 F.3d 181, 194 n.15 (2d Cir. 2016), which cites Nicklaw with apparent approval. It accordingly identified the question as a close one and on that basis certified the question for interlocutory appeal. We accepted the certification and addressed that question, which has indeed proved close.

As a threshold issue, we decided that a state legislature, like Congress, has the power to create legal interests whose violation can satisfy Article III standing. See Maddox, 997 F.3d at 443-44 (2d Cir. 2021). We then affirmed the district court's holding on alternative grounds. First, we held that the statutes are "substantive" provisions and that therefore "the Maddoxes need allege no harm greater than that their discharge was untimely recorded . . . to establish a concrete, intangible injury of the sort that gives them Article III standing." Id. at 447. Second, we held that even if the statutes were "procedural" in nature, the Maddoxes still would have established an injury in fact, since the Bank's violation of the statutes exposed them to a "material risk of [concrete] harm," including the risk of not being able to borrow during the period of delay. Id. at 447-48 (alteration in original) (quoting Spokeo, 578 U.S. at 342).

After our initial disposition, BNY Mellon filed a petition for panel rehearing or rehearing en banc (the "Petition"), and the United States Supreme Court decided TransUnion LLC v. Ramirez, ___ U.S. ___, 141 S. Ct. 2190 (2021), which expanded upon the standing principles raised by this case. The parties submitted supplemental letter briefs discussing the impact, if any, of TransUnion on our previous decision. Because TransUnion bears directly on our analysis, we hereby grant the Petition, withdraw our opinion of May 10, 2021, and issue this amended opinion in its place. Additional oral argument is unnecessary.

DISCUSSION

We review a district court's decision regarding judgment on the pleadings de novo. See Lanning v. City of Glens Falls, 908 F.3d 19, 24 (2d Cir. 2018).

Article III standing requires plaintiffs to show (1) an "injury in fact," (2) a "causal connection" between that injury and the conduct at issue, and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks omitted). The central question on appeal is whether the Maddoxes have met the injury-in-fact requirement.

"To demonstrate injury in fact, a plaintiff must show the invasion of a [1] legally protected interest that is [2] concrete and [3] particularized and [4] actual or imminent, not conjectural or hypothetical." Strubel, 842 F.3d at 188 (internal quotation marks omitted). BNY Mellon argues that, although the New York State Legislature may have implicitly recognized that delayed recording can create harms such as a cloud on title and an adverse affect on a mortgagor's credit, the Maddoxes have not alleged, and cannot allege, that they suffered these harms. Therefore, BNY Mellon asks us to conclude that the Maddoxes have failed to show that the injury alleged was either "concrete" or "particularized" enough to amount to an injury in fact for purposes of Article III standing. The Maddoxes argue to the contrary, that where the Legislature has recognized a legal interest or interests and a plaintiff has suffered a harm or risk of real harm to those interests, Article III is satisfied. According to the Maddoxes, the harms that the Legislature aimed to preclude need not have come to fruition for a plaintiff to have suffered a material risk of real harm sufficient to seek the statutory remedy afforded by the Legislature. We discuss these arguments below.

I. Plaintiffs must suffer a concrete harm to establish standing.

"No concrete harm; no standing." TransUnion, 141 S. Ct. at 2200. This equation, which opens the Supreme Court's TransUnion decision, leaves little room for interpretation and may be sufficient to resolve the issue before us. Still, the facts in TransUnion bear a strong enough resemblance to those in this case that the Supreme Court's treatment of them proves highly instructive.

A class of 8,185 individuals sued TransUnion, a credit reporting agency, alleging two violations of the Fair Credit Reporting Act ("FCRA"). Id. First, the plaintiffs alleged that TransUnion's failure to use reasonable procedures led to an inaccuracy in their credit files—namely, that the class member was a "potential match" to an individual on a Treasury Department list of national security threats (the "OFAC list"). Id. 2202. Second, the plaintiffs claimed that TransUnion failed to adhere to FCRA formatting requirements in the mailings used to inform members about the potential match. Id. The class succeeded at trial, but standing became the primary issue on appeal. Id.

Before addressing the specific allegations, the Supreme Court considered the characteristics that make a harm "concrete" for the purposes of Article III. Id. at 2204. The Court explained that whether a harm qualifies as "concrete" hinges on "whether the alleged injury to the plaintiff has a `close relationship' to a harm `traditionally' recognized as providing a basis for a lawsuit in American courts." Id. (quoting Spokeo, 578 U.S. at 341). The Court recognized that physical and monetary harms, along with other traditional tangible harms, readily qualify as concrete, and that certain intangible harms, such as reputational harm, qualify as well. Id. The Court also allowed that Congress's views may be "instructive" in determining whether a harm is sufficiently concrete, id. (quoting Spokeo, 578 U.S. at 341), although "an injury in law is not an injury in fact," id. at 2205.

With that, the Supreme Court turned to the plaintiffs' claim that TransUnion's failure to use reasonable procedures led to inaccuracy in their credit files. The Court divided the class into two groups: those members whose credit reports were disseminated to third-party businesses; and those whose credit reports never left TransUnion's internal files. Id. at 2200. The Court ruled that the first group "suffered a harm with a `close relationship' to the harm associated with the tort of defamation," and, therefore, "suffered a concrete harm that qualifies as an injury in fact." Id. at 2209. The second group, however, suffered no concrete harm because "[p]ublication is `essential to liability' in a suit for defamation," and their credit files were never published. Id. (quoting Restatement of Torts § 577 cmt. a, p. 192 (1938)). As the Court explained, "there is no historical or common-law analog where the mere existence of inaccurate information, absent dissemination, amounts to concrete injury." Id. (internal quotation marks omitted).

The Court further concluded that these class members could not premise standing on a risk of future harm—that is, the risk that TransUnion would eventually disseminate the misleading information to third-party businesses. While Spokeo stated that "the risk of real harm" can sometimes "satisfy the requirement of concreteness," id. at 2210 (quoting Spokeo, 578 U.S. at 341-42), that observation (the Court explained) applied only to "suit[s] for injunctive relief," id. In suits for damages, "the mere risk of future harm, standing alone, cannot qualify as a concrete harm—at least unless the exposure to the risk of future harm itself causes a separate concrete harm." Id. at 2210-11. Because these class members presented no evidence "that they suffered some other injury (such as an emotional injury) from the mere risk that their credit reports would be provided to third-party businesses," they were unable to establish standing. Id. at 2211.

Regarding the claim that TransUnion failed to adhere to FCRA formatting requirements, the Supreme Court held that the class members (other than the named plaintiff) had failed to demonstrate that they suffered any concrete harm—or "any harm at all"—from such violations, as they presented no evidence that they "so much as opened" the relevant mailings. Id. at 2213. Plaintiffs' distinct argument that TransUnion's formatting violations created a risk of future harm—i.e., the risk that consumers would not learn of, and remedy, the OFAC report in their credit files—failed because "the risk of future harm on its own does not support Article III standing for the plaintiffs' damages claim." Id.

In sum, TransUnion established that in suits for damages plaintiffs cannot establish Article III standing by relying entirely on a statutory violation or risk of future harm: "No concrete harm; no standing." Id. at 2214.

II. The Maddoxes have not suffered a "concrete" harm.

The only allegations that matter are few: the Maddoxes paid off their mortgage when they sold their house; the bank filed the mortgage satisfaction nearly one year afterward. By statute, New York creates a private right to collect an escalating cash penalty if the satisfaction is filed more than thirty days after the mortgage is paid off, up to $1,500 for delay exceeding ninety days.

We need not decide whether state legislatures have the same power Congress enjoys to recognize or create legally protectible interests whose invasion gives rise to Article III standing; TransUnion determined that Congress itself enjoys no such power. 141 S. Ct. at 2205 ("Congress may enact legal prohibitions and obligations. . . . But under Article III, an injury in law is not an injury in fact."). Nor need we decide whether the statutes are "substantive" or "procedural"; TransUnion eliminated the significance of such classifications, which had been a preoccupation.^[2] On this appeal, the determinative standing issue is whether the Maddoxes suffered a concrete harm due to the Bank's violation. It is clear that they have not.

First: for the ordinary borrower, delayed recording of a discharge of mortgage may create and sustain an actionable cloud on title to the property securing the discharged mortgage debt. Long-delayed filings can result in the borrower having to pay a duplicative filing fee for the discharge: once at closing and once when the discharge is actually filed. The Maddoxes did not allege such harms, however, or allege that they were at risk for such harms. This is unsurprising because conveyance of their property was completed several weeks before the mortgage satisfaction occurred. In short, the Maddoxes had no title on which a cloud could settle.^[3]

Second: a mortgage recorded with the county clerk may convey to those viewing the record that the borrower owes a debt secured by a property. Correspondingly, a lender's delay in recording a mortgage satisfaction risks creating the false appearance that the borrower has not paid the underlying debt and is thus more indebted and less creditworthy. This type of reputational harm—i.e., one that flows from the publication of false information—is well established as actionable at common law. See Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 61-62 (2d Cir. 1993) (discussing elements to establish prima facie claim of slander); see also Spokeo, 578 U.S. at 341-42 (noting libel and slander per se as being actionable).

However, the Maddoxes do not allege that they suffered any reputational harm due to the Bank's violation. The misleading record may have been public and available to all; but, so far as is known, it was read by no one. The public nature of the record is not analogous to the dissemination of the credit reports in TransUnion. There could be no doubt that the third-party businesses viewed those credit reports, which they had specifically requested and paid for.

This distinction from TransUnion is critical, as it is self-evident that "unless the defamatory matter is communicated to a third person there has been no loss of reputation." Restatement of Torts § 577 cmt. b; see also Albert v. Loksen, 239 F.3d 256, 269 (2d Cir. 2001) ("A defamatory writing is not published if it is read by no one but the one defamed.'" (quoting Ostrowe v. Lee, 256 N.Y. 36, 38 (1931) (Cardozo, C.J.))). True, the Maddoxes may have suffered a nebulous risk of future harm during the period of delayed recordation—i.e., a risk that someone (a creditor, in all likelihood) might access the record and act upon it—but that risk, which was not alleged to have materialized, cannot not form the basis of Article III standing.

Third: the Maddoxes contend that the Bank's delay adversely affected their credit during that time, making it difficult to obtain financing had they needed it in an emergency or for a new home. But it is not alleged that this purported risk materialized; so it is similarly incapable of giving rise to Article III standing.

Fourth: Tometta Maddox Holley attested (in her affidavit opposing BNY Mellon's motion for judgment on the pleadings) that the Bank's failure to timely record the satisfaction after she sold the Property caused her "great stress, mental anguish, anxiety, and distress, which compelled [her] to expend substantial time attempting to determine the status of the recording of the satisfaction of mortgage document, and seeking out legal counsel to assist [her] in having the satisfaction of mortgage recorded." App'x at 88 ¶ 8. These purported harms are of the sort that TransUnion contemplated might form the basis for Article III standing. See TransUnion, 141 S. Ct. at 2211 n.7 ("[A] plaintiff's knowledge that he or she is exposed to a risk of future physical, monetary, or reputational harm could cause its own current emotional or psychological harm."); see also Denney v. Deutsche Bank AG, 443 F.3d 253, 265 (2d Cir. 2006) ("The risk of future harm may also entail economic costs . . . but aesthetic, emotional or psychological harms also suffice for standing purposes.").

However, the Maddoxes must "plead enough facts to make it plausible that they did indeed suffer the sort of injury that would entitle them to relief." Harry v. Total Gas & Power N. Am., Inc., 889 F.3d 104, 110 (2d Cir. 2018). Although "[i]t is well established in principle that the pleading standard for constitutional standing is lower than the standard for a substantive cause of action," id., the attestations in Tometta Maddox Holley's affidavit were not the subject of allegations in the complaint and, in any event, are implausible.

Holley demands opportunity costs because she "expend[ed] substantial time attempting to determine the status of the recording of the satisfaction of mortgage document." App'x at 88 ¶ 8. But if she had, she would have found out that the satisfaction was recorded three months before the filing of a complaint that nevertheless alleges that the satisfaction was unrecorded at the time this litigation began. As to her emotional distress, she offers no reason why the delayed recordation would cause "great stress, mental anguish, anxiety, and distress." Id. A perfunctory allegation of emotional distress, especially one wholly incommensurate with the stimulant, is insufficient to plausibly allege constitutional standing. Even if it were sufficient, "it is extremely unlikely that such an allegation would be typical of the class." R&R, 2017 WL 449962, at *3 n.5.

In any event, the Maddoxes need not show a cloud, reputational harm, or any other injury. The Maddoxes have an easy way to collect their reward for reporting the Bank's delay in recording the mortgage satisfaction: they may recover the statutory penalty in state court.^[4] This is a small claim, in a fixed amount, amenable to a recovery without dispute—and probably without counsel or fees. It is hard to imagine that a bank would press the issue to litigation.

Of course, state court remains an option for all absent class members as well. To the extent that such members (or their lawyers) prefer to form a class and bring their claims in federal court, they must come prepared to prove that they suffered concrete harm due to the Bank's violation of the relevant statutes.

CONCLUSION

For the foregoing reasons, we vacate the district court's order denying BNY Mellon's motion for judgment on the pleadings and remand with instructions that the case be dismissed.

[1] It did argue, however, that it was associated with the Maddoxes' mortgage only as a trustee and therefore had no liability. The district court rejected that argument, and the issue is not part of the question certified for interlocutory appeal. See Maddox v. Bank of N.Y. Mellon Tr. Co., No. 15-cv-01053, 2018 WL 3544943, at *5 (W.D.N.Y. July 24, 2018).

[2] Our original opinion observed that a statutory right is considered "substantive" if it protects against a harm that has a close relationship to a harm traditionally regarded as providing a basis for a lawsuit in American courts. The violation of a substantive right, the opinion explained, constitutes a concrete injury in fact sufficient to establish Article III standing without any additional showing. TransUnion clarified, however, that the type of harm that a statute protects against is of little (or no) import; what matters is "whether the alleged injury to the plaintiff has a `close relationship' to a harm `traditionally' recognized as providing a basis for a lawsuit in American courts." 141 S. Ct. at 2204 (emphasis added) (quoting Spokeo, 578 U.S. at 341). In other words, plaintiffs must show that the statutory violation caused them a concrete harm, regardless of whether the statutory rights violated were substantive or procedural.

[3] True, it may be said that during the period of BNY Mellon's delayed recordation the two nonparty homebuyers ran a risk that if they had flipped the Property the title insurer would flag a vestigial lien. But the Maddoxes, who had already sold the Property, did not suffer a detriment and never ran the risk of one.

[4] "[S]tate courts are not bound to adhere to federal standing requirements. . . ." ASARCO Inc. v. Kadish, 490 U.S. 605, 617 (1989)."