SPCA of Upstate N.Y., Inc. v. American Working Collie Assn. (Motion for leave granted on Dec. 16, 2010) 74 A.D.3d 1464 (3d Dep’t 2010)

 This appeal addresses the almost entirely subjective issue of long-arm jurisdiction in a defamation action.  New York courts construe long-arm category “transacts any business within the state” under CPLR 302(a)(1) more narrowly in defamation cases than they do in other sorts of litigation.

 The defendant published writings on the American Working Collie Association’s web site about her observations about certain rescued dogs housed at the plaintiff SPCA of Upstate New York, Inc in Queensbury, New York.  The SPCA and its executive director commenced an action against the AWCA claiming that they were defamed by the writings on the AWCA web site.  The defendant executive director is a Vermont resident and president of the AWCA, which is an Ohio not-for-profit corporation.  The president contacted the SPCA’s executive director by telephone on three occasions regarding assistance she offered to SPCA.  The AWCA president visited the SPCA on two occasions within a month; the visits amounted to approximate three-and-a-half hours in total.

 The Third Department observed that whether the long-arm statute applied was a close call.  The Court analyzed the purpose of the defendant president’s contacts with the SPCA in New York, not that there was no evidence that any of those contacts garnered funds, yield members or generated publicity for AWCA.  The Court also noted that the alleged defamatory comments were not made in New York and were placed on a Web site for AWCA members (located throughout the country) with no effort to direct the comments toward a New York audience.

 Notably, the Court recognized that the contact could support long-arm jurisdiction for causes of action other than defamation.  Because the Court framed the contacts as “help[ing] with a difficult situation that had developed suddenly regarding a large number of mistreated dogs,” the Court refused to assert long-arm jurisdiction over the defendants under the “transacts any business within the state” prong.

 The Court of Appeals will wrestle with just how narrow it will construe contacts within a defamation context.  The Court of Appeals’ decision no doubt will still leave litigants guessing whether contacts in future cases are too much or too little to assert jurisdicition.

Halstead v. Brokaw (Motion for leave to appeal granted on Dec. 10, 2010) 74 A.D.3d 1283 (2010)

The appeal concerns one of three related actions to recover damages for defamation.  The novel issue appears to concern a court’s determination of whether a statement is one of opinion or of fact.  The Court of Appeals will likely re-examine its holding in Gross v. New York Times Co., 82 N.Y.2d 146 (1993), which set forth the following relevant factors for a court to determine whether a statement is an opinion or of fact: “(1) whether the specific language in issue has a precise meaning which is readily understood; (2) whether the statements are capable of being proven true or false; and (3) whether either the full context of the communication in which the statement appears or the broader social context and surrounding circumstances are such as to 'signal . . . readers or listeners that what is being read or heard is likely to be opinion, not fact.' " (Id. [quoting Steinhilber v. Alphonse, 68 N.Y.2d 283, 292 [1986]).

 A unanimous panel at the Second Department granted the defendants’ motion for summary judgment dismissing the second action.  The Court held that the plaintiff in action No. 2 failed to raise a triable issue of fact.

Travis v. Batchi (Motion for leave to appeal granted on February 10, 2011) 75 A.D.3d 411 (1st Dep’t 2010)

 This appeal from the First Department addresses the same issue of contemporaneous findings. The Court noted that the examination records of the plaintiff’s own treating physician/expert fatally hindered the plaintiff’s opposition to summary judgment on a “serious injury” threshold motion. The physician submitted in opposition to the summary judgment motion that provided that the plaintiff sustained a permanent injury to the knee as a result of the accident. He prepared this affirmation a few years after the accident. However, his examination records from a few weeks and a few months after the accident indicated that the plaintiff had full strength and range of motion in the knee. The plaintiff also had full strength and range of motion in the knee after a right knee anterior cruciate ligament reconstruction, partial medial and lateral meniscectomy and chondroplasty.

 The Court reasoned that, absent some explanation from the physician, his negative findings cannot be reconciled with the physician’s affirmation submitted in opposition to the motion, prepared a few years after the accident, that the plaintiff sustained a permanent injury to the knee as a result of the accident.

 This appeal appears to differ from Adler v. Bayer because, here, the plaintiff’s physician indicated in the medical records that the plaintiff had full range of motion weeks and months after the accident.  

 Adler v. Bayer (Motion for leave to appeal granted on Jan 18, 2011) 2010 N.Y. Slip Op. 07300 (Oct. 12, 2010)

The Second Department has developed a line of analysis regarding demonstrating a prima facie case of “serious injury” pursuant to Insurance Law § 5102(d) and the Court of Appeals’ decision in Toure v. Avis Rent A Car Sys., Inc.

The line of case law requires that a plaintiff demonstrate limitations of range of motion contemporaneous with the subject motor-vehicle accident.

 The plaintiff in Adler challenges this line of reasoning. The plaintiff in Adler was injured in a motor-vehicle accident when the vehicle in which he was a passenger went off the road and struck a tree. He sustained injuries to his back, needs, eyes, and head. The plaintiff’s treating physician – a physical medicine and rehabilitation physician – verified the plaintiff’s injuries to his right shoulder, right wrist, both knees, right ankle, and cervical and lumbar spine through different tests. However, he did not record the plaintiff’s range of motion limitations because he opined that doing so would be “unreliable”.  In several follow-up examinations, the plaintiff’s treating physician determined that the plaintiff’s examinations were no better and, therefore, he could not record range of motion limitations. Approximately four years after the accident, the plaintiff’s treating physician quantified the plaintiff’s range of motion limitations.  At trial, the treating physician opined, within a reasonable degree of medical certainty, that the plaintiff’s injuries constituted a “permanent partial disability and . . . had impairment in multiple joints and . . . has alterations on examination of different parts of his body.”

The Second Department reversed a judgment in favor of the plaintiff after a jury trial and granted the defendants’ motion for a directed verdict.  In a terse, unrevealing decision, the Court reasoned that “[t]he plaintiff was required to show the duration of the alleged injury and the extent or degree of the limitations associated therewith . . ., which he failed to do.”  By citing Ferraro v. Ridge Car Serv., the Court’s reasoning appears to based on the plaintiff’s failure to provide contemporaneous findings of range-of-motion limitations in his spine.

 The novel question presented is whether Section 5102 and the Court of Appeals’ case law interpreting the “serious injury” threshold require such a showing.  The plaintiff argued in his motion for leave to appeal that such a showing punishes a plaintiff for first concentrating on treatment and not the litigation process.

 Notably, the Court of Appeals will likely hear this appeal with another appeal on the same issue – Perl v. Meher, 74 A.D.3d 930 (2d Dep’t 2010).  Also see Travis v. Batchi tomorrow.

Ovitz v. Bloomberg L.P. (Motion for leave granted on Feb. 17, 2011) 77 A.D.3d 515 (1st Dep’t 2011)

We are all familiar with those magazine subscription deals and the like where you sign up for a free trial period, and the magazine automatically renews your subscription if you don’t contact the company. The matter in Ovitz addresses a somewhat similar concept. General Obligations Law §§ 5-902 and 5-903 are statutes that place limitations on a lessor’s ability to automatically renew a contract for services. In Ovitz, the plaintiff and the defendants’ agreement contained an automatic renewal provision; the plaintiff was representative of a putative class action regarding the inoperability and unenforceability of the defendants’ failure to provide the requisite notice set forth in § 5-903 to the plaintiff that the two-year subscription term was to be automatically renewed.

At least one New York Court has recognized that § 5-903 is clearly designed to protect businessspeople from inadvertent renewal pursuant to automatic renewal clause by requiring timely and explicit notice of provision for renewal. The novel issue appears to be whether §§ 5-902 and 5-903 creates a private right of action. The First Department held that the language of the statutes and a legislative intent to create such a right of action is not fairly implied in the statutory provisions and their legislative history.

The Court of Appeals’ decision in this matter will impact businesses like those providing telephone services, real estate management services, and other service-oriented businesses.

Stuto v. Kerber (Motion for leave granted on Feb. 15, 2011) 77 A.D.3d 1233 (3d Dep’t 2010)

This appeal will not only offer an analysis of Business Corporation Law § 630, it will likely also provide practitioners with a good explanation of legislative history and the interpretation of statutes. In Stuto, the plaintiff worked for the defendant, which was a defunct closely-held foreign corporation incorporated in Delaware. The plaintiff obtained a judge in Supreme Court, Albany County against the defendant based on a claim for unpaid wages. Thereafter, the plaintiff commenced the action at hand against three of the 10 largest shareholders of the defendant corporation. Supreme Court granted the defendants’ motion to dismiss the plaintiff’s complaint, holding that Business Corporation Law § 630 did not apply to foreign corporations.

The Third Department upheld Supreme Court’s dismissal, observing that section 630 “is essentially the reenactment of former Stock Corporation Law § 71 and provides that ‘[t]he [10] largest shareholders’ of a nonpublicly traded company ‘shall jointly and severally be personally liable for all debts, wages or salaries due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation.” Notably, the Third Department pointed out that the former Stock Corporation Law § 71 did not apply to foreign corporations. As such, the Third Department noted that the legislative history of a particular enactment must be reviewed in light of the existing decision law which the Legislature is presumed to be familiar with and to the extent it left it unchanged, that it accepted.

The Court of Appeals will determine whether Business Corporation Law § 630 applies to foreign corporations.

Metropolitican Taxicab Bd. of Trade v. New York City Taxi & Limousine Comm. (Motion for leave granted on Dec. 14, 2010) 71 A.D.3d 508 (1st Dep’t 2010)

Although this appeal addresses the New York City Taxi & Limousine Commission’s authority to amend its rules, the resolution of the appeal might have a broader impact regarding amendments to administrative regulations and the interpretation of the promulgating statutes.  In this appeal, the TLC amended its rules to provide that the statutory cap imposed on the amount charged by taxicab fleet owners when leasing vehicles to taxi drivers.  The First Department noted that the TLC is vested with a broad grant of authority to promulgate and implement a regulatory program for the taxicab industry, including standards and conditions for service, safety, design, comfort, convenience, noise and air pollution control, and efficiency in the operation of vehicles.

The Court held that the TLC was authorized to amend its rules on the issue under the broad grant of authority promulgated to it.  The TLC amended its rules establishing the amount of vehicle lease caps by raising the lease amount for hybrid and fuel efficient vehicles and lowering the lease amount for non-fuel efficient vehicles.  The Court also concluded that the amendments are rationally related to the legitimate governmental goals of providing incentives for fleet owners to purchase fuel efficient vehicles that are designed to reduce harmful emissions, and to require fleet owners to bear some of the additional fuel costs associated with the operation of non-fuel efficient vehicles.

Matter of AAA Carting & Rubbish Removal, Inc. v. Town of Southeast (Motion for leave to appeal granted on Nov. 23, 2010) 74 A.D.3d 959 (2d Dep’t 2010)

This appeal impacts public entities and their ability to analyze and chose bids for contracts in excess of the sum of $10,000.  In this appeal, the Town Board of the Town of Southeast solicited bids for a refuse disposal contract.  Although petitioner AAA Carting’s bid was lower, the Town Board awarded the contract to Suburban Carting on the basis that Suburban Carting could offer superior service and therefore was the lowest responsible bidder.

General Municipal Law sec. 103(1) provides that, in awarding any contract in excess of the sum of $10,000, public entities must award the contract to “the lowest responsible bidder.”  The Second Department noted that the “lowest responsible bidder” is an “elastic” concept including “considerations of skill, judgment and integrity.”  Thus, financial considerations are not the only dispositive factor for public entities awarding contracts.  “[W]here good reason exists, the low bid may be be disapproved or, indeed, all the bids rejected.”  Unless a public entity’s decision is irrational, dishonest or otherwise unlawful, courts should not disturb the entity’s decision where it exercises its discretion to reject one or more bids.  The Second Department concluded that it could not say that the Town Board acted arbitrarily or capriciously in awarding the contract to Suburban Carting rather than AAA Carting.  Thus, it held that Supreme Court erred in substituting its judgment for that of the Town Board.

The Court of Appeals’ decision will likely guide public entities on what considerations they may rely upon beyond the financial aspect in awarding contracts in excess of the sum of $10,000. 

McCabe v. St. Paul Fire & Marine Ins. Co. (Motion for leave to appeal granted on May 3, 2011)

Has the Fourth Department determined that an insurer regarding a “claims made” insurance policy need not receive a report of a claim during the policy period or extended reporting period, as long as there is a reasonable excuse for the late report outside of those time periods? The Fourth Department’s decision in McCabe raises that exact point.

In McCabe, the plaintiffs Amy and Thomas McCabe were the owners of a residence that was totally destroyed by fire on December 30, 2003. They retained attorney David E. Fretz to handle their fire loss claim under their homeowner’s policy. During the course of that representation, Fretz began to suffer from severe depression and thus became unable to handle his own and the plaintiffs’ business and legal affairs. As a consequence of Fretz’s neglect of their insurance claim, the plaintiffs lost their ability to recover on that claim.

The plaintiffs commenced a declaratory judgment action seeking a declaration that Fretz’s professional liability insurer, the defendant St. Paul Fire & Marine Ins., is obligated to indemnify Fretz in the underlying legal malpractice action the plaintiffs brought against Fretz. Fretz’s malpractice insurance policy was a “claims made” professional liability insurance policy that required that any claims must have been reported to the insurer within the policy period and the extended reporting period, which expired March 15, 2007.

The insurer first learned of the plaintiffs’ claim against Fretz on June 22, 2007, approximately three months after the extended reporting period for the “claims made” policy had expired. It disclaimed coverage for Fretz based on the untimely notification. The plaintiffs had obtained default against Fretz in the underlying action and, following an inquest, Supreme Court awarded the plaintiffs $226,000 in compensatory damages. The commenced the declaratory judgment action against the insurer in an attempt to recover the compensatory award they received in the underlying action.

 The Fourth Department concluded that the plaintiffs’ claim was not invalidated even though they failed to give notice to Fretz’s insurer during the policy period or extended reporting period; the Court noted that the plaintiffs gave the insurer notice of their claim against Fretz as soon as reasonably possible. The Court rejected the insurer’s contention that Insurance Law sections (a)(3) and (4) included exceptions for claims-made insurance policies. Those sections of the Insurance Law concern what is deemed notice and whether giving that notice as soon as reasonably possible suffices under insurance policy notice conditions. They generally apply to occurrence-based insurance policies, not claims made policies. 

The Court of Appeals will decide whether notifying an insurer as soon as reasonably possible within the context of a claims-made policy is sufficient. If the Court affirms the Fourth Department’s holding, insurers of claims made policies will not have the same closure that they once had once the reporting period and extended reporting periods expired.

Clarke v. Rodriguez (Motion for leave to appeal granted on Nov. 23, 2010)

73 A.D.3d 677 (2d Dep’t 2010)

 Trial attorneys will want to follow this appeal concerning a point of a little-discussed exception to the best evidence rule.  The appeal concerns the admission of secondary evidence.  A proponent of an written instrument who is unable to produce the paper because it is under the control of the opponent may produce secondary evidence of what is contained in the original instrument.

 The defendant appealed a Supreme Court judgment that, after a nonjury trial, was in favor of the plaintiff and against him directing specific performance for the sale of real property.  Supreme Court allowed the plaintiff to submit secondary evidence of the contents of the original contract of sale.  The Second Department concluded that the plaintiff sufficiently explained the unavailability of the primary evidence -- i.e., the contract of sale for the real property.  The plaintiff established that the defendant’s former attorney, who did not testify at the trial, possessed the original contract of sale.

 The Court will revisit its holding in Schozer v. William Penn Life Ins. Co. of N.Y., 84 N.Y.2d 639 (1994).