New York Law Review

Tag: 2009

  • In re Central Mutual Insurance Co. (Bemiss), 12 N.Y.3d 650 (2009): Interpreting Consent-to-Settle Provisions in SUM Endorsements

    12 N.Y.3d 650 (2009)

    Consent-to-settle and subrogation-protection provisions in a Supplementary Uninsured/Underinsured Motorists (SUM) endorsement remain in effect even after an insured has exhausted the policy limits of one tortfeasor in a multi-tortfeasor accident; settlements with other tortfeasors are still subject to these provisions.

    Summary

    Beverly Bemiss was injured in a multi-vehicle accident. She received settlements from two at-fault drivers: $25,000 from Kowalczyk (the first tortfeasor, exhausting the policy limits), and $2,500 from Genski (the second tortfeasor, less than policy limits) without Central Mutual’s (Bemiss’s insurer) consent. Bemiss then sought SUM benefits from Central Mutual. Central Mutual denied coverage, arguing Bemiss violated the policy by settling with Genski without consent and prejudicing their subrogation rights. The New York Court of Appeals held that the consent-to-settle and subrogation-protection provisions of the SUM endorsement remained in force even after Bemiss exhausted Kowalczyk’s policy limits; therefore, Bemiss’s failure to obtain consent before settling with Genski precluded her from receiving SUM benefits.

    Facts

    Beverly Bemiss was injured in a five-car pileup. Kati Kowalczyk’s vehicle rear-ended Bemiss’s vehicle. John Genski’s vehicle then rear-ended Kowalczyk’s vehicle, pushing Kowalczyk’s car into Bemiss’s car again. Kowalczyk had a $25,000 policy limit with GEICO, and Genski had a $25,000 policy limit with Progressive. Bemiss had a $100,000 SUM policy with Central Mutual. Bemiss settled with Kowalczyk/GEICO for $25,000 (the policy limit) after notifying Central Mutual. Bemiss then settled with Genski/Progressive for $2,500 (less than the policy limit) without notifying or obtaining consent from Central Mutual. The release executed by Bemiss did not preserve Central Mutual’s subrogation rights.

    Procedural History

    Bemiss requested arbitration for SUM benefits from Central Mutual. Central Mutual obtained a temporary stay of arbitration and then sought a permanent stay, arguing Bemiss violated policy conditions. Supreme Court granted Central Mutual’s application and permanently stayed arbitration. The Appellate Division affirmed. The Court of Appeals granted Bemiss’s motion for leave to appeal.

    Issue(s)

    Whether consent-to-settle and subrogation-protection provisions in a SUM endorsement are extinguished once an insured exhausts the policy limits of one tortfeasor in a multi-tortfeasor accident, allowing the insured to settle with other tortfeasors without the insurer’s consent or protecting its subrogation rights.

    Holding

    No, because the consent-to-settle and subrogation-protection provisions in the SUM endorsement remain in force and govern settlements that the insured may subsequently make with other tortfeasors. Bemiss violated the policy condition requiring consent when she settled with Genski for less than the policy limit without Central Mutual’s consent, thereby impairing their subrogation rights.

    Court’s Reasoning

    The court analyzed the interplay of the consent-to-settle (Condition 10), exhaustion (Condition 9), and subrogation-protection (Condition 13) provisions in the standard SUM endorsement prescribed by Regulation 35-D. The court emphasized that Insurance Law § 3420 (f) (2) (A) requires exhaustion of all applicable bodily injury liability policies before SUM coverage is triggered. Citing S’Dao v. National Grange Mut. Ins. Co., the court reiterated that the exhaustion requirement applies to each individual tortfeasor. Condition 10 of the SUM endorsement states that an insured shall not settle with any negligent party without the insurer’s written consent if it impairs the insurer’s rights. The court interpreted “otherwise” in Condition 10 to refer to settlements outside the scope of the 30-day notice provision for settlements at policy limits. The court rejected Bemiss’s argument that “any negligent party” only refers to the first tortfeasor whose policy is exhausted. The court emphasized that Condition 13 explicitly requires the insured to protect the insurer’s subrogation rights. By settling with Genski without consent, Bemiss violated Condition 10 and prejudiced Central Mutual’s subrogation rights. The court stated, “Condition 10 delineates the sole situation in which an insured may settle with any tortfeasor in exchange for a general release, thus prejudicing the insurer’s subrogation rights, without the carrier’s written consent.” The court concluded that allowing Bemiss to settle freely with subsequent tortfeasors would compromise the insurer’s subrogation rights, a key component of the SUM endorsement, noting, “But once having chosen to resolve her claim against Genski, she was not free under the SUM endorsement to compromise Central’s subrogation rights unilaterally.”

  • In re Peaslee, 91 N.Y.2d 78 (2009): Defining Purchase-Money Security Interest and Negative Equity

    In re Peaslee, 91 N.Y.2d 78 (2009)

    Under New York’s Uniform Commercial Code, the portion of an automobile retail installment sale attributable to a trade-in vehicle’s negative equity constitutes part of the “purchase-money obligation” arising from the purchase of a new car.

    Summary

    Faith Ann Peaslee purchased a car, trading in a vehicle with negative equity. This negative equity was rolled into the financing of the new car. Peaslee later filed for bankruptcy, seeking to reduce GMAC’s secured claim to the retail value of the new vehicle, treating the remaining amount as an unsecured claim. GMAC argued that, due to the “hanging paragraph” in the Bankruptcy Code, the entire amount should be treated as a secured claim because it held a purchase-money security interest (PMSI). The Second Circuit certified the question to the New York Court of Appeals, asking whether negative equity qualifies as part of a purchase-money obligation under New York’s UCC. The Court of Appeals held that it does, finding that negative equity fits within the UCC’s definition of “price” or “value given.”

    Facts

    Faith Ann Peaslee purchased a 2004 Pontiac Grand Am, financing it through a retail installment contract. She traded in her existing vehicle, which had a negative equity of $5,980 (the outstanding lien exceeded the vehicle’s value). The dealer rolled this negative equity into the financing for the new car, along with other charges, resulting in a total financed amount of $23,180. The dealer paid off the lien on the trade-in, and the security interest in the new vehicle was assigned to GMAC, LLC.

    Procedural History

    Peaslee filed for Chapter 13 bankruptcy, proposing to reduce GMAC’s secured claim to the vehicle’s retail value. GMAC objected, arguing that the “hanging paragraph” of the Bankruptcy Code entitled it to a fully secured claim because of its purchase-money security interest. The Bankruptcy Court sided with Peaslee, holding that a PMSI under New York’s UCC did not include negative equity. The District Court reversed, finding that it did. The Second Circuit then certified the question to the New York Court of Appeals.

    Issue(s)

    Whether the portion of an automobile retail installment sale attributable to a trade-in vehicle’s “negative equity” is part of the “purchase-money obligation” arising from the purchase of a new car, as defined under New York’s U.C.C.?

    Holding

    Yes, because under New York’s Uniform Commercial Code, negative equity constitutes part of the “price” or “value given” for the new vehicle, thus creating a purchase-money obligation.

    Court’s Reasoning

    The Court reasoned that a purchase-money obligation arises when an obligation is incurred as all or part of the “price” of the collateral or for “value given” to enable the debtor to acquire the collateral. The court found that negative equity fits within either definition.

    Regarding “price,” the Court noted that while the UCC doesn’t define “price,” the official comments provide expansive examples, indicating a broad interpretation is intended. Comment 3 includes expenses incurred in acquiring rights in the collateral, sales taxes, finance charges, and “other similar obligations.” The Court reasoned that negative equity falls within these “other similar obligations,” as it is often “rolled in” as part of the overall price of the newer vehicle to facilitate the transaction. As the court states, “[I]ndeed, to exclude negative equity as part of the ‘price’ would serve to hinder commercial practices rather than facilitate them.”

    Regarding “value given,” the Court rejected the argument that negative equity is merely a payoff of antecedent debt. By paying off the debt on the trade-in, the lender is giving value to the debtor, enabling them to purchase the new vehicle. The court cited In re Price, 562 F3d 618, 625 (4th Cir 2009), to support this point.

    The Court also emphasized the “close nexus” requirement between the acquisition of collateral and the secured obligation, stating that without a payoff of the trade-in debt, the buyer cannot usually complete the purchase of the new car. In this case, Peaslee’s debt to GMAC was incurred at the time of the trade-in, under the same retail installment contract, and for the same purpose of purchasing the Grand Am.

  • Port Authority Police Benevolent Assn. v. Anglin, 12 N.Y.3d 885 (2009): Exclusion of Vacation Day Pay from Retirement Benefits

    Port Authority Police Benevolent Assn. v. Anglin, 12 N.Y.3d 885 (2009)

    Payments for work performed during regularly scheduled hours, even on days that would otherwise be paid vacation, are not considered overtime compensation and are therefore excludable from the calculation of retirement benefits under New York law.

    Summary

    The New York Court of Appeals held that payments made to a Port Authority police officer for working on scheduled vacation days, specifically the first eight hours of such work, were correctly excluded from the calculation of his final average salary for retirement benefits. The court reasoned that these payments did not constitute compensation for “work in excess of regularly established hours of employment,” as required for inclusion under General Municipal Law § 90, because the officer was already being paid for those hours as part of his regular salary. The court distinguished these payments from overtime, which is included in retirement benefit calculations.

    Facts

    Following the September 11, 2001 attacks, a Port Authority Police Department member was required to work 12-hour shifts. His vacation, regular days off, personal days, and compensatory time off were canceled. He received time-and-a-half pay for overtime and for working on scheduled vacation days. Upon his retirement in 2003, the New York State and Local Police and Fire Retirement System excluded a portion of the payments he received for working scheduled vacation days from his final average salary calculation.

    Procedural History

    The officer initiated a CPLR article 78 proceeding challenging the exclusion of the vacation day payments. The Supreme Court transferred the case to the Appellate Division. The Appellate Division confirmed the Deputy Comptroller’s determination and dismissed the petition, finding the exclusion rational. The officer appealed to the New York Court of Appeals.

    Issue(s)

    Whether payments for the first eight hours of work performed on a paid vacation day constitute compensation for “work in excess of regularly established hours of employment” under General Municipal Law § 90, and thus should be included in the calculation of retirement benefits.

    Holding

    No, because the first eight hours of work on a paid vacation day do not constitute “work in excess of . . . regularly established hours of employment.” Therefore, the payments were correctly excluded from the calculation of retirement benefits.

    Court’s Reasoning

    The court based its reasoning on the plain language of General Municipal Law § 90, which allows overtime compensation to be paid to public employees for “all time such [employees] are required to work in excess of their regularly established hours of employment.” The court emphasized that the Retirement and Social Security Law excludes “lump sum payments for deferred compensation, sick leave, accumulated vacation or other credit for time not worked” from retirement benefit calculations. The court found that the officer was already receiving eight hours of straight pay as part of his regular salary for the vacation day, regardless of whether he worked or not. Including the time-and-a-half pay for the first eight hours of work on that day would amount to crediting those hours twice. The court distinguished this situation from payments for working regular days off or extra hours on scheduled work days, which were considered overtime because they involved work outside the regularly scheduled hours. The court cited Matter of Hohensee v Regan and Matter of Hoffman v New York State Policemen’s & Firemen’s Retirement Sys., noting that payments for working normal hours on vacation days were excluded in those cases because the employees voluntarily elected to forgo vacation. The court concluded that including payments for working vacation days would create an anomalous result and that the exclusion was consistent with the Retirement and Social Security Law and General Municipal Law.

  • MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640 (2009): Enforceability of Express Contractual Conditions Precedent

    MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640 (2009)

    An express condition precedent in a contract must be literally performed, and failure to fulfill the condition excuses the obligated party’s duty to perform.

    Summary

    MHR Capital Partners sued Presstek for breach of contract after Presstek terminated a stock purchase agreement. The agreement required a third-party bank, Key Bank, to consent to the transaction by signing a specific consent form by a set date. Key Bank provided a qualified consent via fax but did not sign the required form. The New York Court of Appeals held that Key Bank’s signed consent was an express condition precedent to Presstek’s obligation to close the deal. Since the condition was not met, Presstek was excused from performance, even though it later entered a more favorable agreement. The court emphasized that express conditions must be strictly performed.

    Facts

    Presstek agreed to purchase A.B. Dick Company (ABD) from Paragon Corporate Holdings. MHR, a major creditor of ABD, agreed to waive its rights in exchange for payment from Presstek. An escrow agreement stipulated that the stock purchase would be released only if Key Bank, ABD’s lender, consented by signing a specific consent form by June 22, 2004. The consent form required Key Bank to continue funding ABD and forbear from declaring any default. Key Bank sent a fax consenting to the deal but did not sign the required form and included different terms. Presstek then terminated the stock purchase agreement and later acquired ABD’s assets through a bankruptcy sale.

    Procedural History

    MHR sued Presstek for breach of contract in New York Supreme Court. The Supreme Court granted Presstek’s motion for summary judgment, which was affirmed by the Appellate Division, although on different grounds (condition precedent). MHR appealed to the New York Court of Appeals based on a two-Justice dissent at the Appellate Division.

    Issue(s)

    Whether Key Bank’s execution of the consent form by the specified date was an express condition precedent to Presstek’s obligation to perform under the stock purchase agreement.

    Holding

    Yes, because the escrow agreement clearly stated that the release of the contract documents was contingent upon Key Bank’s execution of the consent form by June 22, 2004; failure to meet this condition rendered the agreement null and void.

    Court’s Reasoning

    The Court of Appeals determined that the escrow agreement’s language – using the terms “unless and until” – created an unambiguous express condition precedent. The court cited Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 690 (1995), noting that such terms constitute “unmistakable language of condition.” Key Bank’s faxed consent did not satisfy the requirement of a signed consent form with all the specified terms. MHR’s argument that the consent form added new conditions was rejected because MHR, a sophisticated party represented by counsel, had agreed to the terms of the escrow agreement, including the consent form. The court also addressed MHR’s argument that Presstek prevented Key Bank from signing the consent form, stating that the burden was on Paragon, not Presstek, to obtain the consent. The court found that Presstek meeting with Key Bank and Key Bank refusing to sign was not interference, particularly since Key Bank possessed the form and refused to sign it before the deadline. The court stated, “a party to a contract cannot rely on the failure of another to perform a condition precedent where he has frustrated or prevented the occurrence of the condition” (citing ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, 490 (2006)), but that this did not occur here.

  • Bazakos v. Lewis, 12 N.Y.3d 631 (2009): Statute of Limitations for Negligence During an Independent Medical Exam

    Bazakos v. Lewis, 12 N.Y.3d 631 (2009)

    A claim against a doctor for negligence during an Independent Medical Examination (IME) is a claim for medical malpractice, subject to CPLR 214-a’s two-year-and-six-month statute of limitations, even in the absence of a traditional doctor-patient relationship.

    Summary

    Lewis Bazakos sued Dr. Philip Lewis, alleging injury during an IME required for a previous lawsuit. Bazakos claimed Lewis negligently injured him by forcefully rotating his head. The suit was filed approximately 2 years and 11 months after the IME. The court addressed whether such a claim constitutes medical malpractice subject to a shorter statute of limitations, or ordinary negligence. The Court of Appeals held that the claim was for medical malpractice because the doctor’s actions involved medical skill, and the legislative intent behind the shorter statute of limitations for malpractice applied equally to IMEs. Therefore, the claim was time-barred.

    Facts

    Lewis Bazakos was involved in a prior lawsuit stemming from an automobile accident. As part of that lawsuit, Bazakos was required to undergo an Independent Medical Examination (IME) by a physician selected by the opposing party.

    The opposing party designated Dr. Philip Lewis to conduct the IME. Dr. Lewis examined Bazakos on November 27, 2001.

    Bazakos alleged that during the IME, Dr. Lewis injured him by “tak[ing] plaintiff’s head in his hands and forcefully rotated it while simultaneously pulling.”

    Procedural History

    Bazakos commenced an action against Lewis on October 15, 2004, approximately 2 years and 11 months after the IME.

    Lewis moved to dismiss, arguing the claim was barred by the statute of limitations. Supreme Court granted the motion, relying on Evangelista v. Zolan.

    The Appellate Division reversed, overruling Evangelista, holding the action was timely because no physician-patient relationship existed, thus the claim was not for medical malpractice. Two justices dissented.

    The Appellate Division granted Lewis leave to appeal, certifying the question of whether its order was properly made.

    Issue(s)

    Whether a claim against a doctor for alleged negligence during an Independent Medical Examination (IME) constitutes a claim for “medical malpractice” under CPLR 214-a, thus subject to the statute’s two-year-and-six-month statute of limitations.

    Holding

    No, because such actions involve medical treatment by a licensed physician, regardless of the absence of a traditional physician-patient relationship.

    Court’s Reasoning

    The Court reasoned that the essence of Bazakos’s claim, like any medical malpractice claim, is that a doctor failed to competently perform a procedure requiring specialized medical skill.

    The Court emphasized that the act underlying the lawsuit – Lewis’s manipulation of Bazakos’s body – constitutes “medical treatment by a licensed physician,” thus negligent performance constitutes medical malpractice, citing Weiner v. Lenox Hill Hosp., 88 N.Y.2d 784, 788 (1996).

    The Court noted the legislative intent behind CPLR 214-a, enacted to address a crisis in medical malpractice insurance, aimed to enable “health care providers to get malpractice insurance at reasonable rates” (quoting Bleiler, 65 NY2d at 68). The Court found it unlikely the Legislature intended to exclude doctors performing IMEs from this protection.

    The Court agreed with the dissenting Justices at the Appellate Division that a “limited physician-patient relationship” exists during an IME, referencing an AMA opinion on the ethical responsibilities of doctors performing IMEs.

    Quoting Dyer v. Trachtman, 470 Mich. 45, 49-50, 679 N.W.2d 311, 314-315 (2004), the Court stated that this limited relationship “imposes a duty on the IME physician to perform the examination in a manner not to cause physical harm to the examinee.”

    The dissenting opinion argued that medical malpractice requires medical treatment, which was absent in the IME context. The dissent emphasized that the purpose of CPLR 214-a was to protect health care providers offering treatment, not those providing litigation support services. The dissent asserted that context matters, and that what constitutes malpractice in a treatment setting may not in an IME setting, highlighting the limited scope of responsibility in an IME.

  • People v. Almeter, 13 N.Y.3d 585 (2009): Notice Required When Judge Acts as Factfinder on Related Violation

    People v. Almeter, 13 N.Y.3d 585 (2009)

    When a defendant faces a jury trial on a misdemeanor charge and a bench trial on a related violation arising from the same incident, the court must provide clear and timely notice to the defendant that the charges will be tried separately by different factfinders.

    Summary

    Defendant Almeter was charged with assault (misdemeanor) and trespass (violation) arising from the same incident. Although charged in separate instruments, the case proceeded as a single prosecution. After jury selection and near the end of the defense case, the trial court revealed its intention to have the jury decide the assault charge while the court would decide the trespass charge. The defense objected, arguing lack of notice. The jury acquitted Almeter of assault, but the court convicted him of trespass. The Court of Appeals reversed, holding that the defendant was entitled to notice that the charges would be decided by different factfinders.

    Facts

    Almeter was charged with assault and trespass based on an incident at the complainant’s home. The assault charge stemmed from Almeter allegedly striking the complainant with a bottle, and the trespass charge stemmed from Almeter’s refusal to leave the property. The charges were documented together in police reports, appearance tickets, and an order of protection. The case proceeded under a single docket number, giving the appearance of a consolidated prosecution.

    Procedural History

    The case proceeded to trial with jury selection. Near the end of the defense’s case, the trial court informed the parties that the jury would decide the assault charge while the court would decide the trespass charge. The defense objected, arguing that they were unaware of this procedure. The jury acquitted Almeter of assault. The court convicted him of trespass. County Court affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the trial court erred in conducting a joint bench and jury trial without providing the defendant with timely notice that the misdemeanor and violation charges would be decided by different factfinders.

    Holding

    Yes, because a defendant is entitled to notice when their charges are to be tried by separate factfinders, especially when the case has proceeded as if it were a single prosecution.

    Court’s Reasoning

    The Court of Appeals found that it was “evident that if, contrary to reasonable expectation, two trials were to be simultaneously held before different factfinders, the court was obliged to inform defendant and his counsel of this unique mode of proceeding from the outset.” The Court emphasized that the charges were treated as consolidated throughout the proceedings, and the defendant was not informed otherwise until the trial was nearly over. This lack of notice prejudiced the defendant because “counsel may well determine that a different trial strategy is warranted based upon whether a particular charge is being presented to a judge or to a jury.” The court noted, “As there was every indication that both charges were being tried by the jury, defendant should have been given notice that that in fact would not be the case, and, since there would be more than one factfinder, of which factfinder would be deciding which charge.” The Court concluded that while the procedure may have been intended to be economical, “the economy was a false one where the defendant was not timely advised that his charges were to be tried by separate factfinders.”

  • People v. Marte, 13 N.Y.3d 583 (2009): Limits of Exclusionary Rule for Suggestive Identifications

    13 N.Y.3d 583 (2009)

    The state constitutional rule excluding unnecessarily suggestive police-arranged identifications does not extend to identifications where the suggestion originates from private citizens.

    Summary

    The New York Court of Appeals held that the rule excluding suggestive police-arranged identifications does not apply when the suggestiveness originates from a private citizen. The victim, Peter L., was robbed and shot. Months later, his sister, Margaret, who knew the defendant, told Peter she thought the defendant was the shooter and showed him the defendant’s picture. Peter then identified the defendant in a police lineup. The Court of Appeals affirmed the conviction, holding that the exclusionary rule is primarily aimed at deterring police misconduct and does not extend to private communications.

    Facts

    Peter L. was robbed and shot. He was shown hundreds of photographs by police but made no identification. Six months later, Peter’s sister, Margaret, met the defendant, who told her, “I actually shot someone on this block.” Margaret later told Peter she thought she knew who shot him and showed him the defendant’s picture. Peter initially rejected the idea but then identified the defendant from the picture. Margaret reinforced this with a letter describing the defendant as “[t]he kid that everyone thinks shot you.”

    Procedural History

    The victim and his sister then went to the police, who arranged a lineup where Peter identified the defendant. The defendant’s motion to suppress the identification was denied, and he was convicted of robbery and assault. The Appellate Division affirmed the conviction, and the Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the state constitutional rule excluding unnecessarily suggestive police-arranged identifications extends to identifications where the suggestiveness originates from a private citizen.

    Holding

    No, because the primary goal of the exclusionary rule is to deter police misconduct, and this goal cannot be advanced by extending the rule to cases where the suggestion comes from private citizens.

    Court’s Reasoning

    The court reasoned that the exclusionary rule for suggestive identifications, as established in People v. Adams, is designed to enhance the truth-finding process and prevent wrongful convictions by influencing police procedures. The court stated: “The exclusionary rules were fashioned to deter improper conduct on the part of law enforcement officials which might lead to mistaken identifications”. Extending this rule to private communications would not deter such communications, as family and friends are unlikely to regulate their conduct based on court rules of evidence suppression.

    The court distinguished this case from federal cases and cases in other states, noting that those cases either involved police or prosecutor actions or dealt with non-constitutional evidentiary issues. The court emphasized that its decision was based on a constitutional issue and declined to extend a per se constitutional rule of exclusion to cases where a private citizen’s communication results in an identification.

    The court acknowledged the risk of misidentification due to suggestiveness, regardless of its source. However, it emphasized that suggestiveness is just one potential source of error. The court noted that the proper remedy when law enforcement is not the source of the suggestive identification is to rely on cross-examination, counsel’s arguments, and other evidence to allow juries to assess the reliability of eyewitnesses.

    Ultimately, the Court refused to extend the Adams rule because its primary purpose is to influence police conduct, and such influence is impossible when private citizens are the source of the suggestion. The Court suggested expert testimony on eyewitness fallibility may be admissible in certain cases and did not foreclose the possibility that a court could exclude testimony that is more prejudicial than probative under common-law rules of evidence.

  • Stern v. Bluestone, 12 N.Y.3d 873 (2009): Defining ‘Unsolicited Advertisement’ Under the TCPA

    12 N.Y.3d 873 (2009)

    Under the Telephone Consumer Protection Act (TCPA), a fax that is primarily informational does not constitute an unsolicited advertisement even if it contains an incidental advertisement of the sender’s services.

    Summary

    Peter Stern, an attorney, sued Andrew Bluestone, also an attorney, under the Telephone Consumer Protection Act (TCPA) for sending 14 unsolicited faxes entitled “Attorney Malpractice Report.” Stern claimed these faxes were unsolicited advertisements. The New York Court of Appeals reversed the lower court’s grant of summary judgment for Stern, holding that the faxes were primarily informational, not advertisements, despite containing Bluestone’s contact information and implicitly advertising his expertise. The court deferred to the FCC’s interpretation that an informational message with an incidental advertisement does not violate the TCPA.

    Facts

    Andrew Bluestone, a lawyer specializing in attorney malpractice, sent Peter Stern, another attorney, 14 unsolicited faxes over 16 months. Each fax, titled “Attorney Malpractice Report,” discussed various topics related to attorney malpractice, such as fee disputes and common causes of malpractice litigation. The faxes included Bluestone’s contact information and website address. Stern had no prior business relationship with Bluestone and never authorized the faxes.

    Procedural History

    Stern sued Bluestone in Supreme Court, alleging violations of the TCPA. The Supreme Court granted summary judgment to Stern, finding that the faxes indirectly advertised Bluestone’s services and that he willfully violated the TCPA. The Appellate Division affirmed. The New York Court of Appeals reversed the Appellate Division’s decision, remitting the case for further proceedings.

    Issue(s)

    Whether Bluestone’s “Attorney Malpractice Report” faxes constitute “unsolicited advertisements” within the meaning of the Telephone Consumer Protection Act (TCPA).

    Holding

    No, because the faxes, though containing Bluestone’s contact information, were primarily informational and, at most, contained only an incidental advertisement of his services, which does not convert the entire communication into an advertisement under the FCC’s interpretation of the TCPA.

    Court’s Reasoning

    The Court of Appeals relied on the FCC’s interpretation of “unsolicited advertisement” in its 2006 rules implementing the TCPA. The FCC stated that “facsimile communications that contain only information…would not be prohibited by the TCPA rules. An incidental advertisement contained in such a newsletter does not convert the entire communication into an advertisement.” The court found that Bluestone’s reports fit the FCC’s framework for an informational message, as they furnished information about attorney malpractice lawsuits, varied in substantive content from issue to issue, and did not directly promote commercial products. The court acknowledged that the faxes might have been intended to impress other attorneys and gain referrals. However, the court determined that the faxes, at most, contained “[a]n incidental advertisement” of Bluestone’s services, which “does not convert the entire communication into an advertisement.” The court emphasized that it could not grant summary judgment for Bluestone because he had not cross-moved for it in Supreme Court.

  • People v. Rodriguez, 12 N.Y.3d 182 (2009): Constitutionality of JHO Adjudication with Consent

    People v. Rodriguez, 12 N.Y.3d 182 (2009)

    New York Criminal Procedure Law § 350.20, which allows class B misdemeanors to be tried by judicial hearing officers (JHOs) with the parties’ agreement, is constitutional and doesn’t violate due process or the structure of the New York court system.

    Summary

    Rodriguez was convicted of violating a New York City park rule by being in a park after closing. He was tried before a JHO after signing a consent form. He argued CPL § 350.20 was unconstitutional and his consent invalid. The New York Court of Appeals held that CPL § 350.20 is constitutional, finding that the state constitution doesn’t prohibit the legislature from establishing tribunals with concurrent jurisdiction and that JHO adjudication with consent doesn’t violate due process. The court emphasized the importance of consent and the procedural safeguards for JHOs.

    Facts

    A police officer observed Rodriguez in Betsy Head Park at 2:06 AM, after the posted closing time of 9:00 PM. Rodriguez was charged with violating 56 RCNY § 1-03(c)(2), a class B misdemeanor. At arraignment, he pleaded not guilty and was given a “CONSENT TO ADJUDICATION BEFORE A JUDICIAL HEARING OFFICER (JHO)” form.

    Procedural History

    Rodriguez was convicted by a JHO. The Appellate Term affirmed. A Judge of the Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether Criminal Procedure Law § 350.20 is facially unconstitutional under Article VI, § 15(a) of the New York Constitution, which establishes the New York City Criminal Court.

    2. Whether Criminal Procedure Law § 350.20 violates federal and state due process rights by allowing a JHO, rather than a judge, to adjudicate a class B misdemeanor case.

    3. Whether Rodriguez’s consent to JHO adjudication was valid without an on-the-record colloquy.

    4. Whether the accusatory instrument was jurisdictionally defective because it didn’t plead an exception to the Parks Department rule.

    Holding

    1. No, because Article VI, § 15(a) does not prohibit the legislature from establishing different tribunals with concurrent jurisdiction or authorizing litigants to resort to those tribunals with their agreement.

    2. No, because consensual JHO adjudication of a petty offense balances the interests of the parties, provides adequate protections, and serves a legitimate governmental interest in efficient court administration.

    3. Yes, because in the context of CPL 350.20 the “parties agreement” and not personal consent is required and the decision to agree to JHO adjudication is a tactical one best left to the determination of counsel.

    4. No, because the qualifying language in the Parks Department rule operated as a “proviso” that must be pleaded and proved by the defendant, not an “exception” that the People must negate.

    Court’s Reasoning

    The Court reasoned that Article VI, § 15(a) of the New York Constitution addresses the organization and jurisdiction of the Criminal Court but doesn’t prohibit the Legislature from creating other tribunals with concurrent jurisdiction, especially when litigants consent. It distinguished People v. Scalza, as that case involved non-consensual referrals. The court relied on Glass v. Thompson, which upheld the authority of Housing Court Judges, and Motor Vehicle Manufacturers Ass’n, which approved arbitration of Lemon Law claims, emphasizing that consent is a crucial factor.

    The Court addressed the Due Process challenge by balancing the interests of the parties, the adequacy of the procedures, and the government’s stake. It determined the defendant’s interest was in a fair trial, not necessarily a trial before a judge. The court noted JHOs are carefully vetted. Quoting Friedman v State of New York, the court emphasized the right to “a fair trial in a fair tribunal.” The governmental interest in alleviating court congestion further supported the law’s validity. Referencing the holdings in Gomez v. United States and Peretz v. United States, the court emphasized that “the defendant’s consent significantly changes the constitutional analysis.”

    The Court found Rodriguez’s consent to JHO adjudication valid because his attorney participated in the trial without objection. The court held that the decision whether to agree to JHO adjudication of a petty criminal case represents the sort of “tactical decision” best left to the determination of counsel

    Finally, the Court clarified the distinction between exceptions and provisos in statutory interpretation, holding that the Parks Department didn’t intend for the People to disprove that an officer or employee authorized Rodriguez to be in the park after hours. Such information is uniquely within a defendant’s knowledge, and to require the People to plead and negate the existence of the relevant permission would require them to go to “intolerable lengths,” including innumerable interviews of officers and employees in the area during the date in question.

  • Bloomingdales, Inc. v. New York City Transit Authority, 13 N.Y.3d 65 (2009): Statute of Limitations for Continuing Trespass and Nuisance Claims

    Bloomingdales, Inc. v. New York City Transit Authority, 13 N.Y.3d 65 (2009)

    When a trespass or nuisance is continuous, resulting in successive causes of action, the statute of limitations does not begin to run from the initial act but accrues as long as the trespass or nuisance persists, until it ripens into a prescriptive right.

    Summary

    Bloomingdales sued the New York City Transit Authority (NYCTA) for trespass and nuisance after a contractor, Janus Industries, cut Bloomingdales’ drainpipe during excavation and installed a conduit in its place, causing flooding. The NYCTA argued the suit was time-barred under Public Authorities Law § 1212 and General Municipal Law § 50-i, as it was filed more than one year and 90 days after the drainpipe was severed. The Court of Appeals held that the placement of the conduit constituted a continuing trespass and nuisance, meaning the statute of limitations had not yet run, as the damages stemmed from the ongoing encroachment, not solely from the initial severance of the pipe.

    Facts

    In September 1999, Janus Industries, working on a NYCTA project, cut Bloomingdales’ drainpipe, mistakenly believing it to be a “dead” water main. Janus installed a concrete-encased conduit in its place. Bloomingdales experienced flooding and, in February 2002, discovered the cut drainpipe and the conduit. Bloomingdales then installed a new drainpipe above the conduit at a cost exceeding $165,000.

    Procedural History

    Bloomingdales sued the NYCTA in January 2003, alleging negligence, trespass, and nuisance. The Supreme Court granted summary judgment to the NYCTA and third-party defendants, dismissing the complaint based on the statute of limitations. The Appellate Division reversed, reinstating the trespass and nuisance claims, holding it was a continuing tort. The NYCTA appealed, and the Appellate Division certified the question of whether its order was properly made to the Court of Appeals.

    Issue(s)

    Whether the placement of a concrete conduit in place of a severed drainpipe constitutes a continuing trespass and nuisance, such that the statute of limitations for those claims begins to run from the cessation of the encroachment, rather than the initial act of severing the pipe?

    Holding

    Yes, because the placement of the concrete conduit interfering with Bloomingdales’ access to its drainpipe constitutes a continuous trespass and nuisance, giving rise to successive causes of action for which the statute of limitations had not yet run.

    Court’s Reasoning

    The Court of Appeals reasoned that while Public Authorities Law § 1212 (2) and General Municipal Law § 50-i require actions for property damage to be commenced within one year and 90 days after the event, this period does not apply to continuous trespasses or nuisances. Citing 509 Sixth Ave. Corp. v New York City Tr. Auth., the Court emphasized that a trespass that unlawfully encroaches on a plaintiff’s property is considered a continuous trespass, giving rise to successive causes of action. The statute of limitations only bars suits after the time required to create an easement by prescription or change of title. Here, the conduit’s presence interfered with Bloomingdales’ access to its drainpipe and the city sewer, forcing the installation of a new pipe. The Court stated that “[t]hus, for purposes of the statute of limitations, suits will only be time-barred by the expiration of such time as would create an easement by prescription or change of title by operation of law.” The Court found the actual damages arose from the need to install a new drainpipe in a different location due to the conduit. The Court considered the nuisance claim another way of characterizing the trespass, subject to the same statute of limitations analysis. Thus, the Appellate Division’s order was affirmed.