New York Law Review

Tag: automatic stay

  • Moray v. Koven & Krause, Esqs., 27 N.Y.3d 384 (2016): Enforcing Automatic Stay When Attorney is Suspended

    27 N.Y.3d 384 (2016)

    When an attorney is suspended from practice, CPLR 321(c) automatically stays the action, and any subsequent proceedings against the represented party are invalid unless the opposing party serves a 30-day notice to appoint new counsel or obtains leave of the court.

    Summary

    Plaintiff Joseph Moray sued defendant Koven & Krause for legal malpractice. After Moray’s attorney was suspended, the defendant moved to dismiss for failure to serve a complaint. The Supreme Court granted the motion. The Appellate Division affirmed, noting that the plaintiff raised the automatic stay provision of CPLR 321(c) for the first time on appeal. The Court of Appeals reversed, holding that CPLR 321(c) created an automatic stay upon the attorney’s suspension, making the subsequent dismissal invalid because the defendant never served the required 30-day notice to appoint new counsel. The Court emphasized the protective purpose of the statute for litigants unexpectedly losing counsel.

    Facts

    Joseph Moray commenced a legal malpractice action against Koven & Krause on December 31, 2007. Moray’s attorney, Warren Goodman, was suspended from practicing law on January 24, 2008. Defendant served a demand for a complaint on February 25, 2008, but no complaint was filed. On April 22, 2008, Defendant moved to dismiss the action for failure to serve the complaint. Moray’s new attorney contacted the defendant’s insurance carrier regarding settlement. Goodman submitted an affidavit, disclosing his suspension and advising he had told Moray to seek new counsel. A draft complaint prepared prior to the suspension was also submitted.

    Procedural History

    The Supreme Court granted the defendant’s motion to dismiss for failure to serve a complaint, finding no reasonable excuse for the default or affidavit of merit. The Appellate Division affirmed, holding that the plaintiff’s CPLR 321(c) argument was raised for the first time on appeal, and thus was not properly before them. The Court of Appeals granted plaintiff’s motion for leave to appeal.

    Issue(s)

    Whether the automatic stay provision of CPLR 321(c) applies when an attorney is suspended from practice, thereby invalidating subsequent proceedings absent the opposing party’s compliance with the statute’s notice requirements or leave of court?

    Holding

    Yes, because CPLR 321(c) mandates an automatic stay when an attorney is suspended, and further proceedings without either serving a 30-day notice to appoint new counsel or obtaining leave of the court are invalid.

    Court’s Reasoning

    The Court of Appeals held that CPLR 321(c) imposes a straightforward command: “[I]f an attorney…is removed, suspended or otherwise becomes disabled…no further proceeding shall be taken…without leave of the court, until thirty days after notice to appoint another attorney has been served.” The court noted this creates “an automatic stay of the action.” Because the defendant never served a notice on the plaintiff to appoint new counsel after Goodman’s suspension, the Supreme Court’s order dismissing the action was improper and must be vacated. The Court rejected the defendant’s argument that the Supreme Court acted with “leave of court,” noting the statute is intended to apply when delaying the action would cause “undue hardship,” like when the time to take an appeal is running or when a provisional remedy is sought. The Court also addressed the argument that plaintiff should be foreclosed from raising CPLR 321(c) for the first time on appeal. The Court distinguished this case from situations where litigants actively participate pro se for an extended period before invoking the statute, emphasizing that unrepresented litigants should not be penalized for failing to invoke a rule designed to protect them. As the court stated, “As a general rule, unrepresented litigants should not be penalized for failing to alert a trial court to the existence of an automatic stay created for the very purpose of safeguarding them against adverse consequences while they are unrepresented.” The Court highlighted that the opposing party can easily end the stay by serving the required 30-day notice.

  • Summerville v. City of New York, 95 N.Y.2d 427 (2000): Automatic Stays for Government Entities Pending Appeal

    Summerville v. City of New York, 95 N.Y.2d 427 (2000)

    A governmental entity is entitled to a new automatic stay each time it files a notice of appeal or moves for leave to appeal, even if a prior automatic stay has lapsed due to failure to comply with CPLR 5519(e).

    Summary

    In a personal injury action against the City of New York, the Court of Appeals addressed whether a governmental entity obtains a new automatic stay under CPLR 5519(a) when it appeals or seeks leave to appeal an adverse order, even if its original stay lapsed under CPLR 5519(e). The Court held that the City did obtain a new automatic stay when it moved for leave to appeal to the Court of Appeals, despite failing to preserve its initial stay. The Court reversed the lower court’s order accelerating payments on the judgment, finding that the City’s payments were not untimely due to the successive automatic stays.

    Facts

    Plaintiff sued the City for personal injuries. A jury awarded damages, which the trial court reduced. A structured judgment was entered in May 1997. The City appealed, triggering an automatic stay under CPLR 5519(a)(1). The Appellate Division modified the judgment, reducing the damages for pain and suffering and ordering a new trial on those damages unless Plaintiff stipulated to a reduced award. Plaintiff stipulated, and an amended judgment was entered on July 6, 1999, requiring the City to make a lump sum payment and purchase an annuity contract. Plaintiff requested satisfaction of the judgment. On August 5, 1999, the City moved for leave to appeal to the Court of Appeals.

    Procedural History

    Plaintiff moved for accelerated payment of the judgment under CPLR 5044. The Appellate Division denied the City’s motion for leave to appeal. The Supreme Court granted Plaintiff’s motion for accelerated payment, reasoning that the City’s initial automatic stay had lapsed, and the City had delayed payments. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a governmental entity obtains a new automatic stay under CPLR 5519(a) when it appeals or moves for leave to appeal from an adverse order, even if it failed to continue its original automatic stay under CPLR 5519(e).

    Holding

    Yes, because CPLR 5519(a)(1) applies to all appeals and motions for leave to appeal, and CPLR 5519(e) only addresses the continuation of an original stay, not the possibility of obtaining a new one.

    Court’s Reasoning

    The Court reasoned that CPLR 5519(a)(1) grants an automatic stay to governmental entities pending an appeal or motion for leave to appeal, without limiting its applicability to initial appeals. The Court stated that “CPLR 5519 (a) (1) does not limit availability of a governmental appellant’s automatic stay to appeals to the Appellate Division, but by its terms applies to all appeals and motions for leave to appeal, including those to this Court.” CPLR 5519(e) provides for the continuation of an original stay, but does not preclude a governmental entity from obtaining a new stay if the original one lapses. The Court stated, “subdivision (e) merely provides for the ‘[c]ontinuation of [an original] stay,’ allowing an appellant to retain a stay arising from a first stage appeal without interruption by appealing or seeking leave to appeal to a higher appellate court within the five-day time frame specified therein.” This interpretation aligns with the policy of stabilizing the effect of adverse determinations on governmental entities and preventing disbursement of public funds pending appeal. Even if the City’s first stay lapsed, it obtained a new one when it moved for leave to appeal. Because of the automatic stays, the City’s payments were not untimely under CPLR 5044. The Court emphasized that, “Motion for a stay denied as unnecessary on the ground that the municipal respondents’ motion for leave to appeal in this court provides an automatic stay’ under CPLR 5519 (a) (1).” The Court found no violation of the statutory obligation to provide an annuity contract because there was never a period of time in which a stay had lapsed for as much as 30 days. The determination of whether a payment is made in a timely fashion depends on the specific circumstances of the case. Here, in view of the relatively short periods of time in which the City’s obligation to make the initial lump sum payment was not stayed, the City’s failure to make a lump sum payment of the magnitude involved here cannot be held to be untimely as a matter of law.

  • Love v. State of New York, 78 N.Y.2d 540 (1991): Interest Accrues from Liability Verdict in Bifurcated Trials

    Love v. State of New York, 78 N.Y.2d 540 (1991)

    In bifurcated trials where liability and damages are determined separately, interest on a judgment accrues from the date the liability is established, not the date damages are finally determined.

    Summary

    This case addresses the issue of when interest begins to accrue on a judgment in a bifurcated trial in New York, specifically when the State is the defendant and an automatic stay is in effect. The Court of Appeals affirmed the lower courts’ decisions, holding that interest accrues from the date liability is determined, even if damages are assessed later. The Court reasoned that this rule compensates plaintiffs for delays in payment and encourages the State to realistically evaluate its appeals, preventing it from gaining an unfair advantage due to the automatic stay provision.

    Facts

    The claimant was injured while a patient at the Pilgrim State Psychiatric Center. A bifurcated trial was held in the Court of Claims, first determining liability and then damages. The Court of Claims found the State liable for the claimant’s injuries. The State appealed the liability finding, triggering an automatic stay. The appellate court affirmed the liability judgment. Subsequently, damages were fixed at $750,000.

    Procedural History

    1. Court of Claims: Interlocutory judgment of liability against the State.
    2. Appellate Division: Affirmed the liability judgment.
    3. Court of Claims: Damages fixed at $750,000.
    4. The State appealed the interest calculation arguing it should run from the final judgement not the liability determination.
    5. Court of Appeals: Affirmed the lower court ruling, upholding the *Trimboli* decision.

    Issue(s)

    Whether interest on a judgment in a bifurcated trial against the State of New York should be calculated from the date liability was determined or from the date the final judgment, including damages, was entered.

    Holding

    Yes, because interest should be calculated from the date of the liability adjudication in bifurcated trials. This compensates plaintiffs for the delay in receiving the principal award rightfully due to them, where only the amount remains uncertain.

    Court’s Reasoning

    The Court relied on its prior decision in Trimboli v. Scarpaci Funeral Home, which established that interest accrues from the date of the liability adjudication in bifurcated trials. The Court reasoned that this rule compensates plaintiffs for the delay in payment. The court rejected the State’s arguments that this constitutes a double recovery or that interest can only be computed on liquidated damages. The Court stated, “[P]laintiffs were to be compensated with interest for the delay in payment of the principal award certainly due them; only the amount remained uncertain.” The Court also noted that CPLR 5002 provides that interest accrues from the date the verdict was rendered, even if the amount of damages is not yet fixed. The Court disapproved of Brock v. State of New York to the extent it was inconsistent with Trimboli. The court emphasized that the State should not receive a double advantage by benefiting from an automatic stay while also avoiding interest payments. The court stated, “Rather than accept the plea to overrule Trimboli, we reaffirm its prudent rationale and holding. There should be no different rule with respect to prejudgment interest just because the defendant happens to be the State and the damage assessment is stayed automatically in its favor (CPLR 5519 [a] [1]). Quite the contrary, the Trimboli rule should be uniformly applied.”