New York State Law Digest: November 2023

News Center
New York State Law Digest: November 2023

CPLR AMENDMENT

Amendment to CPLR 2106 Permits Any Person to Submit Affirmation

Eases Burden in Obtaining Statements, Particularly From Witnesses Located Outside of the State

Obtaining witness statements can be cumbersome and difficult at times, especially where the witness is located outside of the state but in the United States. Specifically, a certificate of conformity has been required in conjunction with an out-of-state affidavit. Such a certificate is to be executed by an attorney admitted in the foreign state attesting to the fact that the affidavit was executed in the manner prescribed by and in conformity with the laws of the foreign state where the affidavit was signed. Courts frequently, but not always, excuse the omission or allow it to be provided nunc pro tunc where no prejudice is shown. See Weinstein, Korn & Miller, New York Civil Practice ¶ 2309.07 (David L. Ferstendig, ed. 2023). However, careful counsel generally would avoid this possibility and go through the ordeal of obtaining the certificate.

Until a 2014 amendment, CPLR 2106 permitted only an attorney admitted to practice in New York State, or a physician, osteopath, or dentist authorized by law to practice in the state, to affirm the truth of their statements. In 2014, CPLR 2106 was amended to allow the use of affirmations in the place of an affidavit by any person physically located outside of the United States, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to U.S. jurisdiction. This presented the irony that, in some ways, it has been easier to obtain a statement from a person located overseas than from a person in an adjoining state—until now.

Effective January 1, 2024, CPLR 2106 will allow a statement by “any person, wherever made, subscribed and affirmed by that person to be true under the penalties of perjury” to be used in a New York action in lieu of and with the same force and effect as an affidavit. The affirmation should include the following language set forth in the amended statute:

I affirm this ___ day of ______, ____, under the penalties of perjury under the laws of New York, which may include a fine or imprisonment, that the foregoing is true, and I understand that this document may be filed in an action or proceeding in a court of law.

The act is to take effect on January 1, 2024, and applies both to “actions commenced on or after such effective date and all actions pending on such effective date.”

The sponsors’ memorandum provides the justification for the new law, including that “[t]he requirement that litigants and other court participants have documents notarized is unduly burdensome, and federal law removed such requirements for federal courts decades ago. . . . This bill will align New York with the over 20 states that follow federal practice. It will relieve unnecessary burdens on litigants, non-party witnesses, county clerks, and courts.”

Note that a separate bill expanding the scope of medical professionals covered under CPLR 2106 from a physician, osteopath, and dentist to “health care practitioners” was signed into law and went into effect immediately. So they have a two month head start on the rest of us!

CASE LAW DEVELOPMENTS

Court of Appeals Holds That Mistake of Law Can Satisfy Third Prong of Parties United in Interest Test

Appellate Division Mistakenly Limited the Doctrine to Mistakes Regarding the Identity or Status of a Proper Party

One form of the relation back doctrine involves parties “united in interest.” Thus, a claim asserted against a defendant in an amended pleading will relate back to claims previously asserted against a co-defendant if all three of the following conditions are met:

Both of the claims must arise out of the same conduct, transaction, or occurrence;
Both parties must be united in interest such that the co-defendant can be charged with notice of the institution of the action and will not be prejudiced thereby; and
The co-defendant must have known, or should have known, that, but for plaintiff’s mistake, the co-defendant would have been included in the original pleadings.

CPLR 203(b), (c). See Buran v. Coupal, 87 N.Y.2d 173 (1995).

Significantly, Buran held that the third prong of the test did not require a showing that the initial failure to name the new defendant resulted from an excusable mistake—it merely needs to be a mistake—thus overruling earlier cases that had required such a showing. A court can, however, refuse to apply the relation back doctrine where the plaintiff intentionally omits the new defendant from the original papers to seek some tactical advantage.

In Matter of Joseph Nemeth v. K-Tooling, 2023 N.Y. Slip Op. 05349 (Oct. 24, 2023), the Court of Appeals was dealing with a different issue, that is, the scope of the mistake that satisfies the third prong. The petitioners failed originally to name a “necessary party” under CPLR 1001(a). The respondents argued that the relation back doctrine was inapplicable because the petitioners were aware of the omitted necessary party’s existence but did not include her in the action. A majority of the Third Department applied its prior precedent limiting the relation back doctrine to mistakes regarding the identity or status of a proper party but not to mistakes of law. The Court of Appeals reversed, finding there to be no basis to make such a limitation:

[A]s we now make clear, the relation back doctrine is not so limited. Rather, the doctrine applies when the party knew or should have known that, but for the mistake—be it a simple oversight or a mistake of law (i.e., that the amending party failed to recognize the other party as a legally necessary party)—the non-amending party would have been named initially (citation omitted).

Id. at *9.

The Court explained that Buran did not support such a limitation. In fact,

in Buran itself, there was no mistake regarding identity. Buran involved husband-and-wife plaintiffs with property on Lake Champlain—the Burans—who sued their husband-and-wife neighbors—the Coupals—for trespass after the Coupals erected a seawall across a portion of the Burans’ property. The Court noted that “John and Janet Coupal obtained [the] property” and that, while the initial suit against the husband (John) was pending, “the Coupal[s] transferred ownership of their lot.” Hence, when the Burans first sued the Coupals, the Burans had reason to know the Coupals were tenants by the entirety and, thus, both necessary parties—as the Coupals later acknowledged in an amended answer. Despite this, the Court did not inquire into whether the mistake in omitting Janet was one of fact or law or otherwise suggest that the Burans’ knowledge of Janet’s identity was dispositive of the doctrine’s applicability. Rather, the Court still held that the Burans’ delayed addition of Janet Coupal related back to the original date of filing because Janet was united in interest with John, undisputedly had notice of the action, there was no delay or prejudice, and “whether the Burans’ mistake in failing to name her initially was ‘excusable’ was immaterial” so long as the Coupals should have realized that her omission was, in fact, a mistake (citations omitted).

Id. at *9–10.

Insurance Law § 3203(a)(2) Refund Provisions Do Not Apply to Discretionary Payments Under a Universal Life Insurance Policy

Court of Appeals Finds Planned Premium Payments Were Not Payments for Insurance

New York Insurance Law § 3203(a)(2) specifies the circumstances under which an insurance company is required to refund policy premium when a policyholder dies. It provides, in part, that “if the death of the insured occurs during a period for which the premium has been paid, the insurer shall add to the policy proceeds a refund of any premium actually paid for any period beyond the end of the policy month in which such death occurred.”

In Nitkewicz v. Lincoln Life & Annuity Co. of N.Y., 2023 N.Y. Slip Op. 05302 (Oct. 19, 2023), the New York State Court of Appeals was asked by the Second Circuit Court of Appeals, via a certified question, whether an annual planned payment that the insured (Joan C. Lupe via the Lupe Trust) made into an interest-bearing account associated with her universal life insurance policy constituted a “premium actually paid for any period” under the refund provision noted above.

The Court of Appeals concluded that § 3203(a)(2) did not apply to such discretionary payments. Initially, the Court explained the difference between whole life and term insurance policies on the one hand, and universal life policies on the other. With respect to the former, the policyholder pays fixed, periodic premiums. Universal life insurance policies, however, which combine pure life insurance with an investment option, do not have fixed premiums. Rather, the policyholder can make a payment in any amount, at any time he or she chooses, subject to certain policy conditions. These payments are then deposited in a “cash value account,” or “policy account,” an interest-earning account that the insurer administers. Deductions for the cost of insurance (COI) are then made by the insurer from the account. Those deductions vary from month to month based on, among other things, the insurer’s total exposure, administrative fees, and other required payments.
The amounts remaining in the account can grow tax-free over time based on an interest rate set by the insurer and can fund deductions in the future. Policyholders can pay a “planned premium,” which is often designed, but not guaranteed, to keep the premium payments up to date and the policy in force. Thus, the failure to pay a planned premium will not result in the termination or lapse of a policy, as long as there are sufficient funds in the policy account to cover the premium deductions. These policies can also provide the policyholder with the option to withdraw funds or take loans against the policy value if there are sufficient funds to cover the premiums.

The policy here listed a “Planned Premium” of $53,877.72 annually but provided that the Trust could “pay premiums by any method agreeable with [defendant], at any time prior to [Lupe’s] Attained Age 121 and in any amount” subject to certain minor limitations; defined “Planned Premium” as “the amount of premium [that the Trust] intend[ed] to pay” and “premium frequency” as “how often [the Trust] intend[ed] to pay the Planned Premium,” but stated that “Payment of the Planned Premium [was the Trust’s] option”; and noted that the Planned Premium “may need to be increased to keep [the Policy] and the coverage in force; payment of the [P]lanned [P]remium may not prevent [the Policy] from terminating.”

On May 7, 2018, the Trust paid its last annual Planned Premium. Six months later, Lupe died. The insurer paid out the $1.5 million death benefit but refused to refund any portion of the Planned Premium paid earlier in the year. The Trustee of the Trust filed a class action in federal district court against the defendant-insurer for breach of contract, alleging that its refusal to refund a prorated portion of the final year’s Planned Premium violated Insurance Law § 3203(a)(2). The District Court granted the insurer’s motion to dismiss. On appeal, the Second Circuit certified the question above.

The Court of Appeals noted that the statute states that the refund only applies to “premium[s] actually paid.” It then looked to Black’s Law and the Miriam-Webster dictionaries for the definition of “premium,” which included “[t]he amount paid at designated intervals for insurance; esp., the periodic payment required to keep an insurance policy in effect” or “the consideration paid for a contract of insurance.”

The Court opined that the Planned Premium paid “at designated intervals” was a “periodic payment” of once a year but did not constitute payments “for insurance.” They were the amounts added to the Policy Value by the Trust when it chose to; the insurer actually paid the policy premiums using monthly deductions “because those deductions kept the policy in force for another month.” Significantly, the policy provided that the Trust controlled the amount of the Planned Premium and it was not required “to keep [the] insurance policy in effect,” but that payments might have to be increased to keep coverage in force. The Court found that the characterization of the payments as “premiums” was not dispositive.

For similar reasons, a Planned Premium is not the “consideration” paid for the insurance contract. Thus, the plain meaning of “premium” as used in section 3203 (a) (2) does not include planned payments into a policy account at the policyholder’s discretion, like the Planned Premiums in this case, irrespective of whether the contracting parties used the word “premium” to describe those payments.

Id. at *8.

Moreover, a Planned Premium was not paid “for any period beyond the end of the policy month in which” Lupe’s death occurred. “[T]he Policy Value remaining after each monthly deduction might have gone to fund future monthly deductions or might have remained in the Policy Value, accruing interest, and ultimately, would be retained by defendant pursuant to the parties’ explicit agreement, given the Trust’s selection of the Option I death benefit.” Id. at *9.

The Court reasoned that

it was solely the Trust’s decision when to make payments and in what amount, and the Planned Premium is untethered to how much is deducted annually to pay for the COI and administrative fees. Further, since an insured is not required to pay an entire planned premium in or for any given period—or could pay in excess of the planned premium—plaintiff’s proposed interpretation would raise questions that the language of 3203 (a) (2) simply does not answer regarding how to allocate such payments to any “period” for purposes of the insurer’s refund obligation. Ultimately, plaintiff’s reading of the statute is both inconsistent with its plain language and lacks any connection to how universal life insurance works in practice.

Id. at *12.

While Bifurcating Liability and Damages in Personal Injury Actions Is the Rule, There Are Exceptions

Testimony of Several Medical Witnesses and Medical Records Were Relevant to Liability Trial

New York Uniform Rule § 202.42, 22 NYCRR § 202.42, entitled “Bifurcated trials” provides that “Judges are encouraged to order a bifurcated trial of the issues of liability and damages in any action for personal injury where it appears that bifurcation may assist in a clarification or simplification of issues and a fair and more expeditious resolution of the action.” § 202.42(a). In such a circumstance, the issue of liability is tried first; if there is any finding of culpability on the defendant’s behalf, damages are then tried. See § 202.42(b).

However, as § 202.42 (a) stresses, the important consideration is whether “bifurcation may assist in a clarification or simplification of issues and a fair and more expeditious resolution of the action.” In Bogumil v. Greenbaum Family Holdings, LP, 2023 N.Y. Slip Op. 05069 (4th Dep’t Oct. 6, 2023), plaintiff alleged that he sustained personal injuries when he fell from an “upper patio or balcony” of an apartment building owned and maintained by the defendants. The trial court granted the defendants’ motion to bifurcate. The Fourth Department reversed, concluding in this case that “the issue of liability is not distinct from the issue of plaintiff’s injuries because plaintiff made statements to several of his medical care providers following his fall that render the testimony of several medical witnesses as well as hospital and medical records relevant to the liability phase of the trial.” Id. at *2.

Yet Again, a Filing Error Results in a Jurisdictional Dismissal

CPLR 2001 Offers No Help

We have stressed many times in the past the critical importance of following jurisdictional filing requirements. And yet we continue to find cases in which proper filing of the required pleadings is not accomplished, resulting in a dismissal with no recourse. In Park Premium Enters., Inc. v. Norben Lofts, LLC, 2023 N.Y. Slip Op. 04971 (2d Dep’t Oct. 4, 2023), the plaintiff filed a complaint without a summons in a breach of contract action alleging non-payment for real property construction work. It also filed a notice of pendency against the property. The trial court granted defendants’ motion to dismiss. The Second Department affirmed. It noted that under CPLR 304(a) an action is generally commenced by the filing of a summons and complaint or summons with notice; the failure to file the initiating papers is a nonwaivable, jurisdictional defect, which renders the action a nullity; the plaintiff did not file (or serve) a summons here; and thus “the jurisdiction of the court was never invoked and the purported action was a nullity (citations omitted).” Id. at *2.

The court rejected the argument that the COVID toll played a role here because “no time period is at issue. Rather, in order to commence an action, Park Premium was required to file a summons and complaint, and the failure to do so warranted dismissal of the complaint.” Id. The court similarly dispensed with the contention that the failure could be disregarded under CPLR 2001 as “the complete failure to file the initial papers necessary to institute an action is not the type of error that falls within the court’s discretion to correct under CPLR 2001 (citation omitted).” Id. at *3.
So, to repeat: Properly file the required initiating papers in a timely fashion and effect service promptly.

Repeal of Civil Rights Law § 50-a Applied Retroactively

Generally Remedial Legislation Is to be Given Retroactive Effect

Former Civil Rights Law § 50-a provided, with limited exceptions, that “[a]ll personnel records [of law enforcement officers] used to evaluate performance toward continued employment or promotion . . . shall be considered confidential and not subject to inspection or review.” On June 12, 2020, the statute was repealed and related amendments were made to the Freedom of Information Law (FOIL). Significantly, the relevant legislation stated it “shall take effect immediately” (L. 2020, ch 96, § 5). In Matter of NYP Holdings, Inc. v. New York City Police Dept., 2023 N.Y. Slip Op. 05193 (1st Dep’t Oct. 12, 2023), the issue was whether the repeal of Civil Rights Law § 50-a applied retroactively to records created before June 12, 2020. In finding that it did, the court noted that the “repeal of Civil Rights Law § 50-a . . . reflected a strong legislative policy promoting transparency of police disciplinary records and eliminated any claim of confidentiality in them (citation omitted).” Id. at *2. Moreover,

[w]hile “the legislature made no express statement in the repeal itself, or in the limited legislative history concerning the same, as to whether the repeal was to be applied retroactively,” the repeal “went into effect immediately and, by its plain reading and intent, applies to records then existing and not simply to records created at a time subsequent to the enactment of the legislation.” The legislative history clarifies that the legislature “conveyed a sense of urgency” and intended for the legislation to be remedial (citations omitted).

Id. at *3.

The court concluded that although the fact that a statute is characterized as remedial is not dispositive, “as a general matter, ‘remedial legislation should be given retroactive effect in order to effectuate its beneficial purpose’ (citations omitted).” Id.

Again, Email Exchange Found to be Insufficient to Enforce a Settlement Agreement

Email Memorializing a “Tentative Resolution” Without Confirmation Fails

In last month’s edition of the Law Digest, we referred to the decision in Harleysville Ins. Company/Nationwide Gen. Ins. Co. v. Estate of Otmar Boser, 194 N.Y.S.3d 106 (2d Dep’t 2023), in which the Second Department held that emails between the parties’ counsel did not evidence a clear mutual accord. More recently, in Vlastakis v. Mannix Family Mkt. @ Veteran’s Rd., LLC, 2023 N.Y. Slip Op. 05287 (2d Dep’t Oct. 18, 2023), the same court found the requisites to enforce a purported settlement agreement lacking because the subject email “stated that it was memorializing the ‘tentative resolution’ of the case and was sent by counsel for the defendant, which is the party seeking to enforce the agreement. There is no email subscribed by the plaintiff, who is the party to be charged, or by her attorney confirming the agreement (citation omitted).” Id. at *2.

A CPLR 3211(a)(4) Dismissal Requires There to Be a Prior Pending Action

If Complaint Was Not Served in the Prior Action, It Is Not Pending!

CPLR 3211(a)(4) provides that “[a] party may move for judgment dismissing one or more causes of action asserted against [them] on the ground that . . . there is another action pending between the same parties for the same cause of action in a court of any state or the United States.”

In Quinones v. Z & B Trucking, Inc., 2023 N.Y. Slip Op. 05282 (2d Dep’t Oct. 18, 2023), the plaintiff commenced a personal injury action in October 2019 (the prior action) but never served the complaint on the defendants. In March 2021, the plaintiff brought this action, which was basically identical to the prior action. The defendants moved to dismiss the complaint in this action on the grounds that there was a prior action pending. The trial court granted the motion.

The Appellate Division disagreed, finding that CPLR 3211(a)(4) was inapplicable because “a complaint must have been served in that other action, otherwise it is not ‘another action,’ or a ‘prior action pending.’ Here, it is undisputed that the complaint in the prior action was not served (citations omitted).” Id. at *3.