New York State Law Digest: October 2023

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New York State Law Digest: October 2023

CASE LAW DEVELOPMENTS

Second Department Affirms Denial of Defendants’ Motion to Compel Production of Arons’ Authorization to Conduct Interview on Causation

Court Refuses to Extend Arons Ruling

In Arons v. Jutkowitz, 9 N.Y.3d 393, 409 (2007), the Court of Appeals considered the privacy issues raised by the Health Insurance Portability and Accountability Act (HIPAA), holding that an attorney could interview a treating physician for an adverse party who affirmatively places his or her medical condition in controversy (but the Court did not require the doctor to participate in the interview). The Court of Appeals analogized interviews of non-party treating physicians to obtaining informal discovery from corporate employees or former corporate executives, which the Court had previously sanctioned. See Niesig v. Team I, 76 N.Y.2d 363 (1990); Muriel Siebert & Co., Inc. v. Intuit, Inc., 8 N.Y.3d 506 (2007). Significantly, the Arons Court also required plaintiff’s counsel to provide HIPAA-compliant authorizations to defendant’s counsel, upon request.

In Yan v. Kalikow Mgt., Inc., 217 A.D.3d 47 (2d Dep’t 2023), the Second Department was confronted with a question it characterized as being of first impression: whether the defendants were entitled to an authorization to conduct such an informal, ex parte interview of a physician assistant who treated the plaintiff, with regard to a statement the plaintiff made as to the cause of her accident, as opposed to the diagnosis or treatment of the alleged accident-related injury.

In Yan, the plaintiff alleged in this personal injury action that her car was parked on the street in front of property owned and managed by the defendants; that she walked in the street behind her car, stepped onto the sidewalk, and then walked into a tree well near the car’s passenger side door; and that she tripped and fell while walking in the tree well, fracturing her right wrist. The plaintiff was then treated at the hospital by a physician assistant, Alejandro F. Molina. A medical record prepared by Molina noted that the plaintiff had stated that “she was attempting to enter her automobile on the passenger’s side when she tripped over a tree branch falling onto [her] outstretched right arm.”

The complaint and bill of particulars alleged that the plaintiff fell due to poorly maintained paver blocks, loose and out-of-place pavers, and exposed tree roots. At her deposition, the plaintiff testified that she tripped when she stepped with her right foot onto a paver, which caused her to trip. Plaintiff’s counsel subsequently refused to provide an authorization requested by the defendants to interview Molina. The trial court denied defendants’ motion to compel the production of the authorization.

The Second Department affirmed. It noted that in Arons, the Court of Appeals did not specifically address the circumstances here, that is, “whether an Arons authorization would apply to information about causation and liability, where, as here, the plaintiff’s alleged injury was not caused by medical treatment but instead was caused by a trip and fall accident.” Thus, “granting the subject branch of the defendants’ motion would result in an extension of the scope of Arons.” Yan, 217 A.D.3d at 51. Instead, Arons focused on the fact that the plaintiff had placed his medical condition in issue and concerned three medical malpractice actions, “where causation is related to and intertwined with the issues of the patient’s medical condition and treatment.” Id.

Ultimately, the Second Department refused to extend the scope of Arons to include an ex parte interview with a medical provider about the cause of an accident, finding such an extension unwarranted. It stressed that CPLR Article 31 “affords litigants numerous discovery devices with which they may obtain such information.” Id. at 52.

Second Department Holds Email Exchange Between Counsel for the Parties Did Not Evidence a Clear Mutual Accord

Thus, it Refuses to Enforce the Alleged Settlement Agreement Reached After an Arbitration Award

We have, in the past, touched on email settlements. We cautioned attorneys to be careful about what they write in emails and not to be lulled by their informality. See, e.g., David L. Ferstendig, First Department Holds Email Settlement Enforceable Without Attorney’s Name Retyped or Signature, 729 N.Y.S.L.D.1-2 (2021). Conversely, however, if you would like to conclude a settlement it is imperative that you take the necessary precautions and cross your t’s and dot your i’s. A recent Second Department case highlights the dangers of not closing the deal.

In Harleysville Ins. Company/Nationwide Gen. Ins. Co. v. Estate of Otmar Boser, 194 N.Y.S.3d 106 (2d Dep’t 2023), the plaintiff brought an action against the defendants, the Estate of Otmar Boser and Ruth Boser, as executor of the Estate of Otmar Boser, to enforce a purported settlement agreement. They alleged that that agreement related to a prior personal injury and wrongful death action commenced by Ruth Boser, in connection with a car accident in which the decedent, Otmar Boser, driving a car insured by the plaintiff here, was injured and later died. Ruth Boser had also filed a demand for arbitration of an underinsurance claim against the plaintiff resulting in a $950,000 arbitration award. However, the plaintiff alleged that a settlement agreement had been negotiated and finalized three days after the award, rendering the arbitration award a nullity and moved to enforce the agreement. The defendants cross-moved to confirm the arbitration award. The trial court denied the motion and granted the cross-motion.

The Second Department affirmed. It noted that CPLR 2104 provides that “[a]n agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered”; a settlement agreement will not be enforceable unless it sets forth all of the material terms and “there must be [a] clear mutual accord between the parties”; and “[a]n email that merely confirms a purported settlement is not necessarily sufficient to bring the purported settlement into the scope of CPLR 2104 (citations omitted).” Id. at *3. Here, the court concluded the email exchange between counsel did not evidence a clear mutual accord, because it contained a discussion of further occurrences necessary to finalize the agreement. Specifically, the email of counsel for the defendants contains an additional term—requiring the plaintiff to agree that the amount of $50,000, which had been received from the insurance carrier of the other vehicle involved in the accident, would not be set off against the settlement, and the defendants would receive a total of $500,000—and thus does not demonstrate a final written agreement which was the product of mutual accord. Further, the email at issue noted that any agreement was based upon an understanding that no arbitration award had been reported, and that counsel for the defendants intended to inform the arbitrator that no award was required—evidencing that additional steps had to be taken to finalize the settlement (citations omitted).

Id. at *3–4.

Because the email exchange between counsel did not meet the requirements of CPLR 2104, it did not establish a settlement agreement between the parties.

On Motion to Change Venue, Majority of First Department Finds That Defendant Did Not Establish That There Was a Valid Agreement That Contained a Forum Selection Clause

Dissent Asserts That Majority Effectively Shifted the Burden of Authenticating the Agreement

In Knight v. New York & Presbyt. Hosp., 194 N.Y.S.3d 218 (1st Dep’t 2023), decedent fell, fractured her hip and was treated prior to her death by the defendants, a hospital, a nursing home and Dewitt Rehabilitation and Nursing Center, Inc. d/b/a Upper East Side Rehabilitation and Nursing Center (Dewitt). Plaintiff, decedent’s son, as administrator of the decedent’s estate, brought this personal injury action in New York County based on allegations that the decedent resided, and defendants operated, in that county.

Dewitt moved to change the venue from New York to Nassau County, arguing that the decedent had executed admission agreements with Dewitt that specified Nassau County as the forum for resolving claims arising out of the agreements or for negligence or personal injury. Dewitt offered the affidavit of its Director of Admissions, Francesca Trimarchi, stating that it was Dewitt’s custom and practice (i) to have a representative meet with residents to review the admissions paperwork, including the admission agreement, and (ii) once it was determined that the resident had the capacity to understand and sign the agreement, the representative would review each page and personally witness the signature (done by hand and electronically). The affidavit attached what purported to be the decedent’s admissions agreement (Docu) signed by the decedent and the facility’s representative, with the decedent’s initials on each page. However, the facility did not submit an affidavit from that representative or “provide any explanation as to how the Docusign signatures were generated or otherwise explain how those signatures could be reliably attributed to decedent.” Id. at *3.

Plaintiff argued that Dewitt had not established that the decedent had executed the agreements and that the affidavit Dewitt proffered was not based on firsthand knowledge that decedent actually signed the document. Plaintiff also submitted an affidavit with an exemplar of decedent’s signature. He maintained that he was familiar with his mother’s signature and asserted that the Docusign signatures on the agreements, which differed visibly from the exemplar, were not the decedent’s.

The trial court granted the venue motion. A majority of the First Department reversed. It acknowledged that [w]here no material facts are in dispute, a contractual forum selection clause is prima facie valid and enforceable, absent a showing that it is “unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching,” or that a trial in the designated forum would be so difficult as to deprive the challenging party of its day in court (citations omitted).

Id. at *4. However, the court found that Dewitt had not properly authenticated the subject agreement. That can be done by several means, including by a certificate of acknowledgment (CPLR 4538), by a comparison of handwriting (CPLR 4536), or by testimony of a person who witnessed the document signing.

Dewitt did not submit a certificate or a handwriting exemplar. Moreover, as noted above, the affidavit submitted by Dewitt was of a representative (Trimarchi) who was not present during the signing of the admission agreements. Thus, she had no knowledge of the circumstances of the actual signing of the agreements. Instead, she discussed “her understanding of how admissions agreements were usually signed,” but “did not describe any protocols governing the use of Docusign.” Id. at *5. The failure to authenticate the agreements rendered the forum selection clauses contained in them unenforceable.

The majority rejected the argument that the agreements were admissible as business records. Significantly, the Trimarchi affidavit failed to assert that the agreements were not only maintained, but created, in the regular course of business and “Trimarchi’s conclusory assertions do not meet what is required for admission of the agreements as business records.” Id. at *7.

In addition, the court found that the plaintiff raised issues of fact as to the validity of decedent’s signatures, highlighting “the irregularities in decedent’s purported signatures, together with an exemplar of a known signature.” Id. at *8.

The court emphasized the particular concerns associated with electronic signatures:

[W]hile electronic signatures, by statute, have the same validity as handwritten signatures, electronic signatures, by their nature, may present special considerations when their genuineness is challenged. Under the current state of technology, it is frequently the case that a person’s electronic signature bears little resemblance to a handwritten signature made the same day. Indeed, an “electronic signature,” which the ESRA defines as “an electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record,” may not seek to duplicate the person’s handwritten signature at all.

Id. at *8–9.

The majority concluded that because Dewitt had failed “at this juncture” to establish that there was a valid agreement with the decedent, the forum selection clause was not to be considered.

The dissent believed the forum selection clause was binding on the parties to this action and should be enforced. It saw “no reason to disregard the prior rulings of this Court enforcing forum selection clauses in admission agreements to nursing homes.” Id. at *11. The dissent argued that while the First Department “has made clear that the burden here is on plaintiff, as the challenging party, to demonstrate why the forum selection clause should not be enforced,” the majority here “is effectively changing the evidentiary standard by erroneously shifting the burden of authenticating the agreements and therefore the enforceability of the forum selection clause to defendant nursing home. This holding disregards our prior decisions as well as CPLR 501, 510 and 514.” Id. at *13. The dissent further criticized the majority for ignoring “the well-settled ‘policy of the courts of this State’” to enforce forum selections clauses, and “basic contract law that ‘parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract’ (citations omitted).” Id. at *15.

Moreover, the dissent found that the plaintiff’s submission did not establish that the admission agreement “was unreasonable, unjust, contravenes public policy, the result of fraud or overreaching, or shown that a trial in the selected forum would deprive the challenging party of its day in court (citations omitted).” Id. at *14. Finally, the person alleging a forgery has the burden to establish that a contract was forged, and plaintiff failed here to meet that burden:

Here, plaintiff did not identify the document from which the exemplar of decedent’s signature was extracted or the date when that document was signed. Plaintiff also failed to present any expert affidavit on the alleged inauthenticity of decedent’s signature. As noted by the court, plaintiff failed to account for the possibility that his decedent’s signature changed as she aged and became infirm. The court also noted that the decedent’s signatures on the several agreements were inscribed via an electronic document signature pad, which almost invariably will make a person’s signature appear different from the same person’s signature on a piece of paper.

Id. at *14–15.

First Department Reaffirms That CPLR 302(a)(2) Requires the Defendant to Commit the Tort While Physically in the State

Finds Plaintiff Did Not Carry Burden in This Case

CPLR 302(a)(2) provides for specific or long-arm jurisdiction where a non-domiciliary defendant “commits a tortious act within the state.” In SOS Capital v. Recycling Paper Partners of PA, LLC, 2023 N.Y. Slip Op. 04480 (1st Dep’t Aug. 31, 2023), the plaintiff alleged that the defendants made misrepresentations in New York. The First Department “reaffirmed” its position that to fall within the language of the statute, the defendant must commit the tort “in person or through an agent, while physically present within the boundaries of this state.” The court emphasized that the fact that the injury may have occurred in the state does not “serve to transmute an out-of-state tortious act into one committed here.”

In this action, the court held that the plaintiff had not carried its burden:

[W]e find that it has failed to demonstrate that the individual defendants, who were domiciled in Florida and Pennsylvania respectively, committed a tortious act within the State of New York in accordance with the meaning of CPLR 302(a)(2). Plaintiff contends that the individual defendants made misrepresentations to plaintiff, a resident of New York, and those statements induced plaintiff to enter into the instant agreement to its detriment. Specifically, plaintiff alleges that the individual defendants sent emails to plaintiff in New York, containing images that falsely represented that the masks being sold were both FDA-approved and approved for medical use. Notably, however, plaintiff does not contend that RPP [Recycling Paper Partners of PA, LLC] or the individual defendants were ever physically present in New York when they made the alleged fraudulent representations.

Id. at *13–14.

The court noted that there was no evidence here of a conspiracy, where the defendant’s physical presence in the state is not required and where the (jurisdictional) acts are carried out by agents or co-conspirators. There, the acts of a co-conspirator can be attributed to a defendant for the purposes of obtaining personal jurisdiction over that defendant. See, e.g., Wimbledon Fin. Master Fund, Ltd. v. Weston Capital Mgt. LLC, 160 A.D.3d 596, 596–97 (1st Dep’t 2018) (“The Supreme Court properly concluded that defendants are subject to jurisdiction under New York’s long-arm statute because they were part of a conspiracy that involved the commission of tortious acts in New York (citations omitted). Defendants were directors on Gerova’s board during most of the time when Gerova was involved in a fraudulent scheme. The amended complaint details the conspiracy to commit fraud using Gerova, the agreements between Gerova and Weston board members and insiders, among others, to loot Wimbledon, and Wimbledon’s resulting insolvency (citation omitted). Although defendants did not reside or do business in New York, other Gerova defendants were in New York or interacted regularly with New York, including one of the masterminds of the fraudulent scheme, John Galanis. Regarding their overt acts in furtherance of the conspiracy, defendants’ approval of a Gerova proxy statement on which they are listed and which seeks approval of the sham acquisition of a reinsurance company, their receipt of ‘hush money’ to ignore certain red flags at Gerova, and their failure to correct misrepresentations or disclose material information to the public sufficed at this stage.”).

First Department Agrees That CPLR 214-g Revives Claims Brought by New York Resident With Respect to Abuse Occurring Outside of the State

Joins the Fourth Department

In the August 2022 edition of the Law Digest, we reported on the Second Department decision in S.H. v. Diocese of Brooklyn, 205 A.D.3d 180 (2d Dep’t 2022), with respect to CPLR 214-g. In 2019, CPLR 214-g was added as part of a comprehensive omnibus bill signed into law as the Child Victims Act (CVA), reviving for one year previously time-barred actions arising out of a claim for child sexual abuse. The revival period was subsequently extended to two years. In S.H., the court ruled, in a case of first impression, that (1) CPLR 214-g is unavailable to nonresident plaintiffs where the alleged abuse occurred outside of New York; and (2) with respect to a cause of action accruing outside the state, CPLR 214-g does not preclude the application of New York’s borrowing statute, CPLR 202.

Subsequently, in Shapiro v. Syracuse Univ., 208 A.D. 3d 958 (4th Dep’t 2022), the Fourth Department held that CPLR 214-g did apply where the plaintiff was a resident even where the abuse occurred outside of New York. See David L. Ferstendig, Does CPLR 214-g Apply to a Resident for Abuse Occurring Outside the State?, 742 N.Y.S.L.D. 2 (2022). The First Department has now concurred with the Fourth Department. See Samuel W. v. United Synagogue of Conservative Judaism, 2023 N.Y. Slip Op. 04416 (1st Dep’t Aug. 24, 2023).

Refresher: Computing the COVID Toll

Window to Bring Actions Based on Causes of Action with Three-Year Limitation Period Closing Fast

Back to the COVID toll. As noted in Brash v. Richards, 195 A.D.3d 582, 582 (2d Dept 2021), “[a] toll suspends the running of the applicable period of limitation for a finite time period, and ‘[t]he period of the toll is excluded from the calculation of the [relevant time period]’ (citation omitted).” Thus, a toll “stops the clock” for statute of limitations purposes during a period that begins with the event that gives rise to the toll and ends with the expiration of the time allotted for the toll.

In Ruiz v. Sanchez, 2023 N.Y. Slip Op. 04608 (2d Dep’t Sept. 13, 2023), the plaintiff mistakenly advanced the notion that she had 228 days after the governor’s COVID tolling period expired to bring her action. That figure (228 days) represents the length of the tolling period covered by the governor’s various executive orders (March 20, 2020 until November 3, 2020). As the Second Department correctly concluded, plaintiff only had the remaining 152 days left on her three-year statute of limitations after the toll was lifted to bring her action, which she failed to do.

Thus, this may be the time to review the necessary computation. Determine the applicable statute of limitations period and when it accrued, then compute how many days were left in the limitation period as of March 20, 2020, when the toll went into effect. An action must be commenced within that time period after the lifting of the toll. This, of course, only covers claims that were not barred prior to March 20, 2020.

Using an example we noted before: As of March 20, 2020, there was one year, 290 days left on the statute of limitations. The action had to be commenced within one year, 290 days after the toll was lifted. Thus, the action should have been brought by August 20, 2022, but since that date falls on a Saturday, the deadline would get pushed off until August 22 (under General Construction Law § 25-a).

Also important to note is that Ruiz dealt with a three-year limitation period, applicable to personal injury actions, which are filed frequently in New York State. The window on bringing actions on those claims using the toll is rapidly closing as we approach the third anniversary of the expiration of the COVID toll. And for causes of action that accrued between March 20 and November 3, 2020, the three-year statute of limitations will run on November 3, 2023 (the last day of the limitation period). For those who procrastinate—DON’T! Get those actions filed immediately!