Use of CPLR 4401 Motion During Trial

In Botwinik v. Moseson, after the jury was empaneled, but before opening statements, the defendant orally moved in limine to preclude plaintiff's expert nurse from testifying on the basis that the nurse was not qualified to give a medical opinion on the issue of lack of informed consent (CPLR 4401-a). The plaintiff cross-moved to substitute the testimony of a physician if the court determined that the nurse's testimony would be insufficient. The court granted the defendant's motion and dismissed plaintiff's case.

On appeal, the First Department reversed. The Court noted that a CPLR 4401-a motion must be made "at the end of plaintiff's case" (see also CPLR 4401 - motion "after the close of evidence presented by an opposing party"). Here, since the motion was made before plaintiff had the opportunity to present her case, the trial court abused its discretion when it granted the defendant's motion.

The Court also observed that courts favor disposition of cases on their merits, rather than on oral application made while the jury is waiting (see Murray v. Brookhaven Mem. Hosp. Med. Ctr, 73 A.D.3d 878 [2010]).

Second Department Issues Big Foreclosure Decision

In a case having potentially enormous implications on foreclosure actions in New York State and throughout the country, the Second Department in Bank of New York v. Silverberg, addressed whether a party has standing to commence a foreclosure action when that party's assignor, Mortgage Electronic Registration Systems, Inc. (MERS), was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes.

As Judge Leventhal described MERS in the Court's decision: "'In 1993, the MERS system was created by several large participants in the real estate mortgage industry to track ownership interests in residential mortgages' (Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90, 96). MERS was intended to 'streamline the mortgage process by using electronic commerce to eliminate paper.'  MERS's implementation followed the delays occasioned by local recording offices, which were at times slow in recording instruments because of complex local regulations and database systems that had become voluminous and increasingly difficult to search (see Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, 78 U Cin L Rev 1359, 1366 [2010]).

'Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system' (Matter of MERSCORP, Inc. v Romaine, 8 NY3d at 96 [internal footnotes omitted]).

The MERS system facilitated the transfer of loans into pools of other loans which were then sold to investors as securities (see Peterson, at 1361-1362). MERS delivers savings to the participants in the real estate mortgage industry by allowing those entities to avoid the payment of fees which local governments require to record mortgage assignments (see Peterson at 1368-1369).

Lenders identify MERS as nominee and mortgagee for its members' successors and assignees. MERS remains the mortgagee of record in local county recording offices regardless of how many times the mortgage is transferred, thus freeing MERS's members from paying the recording fees that would otherwise be furnished to the relevant localities (id.; see Matter of MERSCORP, Inc. v Romaine, 8 NY3d at 100). This leaves borrowers and the local county or municipal recording offices unaware of the identity of the true owner of the note, and extinguishes a source of revenue to the localities. According to MERS, any loan registered in its system is 'inoculated against future assignments because MERS remains the mortgagee no matter how many times servicing is traded.'  Moreover, MERS does not lend money, does not receive payments on promissory notes, and does not service loans by collecting loan payments."

Judge Leventhal speaking for the Court held:

"because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.

MERS purportedly holds approximately 60 million mortgage loans (see Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, New York Times, March 5, 2011), and is involved in the origination of approximately 60% of all mortgage loans in the United States (see Peterson at 1362; Kate Berry, Foreclosures Turn Up Heat on MERS, Am. Banker, July 10, 2007, at 1). This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property."

Is Electronic Filing Of Notice Of Entry Sufficient To Start Clock For Appeal?

In Fazio v. Costco Wholesale, the plaintiffs claimed that the defendant's appeal was untimely because defendant filed its Notice of Appeal 32 days after it was served electronically with Notice of the Entry.  The First Department held that electronic filing did not satisfy the requirement of notice by a party.  According to the court, "New York State Court Electronic Filing (NYSCEF) site confirmation shows the date on which the order with notice of entry was filed electronically and e-mail notifications were sent to counsel for the parties. However, the NYSCEF site's transmission of notification of the entry to e-mail service addresses 'shall not constitute service of notice of entry by any party' (22 NYCRR 202.5b[h][3]). 'A party shall serve notice of entry of an order . . . on another party by serving a copy of the notification . . . and an express statement that the transmittal constitutes notice of entry' (id.). The only affidavit of service in the record shows that the notice of entry was served on defendant by mail. Thus, defendant had 35 days to notice its appeal (see CPLR 2103[b][2])."

Plaintiff's Employer Functioned as "One Company" With Defendant

In Carty v. East 175th Street Housing Dev. Fund Corp., the First Department found that the plaintiff's employer functioned as one company with defendant for purposes of barring plaintiff's claims under Workers' Compensation Law 11. More specifically, the Court reached its conclusion upon finding that the two entitites shared the same president and director of finance, financial management, administrative headquarters and insurance policy, as well as functioning with a common purpose. Moreover, although the building was owned by the defendant, the plaintiff's employer paid all of the building's operating expenses and had employees to operate the facility.

Panel Discusses Jury Charge In A Labor Law 240(1) Case

In Ramirez v. Willow Ridge Country Club, Inc., the plaintiff was in the process of demolishing a second-story deck attached to the defendant's building when he allegedly fell off the deck through a space where the railing had been removed. By contrast, his foreman testified that plaintiff was straddling between an A-frame ladder and an extension ladder affixed to the building when a gutter he was removing broke free, causing plaintiff to lose his balance and fall. The foreman further testified that he specifically admonished the plaintiff to stop.

The jury returned a verdict finding that the defendant had violated Labor Law 240(1), but that the violation was not a substantial factor in causing the accident. In affirming the jury's verdict, the First Department observed that the jury was instructed that it should find for defendants if the jury concluded that plaintiff's actions were the only substantial factor in bringing about the accident. As such, the jury specifically had not been instructed on the recalcitrant worker defense. The Court held that the verdict was consistent with the charge and "pereceive[d] no ground upon which [the] verdict should be disturbed."

For those who are curious as to what the PJI has to say with respect to the "recalcitrant worker defense," the proposed charge is found at PJI 2:217.2, and suggests that the jury be charged the following:

If, however, you decide that plaintiff in this case was a “recalcitrant worker,” then you must find for the defendants. Recalcitrant means that the worker deliberately and unreasonably failed or refused to use an available and adequate safety device. “Deliberately” means intentionally. It does not mean negligently or carelessly. In order to establish that the plaintiff was a recalcitrant worker, the defendant has the burden of proving (1) that [specifiy device such as safety harnesses/vests and tie lines] were provided to the plaintiff and were adequate and safe (2) plaintiff knew both that the safety harness and tie lines were available and that he was expected to use them (3) he chose for no good reason not do to so and (4) had he not made that choice he would not have been injured.

If the foregoing conditions are met, then you will have determined that plaintiff was the sole proximate cause of his accident, and you need proceed no further.

New York Loosens Attorney Admission Rules For In-House Counsel

The Court of Appeals has amended its rules for the Admission of Attorneys adding Part 522 relating to the registration of in-house counsel in New York. The amendment, effective April 20, 2011, permits attorneys in good standing in certain other U.S. jurisdictions to act as in-house counsel for a New York organization without satisfying traditional admission requirements.  For complete details click here.     

New York Establishes Medical Indemnity Fund (also referred to preenactment as the Neurologically Impaired Infant Fund or NIIF)

On Thursday, March 31st, the New York State Legislature passed its first on-time budget in five years. Significantly, for medical malpractice practitioners, the budget included the creation of the Medical Indemnity Fund. The Fund was established to pay for future medical costs in birth-related neurological injury lawsuits. In those cases, all future medical expenses will be paid through the Fund, not by the defendant or its insurer. We are still working our way through analyzing the new legislation, but some of the important early highlights to note:

(1) The law will apply to all birth-related neurological injury lawsuits where no judgment has been entered and no settlement agreement has been entered into by the parties before April 1, 2011.

(2) The costs covered by the Fund include "future medical, hospital, surgical, nursing, dental, rehabilitation, custodial, durable medical equipment, home modifications, assistive technology, vehicle modifications, prescription and non-prescription medications, and other health care costs actually incurred for services rendered to and supplies utilized by qualified plaintiffs."

(3) The plaintiff's attorney's fee will be based upon the "entire sum awarded" by the jury or the court, or the full sum of the settlement. It "shall be paid in a lump sum by the defendants and their insurers pursuant to section four hundred seventy-four-a of the judiciary law; provided however that the portion of the attorney fee that is allocated to the non-fund elements of damages shall be deducted from the non-fund portion of the award in a proportional manner."

(4) Every settlement agreement for an alleged birth related neurological injury shall provide that in the event the administrator of the fund determines that the plaintiff or claimant is a qualified plaintiff, all payments for future medical expenses shall be paid in accordance with the fund provisions. When the settlement agreement does not have such a provision, "the court shall direct the modification of the agreement to include such term as a condition of court approval."

(5) Where the jury or court has made an award for future medical expenses, either party can make an application to the court "that the judgment reflect that, in lieu of that portion of the award that provides for payment of such expenses, and upon a determination by the fund administrator that the plaintiff is a qualified plaintiff, the future medical expenses of the plaintiff shall be paid out of the fund." The Court must grant such a request if the applicant makes a prima facie showing that the plaintiff qualifies for the Fund.

Initially, the most important aspect to note is that if you have a case involving an infant neurologically impaired at birth, which has not settled or reached a judgment as of April 1, 2011, your case appears to qualify for the Fund. That will result in significant cost savings for defendants and plaintiff's counsel will have to advise their clients of how the Fund will operate.

Beyond that, at this preliminary stage, we will hold-off on discussing any other specific implications of the new Fund. Of course, we welcome any insights or perspectives you would like to share. As we continue to analyze the statute and receive feedback, we will provide periodic updates on this blog.