Gartner + Bloom, P.C., participates in Frosty’s Friends 2018 toy drive

By:    Gartner + Bloom, P.C.
Date: December 13, 2018

            Gartner + bloom, P.C., spearheaded by New Jersey Partner Alex Fisher, is participating in this year's Frosty's Friends toy drive. The program collects children’s letters to Santa and sends them to volunteers who play Santa and buy, wrap, and deliver the gifts before Christmas. Happy Holidays!

First Department affirms decision to dismiss claims against individual condo Board Members

By:      Gartner + Bloom, P.C.

Date:   December 5, 2018

            After winning summary judgment in the New York County Supreme Court, William Brophy successfully defeated the Plaintiffs’ appeal to the Appellate Division, First Department. The First Department affirmed the lower court’s decision to dismiss all claims against individuals who serve(d) on the condominium’s Board of Managers based on the business judgment rule.

A Ticking Time Bomb: Existing Arbitration Clauses in Light of New Law

By:         Jacqueline A. Muttick, Esq.
               Associate, New Jersey
Date:      December 3, 2018

            While there is a strong public policy in favor of arbitration, the Appellate Division in Flanzman v. Jenny Craig, Inc., et al., __ N.J. Super. __ (App. Div. 2018), has held that arbitration provisions need to specify the arbitral forum or otherwise set forth the process for arbitration in order to be enforceable. The Appellate Division, in a November 13, 2018, published opinion that superseded its prior October 17, 2018, opinion, held that an arbitration clause that did not specify the forum or process for arbitration was unenforceable, as there is no “meeting of the minds” when the parties do not understand the rights that replace the right to a jury trial.

            The Court found that parties to an arbitration agreement must select the forum, like the American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation Services (“JAMS”), or otherwise set forth the process for arbitration at the time of the agreement. Failure to specify the forum or set forth the process for arbitration may result in an unenforceable arbitration agreement.

            In Flanzman, plaintiff filed a lawsuit for employment discrimination and defendant, relying upon an arbitration clause, sought to compel arbitration. The clause at issue specifically stated the following:

“Any and all claims or controversies arising out of or relating to [plaintiff's] employment, the termination thereof, or otherwise arising between [plaintiff] and [defendant] shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration. This agreement to arbitrate includes all claims whether arising in tort or contract and whether arising under statute or common law including, but not limited to, any claim of breach of contract, discrimination or harassment of any kind.”

            While the trial court compelled arbitration, the Appellate Division reversed and held that there is no “meeting of the minds” between the parties when the arbitration clause lacks an agreed upon forum or process for arbitration. Citing Atalese v. United States Legal Services Group, 219 N.J. 430 (2014), the Court explained that arbitration agreements, like any other contract, require mutual assent and a “meeting of the minds” before the agreement will be found enforceable. Parties to an arbitration agreement must “clearly and unambiguously” agree to waive their otherwise statutory right to a trial, and the parties must understand the ramifications of that waiver. “[T]o understand the ramifications of a waiver of a jury trial, the parties must generally address in some fashion what rights replace those that have been waived.”

            This fashioning includes setting forth the arbitrator(s) who will be used, or identifying an arbitral institution, like AAA or JAMS. Selection of an arbitral institution “informs the parties about the right that replace those that they waived in the arbitration agreement,” including the rules, procedures, and setting for the arbitration. The Court noted that if an arbitration agreement does not specify an arbitration forum it could nonetheless suffice by setting forth the process for selecting a forum.

            The Court distinguished this matter from one in which a court under the Federal Arbitration Act (9 U.S.C. §5) or the New Jersey Arbitration Act (N.J.S.A. 2A:23B-11(a)) could appoint an arbitrator. The Court noted that the case under review was not a matter in which the parties could not select an arbitrator; rather, in this matter the forum, not the arbitrator, was unspecified. In the absence of a forum or forum selection process, there was no “meeting of the minds” or agreement to arbitrate.

            The Court stressed in its ruling that there are no “talismanic words” required in an arbitration provision to make it enforceable, other than the requirement for a “clear mutual understating of the ramifications” of judicial waiver as set forth in Atalese. Since the arbitration provision in Flanzman did not set forth any arbitration forum or process for choosing an arbitration forum, or otherwise specify the rights replacing the right to proceed in court, the clause was unenforceable.

            While the Appellate Division emphasized that this ruling does not require specific language in an arbitration clause to make it enforceable, it does add a previously unarticulated condition for such clauses to be valid. The Court in Atalese mandated that arbitration provisions clearly and unambiguously state that parties waive the right to seek relief in court and instead elect arbitration. The Flanzman ruling now requires the arbitration forum, or the process of choosing a forum, be denoted in sufficient detail so the parties understand the replacement forum.

            While Flanzman dealt with an employment matter, it will likely have a far-reaching impact on arbitration clauses in other contracts, especially contracts between “sophisticated parties” and individuals. Now, parties seeking to enter into arbitration agreements need take heed not only to waive explicitly the right to bring an action in court (as required by Atalese), but also to specify the arbitration forum or forum-selection process in accordance with Flanzman.

Associate Vera Tsai forces reversal at Second Department, which vacated a client’s previous default judgment and struck the Note of Issue, resulting in a return to discovery.

From: Gartner + Bloom, P.C.

Date:   October 14, 2018

            After joining the defense for a Defendant held in default, Associate Vera Tsai successfully appealed to the Second Department. The Second Department reversed the lower court’s decision (i) vacating the default; and (ii) and striking the Note of Issue in order to permit further discovery by the client.

See the decision here.

G&B successfully opposes Motion to Restore, leading to dismissal, of Suffolk County matter that presented unique property damage allegations

By: Gartner & Bloom, P.C.
Date: September 27, 2018

            Partner Arthur P. Xanthos and Associate Michael E. Kar successfully opposed a plaintiff’s Motion to Restore in a matter containing unique property damage allegations. Following the submission of opposition to the Motion, the case was dismissed.

See the decision here.

Rodriguez v. City of New York – Court of Appeals decision is adverse to defense counsel’s ability to defend comparative negligence cases; holds that plaintiffs may obtain summary judgment on liability without establishing the absence of their own negligence

By:      Roy Anderson, Esq.

            Associate, New York

Date:   April 5, 2018

            The Court of Appeals dealt a significant blow to defense counsel in a recent decision, Carlos Rodriguez v. City of New York (2018), by holding that plaintiffs do not bear the burden of first establishing the absence of their own comparative negligence to obtain partial summary judgment as to liability in a negligence case. The Rodriguez decision arguably overrules Thoma v. Ronai, 189 A.D. 2d 635 (1st Dep’t 1993) aff’d 82 N.Y. 2d 736 (1993) and its progeny, which for two decades have been cited for the proposition that Plaintiffs moving for summary judgment on liability bear the burden of demonstrating the absence of any material issue of fact concerning their comparative negligence.

            In Rodriguez, the plaintiff was employed by the City of New York as a garage utility worker. He was injured while working in a garage “outfitting” sanitation trucks with tire chains and plows. An out-of-control sanitation truck skidded on ice and crashed into a car in the garage which then pinned the plaintiff up against a rack of tires. He sustained bodily injuries which necessitated a spinal fusion surgery and rendered him permanently disabled from working.

            After discovery, plaintiff and the City of New York moved for summary judgment on the issue of liability.  Plaintiff’s motion argued that even if there was an issue of fact with respect to his comparative fault, he was entitled to summary judgment on the issue of Defendant’s liability.  The Supreme Court denied both motions and held that there were triable issues of fact regarding foreseeability, causation, and plaintiff’s comparative negligence.  The First Department relied on Thoma and affirmed the denial of plaintiff’s motion because he failed to make a prima facie showing that he was free of comparative negligence.  In a split decision, the Court of Appeals reversed, holding that placing the burden on the plaintiff to show an absence of comparative fault is inconsistent with New York’s system of pure comparative negligence, which was adopted in 1975 and is codified in Article 14-A, Sections 1411 and 1412 of the Civil Practice Law and Rules (“CPLR”).  The Court explained that in a pure comparative negligence state, such as New York, courts are directed to consider a plaintiff’s comparative fault only when considering damages; therefore, the Rodriguez decision gives effect to the plain language and legislative intent of Sections 1411 and 1412.

            Section 1411 provides, in relevant part, that in an action for personal injuries a plaintiff’s culpable conduct “shall not bar recovery, but the amount of damages otherwise recoverable shall be diminished in the proportion which the culpable conduct attributable to the claimant bears to the culpable conduct which caused the damages.”  Section 1412 further provides that “[c]ulpable conduct claimed in diminution of damages, in accordance with [CPLR 1411], shall be an affirmative defense to be pleaded and proved by the party asserting the defense.”

            The Rodriguez opinion explains that the legislature’s intent in enacting Sections 1411 and 1412 was “to bring New York law into conformity with the majority rule” which is that “a plaintiff’s comparative negligence is not a complete defense to be pleaded and proven by the plaintiff, but rather is only relevant to the mitigation of plaintiff’s damages and should be pleaded and proven by the defendant.”  Thus, the Court of Appeals held that “[p]lacing the burden on the plaintiff to show an absence of comparative fault is inconsistent with the language of CPLR 1412.”  The Court also rejected the City of New York’s argument that comparative fault should be considered a defense because “it is not a defense to any element (breach, duty, causation) of plaintiff’s prima facie cause of action for negligence.”

            Significantly, Rodriguez purports to distinguish – without explicitly overruling – Thoma, because in that case the First Department did not address the significance of Article 14-A and the plaintiff effectively conceded that if she failed to establish the absence of a material fact as to her negligence then summary judgment on the issue of liability would be denied.  Conversely, the Rodriguez plaintiff explicitly argued that he was entitled to summary judgment, even if there was an issue of fact regarding his comparative fault. 

            The Rodriguez dissent rejects the majority’s reasoning and argues that the rule in New York is and should remain “that a plaintiff must demonstrate the absence of issues of fact concerning both defendant’s negligence and its own comparative fault in order to obtain summary judgment.”  The dissent further rejects that the Court was not overruling Thoma because “[s]ince Thoma, each Department has held that a plaintiff is precluded from obtaining summary judgment where issues of fact exist concerning comparative fault.”  The dissent also calls attention to the inequity of assessing a percentage of plaintiff’s culpability distinct from the defendant’s and noted that “[d]eterminations of degrees of fault should be made as a whole, and assessing one party’s fault with a preconceived idea of the other party’s liability is inherently unfair.”

            It is not hard to imagine the injurious effect that Rodriguez will have on defendants when it comes time for juries to apportion liability.  As articulated by the dissent, defendants will effectively be “entering the batter’s box with two strikes already called.”

Recent Publication by Associate Attorney Jacqueline Muttick

By:      Gartner + Bloom, P.C.

Date:   April 2, 2018

            Associate Attorney Jacqueline Muttick was recently published in CLM Construction Magazine. Ms. Muttick examined a New Jersey Supreme Court decision that held that a construction defect action accrues not upon substantial completion of construction but instead when the building’s owner knows or should have known through reasonable diligence about the existence of an actionable claim. See the full publication here.

First Department finds factual issues in §241(6) exclusion, and holds that claim by a lessee's contractor triggers the lessor's indemnity

By: Michael E. Kar, Esq.
       Associate, N.Y.

Date: December 27, 2017

Synopsis:

            On March 1, 2018, the First Department entered their decision in Karwowski v. 1407 Broadway Real Estate LLC. This decision gleans two important considerations for insurers and practitioners, in the Appellate Division’s: (i) holding that a lessor’s indemnity provision will be triggered by a claim by a lessee’s contractor; and (ii) finding of factual issues with the lower court’s exclusion of a contractor’s workshop from liability under 241(6).

Background:

            Defendant 1407 Broadway Real Estate LLC (“Broadway”) is the owner of the building wherein this claim arose. Broadway holds an operating lease for the entirety of the building, located in Midtown Manhattan, New York. Defendant Cayre Grp Ltd. (“Cayre”) leases the 41st and 42nd floors of Broadway’s building, and holds a lease extension with Broadway. Plaintiff is a former employee of XCEL Interior Contracting, Inc. (“XCEL”), a third-party defendant in the action. While employed by XCEL, Plaintiff injured his hand while cutting plywood on an unprotected table saw, located on the 16th floor of Broadway’s building. Plaintiff’s injury was in the furtherance of a project undertaken by Cayre, for which XCEL was hired as a contractor.

Indemnity Trigger:

            Pursuant to the lease extension with Broadway, Broadway was given direction and coordination over XCEL, who was one of the lease’s memorialized approved contractors (“[a]ll work done by the contractor [XCEL] must be coordinated with the Building Manager”). This lease extension also contained the following indemnity, recited in pertinent part: “Tenant shall indemnify, defend and save harmless Landlord… from and against (a) all claims of whatever nature against Landlord arising from any act, omission or negligence of Tenant, its subtenant, contractors, licensees, agents, servants, invitees, employees or visitors…”

            Broadway cross-claimed below for summary judgment as to the issue of their contractual indemnification, a claim that was not granted. The First Department reversed and found for Broadway on this issue. The Appellate Division found that this indemnity was clear and unambiguous. In response, Cayre argued that this provision required a finding of “active negligence” or fault on behalf of Cayre. The First Department disagreed with this assertion, in holding that “all that is necessary to trigger the provision is a claim arising from any act or omission of Cayre or Cayre’s contractor…” (emphasis added). Cayre’s contractor here was XCEL, employer of the Plaintiff at the time of the alleged accident. The court held that no negligence was needed to trigger the indemnity, and instead, all that was needed was work being done by Cayre or their contractors within the building leased by Broadway.

Factual issue found in Labor Law §241(6) analysis:

           At the Supreme Court below, Plaintiff’s claims under Labor Law §241(6) were dismissed. Section 241(6) imposes on property owners (and lessee’s under Article 10 of New York Labor Law) the duty to provide reasonable protection and safety for workers, and to comply with all Department of Labor regulations. The issue in application of §241(6) was, primarily, centered around the physical location at which the injury took place. The location was the 16th floor of the building in question. A portion of the 16th floor was XCEL’s in practice, an area where they would keep materials and tools used for renovations within the building. However, no personnel or office furniture existed in a permanent capacity, and XCEL had no lease and did not pay any rent for the space. XCEL maintains a separate permanent office and workshop in Queens.

          In support of their motion for summary judgment as to the applicability of Labor Law §241(6), Defendant Cayre asserted that the 16th floor is a permanent workshop where “for the past 10 years, the… plaintiff reported to work each day….” Their argument concludes that due to these facts the 16th floor is not the statutorily protected “area[] in which construction, excavation or demolition work is being performed….” N.Y. Labor Law §241(6).

            In granting Cayre’s motion for summary judgment below, the Supreme Court found that the 16th floor of the building “was a permanent workshop controlled by XCEL, not a temporary staging area ancillary to the Project and controlled by Cayre.” By extension, this also released Broadway under §241(6).

            The First Department reversed and remanded for the court below, finding that “there are disputed issues of fact concerning whether the 16th floor space qualifies as a construction area.” In remanding, the Appellate Division cited such cases as Gerrish v. 56 Leonard, 147 A.D.3 511 (1st Dept. 2017) (factors for determining applicability of 241(6) are physical proximity, common ownership, and operation of off-site premises) and Gonnerman v. Huddleston, 78 A.D.3d 993 (2d Dept. 2010) (241(6) extends to areas where materials are being readied for use, contrary to areas where materials are merely stored for future use).

            Lastly, and most important for Labor Law practitioners, the First Department then reasoned that because §241(6) would apply if the saw had been utilized on the 41st floor, the Plaintiff should not have an “automatic loss of the protections afforded by the statute” because Plaintiff chose instead to cut the wood on the 16th floor, and then bring it up to the 41st floor in an elevator.

            Application of this trigger to indemnity warrants widespread consideration across the legal universe. The analysis of Labor Law §241(6) by the First Department should be applied by insurance carriers and Labor Law practitioners to all future cases concerning the Section. Insurers should be aware that the designation of a physical area as a construction area is increasingly subject to more liberal interpretations – especially in regards to defense-side summary judgments motions.