Articles Posted in Procedure

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Section 1312(a) of the Business Corporation Law, New York’s “door closing” statute, precludes foreign corporations doing business in the state without authority from maintaining an action in the state.  The purpose of this statute is to regulate foreign companies actually conducting business in the state.  As held in Special Breaks, LLC v. 201 Murray Ave., 2017 WL 987199 (Sup. Ct. Westchester Co. Mar. 10, 2017), the statute does not apply to those foreign companies that are not “doing business” within the state.

The defendant in Special Breaks moved to dismiss the complaint filed by foreign corporate plaintiff on two related grounds:

  1. That the foreign corporation was barred from maintaining an action in New York because it was not authorized to do business in the state, and
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The Nassau County Supreme Court recently held that a contractor demonstrated good cause allowing the Court to extend the contractor’s mechanic’s lien nunc pro tunc.

The action was initially commenced by the property owner, who sought an order pursuant to Lien Law Section 19 discharging and vacating a mechanic’s lien filed by All Sons Electric Corp. (“All Sons”) against a single family residence on the ground that the mechanic’s lien expired by operation of law.  Pursuant to Section 17 of the Lien Law, a mechanic’s lien automatically expires one year after filing unless (i) an extension is filed with the County Clerk or (ii) an action is commenced to foreclose the lien and a notice of pendency is filed.  Section 17 further provides that a lien filed against a single family dwelling may only be extended by court order.  Here, All Sons filed an extension of lien and paid the appropriate fee within the one year time period, but failed to obtain a court order authorizing the extension.

In response to the owner’s application to discharge the lien, All Sons cross-moved for leave to file its extension of lien nunc pro tunc.  The Court, recognizing that a lien automatically expires by operation of law if an extension is not timely filed or a foreclosure action commenced, focused on the fact that All Sons had filed an extension with the County Clerk within the one year period.  This distinguished All Sons’ situation from that presented in the case relied on by the owner, wherein the contractor failed to do anything within the one year period (see Aztec Window & Door Mfg., Inc. v. 71 Vill. Rd., LLC, 60 A.D.3d 795, 875 N.Y.S.2d 528 (2nd Dept. 2009)).

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Construction contracts typically contain indemnification clauses which shift the financial burdens and risks between and among various parties.  Although these clauses are common, their precise meaning and effect can still raise novel legal issues.  Recently, Justice Carolyn Demarest of the Commercial Division in the Brooklyn Supreme Court rendered a decision grappling with certain issues of first impression in Board of Managers of the 125 North 10th Condo v. 125 North 10, LLC (Supreme Court Kings County Index Number 14982/2012).

Plaintiff Board of Managers brought the underlying action against the sponsors of the condominium in question.  The sponsors, in turn, brought third party claims against their construction manager, Ryder Construction, Inc.  Ryder then brought claims for contractual and common law indemnification, and declaratory relief, against fifteen subcontractors who had worked on the project.  These fifteen subcontractors moved to dismiss Ryder’s claim against them and the sponsors claim against Ryder, among other things.

Justice Demarest, in a decision dated January 26, 2016, dismissed Ryder’s claims for declaratory relief, holding that it was essentially duplicative of the claim for contractual indemnification.

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The Kings County Supreme Court has once again dismissed, on statute of limitations grounds, an action commenced by Save the View Now (“STVN”) against the Pierhouse hotel/condo complex currently being built in Brooklyn Bridge Park.   STVN previously sought a temporary restraining order and a preliminary injunction halting construction of the two buildings that comprise the Pierhouse, on the ground that the structures violated the building height limitations set forth in the 2006 Modified General Project Plan (“MGPP”), which governs the development of Brooklyn Bridge Park.  The request for injunctive relief was denied as untimely, but STVN returned to court in August 2015 with what is argued to be newly discovered evidence.

Pier 1 Development

The Pierhouse development located in Pier 1 of the park includes two buildings.  Throughout the approval and construction of the Pierhouse there has been much discussion about the negative impact the development would have on the views of the Brooklyn Bridge and Manhattan skyline as seen from the Brooklyn Heights Promenade.  As recognized by Judge Knipel in his first decision, the panorama is “an iconic, world-class view worthy of the maximum protection the law can afford.”  STVN argues that these views are being compromised because the Pierhouse has exceeded the maximum height permitted under the MGPP, which was designed to protect the views of from the promenade.

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In 1979, the Court of Appeals issued its ruling in Immediate v. St. John Queens Hospital, 48 N.Y.2d 671 (1979), wherein the Court held that a bare assertion of a statute of limitations defense in an answer would be sufficient to withstand the pleading particularity requirements of CPLR 3013. 48 N.Y.2d at 673. Recently, the First Department suggested that it was time for the high court to revisit the issue.

In Scholastic Inc. v. Pace Plumbing Corp., 8 N.Y.3d 143 (1st Dep’t 2015), the First Department considered a lower court order granting summary judgment dismissing a property damage case. In the case, the defendant had filed an answer containing a single, catch-all paragraph containing 15 affirmative defenses, including a statute of limitations defense. While the lower court dismissed the statute of limitations defense as improperly pleaded, it still dismissed the action on the merits.

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The Second Department has recently ruled a plaintiff’s failure to provide a defendant who has appeared in an action, but subsequently defaulted, with notice of a motion to enter a default judgment, is a jurisdictional defect.

In Paulus v. Christopher Vacirca, Inc., 2015 WL 1542183 (2nd Dept. 2015), the defendant-appellant had filed a pre-answer motion to dismiss the complaint pursuant to CPLR 3211, which resulted in the lower court dismissing five of the six causes of action asserted against the defendant.  The court then directed the defendant to file an answer within 30 days.  When the defendant failed to answer the remaining cause of action as directed, the plaintiffs obtained a default judgment against him.  The defendant then moved to vacate the default, arguing, among other things, that his failure to answer was excusable because he believed that the plaintiffs were required to serve an amended complaint, after which he had 30 days to answer.

In addition, the defendant argued that the default judgment was defective because the plaintiffs had failed to serve his attorney with five days’ notice of their motion for leave to enter a default judgment, as required by CPLR 3215(g)(1).

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