E. Leo Milonas and Andrew C. Smith

Gradually, New York's courts, like the rest of the state, are returning to a "new normal." When the justices of the Appellate Divisions have not been hearing arguments by videoconference, they have been hard at work writing opinions for cases brought in simpler times, and for some prompted by COVID, too.  Below are some of the highlights from the second quarter of 2020.

First Department

NYC Human Rights Law (NYCHRL). The NYCHRL forbids landlords from discriminating against tenants because of "any lawful source of income." Does that include security deposit vouchers issued by the New York City Human Resources Administration (HRA), which guarantee payment of security deposits? In Estates NY Real Estate Servs. v. City of New York, 2020 N.Y. Slip Op. 03093 (1st Dep't May 28, 2020), the First Department held that it does.

A prospective tenant informed her landlord that she intended to pay her security deposit with an HRA voucher. The landlord insisted on a cash deposit. After the prospective tenant filed an administrative complaint, the landlord brought a declaratory judgment action in Supreme Court against the City, arguing that the HRA voucher was not a "source of income" because "income" denotes only a means of paying rent, not security deposits, and refers only to cash or cash equivalents, not vouchers, which are mere guarantees of payment. The Supreme Court disagreed and granted the City's motion to dismiss.

In an opinion by Justice Troy K. Webber, the First Department affirmed. The court noted that it previously held Section 8 vouchers (which are used to pay rent and security deposits) were "sources of income" but "never expressly addressed the issue of whether security deposit vouchers constitute lawful sources of income." Based on the text, legislative history and purpose of the NYCHRL, the court determined that the vouchers are indeed "sources of income" as "they are an item of value, worth a payment of up to one month's rent on the tenant's behalf to compensate for unpaid rent or damages to an apartment."

Insurance. A "creditor trust" is a litigation trust set up under Chapter 11 reorganization plans to pursue a bankruptcy estate's claims on behalf of unsecured creditors in the post-confirmation period. Is such a trust a "bankruptcy trustee" or "comparable authority" for purposes of D&O insurance policy provisions that restore coverage (otherwise excluded as an "insured vs. insured" claim) where the litigation is commenced by such entities? In Westchester Fire Insurance Co. v. Schorsch, 2020 N.Y. Slip Op. 02895 (1st Dep't May 14, 2020), the First Department held that a creditor trust is a "comparable authority."

Debtor RCAP had a D&O policy that excluded coverage for claims brought by or on behalf of RCAP against its current or former directors or officers. However, suits on behalf of RCAP by a "bankruptcy trustee" or "comparable authority" were excepted from the exclusion. After the creditor trust sued former directors and officers, the insurer sought a declaratory judgment that the insured vs. insured exclusion barred coverage. The Supreme Court ruled in favor of the insureds on the parties' dispositive motions.

In an opinion by Justice Dianne T. Renwick, the First Department affirmed, explaining that, under the plain language of the policy and the Bankruptcy Code, there was "no valid rationale for excluding D&O claims from D&O coverage when asserted by a post-confirmation litigation trust where coverage would otherwise exist for identical claims asserted by a Chapter 11 trustee." In both instances, the claims were being asserted on behalf of the estate for the benefit of creditors.

Disability Rights. In Center for Independence of the Disabled v. Metropolitan Transportation Authority, 2020 N.Y. Slip Op. 03203 (1st Dep't June 4, 2020), various disability rights organizations and individuals with disabilities sued the MTA and other agencies alleging unlawful discrimination against persons with disabilities in violation of NYCHRL because 80% of New York City subway stations are not equipped with vertical accessibility other than stairs. Defendants moved to dismiss the complaint as untimely because the inaccessible subway stations were built at the turn of the last century, and on the grounds that NYCHRL was preempted by the New York State Transportation Law, which imposes less strict accessibility requirements. The Supreme Court denied the motion.

The First Department unanimously affirmed. In an opinion by Justice Judith J. Gische, the court explained that the "continuous violation" doctrine—which is broader under NYCHRL than federal and state counterparts—tolls the statute of limitations until the discrimination ends. Here, the discrimination is not "limited to the single act of original construction"; it "continues every time a person seeks to use the subway system, but is prevented from doing so based upon their physical disability." As to preemption, the court held that NYCHRL does not conflict with the Transportation Law, as the latter "does not set a maximum number of accessible subway stations." Nor does the Transportation Law preempt the field: "the Transportation Law was never intended to be the final word on accessibility."

Second Department

Executive Authority.Does the New York governor have the authority to cancel a special election in response to a growing epidemic? In Dao Yin v. Cuomo, 183 A.D.3d 926 (2d Dep't May 27, 2020), the Second Department answered, "yes."

On April 24, 2020, Governor Andrew Cuomo issued an Executive Order in response to the spread of COVID-19, which canceled the special election for Queens Borough President.  Petitioners, a registered voter and one of the candidates on the ballot, brought a special proceeding for a judgment declaring the Executive Order invalid as applied to the election. The Supreme Court denied the petition.

In a unanimous opinion by Justice Mark C. Dillon, the Second Department affirmed. Executive Law 29-a grants the governor the power to "temporarily suspend any statute, local law, ordinance, or orders, rules or regulations … during a state disaster emergency, if compliance with such provisions would prevent, hinder, or delay action necessary to cope with the disaster." The court held that this provision extends to cancelling the special election, and judgment in favor of the governor was warranted because he had demonstrated that the cancellation was the "minimum deviation necessary to assist or aid in coping with the COVID-19 pandemic."

Third Department

Freedom of Information Law (FOIL). The internet has been a boon for family history buffs. At the same time, the availability of personal information online poses risks of identity theft and harassment. In Hepps v. New York State Department of Health, 2020 N.Y. Slip Op. 02517 (3d Dep't April 30, 2020), the Third Department concluded that these competing concerns weighed against disclosure of marriage records under FOIL.

Petitioners, a non-profit genealogical advocacy organization and two of its officers, submitted a FOIL request for a copy of the state marriage index from 1881 through 2016, with the intent of making the records searchable and widely accessible on the internet. Respondent produced records through 1965 but withheld more recent records as exempt from disclosure on personal privacy grounds. Petitioners commenced an Article 78 proceeding, and the Supreme Court ordered the disclosure of the recent records (with certain information redacted).

In an opinion by Justice John P. Colangelo, the Third Department reversed. The court explained that an agency may decline disclosure if it "would constitute an unwarranted invasion of personal privacy," which is assessed by balancing privacy interests against the public interest in disclosure. Here, even assuming a legitimate public interest in genealogical research, that interest does not further the purpose of FOIL—to promote transparency and scrutiny of government actions. Moreover, significant privacy interests, including guarding against identify theft and protecting transgendered individuals, couples in same-sex marriages, and victims of sexual abuse, weighed in favor of exempting the records from disclosure. "The ubiquitous global Internet requires a different, more cautious analysis in addressing requests for the wholesale disclosure of personal information about private citizens on this scale."

Fourth Department

Nuisance.May an alleged victim of sexual abuse bring a claim based on a nuisance theory against a diocese for transferring an allegedly predatory priest among parishes? In Golden v. The Diocese of Buffalo, 2020 N.Y. Slip Op. 03354 (4th Dep't June 12, 2020), the Fourth Department answered in the negative.

Plaintiff alleged that he was abused at Our Lady of Perpetual Help by a priest who the diocese knew or should have known was a danger to children, and who the diocese moved from parish to parish without informing parishioners of the reported abuse. The Supreme Court granted the Diocese's motion to dismiss the sole cause of action for nuisance for failing to state a claim.

The Fourth Department affirmed. In an unsigned opinion, the court explained that public nuisance requires "substantial interference with the exercise of a common right of the public," but the complaint did not allege that the general public was exposed to the priest's conduct, only "parishioners … active in the priest's parishes." The court also rejected a claim based on criminal nuisance on the grounds that Penal Law §240.45 does not imply a private right of action.

 

E. Leo Milonas is a litigation partner at Pillsbury Winthrop Shaw Pittman. He is a former Associate Justice of the Appellate Division, First Department, and the former Chief Administrative Judge of the State of New York. Andrew C. Smith is also a litigation partner at the firm. Pillsbury counselJay D. Dealy and Joshua I. Schlenger and associate Brian L. Beckerman assisted in the preparation of this column.