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Caldwell v. New York City Transit Authority

Supreme Court of New York, New York County

June 19, 2013

Ronald E. CALDWELL d/b/a Eye Candy 329 Lafayette Street New York, New York 10012, Plaintiff,
v.
NEW YORK CITY TRANSIT AUTHORITY 130 Livingston Street Brooklyn, New York 11201, Defendant. No. 102451/2011.

Editorial Note:

This decision has been referenced in a table in the New York Supplement.

Melissa A. Weinberg, Esq., New York, for plaintiff.

Robert J. Paliseno, Esq., Smith Mazure Director Wilkins Young & Yagerman, PC, New York, for New York City Transit Authority.

Decision and Order

MICHAEL D. STALLMAN, J.

In this action, plaintiff alleges that construction in connection with the " Bleecker Street Subway Project" blocked access to the public sidewalk and entrance to plaintiff's business. Plaintiff maintains that the construction caused revenue to drop by 40%, and caused the business to fall behind on the rent.

Defendant moves to dismiss the complaint on the grounds that plaintiff failed to serve a timely notice of claim upon defendant, and that the action is time-barred. Plaintiff cross-moves to strike defendant's fourth and ninth affirmative defenses, which assert these two grounds. Plaintiff also seeks leave to serve a late notice of claim, nunc pro tunc, and seeks an order striking defendant's answer based on defendant's failure to appear for a deposition.

BACKGROUND

The complaint alleges that plaintiff is engaged in a small retail fashion accessories business called Eye Candy, and that plaintiff's principal place of business is located at 329 Lafayette Street in Manhattan. (Paliseno Affirm., Ex B [Complaint] ¶ 2.) Eye Candy allegedly " specializes in one of a kind contemporary and vintage collect[i]ble fashion accessories." (Paliseno Affirm., Ex A.)

The complaint alleges that, on January 19, 2009, defendant New York City Transit Authority (N.Y.CTA) began blocking access to the public sidewalk and entrance to plaintiff's business, and that the work being conducted by contractors of the NYCTA was related to the Bleecker Street Subway Project. (Complaint ¶¶ 4-5.) According to plaintiff, " [a]lthough the construction and resulting negative impact on Eye Candy began on January 19, 2009, it continued for eleven months and ended on December 1, 2009." ( Id. ¶ 6.) The complaint alleges that, prior to the construction, the NYCTA's representatives stated at community board meetings that access to retail stores on Lafayette Street would never be blocked, and that the walkway for the public would be kept at ten feet wide at all times. ( Id. ¶¶ 8-9.) Plaintiff asserts that these statements were deceptive and misleading, in that the NYCTA allegedly blocked the entrance to his business, and constantly shifted the narrow passageway for pedestrians. ( Id. ¶ 10.) The complaint alleges that, because of the ongoing construction, plaintiff's business " dropped by 40% compared to the previous 11 years of business", and that " [d]amage caused by the [NYCTA] resulted in revenue losses to Eye Candy ... in the amount of $65,594.71." ( Id. ¶¶ 13-14.)

In addition, the complaint alleges that construction damaged Eye Candy's property. The arm of digging machinery allegedly damaged Eye Candy's banner/sign. ( Id. ¶ 16.) Black soot raised by construction allegedly damaged and ruined vintage and antique merchandise. ( Id. ¶ 17.)

It is undisputed that the NYCTA received a notice of claim from plaintiff. A form entitled, " Claim Against NYC Transit for Property Damage", dated February 26, 2010, was apparently signed by plaintiff, and bears a notary's stamp, and purportedly attached to this form was a letter dated February 23, 2010, which begins, " Herewith is notification of claim against NYC Transit for property damage and loss of business damage sustained in the following manner...." (Paliseno Affirm., Ex A.) Both the form and the first page of the February 23, 2010 letter each bear two date/time stamps next to each other:

MTA NYC TRANSIT

LAW DEPARTMENT

2010 APR -8 PM 12:54
RECEIVED
CLAIMS PROCESSING UPS

Received by Certified Mail [initials]

MTA NYC TRANSIT
LAW DEPARTMENT
2010 MAR -1 AM 11:55
RECEIVED
CLAIMS PROCESSING

( See Paliseno Affirm., Ex A.) Defendant acknowledges that it received this notice of claim on March 1, 2010. (Paliseno Affirm. ¶ 4.)

On February 28, 2011, plaintiff commenced this action. By a preliminary conference order dated June 7, 2012, defendant's deposition was scheduled for August 2, 2012. (Paliseno Affirm., Ex D.) By a so-ordered stipulation dated November 8, 2012, defendant's deposition was rescheduled for December 18, 2012. (Weinberg Affirm., Ex A.) It appears from an affidavit of service that, on December 5, 2012, defendant served the instant motion to dismiss the action.

DISCUSSION

Defendant moves to dismiss the complaint on the grounds that plaintiff failed to serve a timely notice of claim upon defendant, and that the action is time-barred. Defendant takes the position that plaintiff's claim arose on January 19, 2009. Consequently, defendant maintains that the notice of claim that it admittedly received in March 2010 was untimely, and that the action was commenced after the limitations period had run.

In opposition, plaintiff argues that defendant is estopped from raising as defenses the statute of limitations or an untimely notice of claim. Plaintiff asserts that he called Sharon Stevens, a Claims Processing Manager allegedly employed by defendant, " for the specific purpose of finding out the correct procedure for filing a claim against the TA", and that Ms. Stevens provided him with a claim form by a letter dated January 21, 2009. (Weinberg Affirm., Ex B [Caldwell Aff.] ¶ 8.) Plaintiff claims that he was not sure what the phrase " the claim arose" on the claim form meant, and that he again called Ms. Stevens " specifically to obtain clarification and guidance...." ( Id. ) According to plaintiff,

" I was prepared to immediately file any form required by the TA to get compensation for my losses. However Ms. Stevens told me to wait until construction was completed in front of my business and that I would have 90 days from that time to file the claims forms. Based solely on Ms. Steven's [ sic ] advice and representations, I postponed filing the Notice of Claim, although I was at all times ready to do so."

( Id. ¶ 9.)

The requirements for a notice of claim and the statute of limitations both establish deadlines, but they are fundamentally different in nature. For a notice of claim, the clock " starts to run upon the accrual of the claim, that is, the moment a wrong becomes actionable. A statute of limitations speaks to the latest point in time that an action for a wrongful act may be commenced." ( Melfi v. Mount Sinai Hosp., 64 A.D.3d 26, 40 [1st Dept 2009].) CPLR 3018(b) requires a defendant to plead the statute of limitations as an affirmative defense, and " CPLR 3211(e) explicitly provides that an objection or defense based on the statute of limitations is waived unless raised in a responsive pleading or in a pre-answer motion to dismiss." ( Horst v. Brown, 72 A.D.3d 434 [1st Dept 2010].) By contrast, a defendant is not required to raise the late service or lack of service of a notice of claim as an affirmative defense. ( Singleton v. City of New York, 55 A.D.3d 447 [1st Dept 2008]; Reaves v. City of New York, 177 A.D.2d 437 [1 Dept 1991].) Service of a notice of claim " is a condition precedent to the commencement of the action in the same way as is the service of a summons." ( Barchet v. New York City Tr. Auth., 20 N.Y.2d 1, 6 [1967]; see e.g. Bennett v. New York City Tr. Auth., 4 A.D.3d 265 [1st Dept 2004].) Given these differences, each defense should be considered separately.

I.

As a threshold matter, the Court must discern the possible legal theory or theories under which the allegations might fall to determine the applicable statute of limitations. Plaintiff does not specifically name a legal theory or a cause of action in the complaint under which the allegations should fall or be considered. In the cross motion, plaintiff characterizes the action as seeking damages for property damage and loss of revenue " caused by the tortious interference of access to plaintiff's place of business by the TA...." (Weinberg Affirm. ¶ 6.) The allegations of blocked access might fall under the theory of a private nuisance, which sounds in tort. ( See Volunteer Fire Assn. of Tappan v. County of Rockland, 101 A.D.3d 853 [2d Dept 2012] [construction of a raised curb in front of the plaintiff's firehouse that materially impeded access to and from its firehouse constituted trespass and private nuisance].)

Public Authorities Law § 1212(2) provides that, " Except in an action for wrongful death, an action against the authority founded on tort shall not be commenced more than one year and ninety days after the happening of the event upon which the claim is based...." However, Public Authorities Law § 1212(1) requires that the complaint " contain an allegation that at least thirty days have elapsed since the demand, claim or claims upon which such action is founded were presented to a member of the authority...." Thus, " it has been held that the effect of such a statute is to extend the general period of limitation by an additional 30 days." ( Barchet v. New York City Tr. Auth., 20 N.Y.2d 1, 5 [1967]; see Burgess v. Long Is. R.R. Auth., 79 N.Y.2d 777, 778 [1991][" This stay' of 30 days is not counted as part of the limitations period" ].) Therefore, for the purposes of determining whether an action founded on tort against NYCTA (except an action for wrongful death) is time-barred, the limitations period is effectively one year and 120 days, instead of one year and 90 days.

The complaint alleges that, on January 19, 2009, defendant New York City Transit Authority (N.Y.CTA) began blocking access to the public sidewalk and entrance to plaintiff's business. (Complaint ¶¶ 4-5.) Defendants argue that the limitations period should be measured from January 19, 2009 because Public Authorities Law § 1212(2) provides that the action founded on tort may not be commenced more than one year and ninety days " after the happening of the event upon which the claim is based ..." Given that language, " courts have uniformly concluded that the limitation period begins to run upon the happening of the event, irrespective of when the action accrued." ( Klein v. City of Yonkers, 53 N.Y.2d 1011, 1012 [1981].)

However, the alleged blocked access to the public sidewalk and to the entrance of plaintiff's business implies the doctrine of continuing wrong. The doctrine of continuing wrong applies

" in certain cases such as nuisance or continuing trespass where the harm sustained by the complaining party is not exclusively traced to the day when the original objectionable act was committed. The rule is based on the principle that continuous injuries create separate causes of action barred only by the running of the statute of limitations against each successive trespass. The repeated offenses are treated as separate rights of action and the limitations period begins to run as to each upon its commission."

( Covington v. Walker, 3 N.Y.3d 287, 292 [2004] [internal citations omitted].) Here, the harm that allegedly befell plaintiff— i.e., the amount of income that plaintiff allegedly lost— did not occur entirely on the first day when construction allegedly began. Rather, plaintiff allegedly lost business for each day that the NYCTA allegedly blocked access to the entrance of plaintiff's business. Each day that access was allegedly blocked may be viewed as giving rise to separate wrongs.

In Bloomingdales, Inc v. New York City Transit Authority (13 N.Y.3d 61 [2009] ), the Court of Appeals applied the continuing wrong doctrine to Public Authorities Law § 1212(2) and rejected arguments that an action sounding in trespass and nuisance should be measured from a single date from which to measure the limitations period for all of the plaintiff's claims.

In Bloomingdales, a contractor began excavation work in September 1999, between East 59th Street and East 60th Street on the west side of Third Avenue in Manhattan, as part of a project undertaken by the NYCTA. In the course of the work, the contractor cut a working drainpipe that ran down from the roof of Bloomingdales, believing it to be a " dead" water main. The contractor then installed a conduit encased in concrete in its place. Sometime thereafter, Bloomingdales experienced flooding on the lower level of its store when it rained. In February 2002, Bloomingdales hired a contractor, who excavated the area of the drainpipe, determined that it had been cut and discovered the conduit. Bloomingdales alleged that it was required to install a new drainpipe above the conduit costing in excess of $165,000. After filing a notice of claim, Bloomingdales then commenced an action against the NYCTA in January 2003, alleging causes of action for negligence, trespass and nuisance.

The NYCTA and third-party defendants moved for summary judgment dismissing the complaint. Invoking Public Authorities Law § 1212, General Municipal Law §§ 50-e and 50-i and CPLR 214, they argued that Bloomingdales's claim was time-barred, because the action was commenced more than one year and 90 days after the severing of the drainpipe.

The Supreme Court granted summary judgment, finding that the action was time-barred. By a 3-2 decision on appeal, the Appellate Division reversed and reinstated the trespass and nuisance causes of action. The majority ruled that Bloomingdales's claims were timely because the claims were not tied to the single negligent act of severing the drainpipe. Rather, the Appellate Division ruled that the concrete duct, which physically interrupted plaintiff's storm drainpipe and interfered with plaintiff's easement and right of access to the sewer, " constituted a continuing trespass and resulted in successive causes of action." ( Bloomingdales, Inc. v.. New York City Tr. Auth., 52 A.D.3d 120, 124 [1st Dept 2008].)

The Court of Appeals affirmed the Appellate Division. The Court of Appeals stated,

" because the conduit encroached on Bloomingdales' right-of-way, we find that the Appellate Division correctly concluded that Bloomingdales has a viable cause of action sounding in trespass, for which the statute of limitations has not yet run.
For the same reasons, we find that there is a viable claim for private nuisance, which is, in this case, simply another way of characterizing the trespass claim. There was a continuous interference with Bloomingdales' right to use and enjoy its property right, and as such the same statute of limitations as the trespass applies"

( Bloomingdales, 13 N.Y.3d at 66.)

Here, plaintiff alleges that construction blocked access to plaintiff's business, which can be viewed as continuously interfering with plaintiff's use and enjoyment of its leased premises for that period of alleged blocked access. Therefore, the Court rejects the NYCTA's argument that, under Public Authorities Law § 1212, the limitations period should be measured from January 19, 2009. Rather, each day that access was allegedly blocked gave rise to a successive cause of action. The complaint alleges that access was blocked from January 19, 2009 until December 1, 2009, which is 316 days. Thus, the alleged continuing interference with access gave rise possibly to as many as 316 successive causes of action (assuming plaintiff's business would have been open every day of the week).

Here, this action was commenced on February 28, 2011. As discussed above, the limitations period for plaintiff's claims against the NYCTA is effectively one year and 120 days. One year and 120 days prior to February 28, 2011 is October 31, 2009. Therefore, the action is timely with respect to a wrong founded on tort which occurred on or after October 31, 2009, and the action is time-barred with respect to a wrong founded on tort which occurred before October 31, 2009. That is, the action is timely with respect to allegations that construction blocked access to the entrances to plaintiff's business on or after October 31, 2009. The claims of lost revenue due to blocked access prior to October 31, 2009 are time-barred.

II.

For an action against the NYCTA founded on tort (except in an action for wrongful death), Public Authorities Law §§ 1212(2) requires service of a notice of claim upon the NYCTA within the time limited by General Municipal Law § 50-e. General Municipal Law § 50-e (1)(a) states that the notice of claim must be served " within ninety days after the claim arises...."

The NYCTA argues that the 90-day period must be measured from January 19, 2009, arguing that plaintiff's claims for lost revenue due to the alleged interference arose on the first that construction allegedly began. The Court disagrees. As discussed above, the alleged interference is viewed as a continuing wrong, having given rise to successive causes of action.

However, even for a continuing wrong, " plaintiff['s] damages must be limited to those occurring within the 90-day period before service of the notice of claim." ( Doran v. Town of Cheektowaga, 54 A.D.2d 178, 181 [4th Dept 1976]; see Stone v. Town of Clarkstown, 82 A.D.3d 746, 748 [2d Dept 2011].) Here, plaintiff states that he filed the notice of claim on February 26, 2010. (Caldwell Aff. ¶ 19.) A copy of the notice of claim reflects that the notice of claim was sworn to before a notary on February 26, 2010. (Paliseno Opp. Affirm., Ex A.) Therefore, plaintiff's damages must be limited to those damages that occurred on or after November 28, 2009, which is 90 days before February 26, 2010.

The Court does not consider the NYCTA's additional arguments that (1) the notice of claim failed to comply with notice requirements because the notice of claim alleged the actions of the MTA, and not the NYCTA; (2) the summons and complaint were not timely served; [1] and (3) the complaint failed to contain allegations required by Public Authorities Law § 1212(1). ( see Raicus Reply Affirm. ¶¶ 11, 27, 30.) These arguments were raised for the first time in reply. ( Ritt v. Lenox Hill Hosp., 182 A.D.2d 560 [1st Dept 1992].)

III.

As a general rule,

" estoppel cannot be invoked against a governmental agency to prevent it from discharging its statutory duties. Among other reasons, to permit estoppel against the government could easily result in large scale public fraud.' While we have not absolutely precluded the possibility of estoppel against a governmental agency, our decisions have made clear that it is foreclosed in all but the rarest cases." '

( Matter of New York State Med. Transporters Assn. v. Perales, 77 N.Y.2d 126, 130 [1990] [citations omitted].) Plaintiff relies upon an exception that the Court of Appeals recognized in Bender v. New York City Health & Hospitals Corp. (38 N.Y.2d 662, 668 [1976] ). Plaintiff's attorney asserts that plaintiff was ignorant of the legal requirements necessary to file a notice of claim (Weinberg Affirm. ¶ 35), and that plaintiff postponed serving the notice of claim based on what Sharon Stevens, a NYCTA Claims Processing Manager, allegedly told him. (Caldwell Aff. ¶¶ 8-9.) In postponing service of the notice of claim, plaintiff consequently delayed the commencement of the action.

In Bender, which decided appeals in two separate cases, the plaintiffs served notices of claim upon the City of New York instead of the New York City Health and Hospitals Corporation. The Legislature had passed a statute that required a party sustaining injury allegedly attributable to municipal medical facilities to file a notice of claim with the New York City Health and Hospitals Corporation. In both cases, the Corporation Counsel, who appeared for the City of New York and the Health and Hospitals Corporation, conducted hearings and physical examinations of the plaintiffs without informing the plaintiffs that the notices of claim had been filed with the wrong agency. Both plaintiffs sought leave to file notices of claim on the Health and Hospitals Corporation, nunc pro tunc, claiming that they were misled by the manner in which their claims were handled and by the inequity caused by the new statutory scheme as it related to notice.

The Court of Appeals ruled that " where a governmental subdivision acts or comports itself wrongfully or negligently, inducing reliance by a party who is entitled to rely and who changes his position to his detriment or prejudice, that subdivision should be estopped from asserting a right or defense which it otherwise could have raised." ( Bender, 38 N.Y.2d at 668.) However, the Court of Appeals ruled that " the records before us do not present facts sufficient to resolve the issue", and remitted the matters to Special Term. ( Id. at 668-669.)

Several years later, the Court of Appeals discussed Bender:

" In that case [ Bender ] we held that, subject to the development of additional evidentiary facts, the doctrine of equitable estoppel might be invoked to permit the filing of notices of claim nunc pro tunc under section 50-e of the General Municipal Law during a period of particular confusion incident to the transfer of operational control of municipal hospitals from the city to the Health and Hospitals Corporation. That holding, addressed to an unusual factual situation, is of very limited application and should not be read as diminishing the vitality of the general rule that the doctrine of estoppel is not applicable to agencies of the State acting in a governmental capacity."

( Matter of Hamptons Hosp. & Med. Ctr. v. Moore, 52 N.Y.2d 88, 94 n 1 [1981]; Luka v. New York City Tr. Auth., 100 A.D.2d 323, 325 [1st Dept 1984] [" It is to be invoked sparingly and only under exceptional circumstances" ].)

Here, plaintiff has not demonstrated the exceptional circumstances that would warrant application of doctrine of equitable estoppel. " [E]rroneous advice by a government employee does not constitute the type of unusual circumstance[s] contemplated by the exception to this general rule." ( Matter of Amsterdam Nursing Home Corp. (1992) v. Daines, 68 A.D.3d 1591, 1592 [3d Dept 2009] [internal quotation marks and citations omitted].)

Therefore, the branch of plaintiff's cross motion seeking to strike the fourth and ninth affirmative defenses of the NYCTA's answer is denied.

IV.

Pursuant to General Municipal Law § 50-e (5), the Court has discretion to grant leave to serve a late notice of claim under certain statutorily permitted circumstances.

" In deciding whether a notice of claim should be deemed timely served under General Municipal Law § 50-e(5), the key factors considered are whether the movant demonstrated a reasonable excuse for the failure to serve the notice of claim within the statutory time frame, whether the municipality acquired actual notice of the essential facts of the claim within 90 days after the claim arose or a reasonable time thereafter, and whether the delay would substantially prejudice the municipality in its defense. Moreover, the presence or absence of any one factor is not determinative." '

( Plaza v. New York Health & Hosps. Corp. [Jacobi Med. Ctr.], 97 A.D.3d 466, 467 [1st Dept 2012] [internal citations omitted]; Matter of Porcaro v. City of New York, 20 A.D.3d 357, 358 [1st Dept 2005].) " Proof of actual knowledge, or lack thereof, is an important factor in determining whether the defendant is substantially prejudiced by such a delay." ' ( Plaza, 97 A.D.3d at 471; see e.g. Padilla v. Department of Educ. of City of NY, 90 A.D.3d 458 [1st Dept 2011][" The most important factor that a court must consider in deciding such a motion is whether corporation counsel, ... acquired actual knowledge of the essential facts constituting the claim within the time specified" '].)

Where the statute of limitations has run, the Court is without discretion to permit service of a late notice of claim. " To permit a court to grant an extension after the Statute of Limitations has run would, in practical effect, allow the court to grant an extension which exceeds the Statute of Limitations, thus rendering meaningless that portion of section 50-e which expressly prohibits the court from doing so." ( Pierson v. City of New York, 56 N.Y.2d 950, 954 -955 [1982].)

Here, plaintiff did not seek leave to serve a late notice of claim until January 25, 2013, when this cross motion was purportedly served. Leave was sought more than three years after the construction allegedly ended on December 1, 2009. Even viewing the alleged blocked access as a continuing wrong, the statute of limitations with respect to claims that construction blocked access to plaintiff's business and the claims of property damage has long since run.

Therefore, the branch of plaintiff's cross motion that seeks leave to serve a late notice of claim upon the NYCTA is denied.

V.

The branch of plaintiff's motion for an order striking the NYCTA's answer for failing to appear at a deposition is denied.

" The drastic remedy of striking an answer is inappropriate, absent a clear showing that defendant's failure to comply with discovery demands was willful or contumacious." ( Daimlerchrysler Ins. Co. v. Seck, 82 A.D.3d 581, 582 [1st Dept 2011].) A pattern of noncompliance with court orders and discovery demands and failure to offer a reasonable excuse for the noncompliance may give rise to an inference of wilful and contumacious conduct. ( See e.g. Henderson v. Manhattan and Bronx Surface Tr. Operating Auth., 74 A.D.3d 654 [1st Dept 2010]; Fish & Richardson, P.C. v. Schindler, 75 A.D.3d 219 [1st Dept 2010]; Bryant v. New York City Hous. Auth., 69 A.D.3d 488 [1st Dept 2010]; Figiel v. Met Food, 48 A.D.3d 330 [1st Dept 2008].)

Plaintiff has not demonstrated a pattern of the NYCTA's noncompliance with court orders. It is undisputed that the deposition of defendant was not held on August 2, 2012, as scheduled in the preliminary conference order dated June 7, 2012. However, the NYCTA did not violate the so-ordered stipulation dated November 8, 2012, which again scheduled the NYCTA's deposition for December 18, 2012. NYCTA brought this motion to dismiss four days prior to its scheduled deposition. (Weinberg Affirm., Ex A.) The NYCTA's dispositive motion triggered an automatic stay of disclosure. (CPLR 3214[b].) " The stay is effective even with respect to disclosure obligations that arose before the motion was made." (7-3214 Weinstein-Korn-Miller, N.Y. Civ Prac CPLR ¶ 3214.02.)

CONCLUSION

The Court has ruled that this action is timely commenced with respect to allegations that construction blocked access to the entrance to plaintiff's business on or after October 31, 2009. The claims of lost revenue for blocked access prior to October 31, 2009 are time-barred. In addition, the Court has ruled that this action is further limited given that plaintiff served a notice of claim on February 26, 2010. Plaintiff's damages must be limited to those damages that occurred on or after November 28, 2009. Plaintiff has not demonstrated the exceptional circumstances that would warrant application of doctrine of equitable estoppel in this case.

Accordingly, it is hereby

ORDERED that defendant's motion to dismiss is granted in part as follows:

(1) plaintiff's claims of lost revenue for blocked access prior to October 31, 2009 are dismissed as time-barred;
(2) plaintiff's claims of damages that occurred prior to November 28, 2009 are dismissed due to plaintiff's failure to serve a timely notice of claim;

and the motion is otherwise denied; and it is further

ORDERED that plaintiff's cross motion is denied in its entirety.


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