Opinion
INDEX NO. 152479/2013
09-08-2020
MICHAEL SAGINOR, Plaintiff, v. OSIB-BCRE 50TH STREET HOLDINGS, LLC, and FLINTLOCK CONSTRUCTION SERVICES, LLC, Defendants.
NYSCEF DOC. NO. 282 PRESENT: HON. JOHN J. KELLEY Justice MOTION DATE 08/31/2020 MOTION SEQ. NO. 008
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number 234, 235, 236, 237, 238, 239, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, 251, 252, 260, 272, 273, 274, 275, 276, 277, and 281 (Motion 008) were read on this motion to/for VACATE SETTLEMENT AGREEMENT.
I. INTRODUCTION
In this action to recover damages for personal injuries, the defendants move to set aside a post-verdict settlement agreement on the ground that it was induced by fraud. In particular, they allege that, both during the trial and during post-verdict negotiations, the plaintiff and his trial attorney misrepresented the plaintiff's ability to work, thus inducing the defendants to offer far more to compensate the plaintiff for past and future economic losses than they would have offered had they known of his activities as an alleged general contractor in early 2018, slightly more than one year prior to the May 2019 trial. The plaintiff opposes the motion, contending that neither his trial testimony nor the contentions of his attorney misrepresented the facts as to whether he could or could not actually engage in carpentry work between the date of the accident in 2013 and 2018, whether he could or could not perform such work at the time that the trial was conducted in 2019, and whether he would or would not be unable to perform such work at any time in the future. The motion is denied.
II. RELEVANT PRE-TRIAL PROCEEDINGS
The plaintiff was injured in a workplace accident on February 26, 2013. He commenced this action on March 18, 2013. The court conducted a preliminary conference on July 24, 2013. The preliminary conference order issued on that date indicated that the plaintiff had already provided the defendants with his employment records or authorizations permitting them to obtain those records. In subsequent discovery orders, including an October 16, 2013 compliance conference order, and January 15, 2014 and April 16, 2014 status conference orders, no directive was included addressing the production of employment records or information concerning sources of the plaintiff's income. In his bill of particulars June 4, 2013, the plaintiff asserted that he may "likely be permanently disabled." At his November 18, 2013 deposition, the plaintiff testified that he had yet to return to work.
The plaintiff first filed a note of issue on April 24, 2014. By so-ordered stipulation dated July 30, 2014, the court (Wooten, J.) vacated the note of issue on the ground that discovery remained outstanding. The court issued additional status conference orders on February 25, 2015 and April 8, 2015. Neither of them addressed any issues concerning employment records or sources of the plaintiff's income.
After additional discovery was conducted, including discovery from nonparties, the plaintiff again filed a note of issue on May 19, 2015. On May 29, 2015, the defendant again moved to strike the note of issue. The motion was withdrawn pursuant to a stipulation dated July 30, 2015, apparently on the ground that the plaintiff again agreed to vacate the note of issue. The parties thereafter conducted additional nonparty discovery. On October 8, 2015, the plaintiff, for the third time, filed a note of issue, this time without objection.
The defendants thereafter moved for partial summary judgment dismissing the cause of action alleging a violation of Labor Law § 241(6). By order dated February 6, 2017, the court (Lebovits, J.) granted the motion to the extent of dismissing so much of the cause of action as was predicated on the Industrial Code provisions regulating tripping hazards (see 12 NYCRR 23-1.7[e][1], [2]), inasmuch as the object over which the plaintiff tripped and fell was integral to the construction work then being undertaken. The defendants' motion otherwise was denied, thus permitting the plaintiff to establish that the defendants' negligent violation of the Industrial Code provisions regulating the sufficiency of lighting at the work site proximately caused his accident. By decision and order dated November 27, 2018, the Appellate Division, First Department, affirmed the order of the Supreme Court (see Saginor v Friars 50th St. Garage, Inc., 166 AD3d 529 [1st Dept 2018]).
III. TRIAL
The trial of this action commenced on May 7, 2019. In the course of opening statements, the plaintiff's attorney, after generally describing the plaintiff's injuries and medical treatment, asserted that, "needless to say, Michael has been unable to work in the construction trade, and the loss to him and his family will be outlined to you by an economist based on his prior work history." Defense counsel countered during his opening statement by asserting that "Mr. Saginor is not disabled from employment. There are other jobs that he can gain and do well, but he's never tried."
At trial, the plaintiff established that, as a proximate cause of his construction-related trip-and-fall accident, he sustained several fractures to his right, dominant arm, and required orthopedic and neurosurgery to repair the fractures and associated nerve damage. The plaintiff and his retained medical experts claimed that the injuries and necessary surgery caused him to suffer from complex regional pain syndrome (CRPS), a condition formerly referred to as reflex sympathetic dystrophy (RSD). The plaintiff and his treating and retained health-care providers adduced ample evidence at trial that the plaintiff had permanent burning pain in his right arm with discoloration, was receiving monthly injections of a nerve-blocking agent and would be required to continue that treatment into the future, and underwent a procedure to implant a nerve-blocking device known as a spinal cord stimulator near his spinal cord.
There was conflicting expert medical testimony as to whether the accident caused the plaintiff to become permanently disabled, whether he suffered from CRPS, and whether he would require pain-management medications, injections, and consultations in the future. Specifically, orthopedic surgeon Dr. Raz Winiarsky testified that the plaintiff suffered from RSD, that he would require pain and nerve-blocking treatments for the remainder of his life, and that, although he could perform the tasks of daily living when he was not in pain, when the pain flared up, he would be unable to take care of himself. Dr. Winiarsky also opined that the plaintiff was disabled from working in any capacity, although he might be able to function normally, at most, for a period of three weeks at a time during periods when analgesic and nerve-blocking treatments were effective.
Dr. Chaim Mandelbaum, a pain-management specialist who treats RSD/CRPS patients, testified that he was "100% confident" that the plaintiff's arm and wrist injuries caused him to sustain RSD/CRPS, and that, at most, the plaintiff could expect only two to three weeks of relief at a time from analgesic and nerve-blocking injections. Dr. Mandelbaum further testified that the plaintiff would need to continue taking Suboxone for pain, as well as topically applying various anesthetic creams and gels on his injured hand and wrist. He also opined that the goal of pain management therapy was to make the plaintiff comfortable enough to undergo physical therapy. As Dr. Mandelbaum described it, when the plaintiff's pain flared up, which occurred continually, "he has difficulty with writing, with holding a cup, even taking care of himself, combing his hair, taking a shower which water becomes so hypersensitive to light touch." Dr. Mandelbaum concluded that these symptoms would likely remain for the remainder of the plaintiff's life. He concluded that the plaintiff,
"unfortunately, will not be able to have gainful employment, certainly not within doing construction or electrical work because of the ongoing pain. He even has great difficulty doing sedentary work, and I have doubts—almost none of our patients with RSD actually go back to work, unfortunately. Because the pain just, again, it waxes and wanes. There are bouts where the pain is severe, especially with changes in weather, cold, and I can't see him going back to work at all."
The defendants' expert, Dr. Lloyd Saberski, emphatically denied that the plaintiff presented symptoms of CRPS. Rather, Dr. Saberski opined that while the underlying symptoms described by the plaintiff were doubtlessly painful, they did not constitute a "regional" pain syndrome because the pain and burning sensations were localized in two specific sites on the plaintiff's arm and did not shoot all the way down to the plaintiff's hand. Although Dr. Saberski conceded that the symptoms were not inconsistent with the definition of the now-disused and superseded diagnostic condition known as RSD, he concluded that, in present medical parlance, the plaintiff did not suffer from any regional pain syndrome. In addition, Dr. Saberski opined that, with the proper treatment, the plaintiff could indeed engage in some sort of sedentary work.
The defendants introduced surveillance videos of the plaintiff from 2015 and 2016 that essentially depicted him holding a cup of coffee and engaging in other daily activities. The videos did not depict him undertaking physical labor, heavy work, or strenuous activities.
During his direct examination, the plaintiff testified that "I haven't brought no [sic] money home in like five years, paid bills in five years. My kids are paying my bills. It's pathetic." Even though this apparently opened the door to questioning on the issue of whether the plaintiff received income from any source between 2014 and 2019, on cross-examination, he was not questioned about whether he engaged or attempted to engage in any income-producing activities. Rather, the extent of the cross-examination with respect to his disabilities was as follows:
"Q. And if your pain was alleviated by something, anything, if your pain was alleviated, it's your intention to return to work, correct?
"A. If I can relieve the pain, I wish I could go back to work.
"Q. And if the pain was alleviated, do you think you could be a carpenter again?
"A. I wish.
"Q. In terms of the structure of your right arm, the mechanical structure of your right arm, do you think that you're capable of performing the tasks of a carpenter if you didn't have pain?
"A. I have to rebuild my strength in my arm because my arm is like nothing now.
"Q. If the pain were eliminated, would you attempt to be a carpenter again?
"A. Of course, that's my life, I love it.
"Q. How about electrician?
"A. I love it too. Plumbing too.
"Q. Thank you very much, sir.
"A. Thank you."
During summation, the plaintiff's counsel stated, in general terms, that the plaintiff would not be able to enjoy life to the fullest because of his injuries. As relevant to the issue of the plaintiff's ability to work, counsel further asserted that
"There's no evidence he can work. The idea that he could work is them trying to shift the blame for their responsibility to Michael when for six and a half years if they would have provided medical care maybe he would have worked."(emphasis added).
*****
"You can fix it going forward as well. There's nothing else that this man -- that they've shown evidence that this man can do. They've put him in that situation. The future loss of wages is a simple calculation based on two years which is a conservative estimate because union carpenters are making a lot more right now"
The jury ultimately found that the defendants were negligent in creating a tripping hazard and providing insufficient illumination at the work site, and negligently violated the Industrial Code provision requiring sufficient illumination. It further found that this negligence was a significant factor in bringing about the plaintiff's injuries. Although it is unclear as to whether the jury actually concluded that the plaintiff suffered from CRPS/RSD, it is clear that the jury concluded that he sustained a fairly serious and debilitating injury, that it would continue into the future, that the plaintiff had been unable to work in his chosen field of carpentry from the 2013 accident date until the trial in 2019, and that he would be unable to work in that field in the future. In making awards for future lost wages at union scale, future lost union benefits, and future social security retirement benefits, the jury impliedly rejected Dr. Saberski's testimony that the plaintiff should be able to secure sedentary employment in the future.
As relevant here, the jury awarded the plaintiff the sums of $250,000.00 over 27.6 years for future lost wages, $232,547.00 over 16 years for future lost social security retirement benefits, and $25,000.00 over 27.6 years for future lost union pension and annuity benefits.
The jury also awarded the plaintiff the sums of $375,000.00 for past pain and suffering and, after being instructed to reconsider its award of $0 for future pain and suffering in light of its award of future medical expenses, it awarded the plaintiff the sum $150,000.00 for future pain and suffering over a period of 27.6 years. In addition, after being directed to reconsider its award for future pain and suffering, the jury, before rendering its final verdict, unilaterally reconsidered some of its other awards, and ultimately awarded the plaintiff the sums of $432,474.00 for past lost wages, $185,964.00 for past loss of union pension and annuity benefits, $300,000.00 over 27 years for the future cost of physical and occupational therapy, $75,000.00 over 8 years for the future cost of pain management visits to health-care professionals, $250,000.00 over 15 years for future costs of pain injections, and $209,753.00 over 27 years for the future cost of surgical procedures.
Hence, the jury awarded the plaintiff the total sum of $2,485,738.00.
IV. POST-TRIAL MOTION AND CROSS MOTION
The defendants moved pursuant to CPLR 4404(a) to set aside the awards for past and future economic loss as excessive. They also contended that the jury had no authority to alter its verdict in connection with any awards other than that for future pain and suffering, that the verdict on the issue of liability was both legally insufficient and contrary to the weight of the evidence, and that the verdict on the issue of damages for future lost wages was based on legally insufficient evidence. The plaintiff cross-moved to set aside, as insufficient, the awards for future pain and suffering and future lost wages.
By order dated November 18, 2019, the court rejected the defendants' contentions concerning the issues of liability, the legal sufficiency of the evidence, and the jury's authority to revisit its verdict before it formally was recorded in the clerk's minutes of the trial. The court, however, set aside so much of the verdict as awarded damages for future economic loss on the ground that the three elements of future economic loss for which awards were made were inconsistent with each other. The court concluded that the awards for each of those elements could either be excessive or insufficient had the jury properly harmonized the periods of time over which it made those awards, and had based its awards in this regard on the evidence presented. Consequently, the court directed a new trial on the issue of future economic loss unless both the plaintiff and the defendants stipulated to increase the award for future lost wages from the sum of $250,000.00 over 27.6 years to the sum of $791,663.50 over 9.5 years, to decrease the award for future lost social security retirement benefits from the sum of $232,547.00 over 16 years to the sum of $138,074.81 over 9.5 years, and to increase the award for future lost union pension and annuity benefits from the sum of $25,000.00 over 27.6 years to the sum of $294,443.00 over 9.5 years. Thus, the court directed a new trial on the issue of these three elements of future economic loss, unless the parties stipulated to revise the award for all future economic loss from $507,000.00 to $1,224,181.31, a net increase of $717,181.31.
The court also set aside so much of the verdict as awarded the plaintiff the sum of $150,000.00 for future pain and suffering, and directed a new trial on the issue of damages for future pain and suffering unless the defendants stipulated to increase the award for future pain and suffering to the sum of $750,000.00, a net increase of $600,000.00
The court sustained the awards for past economic loss, past pain and suffering, future medical expenses, and all other items of damage. Consequently, had the parties stipulated to the various revisions of the relevant awards, as indicated by the court, the amount of the award would have been increased from $2,485,738 to $3,802,919.31, reflecting a net upward revision of $1,317,181.31 in the total award.
After the court issued its November 18, 2019 order, the parties declined to stipulate to the revisions set forth therein. In fact, the defendants filed a notice of appeal from that order. Hence, the awards for future pain and suffering and future economic loss remained nullities during the period when the parties were awaiting a new trial or an appellate determination.
V. SETTLEMENT NEGOTIATIONS, SETTLEMENT, AND RELEASE
The parties nonetheless engaged in settlement negotiations. On or about July 8, 2020, while the appeal remained pending, and before the court could schedule a new trial on the issue of the awards that it had set aside, the parties agreed to settle the dispute for the total amount of $2,600,000.00, a net increase of $114,262.00 from the jury's award. On July 14, 2020, the plaintiff served the defendants with a general release and an executed stipulation of discontinuance, as required by CPLR 5003-a.
In the general release, the plaintiff recited that
"It is further acknowledged that payment of the sum by the Released Parties and the negotiations for this settlement (including all statements, admissions, or communications) by the Released Parties or their attorneys or representatives, are made solely for purposes of avoiding the excessive costs of further litigation of this matter only, and that the Released Parties do not in any way admit any liability to the Releasing Party by entering into this agreement to compromise and settle this lawsuit. In fact, the Released Parties continue to expressly deny any and all liability whatsoever in this matter."This assertion that was neither contradicted nor rejected by the defendants.
VI. THE NEW JERSEY ACTION AGAINST THE PLAINTIFF
According to the defendants, only days before the 21-day prompt-payment period set forth in CPLR 5003-a was set to expire on August 4, 2020, they learned, via an investigation conducted by their insurance carrier, that the plaintiff had been sued on February 11, 2019 in the Superior Court of the State of New Jersey by property owners Moishe Kinraich and First Star Promo, Inc. (together the claimants). In their New Jersey complaint, the claimants asserted that the plaintiff falsely had held himself out to be a general contractor, nonetheless entered into a contract with them for renovation of premises at two locations in New Jersey, and failed to perform any of the work required by the contract. They asserted causes of action against the plaintiff to recover for breach of contract, fraud, conversion, and violation of the New Jersey Consumer Fraud Act.
Specifically, the claimants, in addition to alleging that the plaintiff did not have the required home improvement license and did not secure the necessary building permits, alleged in their complaint that the plaintiff "did nothing to perform the Contract except to cut a structural beam in one of the Premises, which caused damage to that Premises." Although the claimants further asserted in the complaint that damages to that structure also included the "cutting of all electric wires, destr[uction of] the electric box, install[ation of] incorrect plumbing throughout the Premises, which must be replaced, cut[ting of] studs in the basement to fit the new plumbing, [and] installing incorrect ceiling beams," they conceded therein that the plaintiff "claimed another contractor did this work, but refused to provide their [sic] identity," while nonetheless alleging "on information and belief" that the plaintiff himself had performed that work. In addition, the claimants averred that the plaintiff charged more than $10,000 to their credit cards, ostensibly for purchases necessary to the renovation projects, but in actuality for items used solely for his own benefit. They also alleged that the plaintiff took their laptop computer, two l-pods, and a wooden china cabinet, the latter of which the claimants agreed to sell to the plaintiff, but for which the plaintiff did not pay. In addition, the claimants asserted that the plaintiff harassed Kinraich's wife at her home, insisting that she give him $65.00 for certain out-of-pocket expenses.
The plaintiff defaulted in appearing in the New Jersey action. In the affidavit supporting the entry of default judgment, the claimant's attorney asserted that the contract that the plaintiff had breached was entered into in "early 2018." As a consequence of the plaintiff's default, on April 10, 2019, the claimants secured a default judgment against the plaintiff in New Jersey in the sum of $120,239.67.
On July 30, 2020, the claimants commenced an action in the Supreme Court, New York County, to domesticate the New Jersey judgment. In the New York action, the claimants also joined the plaintiff's attorneys, the defendants' attorneys, and the defendants' insurer, Liberty Mutual Insurance Company, as persons who owed a debt, or were holding money due, to the plaintiff. Although the defendants assert herein that it was their insurer's investigation that yielded their knowledge of the New Jersey action and default judgment, it is unclear as to whether they actually learned of it when they were served with the papers in the New York action.
VII. DISCUSSION
"Stipulations of settlement are favored by the courts and not lightly cast aside" (Hallock v State of New York, 64 NY2d 224, 230 [1984]; see Matter of Galasso v Galasso, 35 NY2d 319, 321 [1974]; Gyabaah v Rivlab Transp. Corp., 102 AD3d 451, 454 [1st Dept 2013]). A stipulation of settlement is a contract that is subject to rules applicable to all contracts (see Brad H. v City of New York, 17 NY3d 180, 185 [2011]). Similarly, "'[a] release is a contract, and its construction is governed by contract law'" (Cames v Craig, 181 AD3d 851, 851 [2d Dept 2020], quoting Schiller v Guthrie, 102 AD3d 852, 853 [2d Dept 2013]). Proof that a contract was secured by means of fraudulent inducement constitutes a basis for rescinding the contract (see Babylon Assocs. v County of Suffolk, 101 AD2d 207, 215 [2d Dept 1984]).
"A release will not be treated lightly because it is 'a jural act of high significance without which the settlement of disputes would be rendered all but impossible'" (Allen v Riese Org., Inc., 106 AD3d 514, 516 [1st Dept 2013], quoting Mangini v McClurg, 24 NY2d 556, 563 [1969]). "Where the language is clear and unambiguous, the release is binding on the parties unless it is shown that it was procured by fraud, duress, overreaching, illegality or mutual mistake" (Allen v Riese Org., Inc., 106 AD3d at 516; see Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d 269, 276 [2011]; Johnson v Lebanese Am. Univ., 84 AD3d 427 [1st Dept 2011]; Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 97 [1st Dept 2006]; see also Mergler v Crystal Props. Assoc., 179 AD2d 177 [1st Dept 1992]; Skluth v United Merchants & Mfrs., 163 AD2d 104 [1st Dept 1990]).
Here, the defendants do not challenge the fact that they entered into an otherwise-valid and binding settlement agreement, nor do they dispute the terms of that agreement; instead, they claim that the settlement agreement was induced by the plaintiff's fraud.
A claim of fraud must allege:
"(1) a false representation of fact, (2) knowledge of the falsity, (3) intent to induce reliance, (4) justifiable reliance, and (5) damages. To plead a cause of action alleging fraud in the inducement or fraudulent concealment, the plaintiff must allege facts to support the claim that it justifiably relied on the alleged misrepresentation"(JGK Indus., LLC v Hayes NY Bus., LLC, 145 AD3d 979, 980 [2d Dept 2016] [citations omitted]; see ACA Fin. Guar. Corp. v Goldman, Sachs & Co., 25 NY3d 1043, 1044 [2015;] Eurycleia Partners, L.P. v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]; Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d 1185, 1188-1189 [2d Dept 2012]). Consequently, to set aside a release on the grounds of fraudulent inducement, a plaintiff must establish the basic elements of fraud, namely, "a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury" (Global Mins. & Metals Corp. v Holme, 35 AD3d at 98; see Pope v Saget, 29 AD3d 437, 441 [1st Dept 2006], citing Channel Master Corp. v Aluminum Ltd. Sales, 4 NY2d 403, 406-407 [1958]). Fraud, including fraudulent inducement to enter into a contract, may also be demonstrated where one party fraudulently conceals material facts, and owes a duty to disclose them because that party's "'superior knowledge of essential facts renders a transaction without disclosure inherently unfair'" (Greenman-Pedersen, Inc. v Berryman & Henigar, Inc., 130 AD3d 514, 516 [1st Dept 2015], quoting Pramer S.C.A. v Abaplus Intl. Corp., 76 AD3d 89, 99 [1st Dept 2010]).
Where a party claims that it justifiably relied upon either a misrepresentation or concealment of a material fact,
"'[i]f the facts represented [or concealed] are not matters peculiarly within the party's knowledge, and the other party has the means available to him of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations'"(Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d at 278-279, quoting Schumaker v Mather, 133 NY 590, 596 [1892]; see DDJ Mgt., LLC v Rhone Group LLC, 15 NY3d 147, 154 [2010]; Stuart Silver Assocs. v Baco Dev. Corp., 245 AD2d 96, 98-99 [1st Dept 1997]). In other words, a sophisticated party must protect itself from misrepresentation and concealment by investigating the details of transactions into which they enter (see Global Minerals & Metals Corp. v Holme, 35 AD3d at 100) and by showing that it took reasonable steps to discharge that duty of investigation in order support a claim of fraudulent inducement (see DDJ Mgt, LLC v Rhone Group LLC, 15 NY3d 147).
Fraud must be established by clear and convincing evidence (see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 349-350 [1999]; Callisto Pharm., Inc. v Picker, 74 AD3d 545, 545-546 [1st Dept 2010]). "[L]oose, equivocal or contradictory" evidence will not suffice (Abrahami v UPC Constr. Co., 224 AD2d 231, 233 [1st Dept 1996]).
Crucially, the defendants have failed to demonstrate that they justifiably relied on any fraudulent statement or omission, as the substance of the New Jersey dispute was set forth in a public record that pre-dated the trial of this action (see Urstadt Biddle Props., Inc. v Excelsior Realty Corp., 65 AD3d 1135,1137 [2d Dept 2009]; Alpha GmbH & Co. Schiffsbesitz KG v. BIP Indus. Co., 25 AD3d 344, 344 [1st Dept 2006]; Barrett v Huff, 6 AD3d 1164, 1167 [4th Dept 2004]; National Union Fire Ins. Co. v Red Apple Group, Inc., 273 AD2d 140 [1st Dept 2000]). The defendants thus cannot show that the facts of the dispute were solely within the plaintiff's knowledge---a requisite for rescinding a contract on the ground of fraudulent inducement---or that it took reasonable steps to discharge its duty of investigation in order to support its claim of fraudulent inducement (see Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d at 278-279; DDJ Mgt, LLC v Rhone Group LLC, 15 NY3d 147; Global Minerals & Metals Corp. v Holme, 35 AD3d at 100). Having failed to undertake a search of prior lawsuits in which the plaintiff was a party before proceeding to trial, the defendants should not be permitted to rely on the fact that the New Jersey action was not disclosed to them.
In any event, the court also concludes that the defendants failed to make a showing, by clear and convincing evidence, that the plaintiff intentionally misrepresented at trial that he did not earn any income for the five years between 2014 through 2019, that he could not work after the accident, or that he intentionally withheld information concerning the New Jersey action and default judgment. Nor did the defendants make a showing, by clear and convincing evidence, that the plaintiff's attorney knew about the New Jersey action, but nonetheless knowingly permitted the plaintiff falsely to testify that he could not work between 2014 and 2019 or made false statements during opening, summation, and settlement negotiations concerning the plaintiff's ability to work.
In fact, the plaintiff's attorney stated during summation that there was no evidence presented that the plaintiff could have worked between the date of the accident and the beginning of trial, not that the plaintiff did not attempt to engage in any income-generating activities. Similarly, the plaintiff himself asserted that he earned no income for the five years from 2014 to 2019, not that he made no attempt to engage in some sort of work. As noted, defense counsel did not pursue this avenue of inquiry on cross-examination, limiting his questions to whether the plaintiff might be able to work in the future. In other words, the defendants have not made a prima facie showing that the plaintiff or his attorney made false statements or concealed material facts, let alone that the alleged evidence demonstrating falsity or concealment was "clear and convincing." There is no evidence whatsoever that the plaintiff falsely testified at trial that he could not perform carpentry work; he essentially concedes that the 2018 New Jersey contract was in the nature of a "scam," and that he never intended to perform under the New Jersey contract. The plaintiff asserts that he did not perform any physical work in connection therewith, and that he could not sustain a career as a general contractor whether or not he could perform any physical work.
In fact, in all of the papers filed by the claimants in the 2019 New Jersey action, the claimants and their attorney repeatedly alleged that the plaintiff simply did no work whatsoever. This is consistent with the plaintiff's repeated allegation that he could not perform carpentry work. To the extent that the claimants alleged that the plaintiff cut one structural beam, this contention is also not inconsistent with the plaintiff's testimony that he was unable to work, as, at most, it establishes that he was unable to perform carpentry work in any proper manner.
Inasmuch as the New Jersey judgment was entered on the plaintiff's default, all of the allegations made by the claimants in the New Jersey action have not been proven, and do not estop the plaintiff from contesting them, as he does here. In the absence of live testimony from persons with actual knowledge of the facts, mere allegations in a foreign-state lawsuit are not evidence that the jury would have been permitted to hear. As explained by the Appellate Division of the Superior Court of New Jersey,
"the doctrine of collateral estoppel, which bars the relitigation of issues 'actually determined in a prior action between the same parties and their privies involving a different claim or cause of action,' Allesandra v Gross, 187 NJ Super. 96, 103, 453 A2d 904 [App Div 1982]; accord State v Gonzalez, 75 NJ 181, 186, 380 A.2d 1128 [1977]; New Jersey Mfrs. Ins. Co. v. Brower, 161 NJ Super. 293, 297, 391 A2d 923 [App Div1978], would be equally inapplicable to bar . . .litigati[on of] the issues of fraud and forgery. The doctrine of collateral estoppel 'precludes relitigation only of questions "distinctly put in issue" and "directly determined" adversely to the party against which the estoppel is asserted.' Eatough v Board of Medical Examiners, 191 NJ Super. 166, 175, 465 A2d 934 [App Div 1983]; accord Plainfield v Public Serv. Elec. and Gas Co., 82 NJ 245, 257, 412 A2d 759 [1980]; Washington Township v Gould, 39 NJ 527, 533, 189 A2d 697 [1963]"(Slowinski v Valley Natl. Bank, 264 NJ Super 172, 182 [App Div 1993]). New York law is in accord with New Jersey law on this issue (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457, [1985] ["An issue is not actually litigated" for collateral estoppel purposes "if, for example, there has been a default"]; Rojas v Romanoff, ___AD3d___, 2020 NY Slip Op 04237, 2020 NY App Div LEXIS 4309, *8 [1st Dept., Jul. 23, 2020]; Matter of American Tr. Ins. Co. v Hossain, 100 AD3d 421, 421 [1st Dept 2012[; Pigliavento v Tyler Equip. Corp., 233 AD2d 810, 811 [3d Dept 1996]). Hence, the New Jersey default judgment does not collaterally estop the plaintiff from alleging that he performed no work whatsoever, or even that he did not receive the checks that the claimants alleged that they tendered to him. Nor does it constitute proof of the allegations set forth in the New Jersey complaint.
In any event, the claimants' allegations in the New Jersey complaint that the plaintiff physically performed all of the other "work" that caused damage to their two premises were made upon information and belief. Where an allegation is based only upon information and belief, "without the slightest reference to the source of the information or the grounds for the belief" (Zelnik v Bidermann Indus. U.S.A., 242 AD2d 227, 228 [1st Dept. 1997]), it is without evidentiary value (see id; see also Henriquez v Purins, 245 AD2d 337, 338 [2d Dept 1997]). Inasmuch as the claimants now claim suddenly to "remember" on this motion that the plaintiff personally undertook that additional "work," it constitutes "an attempt to create a feigned issue of fact specifically designed to avoid the consequences" of their prior unsupported allegations (Keizer v SCO Family of Servs., 120 AD3d 475, 477 [2d Dept 2014]), particularly where, as here, the grounds for the claimants' belief remains unidentified.
There is also no merit to the defendants' contention that the plaintiff breached any duty to update his discovery responses. Discovery was completed on October 8, 2015, the date when the plaintiff filed the note of issue for the third time, and the defendants did not seek to vacate it. The defendants make no allegation that the plaintiff was able to undertake work of any variety between the February 26, 2013 accident and October 8, 2015. Nor do the defendants submit any evidence that the plaintiff undertook any remunerative activities between October 8, 2015 and "early 2018."
As the defendants correctly note, CPLR 3101(h) provides, in relevant part, that
"A party shall amend or supplement a response previously given to a request for disclosure promptly upon the party's thereafter obtaining information that the response was incorrect or incomplete when made, or that the response, though correct and complete when made, no longer is correct and complete, and the circumstances are such that a failure to amend or supplement the response would be materially misleading."(see generally Patterson v Calogero, 150 AD3d 1131 [2d Dept 2017]). Nonetheless, during the course of discovery, the defendants requested the plaintiff's "employment records," which presumably refer to employment as an employee by another party. They submit no documentation, however, to support their contention that, during the course of discovery, they had asked the plaintiff for records concerning all income that he received from any source, including unexpected income (such as a lottery prize), aleatory income (such as gambling winnings), or illegally procured gains (such as those secured through fraud or criminal conduct). Such a discovery request might have imposed a continuing duty upon the plaintiff to reveal his activities in New Jersey, but only if the plaintiff admitted that he received $45,000-$50,000 from the claimants, as they have alleged, something that the plaintiff has not done.
In addition, the plaintiff correctly notes that the settlement agreement primarily was based, among other things, on the expert medical and vocational testimony properly adduced at trial, the evaluation of the prospects for success on appeal or at a new trial, and the desire to bring costly litigation to a close.
Nor have the defendants established that, had the facts underlying the New Jersey action been developed at trial, the jury would have rendered a different verdict concerning the plaintiff's ability to engage in physical or other legal, remunerative work. This conclusion is underscored by the fact that the defendants were permitted to impeach the plaintiff's character and credibility during trial, based on his history of opioid dependence and abuse, while the jury nonetheless rendered a verdict quite favorable to the plaintiff. Indeed, even had the defendants known about the New Jersey action and default judgment, they would not have been permitted to employ it solely to establish that the plaintiff had previously committed a bad act (see Morency Horizon Transp. Servs., Inc., 139 AD2d 1021, 1023 [2d Dept 2016]). At most, they would have been limited to asking the plaintiff whether he had actually performed physical labor or attempted to secure income as a general contractor in New Jersey in 2018, asking him whether he knew about the New Jersey lawsuit, and showing him a copy of the complaint to read to himself to refresh his recollection; they would not have been permitted to recite from the complaint or the attorney's affidavit in that action, as that would have constituted hearsay.
As the court noted in its November 18, 2019 order, the defendants did in fact adduce evidence from their expert witness, Dr. Saberski, that the plaintiff could perform sedentary work in the future. The jury chose to accept the opinions of the plaintiff's experts that he would be unable to perform either carpentry or sedentary work (cf. Edwards v Stamford Healthcare, 267 AD2d 825 [3d Dept 1999] [defendants adduced no evidence to support their contention that a small award for future lost earnings was justifiable because the jury disbelieved the plaintiff's contention that he could not work at all]). Had the jury known that the plaintiff engaged in the conduct that led to the 2019 lawsuit, it might not have viewed him favorably, but that conduct was irrelevant to his physical ability ably to perform work, as the facts concerning those issues were developed not merely through his own testimony, but through the testimony of several medical witnesses.
Finally, the court notes that, at the time when the settlement negotiations were being conducted during the first part of 2020, the award for future economic loss had been vacated. The defendants do not and cannot know whether a new jury considering the claims of future economic loss would have attributed a shorter duration to those losses than did the jury that already ruled upon those claims. Nor do they know whether that jury would have calculated the plaintiff's future losses in this regard at a lesser rate. Hence, the defendants have not made the necessary showing that they would not have offered the plaintiff the sum of $2.6 million had they known about his alleged activities in 2018, or the commencement of the New Jersey action in February 2019.
Accordingly, it is
ORDERED that the defendants' motion to vacate and rescind the settlement agreement and release dated July 14, 2020 is denied.
This constitutes the Decision and Order of the court. 9/8/2020
DATE
/s/ _________
JOHN J. KELLEY, J.S.C.