New York Court of Appeals Takes Strict View on Preservation

—by David Katz

In re New York City Asbestos Litigation (Konstantin v. Tishman Liquidating Corp.), 2016 N.Y. LEXIS 1765; 2016 NY Slip Op 05064 (N.Y. June 28, 2016), aff’g on other grounds 121 A.D.3d 230 (N.Y. App. Div. 2014).

Abstract:

The Court of Appeals recently reminded litigators that preservation doctrine favors the cautious litigator who renews his objections whenever circumstances change.  The Court held that an objection to allowing cases to be tried jointly was unpreserved for appellate review where parties settled after the order was made and the defendant failed to renew its objection at trial.

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On June 28, 2016, the New York Court of Appeals delivered a decision highlighting the pitfalls of preservation doctrine in New York.  “You snooze, you lose” is the basic aphorism that summarizes preservation doctrine, but the New York Court of Appeals reminded the legal community that a hole in the preservation chain can sever appellate review.  In re New York City Asbestos Litigation presented the Court with a specific iteration of an oft-faced preservation issue: when circumstances change, will an initial objection suffice for preservation purposes.

Ten plaintiffs moved to have their cases tried jointly.  The defendants opposed the joint trial, but the trial court allowed seven cases to be joined for trial.  Between the order granting a joint trial and the trial, five cases settled; thus, two cases remained to be tried.  One defendant did not renew its opposition to the joint trial.  After trial, one defendant made a post-trial motion challenging the joint trial.  The trial court denied the motion.

The defendant then appealed, arguing that the order allowing a joint trial was improperly made.  Plaintiffs, in response, argued that the issue was not preserved for appellate review because, amongst other arguments, Defendants’ opposition was not renewed after the five cases settled.

The First Department, in a three-to-two decision, found that the issue was preserved on review.  Specifically, the majority reasoned that the issue was preserved because the appeal stemmed from a final order, which brought the interlocutory order up for review.  As a result, the majority found that there was no need to renew an objection after five cases settled.  The majority, having found the issue preserved, affirmed the trial court’s decision on the merits.  The dissent also was not willing to find the issue unpreserved.  Instead, the dissent disagreed with the majority’s conclusion that the appendix on appeal was sufficient to permit appellate review.

A unanimous Court of Appeals affirmed the result, but wrote a separate opinion addressing the preservation issue.  According to the Court of Appeals, opposing the initial joint trial motion, along with a post-trial motion, was insufficient to preserve the issue for appellate review.  Instead, according to the Court of Appeals, the defendant should have renewed the motion after five plaintiffs settled in the hopes that the trial court would rebalance CPLR § 602 considerations in its favor.  As a result, the Court of Appeals refused to review the order.

The Court of Appeals reminds litigation counsel: object early, object often.  In order to argue a case effectively on appeal, litigators must remember to renew arguments, even if the litigator does not think the rationale underpinning the decision has changed.  Raising a trial court’s ire just before trial is a gamble, but the Court of Appeals reminded us that failing to preserve an issue is a sure bet against appellate review.

NY Court of Appeals Grants Summary Judgment in Joint Venture Dispute

—by Shannon Crane

Littleton Constr. Ltd. v. Huber Constr., Inc., No. 96, 2016 N.Y. LEXIS 1688 (June 14, 2016).

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In Littleton Construction Ltd. v. Huber Construction, Inc, plaintiff commenced a proceeding against defendants Huber Construction, Inc. (“Huber”) and Littleton/Huber Joint Venture (the “Joint Venture”) seeking a portion of the management fees collected by Huber as part of the payment for projects completed by the parties in connection with a joint venture. Huber Construction, Inc. (Huber) and Littleton/Huber Joint Venture (the joint venture) seek a portion of the management fee. 2016 N.Y. Slip Op.  04657, at 1–2. Defendants moved for summary judgment, and the motion relied upon the validity and interpretation of the party relationship governing documents. Id. at 2. The trial court partially granted defendants’ motion, leaving one claim seeking recovery of a portion of management fees. The Appellate Division dismissed the complaint in its entirety. Id.

The issue before the Court of Appeals was the parties’ dispute over which agreement governed the joint venture relationship. Pursuant to the motion for summary judgment, defendants met their evidentiary burden of establishing that the Operating Agreement was not executed by Huber, and was thus unenforceable. Id. The joint venture cannot be governed by the terms of an unenforceable document. Id. Because the terms of the Operating Agreement were not enforceable, the Court determined that the Memorandum of Understanding governed the relationship. Littleton Construction Ltd. 2016 N.Y. Slip Op.  04657, at 2 (N.Y. 2016). The Memorandum of Understanding plainly provided for a 9 percent management fee to Huber, which Huber was not required to share with the plaintiff. When a contract is complete, clear and unambiguous, it must be enforced according to its plain meaning; thus, defendants were entitled to summary judgment. Id.