Court of Appeals January Session: Arguments of Interest for January 11, 2017

The Court of Appeals’ January Session continues on Wednesday, January 11, 2017, with three cases on the docket (the Court’s case summaries can be found here). The Court will address (1) whether a police officer who witnessed and videoed the administration of a breathalyzer test may be used as a substitute witness to introduce the results of the test into evidence at trial without violating the criminal defendant’s rights under the Confrontation Clause, when the administering officer is unavailable; (2) whether a tower crane damaged in Superstorm Sandy is covered under a property owner’s insurance policy as a “temporary work” or is subject to the policy’s exclusion for contractor’s tools and machinery that is not intended to become a permanent part of the insured property; and (3) whether a criminal defendant can be convicted of grand larceny by false pretenses where, despite his best efforts and admitted misrepresentations, he failed to ever obtain any fraudulently transferred property.

No. 11 Lend Lease (US) Construction LMB Inc. v Zurich American Insurance Company 

The owner and construction manager of a 74-story high rise being built in midtown Manhattan sought coverage for damage caused to the tower crane being used to build the building during Superstorm Sandy in October 2012. Zurich, one of the insurers of the property, disclaimed coverage on the grounds that the tower crane was not covered property and fell within one of the policy’s exclusions for “[c]ontractor’s tools, machinery, plant and equipment including spare parts and accessories…, and property of a similar nature not destined to become a permanent part of the INSURED PROJECT….” This suit ensued.

After Supreme Court denied summary judgment to both parties, finding issues of fact concerning whether the exclusion applied, the Appellate Division, First Department, in a 3-2 decision, granted summary judgment to Zurich and declared that the insurer was not on the hook for the claimed $6.5 million in damage. The Court held that the tower crane did not fall within the policy’s definition of covered “Temporary Works,” defined as “[a]ll scaffolding (including scaffolding erection costs), formwork, falsework, shoring, fences, and temporary buildings or structures, including office and job site trailers, all incidental to the project,” because the crane was integral, not incidental, to the project as the building couldn’t be built without it. In any event, the Court held, even if the tower crane was covered property, the policy’s exclusion for contractor’s tools applied, which absolved the insurer from liability.

The two dissenters disagreed and would have sent the case back for trial. They held that the definition of “Temporary Work” was not limited to the specific items it lists, but should also be read to include similar items that are incidental, but necessary, to the project, of which the tower crane was one. The dissenters also took issue with the majority’s holding that the “contractor’s tools” exclusion applied, because applying it in such a broad manner would “render coverage for temporary works illusory” and “unfairly deprive[] plaintiffs of the benefit of their bargain.”

The Appellate Division, First Department’s order can be found here.

No. 12 People v Fernando Maldonado 

This is the case of the failed fraudster. Maldonado, the first president of 242 South Second Street Housing Development Fund Corporation (HDFC), resided in a Brooklyn apartment building that was converted to a cooperative owned by its tenants in 1985. In 2007, however, Maldonado no longer lived in the building. Nevertheless, he began to hold himself out as the owner of the building, sent letters to the residents to that effect and asked them to contact him with any building management issues, showed the building to a prospective purchaser even though the building was not for sale, and quashed a building permit that the HDFC had obtained to repair the roof by telling the City that he had not authorized the work. As if that wasn’t enough, in 2008, Maldonado filed a homemade quitclaim deed to the building with the City Register, attempting to transfer the property to himself, and applied for a construction loan secured by a mortgage on the building that was ultimately denied.

As a result of his fraudulent attempts to transfer ownership of the building and secure a loan using it as collateral, Maldonado was convicted of first-degree grand larceny by false pretenses and possession of a forged instrument for filing the makeshift deed and attempted first-degree larceny for the failed loan application, and was sentenced to 3 to 9 years in prison. The Appellate Division, Second Department affirmed the conviction.

On appeal, Maldonado argues that his convictions should be reversed because he was failed criminal. Despite his numerous attempts, he argues, he never actually ever obtained any property fraudulently because the deed was void ab initio and the appearance of a transfer is not enough to establish grand larceny by false pretenses. Moreover, he claims, the residents of the building ignored him and the HDFC Board thwarted his efforts at every turn. Plus, he contends, he can’t be guilty of forging the deed because he signed his own name, and the bank was never even close to lending him money such that he can be found guilty on the attempted larceny count. The prosecution counters that his arguments are unpreserved and that a failed criminal is still a criminal. In this case, the People contend, the appearance of a transfer of the property to Maldonado through the filing of the false deed was enough to sustain his conviction.

The Appellate Division, Second Department’s order can be found here.

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