Caffrey v. N. Arrow Abstract & Settlement Servs., Inc., 2015–06114

CourtNew York Supreme Court Appellate Division
Citation160 A.D.3d 121,73 N.Y.S.3d 70
Docket NumberIndex No. 102525/09,2015–06114
Parties Maureen CAFFREY, etc., respondent, v. NORTH ARROW ABSTRACT & SETTLEMENT SERVICES, INC., et al., defendants, Eric Nelson, appellant.
Decision Date14 February 2018

160 A.D.3d 121
73 N.Y.S.3d 70

Maureen CAFFREY, etc., respondent,
v.
NORTH ARROW ABSTRACT & SETTLEMENT SERVICES, INC., et al., defendants,

Eric Nelson, appellant.

2015–06114
Index No. 102525/09

Supreme Court, Appellate Division, Second Department, New York.

Argued—September 5, 2017
February 14, 2018


Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrera & Wolf, LLP, Brooklyn, N.Y. (Michael A. Coscia of counsel), for appellant.

Crawford, Bringslid, Vander, Neut, LLP, Staten Island, N.Y. (Allyn J. Crawford of counsel), for respondent.

MARK C. DILLON, J.P., CHERYL E. CHAMBERS, JEFFREY A. COHEN, ANGELA G. IANNACCI, JJ.

OPINION & ORDER

DILLON, J.P.

APPEAL from a judgment of the Supreme Court, Richmond County (Philip G. Minardo, J.), dated March 13, 2015. The judgment, insofar as appealed from, upon a decision dated December 5, 2013, made after a nonjury trial, is in favor of the plaintiff and against the defendant Eric Nelson in the principal sum of $115,000.

We address two related issues concerning subject matter jurisdiction that have not previously been addressed by our Court. The first is whether a court with subject matter jurisdiction, which pursuant to CPLR 325(d) has erroneously transferred an action to a lower court lacking subject matter jurisdiction to adjudicate the matter, may retransfer the action to itself after the lower court has already tried the matter and rendered a judgment. The second question is whether, upon a retransfer of the action to a court with subject matter jurisdiction pursuant to CPLR 325(b), the court may adopt the findings of fact and conclusions of law of the lower court and thereupon substitute the lower court's judgment with its own judgment. We answer the first question in the affirmative and the second question in the negative.

73 N.Y.S.3d 73

I. Facts

This appeal presents an unfortunate and tortured procedural history.

In October 2009, the plaintiff, Maureen Caffrey, individually and as a shareholder of the defendant North Arrow Abstract & Settlement Services, Inc. (hereinafter North Arrow), commenced this shareholder derivative action in the Supreme Court, Richmond County, against North Arrow and the defendant Eric Nelson, to recover damages for, inter alia, corporate mismanagement. The complaint asserted equitable causes of action alleging misappropriation of funds, breach of fiduciary obligations, corporate waste, conversion, the failure to maintain a proper accounting, fraud, and unjust enrichment, and sought injunctive relief and a declaratory judgment. Nelson interposed an answer dated April 20, 2010, denying the material allegations of the complaint.

The action was referred by the Administrative Judge of Richmond County "for assignment to a Judicial Hearing Officer/Court Attorney Referee to conduct a nonjury trial." By order dated August 5, 2011, the Supreme Court, rather than assigning the matter to a judicial hearing officer or referee as directed, sua sponte, transferred the action pursuant to CPLR 325(d) to the Civil Court of the City of New York for trial. There was no order designating any particular judge of the Civil Court to hear the action as an Acting Justice of the Supreme Court.

By order dated January 9, 2012, the Civil Court denied the parties' respective motions for summary judgment. The order was signed by Hon. Orlando Marrazzo, Jr., as "Judge, Civil Court."

Thereafter, the action was tried without a jury in the Civil Court for 11 nonconsecutive days spanning the course of several months. In a decision dated December 5,

73 N.Y.S.3d 74

2013, the Civil Court found that Caffrey established her 50% ownership of North Arrow and that Nelson had breached obligations to her, misappropriated funds to himself, and diverted business to another entity which he owned. The Civil Court calculated Caffrey's damages at $115,000.* The decision was signed by Judge Marrazzo, in this instance, as "Acting Justice, Supreme Court," which is the first time in the chronology of events that the term "Acting Justice" appears in the case. On January 17, 2014, a judgment was filed in the Civil Court, Richmond County, in favor of Caffrey and against Nelson in the principal sum of $115,000, plus statutory interest, costs, and disbursements, for a total sum of $192,995.21.

Nelson appealed the Civil Court judgment to the Appellate Term for the Second, Eleventh, and Thirteenth Judicial Districts. Nelson argued before the Appellate Term that the judgment was void, as the Civil Court was without subject matter jurisdiction to hear the equitable causes of action alleged in Caffrey's complaint.

During the pendency of Nelson's appeal to the Appellate Term, Caffrey moved by order to show cause in the Supreme Court, Richmond County, to retransfer the action from Civil Court to Supreme Court, pursuant to CPLR 325(b). Caffrey also requested that, upon the retransfer, the Supreme Court vacate the Civil Court judgment and enter, in its place, a Supreme Court judgment consistent with the trial decision of Judge Marrazzo.

In an order entered February 25, 2015, the Supreme Court granted Caffrey's motion, retransferred the action from the Civil Court to the Supreme Court pursuant to CPLR 325(b), and vacated the Civil Court judgment. On March 13, 2015, the Supreme Court entered the judgment appealed from, with updated statutory interest, in the total sum of $205,307.35. The Supreme Court judgment referred to Judge Marrazzo as an "Acting Justice of the Supreme Court" during the dates of the trial. In light of the entry of the Supreme Court judgment, Nelson's appeal of the Civil Court judgment to the Appellate Term was dismissed as academic.

The parties agree that the initial transfer of the action to the Civil Court for trial pursuant to CPLR 325(d) was jurisdictionally erroneous and procedurally improper. The parties dispute whether the Supreme Court had the authority to retransfer the action to itself after the Civil Court judgment had already been entered. They also dispute the authority of the Supreme Court to, in effect, adopt the findings of fact and conclusions of law of the Civil Court trial judge and to concomitantly substitute the Civil Court judgment with a Supreme Court judgment based on the same trial proceeding.

II. Judicial Notice Of Trial Judge's Status

The record on appeal contains no document conferring upon Civil Court Judge Marrazzo the authority of an Acting Justice of the Supreme Court for this case. Nelson argues in his appellate brief, as he had previously argued at the Appellate Term, that the Civil Court was without subject matter jurisdiction to adjudicate the action and render judgment, since Civil Courts generally cannot hear actions sounding in equity. Nelson further argues that the trial judge did not have the

73 N.Y.S.3d 75

authority of an Acting Justice of the Supreme Court, as he expressly issued the order dated January 9, 2012, denying the parties' respective motions for summary judgment, as a "Judge, Civil Court."

In response, Caffrey circumvents the issue of the Civil Court's purported jurisdictional infirmity to hear by instead arguing that any infirmity was cured by the Supreme Court's retransfer of the action to itself under CPLR 325(b) and the subsequent entry of a Supreme Court judgment. Notably, the decision dated December 5, 2013, rendered after trial, was executed by the presiding judge as "Acting Justice, Supreme Court," but at oral argument of this appeal, neither of the parties' counsel could explain the presence of the Acting Justice designation.

After oral argument of this appeal, this Court contacted the Office of Court Administration (hereinafter OCA) to inquire whether the authority of an Acting Justice of the Supreme Court had been conferred upon Judge Marrazzo in 2012–2014, the years when the action was tried and decided and when the Civil Court judgment was entered. OCA advised that, pursuant to an Administrative Order of the Chief Administrative Judge dated January 5, 2012, Civil Court Judge Marrazzo had, in fact, been designated as an "Acting Justice of the Supreme Court, to serve in the Supreme Court, Thirteenth Judicial District, Civil Term" (Admin Order of Chief Admin Judge of Cts AO/227/2012). The designation was administratively extended for subsequent relevant years. Thus, when Judge Marrazzo denied the parties' motions for summary judgment on January 9, 2012, he had already been designated an Acting Justice of the Supreme Court.

As a general rule, the factual review power of the Appellate Divisions is confined to the content of the record compiled before the court of original instance and does not include matter dehors the record (see CPLR 5526 ; Flagstar Bank, FSB v. Titus, 120 A.D.3d 469, 470, 991 N.Y.S.2d 110 ; Brandes Meat Corp. v. Cromer, 146 A.D.2d 666, 667, 537 N.Y.S.2d 177 ; Mi Suk Buley v. Beacon Tex–Print, 118 A.D.2d 630, 631, 499 N.Y.S.2d 782 ; Broida v. Bancroft, 103 A.D.2d 88, 93, 478 N.Y.S.2d 333 ). However, the general rule is not inviolate, as courts may take judicial notice of a record in the same court of either the pending matter or of some other action (seeMatter of Currier [Woodlawn Cemetery] , 300 N.Y. 162, 170, 90 N.E.2d 18 ; Matter of Khatibi v. Weill, 8 A.D.3d 485,...

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  • Citibank v. Kerszko, 2019-00175
    • United States
    • United States State Supreme Court (New York)
    • 5 Enero 2022
    ...notice should be taken, and, if so, the significance of its content" (see Caffrey v North Arrow Abstract & Settlement Servs., Inc., 160 A.D.3d 121, 127 [emphasis added]). We are a stare decisis court. The obvious reason for Caffrey's perspicacious caution in taking judicial notice is the ba......
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    • United States
    • United States State Supreme Court (New York)
    • 5 Enero 2022
    ...notice should be taken, and, if so, the significance of its content" (see Caffrey v North Arrow Abstract & Settlement Servs., Inc., 160 A.D.3d 121, 127 [emphasis added]). We are a stare decisis court. The obvious reason for Caffrey's perspicacious caution in taking judicial notice is the ba......
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    ...notice should be taken, and, if so, the significance of its content " (see Caffrey v. North Arrow Abstract & Settlement Servs., Inc., 160 A.D.3d 121, 127, 73 N.Y.S.3d 70 [emphasis added]). We are a stare decisis court. The obvious reason for Caffrey's perspicacious caution in taking judicia......
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    • United States
    • James Publishing Practical Law Books New York Objections
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    ...defendants’ filings evidenced any admission as to the validity of the contracts. Caffrey v. N. Arrow Abstract & Settlement Servs., Inc., 160 A.D.3d 121, 73 N.Y.S.3d 70 (2d Dept. 2018). The Appellate Division held that it was permissible to take judicial notice that the judge who denied the ......

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