assignment of a claim or cause of action new york

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What is a cause of action.

A cause of action is the specific legal right  -- triggered by the case’s facts – that entitles plaintiff to sue (e.g. foreclosure or fraud). In practice, courts and lawyers use “claim” and “cause of action” interchangeably. Also the terms “count” (e.g., “Count IV of the complaint”) and “legal theory” loosely serve as synonyms for “cause of action.”

A case’s facts can implicate more than one cause of action against a single or multiple defendants. And plaintiff is authorized to plead causes of action in the alternative.

New York Civil Practice Before Trial § 15:162 Cause of Action

• CPLR 3013, 3014  cover how cause of actions claims should be organized in papers filed with the court.

Subject treatises go into causes of actions. For example, in Residential landlord Tenant Law in New York –searching the text with the term “cause of action” turns up fifty-eight sections that mention the term and applicable tenant-landlord laws.

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Employment Litigation: Tort Causes of Action (NY) | Practical Law

Employment Litigation: Tort Causes of Action (NY)

Practical law practice note w-012-8451  (approx. 33 pages).

New York Tort Causes of Action: Understanding and Examples

Table of Contents

Introduction

When someone commits a tort, the victim has the right to seek legal recourse by filing a lawsuit. New York recognizes various tort causes of action (CoA) under its statutes. While some CoAs are common, others are less known. In this article, we will explore the different tort causes of action recognized in New York and provide examples of notable cases.

What is a Tort Cause of Action?

In New York, a tort is defined as an unlawful act that causes harm to someone’s person, property, reputation, or similar interests. For instance, if an individual suffers an injury, they can seek compensation from the responsible party through the help of lawyers and the court system. A famous example is the defamation case of Johnny Depp vs. Amber Heard (Depp v. Heard), in which Depp emerged as the plaintiff.

List of Tort Causes of Action

In today’s global market, commercial litigation has seen a significant increase. Here are some of the major types of tort causes of action that can lead to legal claims in New York, including those related to commercial litigation:

• Misappropriation of trade secrets
• Conversion of business property
• Deceptive and unlawful trade practices
• Breach of fiduciary duty
• Trespass to land

Claims of Unjust Enrichment

Let’s delve into each of these tort causes of action and explore their definitions and implications.

Misappropriation of Trade Secrets

New York law recognizes the importance of employers safeguarding their proprietary information from misuse by employees after their employment ends. However, courts carefully review such clauses, upholding them only if they meet specific standards of reasonableness.

Conversion of Business Property

“Conversion” refers to the intentional taking or unlawful use of someone else’s property. It includes situations where there is a distinct, identifiable fund that should be treated in a particular manner. The intent to take or exercise control over the property is sufficient, regardless of whether the defendant intended to do so. Examples of conversion include giving someone’s property to an unauthorized person or unlawfully combining finances.

Deceptive and Unlawful Trade Practices

Under New York General Business Law, both the state attorney general and private individuals can file claims against unfair and illegal business practices. The law aims to protect consumers from deceptive practices in business, trade, commerce, and the provision of services. Claims made under this legislation often involve false or deceptive advertising targeting consumers.

Breach of Fiduciary Duty

A person has a fiduciary duty to act in the best interests of another person or entity. This duty entails trust and reliance on the fiduciary to use their discretion or knowledge for the other party’s benefit. Breach of fiduciary duty occurs when the fiduciary fails to fulfill their obligations, resulting in losses for the other party. Violating the duty of care, loyalty, or truthfulness are examples of breaching fiduciary duty.

Negligence is the most common type of tort claim. It occurs when someone acts carelessly and causes injury to another person. Four elements must be established for a negligence claim to succeed:

• Duty: The person must have a duty of care towards another.
• Breach: The person must breach that duty.
• Causation: The breach must directly cause harm.
• Harm: The harm must result in actual damages.

If any of these elements cannot be demonstrated, the negligence claim is inadequate.

Civil assault refers to the intentional act by a defendant that reasonably causes the plaintiff to fear harmful or offensive contact. Unlike criminal assault, physical contact is not necessary. Intentionally causing harm or fear to another person constitutes assault as an intentional tort.

Battery occurs when the defendant intentionally makes harmful or offensive contact with the plaintiff. Assault and battery often go hand in hand. Battery encompasses the injurious or objectionable contact, and it is the closest term to criminal assault. For battery to be established, the plaintiff must demonstrate that the defendant acted intentionally and caused harm through the contact.

Trespass to Land

Trespass to land refers to intentional intrusion or interference with someone else’s property. It is akin to criminal trespass and is considered a malicious injury to property.

Defamation involves intentionally making false statements about someone and communicating them to a third party, thereby damaging their reputation. In New York, the landmark case New York Times Co. v. Sullivan set the standard that public officials must prove “actual malice” to be entitled to damages for defamation. To meet the definition of actual malice, the defendant must have acted with reckless disregard for the truth or with knowledge of the falsehood.

Unjust enrichment, unlike other CoAs, is not inherently an intentional tort. In New York, courts have determined that unjust enrichment requires three elements to be demonstrated: the defendant gained an advantage at the plaintiff’s expense, equity and morality demand restitution, and the plaintiff sustained losses. Recognizing unjust enrichment does not require intent, but rather the existence of these three elements.

Extortion occurs when someone uses threats or force to obtain money or property from another person, usually under the threat of physical harm, property damage, or public humiliation. The severity of an extortion conviction varies depending on the tactics used. For example, demanding money to conceal an adulterous affair can be considered extortion.

Case Study: Kickertz v. New York University

In the case of Kickertz v. New York University, a former dental college student filed a plenary action against the university and faculty members. The student alleged false and misleading advertising, breach of contractual promises, defamation, and discrimination. The Supreme Court, New York County, dismissed the plenary action and the Article 78 petition. The student appealed the decision.

Case Study: Stuart’s LLC v. Edelman

In Stuart’s LLC v. Edelman, a former employee was sued for tortiously interfering with their former employer’s contractual relationship and engaging in unfair competition. The lower court ruled in favor of the plaintiff, but the New York Supreme Court, Appellate Division, Second Department, amended and decreased the award after finding that only the claims for tortious interference with a contract were proven. The court emphasized the need for additional evidence to support claims of tortious interference with business relations or unfair competition.

Tort causes of action provide a legal avenue for seeking both compensatory and punitive damages. They differ from breach of contract claims as tort claims allow for the recovery of fines and compensation for the victim’s losses. Additionally, tort claims often include damages for pain and suffering. Commercial torts are prevalent in New York, reflecting the complexities of today’s business landscape.

Discover more about tort-related cases in New York with Westlaw Precision™

Cut down your research time like never before with Westlaw Precision™. Request a free trial.

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About the author.

Garrity Traina

Mr. Traina holds bachelor’s degrees in Journalism and Computer Science and earned his law degree at Nova Southeastern University, having been a Goodwin Scholar. As a Registered Patent Attorney at Garrity Traina , Mr. Traina assists clients with the preparation and filing of patent applications in a wide array of fields. He is also an editor of the Barrister, a monthly publication of the Broward County Bar Association, and is a former member of the board of directors of ArtServe, a South Florida art incubator that has been supporting local artists for more than 25 years. He is also a member of the Broward County Bar Association and the Intellectual Property Law Association of Florida. In addition, Mr. Traina guest lectures on a variety of intellectual property topics in engineering and law classes, organizational events, and more. See more About us .

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US Bank N.A. v Nelson

Jared B. Foley, for appellants.

Katherine Wellington, for respondent.

New York State Foreclosure Defense Bar, amicus curiae.

MEMORANDUM:

The order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

We conclude that, under the circumstances of this case, Supreme Court did not err in granting plaintiff's motions for summary judgment and for a judgment of foreclosure and sale. Defendants failed to raise standing in their answers or in pre-answer motions as required by CPLR 3211 (e) and accordingly, under the law in effect at the time of the orders appealed from, the defense was waived (see Fossella v Dinkins, 66 NY2d 162, 167 [1985]). Defendants' argument that ownership is an essential element of a foreclosure action, raised for the first time in support of their motion for reargument at the Appellate Division, is unpreserved for our review. We do not reach the issue of whether RPAPL 1302-a, enacted while this appeal was pending, affords defendants an opportunity to raise standing at this stage of the litigation. Defendants are free to apply to the trial court for any relief that may be available to them under that statute.

The dispute here, which has roiled the lower courts, arises from a simple misnomer. Whether a plaintiff is a party to a contract — and therefore can sue for breach of contract — is not a question of "standing." New York law suggests that true standing must be pleaded as an affirmative defense. But whether a plaintiff is a party to a contract and, therefore, can sue for breach, is not a question of standing — it is an essential element of a plaintiff's claim, which must be pleaded affirmatively in a complaint.

A promissory note is a contract. A suit to recover on a note or to foreclose on a mortgage securing that note is a contract action. Installment notes secured by a mortgage — which are what people commonly use to buy homes and other real property, and what is at issue here — have existed for centuries. It is only recently that the New York courts have used the term "standing" to refer to whether the plaintiff in a foreclosure action is a party to the contract (or other person with the right to enforce the contract)[FN1]. The dispute and confusion as to whether the borrower must plead "lack of standing" as an affirmative defense arises purely from the misuse of the word "standing" to relate to the question of whether the plaintiff is the holder of the note.

Recognizing that borrowers have been saddled by this terminological mishap, the legislature stepped in, first in 2013, and again in 2019. In 2013, the legislature required that a plaintiff suing to foreclose on a home mortgage must "includ[e] the mortgage, security agreement and note or bond underlying the mortgage executed by defendant and all instruments of assignment" (CPLR 3012-b)[FN2]. Last December, the legislature, addressing the forfeitures caused [*2]by the courts' misuse of "standing," directed that the so-called issue of "standing" in foreclosure actions related to a home loan may be raised at any time prior to the entry of a judgment of foreclosure. The legislature further directed that the legislation apply immediately, which would include this case. In truth, the legislation is unnecessary, because a plaintiff suing to foreclose on a mortgage or to sue on a promissory note has the affirmative obligation to plead (and prove, if put at issue) that it is the holder of the note forming the basis of the suit.

Here, U.S. Bank's complaint properly alleged that it was the holder of the note executed by the Nelsons. (The foreclosure action predated CPLR 3012-b's enactment, so U.S. Bank was not obligated to provide the required documentation when it commenced the foreclosure action.) The Nelsons, whose loan originated with a completely different and unrelated lender, appropriately answered that they lacked knowledge or information as to whether U.S. Bank was the holder of the note under which they were obligated. Under ordinary rules of civil procedure, that answer put U.S. Bank on notice that it would have to prove that it held the note.[FN3]

I concur in the result here for a reason unrelated to the standing fiasco: in moving for summary judgment, U.S. Bank tendered evidence that it was the holder of the note. The Nelsons did not offer any contrary proof or any argument that the proof was deficient. Accordingly, Supreme Court properly granted summary judgment in favor of U.S. Bank.

Both appellants and respondents frame the pivotal issue in terms of what they refer to as "standing," by which they mean whether the Nelsons' denial of US Bank's assertion that it is the holder of their note was sufficient to put at issue whether U.S. Bank was the holder of the note on which it sued at the time it sued. The actual doctrine of standing has nothing to do with this case — or with any foreclosure action.

Standing comes in two flavors: constitutional and prudential. The former is derived from the Case or Controversy Clause of article III, § 2 of the United States Constitution, and has three elements; injury in fact, [*3]causation and redressability (Lujan v Defenders of Wildlife, 504 US 555, 560—561 [1992]). The United States Supreme Court has defined injury in fact as "an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) 'actual or imminent, not 'conjectural' or 'hypothetical'" (id. at 560, quoting Whitmore v Arkansas, 495 US 149, 155 [1990]). The New York Constitution contains no case or controversy requirement; hence, federal constitutional standing doctrine is of little or no relevance.[FN4]

In contrast, prudential standing is "not derived from Article III and 'not exhaustively' defined" (Lexmark Intern., Inc. v Static Control Components, Inc., 572 US 118, 126 [2014], quoting Elk Grove Unified Sch. Dist. v Newdow, 542 US 1, 12 [2004]; see also Charles Alan Wright et al., 33 Fed Prac & Proc Judicial Review § 8343 [Oct 2020 update]). Though not bound by federal doctrine on prudential standing, our Court has adopted the prudential requirement that "a party must show that the in-fact injury of which it complains falls within the 'zone of interests,' or concerns, sought to be promoted or protected by the statutory provision under which the agency has acted" (Society of Plastics Indus., Inc. v County of Suffolk, 77 NY2d 761, 773 [1991]).[FN5]

Standing comes into play when parties aim to enforce public — as opposed to private — rights.[FN6] The doctrine emerged in response to a growing administrative state and the increasing use of litigation to "enforce public, primarily constitutional values" (William A. Fletcher, The Structure of Standing, 98 Yale L J 221, 225 [1988]). At the height of the Lochner era, certain judges, particularly Justice Brandeis, sought to limit judicial intervention in the legislative process and protect Progressive Era legislation from attack (Cass R. Sunstein, Standing and the Privatization of Public Law, 88 Colum L Rev 1432, 1437—1438 [1988]; Cass R. Sunstein, What's Standing After Lujan? Of Citizen Suits, "Injuries," and Article III, 91 Mich L Rev 163, 179 [1992]; see also Daniel E. Ho & Erica L. Ross, Did Liberal Justices Invent the Standing Doctrine? An Empirical Study of the Evolution of Standing, 62 Stan L Rev 591 [2010]). In a series of taxpayer standing cases, the U.S. Supreme Court drew on the law of equity, namely the requirement that plaintiffs assert an interest or right that a court of equity could enforce, to reject constitutional challenges to legislation (Steven L. Winter, The Metaphor of Standing and the Problem of Self-Governance, 40 Stan L Rev 1371, 1422, 1441—1449 [1988]). Although the term "standing" was employed in the 19th Century as shorthand for that question, it was not explicitly linked to the case or controversy requirement until Justice Frankfurter's concurring opinion in Coleman v Miller (id. at 1422, 1449).[FN7]

The rise of impact litigation at midcentury brought standing back to the forefront of the Supreme Court's jurisprudence (see generally Abram Chayes, Public Law Litigation and the Burger Court, 96 Harv L Rev 4 [1982])[FN8]. The major standing cases since the 1960s generally involve private individuals or organizations challenging government policies and practices (see, e.g., Flast v Cohen, 392 US 83 [1968]; Schlesinger v Reservists Comm. to [*4]Stop the War, 418 US 208 [1974]; City of Los Angeles v Lyons, 461 US 95 [1983]; Allen v Wright, 468 US 737 [1984]; Clapper v Amnesty Intl., 568 US 398 [2013]).[FN9] Like their predecessors, more recent jurists have expressed concern these suits transformed judges into legislators and violated the separation of powers, a process described by Justice Scalia as the "overjudicialization of the processes of self-governance" (Antonin Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers, 17 Suffolk U L Rev 881, 881 [1983]). The judicial power, they argued, should be restricted to resolving disputes that were "traditionally amenable to, and resolved by, the judicial process" (Vermont Agency of Natural Resources v United States ex rel Stevens, 529 US 765, 774 [2000]). In accordance with that view, the U.S. Supreme Court has significantly limited who can bring suit to challenge government action and what kind of relief they can seek (see, e.g., Lujan, 504 US at 565 [reasoning that profession of an intent to travel to observe endangered species in the future do not support a finding of "actual or imminent" injury sufficient to establish standing]; Clapper, 568 US at 415—417 [rejecting argument that human rights activists' "costly and burdensome measures" to avoid government of surveillance constitute an ongoing injury]).

Our decisional law on standing treats it as a prudential issue focused on the enforcement of public rights — typically, whether a plaintiff has suffered some injury and "is arguably within the zone of interest to be protected by the statute" or regulation

(Dairylea Coop, Inc. v Walkley, 38 NY2d 6, 9 (1975); see also Matter of Acevedo v New York State Dept. of Motor Vehicles, 29 NY3d 202 [2017] [holding plaintiffs had standing to challenge DMV regulation]; Matter of Sierra Club v Village of Painted Post, 26 NY3d 301 [2015] [holding plaintiff had standing to challenge governmental land use decision]; Matter of Colella v Board of Assessors, 95 NY2d 401 [2000] [concluding that taxpayers lack standing to challenge tax exemption granted to a temple]). "Standing is a threshold determination, resting in part on policy considerations, that a person should be allowed access to the courts to adjudicate the merits of a particular dispute that satisfies the other justiciability criteria" (Society of Plastics Indus., Inc., 77 N.Y.2d at 769). Needless to say, when someone purporting to be a party to a contract sues to enforce that contract, no issue of standing is involved. You're either a party to the contract or not.

Standing has increasingly been misapplied in cases where private rather than public rights are at issue (see Charles Alan Wright et al., 13A Fed Prac & Proc Juris § 3531 [Oct 2020 update] ["The fascination of complex standing doctrine and the concern to observe constitutional limits on the judicial power occasionally lead courts to invoke public-law concepts to resolve concerns that are better addressed through private-law concepts. . . . It would be better to rely directly on cause-of-action, real-party-in-interest, capacity, intervention, and like concepts"]). The U.S. Supreme Court likewise cautioned against confusing standing with the existence of a cause of action:

"[T]he distinct concepts [of standing and cause of action] can be difficult to keep separate. If, for instance, the person alleging injury is remote from the zone of interests a statute protects, whether there is a legal injury at all and whether the particular litigant is one who may assert it can involve similar inquiries . . . Still, the question whether a plaintiff states a claim for relief 'goes to the merits' in the typical case, not the justiciability of a dispute, and conflation of the two concepts can cause confusion (Bond v US, 564 US 218—219 [2011])."

Substituting standing for the proper inquiry confuses the legal principle at issue. This is such a case.

The law of negotiable instruments has been four centuries in the making. The use of negotiable instruments, particularly the bill of exchange, became common in England following Parliament's repeal of the ban on charging interest in 1623 (Ann M. Burkhart, Lenders and Land, 64 Mo L Rev 249, 261 [1999]). Easily transportable and readily exchangeable, the bill of exchange became a stand-in for currency (id.). By the close of the 17th Century, [*5]common law had recognized the right of purchasers to enforce bills of exchange, laying the foundation for the doctrine of holder in due course (id.). In 1704, the Statute of Anne provided that promissory notes properly indorsed, like bills of exchange, could be enforced by bona fide purchasers, and sixty years later, in Grant v Vaughan, Lord Mansfield recognized promissory notes as negotiable instruments (Frederick K. Beutel, The Development of Negotiable Instruments in Early English Law, 51 Harv L Rev 813, 844 [1938]). The Statute of Anne was adopted by most American states, and when the term "bona fide purchaser" was replaced with "holder in due course" by the English Bills of Exchange Act in 1882, American law followed suit (Burkhart at 263).

Since their inception, negotiable instruments have been understood as contracts, a fact recognized by this Court (Oddo Asset Mgt. v Barclays Bank PLC, 19 NY3d 584, 593 [2012] ["A debtor and a creditor have no special relationship of confidence and trust . . . and the relationship is generally controlled by contract"]; see also Official Comment 3 to NY UCC 3-119 ["As between the immediate parties a negotiable instrument is merely a contract]). Holders of notes sue for breach of contract when the borrower fails to pay.

Negotiable instruments differ from other contracts in a way germane to this case: ordinarily, the parties to a contract remain static and are known to each other. Negotiable instruments by definition are meant to be bought, sold and traded, so that the "drawer" or "obligor" on the note (the person who promises to pay back the money) may not, down the road, have any idea who holds the note and, consequently, to whom the money is presently owed. When a negotiable instrument is an installment note, such as a typical home mortgage, the persons entitled to receive the payments may change over time, even repeatedly. For that reason, proof that the plaintiff is the current holder of the defendant's note is much more frequently at issue in suits involving negotiable instruments than suits involving other types of contracts.

The law governing that determination is not our jurisprudence on standing but rather the law of negotiable instruments, codified in New York's Uniform Commercial Code. NY UCC 3-301 makes it clear that the holder of the note is entitled to enforce it, and so courts must determine whether the plaintiff is in "possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession" (NY UCC 1-201 [b] [21] [A]). A purchaser of a note becomes the holder through negotiation (NY UCC 3-202). "If the instrument is payable to order it is negotiated by delivery with any necessary indorsement; if payable to bearer it is negotiated by delivery" (id.). Therefore, the issue of what documentation is necessary to establish a plaintiff's right to demand payment on a negotiable instrument is properly understood as a question of whether the note in question has been negotiated such that the plaintiff becomes the holder (see 80 NY Jur 2d Negotiable Instruments § 269 [2d ed 2013] ["The mere possession of a promissory note endorsed in blank, just like a check, provides presumptive ownership of that note by the current holder; such is the foundation of negotiable instruments law. Assuming that execution of a negotiable instrument if put in issue has been proved, its possession and production at the trial of the action to enforce it is sufficient prima facie proof of the plaintiff's ownership. This is the rule applicable to an instrument payable to bearer or indorsed in blank"])[FN10].

Our seminal jurisprudence in this area does not reference standing, instead framing the question whether the plaintiff has produced proof that the negotiable instrument had been assigned to it (Merritt v Bartholick, 36 NY 44, 44 [1867] [holding that third party assignee of mortgage "obtained no interest in the mortgage" in the absence of the assignment of the bond]; Payne v Wilson, 74 NY 348, 354—355 [1878] [reasoning that plaintiff who was not expressly assigned mortgage had right to foreclose because an "assignment of the debt transferred the interest of the owner of it in the land mortgaged"]; Bergen v Urbahn, 83 NY 49, 50 [1880] [concluding that plaintiff who failed to produce the note "was not entitled to recover"]). As recently as 1998, the Appellate Division affirmed the dismissal of a foreclosure action on the grounds that plaintiff "had no legal or equitable interest" in a mortgage that had been assigned to a third party; the court did not mention standing (Katz v East-Ville Realty Co, 249 AD2d 243 [1st Dept 1998]; see also Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988] ["The plaintiff's first and second causes of action for foreclosure and deficiency judgment, respectively, must fail since foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity"]).

Although New York courts occasionally used the term "standing" to refer to the question of whether a plaintiff is the holder of a note prior to the financial crisis of 2008,[FN11] the vast majority of such cases arose in its aftermath. Borrowers began to raise "standing" as a defense in part because the process of securitization, particularly the transfer of notes and mortgages to new entities, made it more difficult to ascertain the identity of the note holder at the time of default (see, e.g., US Bank, NA v Collymore, 68 AD3d 752 [2d Dept 2009]; see also Adam J. Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title, 63 Duke LJ 637 [2013]; Mark C. Dillon, Unsettled Times Make Well-Settled Law: Recent Developments in New York State's Residential Mortgage Foreclosure Statutes and Case Law, 76 Alb L Rev 1085 [2013]).

The Nelsons' case is an archetypical illustration of the uncertainty generated by the securitization process. The Nelsons initially executed a note in favor of Knightsbridge Mortgage Bankers, and a mortgage in favor of the Mortgage Electronic Registration Systems (MERS). MERS is a private mortgage registry system created in the early 1990s to track ownership and servicing interests in mortgages, thereby reducing the transaction costs that arise from registering mortgages in public land records systems (Levitin at 649, 677—676).[FN12] The note changed hands at least twice, passing from Knightsbridge to Wells Fargo before it was indorsed in blank and sold, according to the plaintiffs, to the Deutsche ALT-A Securities Mortgage Loan Trust, of which US Bank is the trustee.

In the past decade, New York courts have firmly adopted the mistaken use of the word "standing" to refer to questions about whether the plaintiff in a foreclosure action holds the defendant's note. The consequence of that mislabeling has caused many courts to hold that the note's obligor (the homeowner, typically) must plead "lack of standing" as an affirmative defense (see, e.g., Security Pacific Natl. Bank v Evans, 31 AD3d 278, Wells Fargo Bank Minnesota, Natl. Assn. v Mastropaolo, 42 AD3d 239, 244 [2d Dept 2007]; Nationstar Mortg., LLC v Alling, 141 AD3d 916, 917 [3d Dept 2016]; JPMorgan Chase Bank, Nat. Assn. v Kobee, 140 AD3d 1622, 1623 [4th Dept 2016]), while others have held the contrary (Nationstar Mtge., LLC v Wong, 132 AD3d 825, 826 [2d Dept 2015]; US Bank, Natl. Assn. v Faruque, 120 AD3d 575, 576 [2d Dept 2014]).

As to true, prudential standing, although some cases hold otherwise, the weight of the authority suggests that standing must be pleaded as an affirmative defense (See Santoro v Schreiber, 263 AD2d 953, 954 [4th Dept 1999] ["Respondents waived any objection to petitioner's standing because they did not raise the defense of lack of standing either in a pre-answer motion or in their responsive pleadings"]; Klein v Garfinkle, 12 AD3d 604, 605 [1st Dept 2004] ["(A)s the issue of standing was not raised as an affirmative defense in an answer or in the pre-answer motions to dismiss the petition, the issue was waived"]; see also 3 Carmody-Wait 2d § 19:10 [Nov 2020 update])[FN13]. The prevailing view that true standing must be pleaded as an affirmative defense, when combined with the misuse of "standing" in mortgage foreclosure actions, has led courts to hold that the failure of a homeowner to plead affirmatively the plaintiff is not the noteholder waives any challenge on that issue. Courts now regularly and erroneously describe that issue as "standing," when the question really is whether the plaintiff holds the note, and therefore possesses a cause of action.

"CPLR 3018 (b), which governs affirmative defenses, reads:

A party shall plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading such as arbitration and award, collateral estoppel, culpable conduct claimed in diminution of damages as set forth in article fourteen A, discharge in bankruptcy, facts showing illegality either by statute or common law, fraud, infancy or other disability of the party defending, payment, release res judicata, statute of frauds, or statute of limitation. The application of this subdivision shall not be confined to the instances enumerated."

A fundamental requirement of any breach-of-contract action is for the plaintiff to allege that it is a party to the contract (or has acquired the rights of a party). Moreover, whatever arguments might be made about whether CPLR 3018 (b) requires true standing to be pleaded as an affirmative defense, the chain of indorsements on a note entitling the plaintiff to foreclose on a mortgage is nothing that would take the plaintiff by surprise — it is information principally in the possession of the plaintiff and often unknown to the defendant. CPLR 3012-b expressly recognizes that fact by requiring the noteholder to provide proof of ownership of the note at the time it commences an action.

In any event, given the holdings of numerous courts that the failure to plead lack of standing as an affirmative defense in mortgage foreclosure actions disabled borrowers from determining whether the plaintiff really was the present noteholder, the legislature modified the Real Property Actions and Proceedings Law. Adopting the "standing" language pervasive in recent judicial decisions, the RPAPL now provides that "any objection or defense based on the plaintiffs lack of standing in a foreclosure proceeding related to a home loan . . . shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss" (§ 1302-a). As warned by the Supreme Court in Bond, misapplication of the standing doctrine confuses a merits question — whether the plaintiff holds the note and, as such, has the right to enforce it — with a threshold determination of justiciability. Our legislature has intervened twice to undo that confusion.

Returning to the question at the crux of this case, U.S. Bank affirmatively pleaded that a mortgage executed by the Nelsons as security for a $660,000 loan had been assigned to it in its capacity as trustee for Deutsche ALT-A Securities Mortgage Loan Trust in August of 2009 and that it was the holder of the Nelsons' note. Ordinary rules of pleading in contract actions required US Bank to do so. The Nelsons answered that they lacked "knowledge or information sufficient to form a belief as to the truth of the allegations" as to U.S. Bank's allegation that it held the note and mortgage. It is hardly surprising that the Nelsons did not know whether their note had been negotiated, and US Bank cannot possibly claim surprise that its ownership of the note and mortgage was put to proof (see 80 NY Jur 2d, Negotiable Instruments § 700 [2d ed 2013] ["As in other actions, a general denial usually puts in issue every material allegation on the complaint on a negotiable instrument. It goes to the root of the cause of action and permits the introduction of any proper evidence tending to controvert the facts which the plaintiff must establish to sustain his or her case"]). Indeed, U.S. Bank understood that its ownership of the note and mortgage was at issue, and tendered proof of such when it moved for summary judgment. Because the question of whether U.S. Bank is the holder of a negotiable instrument has nothing to do with standing and is, instead, an essential element of the holder's claim the Nelsons were not required to raise it as an affirmative defense.[FN14] In this case, the issue of whether the plaintiff was the noteholder was properly before the court in exactly the way it should have been raised.

However, the Nelsons have an unrelated, dispositive problem. When U.S. Bank moved for summary judgment, it attached the Nelsons' note, indorsed in blank, the mortgage, and the assignment of the mortgage. Doing so established, prima facie, U.S. Bank's right to judgment as a matter of law. To defeat U.S. Bank's motion for summary judgment, the Nelsons were required to adduce admissible facts controverting U.S. Bank's proof of [*7]ownership (see, e.g., Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 740 [3d Dept 2015]). That they utterly failed even to attempt to do. U.S. Bank, therefore, was entitled to summary judgment.

Although I can join neither the majority's rationale nor the numerous courts' mistaken treatment of negotiable instrument ownership as a question of standing, I concur in the result.

Order affirmed, with costs, and certified question answered in the affirmative, in a memorandum. Chief Judge DiFiore and Judges Rivera, Stein, Fahey, Garcia and Feinman concur. Judge Wilson concurs in result in an opinion.

Decided December 17, 2020

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

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Pleading With Particularity: Defamation Causes of Action

• Posted on: Dec 13 2023

By: Jeffrey M. Haber

As readers of this Blog know, we often write about the pleading requirements under the Civil Practice Law and Rules (“CPLR”). In that regard, many of our articles involve cases in which CPLR 3016(b) is at issue – the provision of the civil practice rules requiring pleading fraud with particularity.

There is another provision of the civil practice rules that requires particularity – CPLR 3016(a). This provision of the CPLR concerns claims for libel and slander ( i.e. , defamation) and requires the plaintiff to plead “the particular words complained of.” Today, we examine the particularity requirement of CPLR 3016(a).

To plead a claim of defamation, the plaintiff must satisfy the following elements: “a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se.” 1 There are two forms of defamation: libel and slander. 2 Since only facts can be proven false, statements purporting to assert facts about the plaintiff are the proper subject of a defamation claim. 3  

In deciding whether a statement is defamatory, a court “must consider the content of the communication as a whole, as well as its tone and apparent purpose and in particular should look to the over-all context in which the assertions were made and determine on that basis whether the reasonable reader would have believed that the challenged statements were conveying facts about the [] plaintiff.” 4  

When pleading a claim of defamation, “[t]he complaint … must allege the time, place and manner of the false statement and specify to whom it was made.” 5 The failure to make such allegations is fatal to a defamation cause of action. 6

Additionally, pursuant to CPLR 3016(a), the complaint must set forth “the particular words complained of.” The language at issue cannot amount to “expressions of opinion” or ‘“loose, figurative or hyperbolic statements.’” 7 Nor can the language at issue be paraphrased. Courts will only consider “the particular defamatory words” stated; they will not entertain a claim “based instead on a paraphrased version.” 8 Indeed, imprecision and paraphrasing “not only opens the complaint to the question of whether the words were ever published, but also renders the complaint defective as a matter of law.” 9  

Finally, a plaintiff alleging defamation per quod must plead special damages. 10 Special damages must be “fully and accurately identified ‘with sufficient particularity to identify actual losses.’” 11  

Against this background, we examine Salescare, Inc. v. SEIU 1199 Natl. Benefits Fund , 2023 N.Y. Slip Op. 06340 (1st Dept. Dec. 12, 2023) ( here ).

Plaintiffs, SalesCare Inc. (“SalesCare”) and Marian Parker (“Parker,” and collectively with SalesCare, the “plaintiffs”) brought action against defendants, SEIU 1199 National Benefit Fund (the “Fund”), 1199 SEIU Funds, 12 and Auburn IT Resources (“Auburn”), claiming breach of contract and defamation.

In August 2019, Auburn contacted Parker about the potential for SalesCare working on an Information Security project with the Fund. Parker, who was SalesCare’s President at the time, met with the Fund’s staff and discussed the project. Thereafter, Parker entered into a Contractors Agreement (the “agreement”) with Auburn. Among other things, the agreement governed the terms of the project. 

Relevant to the order on appeal, the agreement provided that its terms became effective on the date it was signed, and that Parker’s engagement with the Fund would continue “AS REQUIRED, or until the completion of [SalesCare’s] designated work at the client, whichever occur[red] first.” Either SalesCare or Auburn could terminate the agreement on ten days’ written notice. If the Fund elected to terminate SalesCare’s assignment “prior to the time or event as specified in paragraph 1 [of the agreement], such notice as [the Fund] gives to [Auburn] will also be given to [SalesCare].”

On September 3, 2019, Parker began her assignment with the Fund. Shortly before the Fund ended the assignment, the Fund changed Parker’s job responsibilities in a way that Parker claimed went beyond the terms of the agreement. Because of this switch and a lack of administrative guidance with the Fund, Parker alleged that her last two weeks of work with the Fund were unproductive.

On November 7, 2019, Parker reported to work and found that her ID credentials had been canceled. Shortly thereafter, she was dismissed from the assignment. According to Parker, that evening, Auburn’s President contacted her and told her that an unnamed representative of the Fund had told him that the Chief Information Security Officer (“CISO”) had said to them that Parker’s assignment had ended due to her “insubordination.” A few days later, Parker spoke to one of her former colleagues at the Fund, who informed her that the CISO had stated in a meeting on November 7, 2019, that he “had to fire her” and he would fire anyone else who challenged him.

Defendants moved separately to dismiss the complaint based on documentary evidence and for failure to state a cause of action, pursuant to CPLR 3211(a)(1) and (a)(7).

The motion court granted the motion.

Regarding the defamation causes of action, the motion court held that plaintiffs failed to satisfy the particularity requirement of CPLR 3016(a).

First, the motion court held that plaintiffs failed to identify the person to whom the alleged defamatory statement was published. Instead, said the motion court, plaintiffs simply alleged that an unnamed employee of the Fund was told by the CISO that Parker’s assignment was terminated because she was insubordinate.

Second, the motion said that the second statement – that the CISO had to fire Parker – was qualified in the complaint by the statement “or words to that effect.” Such imprecision, held the motion court, rendered the claim inactionable. 13  

On appeal, the Appellate Division, First Department affirmed, holding that the motion court “properly dismissed plaintiffs’ defamation claim and related business disparagement claim against [the] Funds.” 14

Like the motion court, the Court found that the first statement – that Parker was “insubordinate” – failed to satisfy CPLR 3016(a) because “plaintiffs failed to identify the employee to whom the supervisor made the alleged statement.” 15 The Court also found the second statement – that Parker was fired – to be inactionable because the statement was true. 16

Finally, the Court held that the claim for defamation per quod was defective because “plaintiffs were required to allege special damages,” which they “failed to do.” 17  

To satisfy CPLR 3016(b), the plaintiff must state the defamatory statement in haec verba and identify the time, place and person(s) to whom the statement was made. These requirements are strictly enforced. As shown in SalesCare , the failure to comply with CPLR 3016(a) and related interpretations will result is dismissal of a defamation claim.

• Circulation Assocs., Inc. v. State , 26 A.D.2d 33, 38 (1st Dept. 1966); Salvatore v. Kumar , 45 A.D.3d 560, 563 (2d Dept. 2007).
• Ava v. NYP Holdings, Inc. , 64 A.D.3d 407, 411 (1st Dept. 2009).
• Davis v. Boeheim , 24 N.Y.3d 262, 268 (2014).
• Mann v. Abel , 10 N.Y.3d 271, 276 (2008) (internal quotation marks omitted).
• Dillon v. City of New York , 261 A.D.2d 34, 38 (1st Dept. 1999).
• E.g. , CSI Grp., LLP v. Harper , 153 A.D.3d 1314, 1321 (2d Dept. 2017) (“[f]ailure to state the particular person or persons to whom the allegedly defamatory statements were made … warrants dismissal” of a complaint for defamation); Arvanitakis v. Lester , 145 A.D.3d 650, 652 (2d Dept. 2016) (failure to plead when the false statement was made).
• Wolberg v. IAI N. Am., Inc. , 161 A.D.3d 468, 470 (1st Dept. 2018) (quoting Dillon , 261 A.D.2d at 38).
• BCRE 230 Riverside LLC v. Fuchs , 59 A.D.3d 282, 283 (1st Dept. 2009).
• Stephan v. Cawley , 24 Misc. 3d 1204(A), at *2 (Sup. Ct., N.Y. County 2009); Oszustowicz v. Admiral Ins. Brokerage , 25 Misc. 3d 1201(A), at *5 (Sup. Ct., Kings County 2007), aff’d sub nom. , Oszustowicz v. Admiral Ins. Brokerage Corp., 49 A.D.3d 515 (2d Dept. 2008); Ramos v. Madison Square Garden Corp. , 257 A.D.2d 492, 493 (1st Dept. 1999).
• See Liberman v. Gelstein , 80 N.Y.2d 429 (1992); L.W.C. Agency, Inc. v. St. Paul Fire & Marine Ins. Co. , 125 A.D.2d 371 (2d Dept. 1986).
• Carter v. Waks , 57 Misc. 3d 1208(A) (Sup. Ct., Queens County 2017) (citing Cammarata v. Cammarata , 61 A.D.3d 912, 915 (2d Dept. 2009)); see also Epifani v. Johnson , 65 A.D.3d 224 (2d Dept. 2009).
• The SEIU defendants are collectively referred to as the “Funds”.
• Citing Geddes v. Princess Properties Intern., Ltd. , 88 A.D.2d 835 (1st Dept. 1982) (stating, “[a]ny qualification in the pleading thereof by use of the words ‘to the effect’, ‘substantially’, or words of similar import generally renders the complaint defective”); see alsoOffor v. Mercy Med. Ctr. , 171 A.D.3d 502, 503 (1st Dept. 2019).
• Slip Op. at *2.
• Id. (citing BDCM Fund Adviser, L.L.C. v. Zenni , 98 A.D.3d 915, 917 (1st Dept. 2012); Bell v. Alden Owners , 299 A.D.2d 207, 208 (1st Dept. 2002), lv. denied , 100 N.Y.2d 506 (2003)).
• Id. (citing Rosenberg v. Metlife, Inc. , 8 N.Y.3d 359, 370 (2007)).
• Id. (citing Franklin v. Daily Holdings, Inc. , 135 A.D.3d 87, 93 (1st Dept. 2015); Harris v. Hirsh , 228 A.D.2d 206, 209 (1st Dept. 1996), lv. denied , 89 N.Y.2d 805 (1996)).

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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In re Sept. 11 Litig. , 751 F.3d 86, 94 (2d Cir. 2014)

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