Failure to Comply with Notice Provisions under Liability Policies Dispositive as to Survival of Third-Party Complaint: Carpio-Sanchez v Nakamura
In a November 4, 2011, decision by Justice Grays, the court granted defendant/third-party plaintiff’s and third-party defendants’ respective motions for summary judgment dismissing the complaint and third-party complaint. Plaintiff-construction worker was injured on the job and sued defendant-homeowner to recover damages for his injuries. In turn, defendant-homeowner sued third-party defendant-insurers for defense and indemnification under their respective general liability policies. The insurers moved for summary judgment on grounds that defendant-homeowner failed to give timely notice of the lawsuits and that plaintiff’s injury was not covered under the policy. The court granted the insurer’s motions, finding that defendant-homeowner failed to comply with the condition precedent of notice under the policies and that the plain meaning of the language excluding plaintiff as a particular class of employee was dispositive. The court also granted defendant-homeowner’s own motion for summary judgment, finding that as an owner of a single-family dwelling who did not supervise, direct, or control the work of plaintiff, defendant-homeowner was entitled to the protection of the homeowner’s exemption under the Labor Law.
Carpio-Sanchez v Nakamura, Sup Ct, Queens County, November 4, 2011, Grays, J., Index No. 7901/2009
Failure to Follow Traditional Mezzanine Financing Structure Precludes Plaintiffs from Recovering as Secured Parties: Lebedowicz v Meserole Factory LLC
In a December 20, 2011, decision by Justice Schmidt, the court denied plaintiffs’ motion for summary judgment declaring that they are entitled to defendants’ membership interests in defendant-LLC as a security interest in connection with the purchase of real property. Defendant-LLC borrowed $3.5 million to purchase real property from the plaintiffs. Plaintiffs claimed that under the mezzanine loan agreements, the defendant-LLC members pledged their membership interests in the LLC as security to be transferred to plaintiffs upon default. The defendant-members signed the loan agreements, not in their individual capacities, but on behalf of defendant-LLC. Because an LLC “cannot hold its own LLC interests and, therefore, could not grant the plaintiffs a lien on its own LLC interests,” the court denied plaintiffs’ motion. The court further noted that had the parties followed “the traditional mezzanine loan structure,” they would have formed a separate holding company to own the borrower-LLC, allowing the LLC to grant plaintiffs a lien on its interests in the newly-formed holding company.
Lebedowicz v Meserole Factory LLC, Sup Ct, Kings County, December 20, 2011, Schmidt, J., Index No. 20293/10
Motion to Reargue Denied, Defendants Fail to Show Steps Taken Prior to Closing To Remedy Alleged Title Defect: Latipac Corp. v. Birchard and Haddock
In a January 31, 2012 decision by Justice Oing, the court denied a motion to reargue the denial of defendants’ summary judgment motion. Plaintiff was supposed to purchase a $3 million property from defendants but failed to do so, arguing that two commercial units in the property had been illegally combined in contravention to the property’s certificate of occupancy. Plaintiff sued to recover its $150,000 deposit and defendants counterclaimed for a declaration that they were entitled to keep the down payment. The parties disputed whether the nonconforming use was, under the contract, a defect that defendants had to cure. The court determined that there was no dispute that the parties were discussing a remedy for the nonconforming, but there was an issue of fact as to what steps, if any, defendants took prior to the closing to rectify the situation requiring the denial of defendants’ summary judgment motion.
Latipac Corp. v. Birchard and Haddock, Sup Ct, New York County, January 31, 2012, Oing, J, Index No. 603299/09.
Court's Granting Motion to Amend Renders Summary Judgment Motion Moot: Fusco and Fasulo v. Direct Access Management, LLC et al.
In a December 7, 2011 decision by Justice Driscoll, the court granted a motion to amend and denied a motion for summary judgment based on the original complaint finding that the amendment rendered the original complaint a nullity, and therefore moot. After the completion of a number of depositions, plaintiffs sought to amend their complaint to add additional causes of action and additional parties. Plaintiffs based their amendment on information disclosed during discovery, including party and non-party depositions. Defendants opposed the amendment arguing that the proposed amendment did not state any valid causes of action and that plaintiffs were aware of certain of their new claims when they commenced the action and should not be allowed to amend their pleadings at such late date. Defendants also moved for summary judgment dismissing all of the claims brought in the original complaint. The court granted plaintiffs’ motion to amend finding that the proposed amendment is not palpably insufficient or patently devoid of merit. The court further found that, because the complaint was deemed amended, plaintiffs’ originally complaint was a nullity and defendants’ motion for summary judgment against the original complaint was moot.
Fusco and Fasulo v. Direct Access Management, LLC et al., Sup Ct, Nassau County, December 7, 2011, Driscoll, J, Index No. 4450/09.
Court Denies Motion for Summary Judgment Made Before Discovery as Premature: Padilla Constr. Servs., Inc. v DeMicco Bros., Inc.
In a January 9, 2012, decision by Justice Bucaria, the court denied plaintiff’s motion for summary judgment as pre-mature and granted defendants’ motion for leave to amend its answer to allege the statute of frauds as an affirmative defense. Plaintiff-contractor sued defendant-general contractor and its surety in connection with unpaid balances on three separate construction projects and moved for summary judgment before the parties engaged in discovery. Defendants opposed the motion as pre-mature and cross-moved for leave to assert the statute of frauds as an affirmative defense based on the alleged absence of written agreements with respect to at least two of the three projects. The court agreed with defendants and denied plaintiff’s motion, stating that “discovery may lead to relevant evidence” regarding, among other things, monies paid on the projects and plaintiff’s damages. The court also granted defendants’ motion for leave to amend, finding that the statute-of-frauds defense was “meritorious” and that plaintiff would not be “prejudiced or surprised” by it.
Padilla Constr. Servs., Inc. v DiMicco Bros., Inc., Sup Ct, Nassau County, January 9, 2012, Bucaria, J., Index No. 4391/11
Affirmative Defenses are Barred by Guaranty's Express Waiver Provision: J. Remora Maintenance LLC v Efromovich
In a January 4, 2012 decision by Justice Fried, the court granted the plaintiff’s motion for summary judgment to enforce a guaranty executed by the defendant in connection with the plaintiff’s sale of its interest in a company to a third party. The court found that because the two express conditions set forth in the guaranty for its enforcement were met, the plaintiff established entitlement to summary judgment as a matter of law. The court then determined that the defendant failed to raise an issue of fact through its affirmative defenses of fraudulent inducement and lack of consideration. Based on the Court of Appeal’s decision in Citibank v Plapinger, the court concluded that an express waiver contained in the guaranty barred the defendant from asserting the substantive defenses. The court rejected the defendant’s argument that the waiver did not apply to the two affirmative defenses at issue because it did not contain the words “absolutely and unconditional”, finding that such language was unnecessary under New York law for a waiver to effectively waive substantive defenses. The court also granted the plaintiff’s motion to dismiss the defendant’s fraudulent inducement counterclaim under CPLR § 3016(b) on the grounds that the circumstances surrounding the alleged fraudulent inducement were not alleged in sufficient detail.
J. Remora Maintenance LLC v Efromovich, Sup Ct New York County, January 4, 2012, Fried, J, Index No. 650943/11
Preference to Particular Bidders Did Not Require Acceptance of Bid At Any Cost: Outstanding Transp., Inc. v. Interagency Council of Mental Retardation & Dev. Disabilities, Inc.
In a January 13, 2012 decision by Justice Demarest, the court granted defendant’s motion for summary judgment dismissing the complaint – even though discovery was not complete. The dispute arose from a private bus transportation contract. In a prior contract, the parties agreed that the companies already providing transportation services would be given a “preference” in subsequent contract negotiations. Plaintiff alleged that defendant ignored that preference and awarded the new contract to another bus company. Plaintiff also alleged that it relied on defendant’s false and misleading statements in acquiring new equipment.
The court dismissed plaintiff’s cause of action based on the contract’s preference language because plaintiff’s bid was between 26% and 112% higher than the lowest bidder, negating the preference language because plaintiff’s reading of that language would have required defendant to award plaintiff the contract no matter the amount of plaintiff’s bid. The court also dismissed plaintiff’s implied covenant of good faith and fair dealing cause of action, finding that cause of action could not be used to resurrect a defective breach of contract claim. Also, the court found that there was no basis for plaintiff’s negligent misrepresentation and fraudulent inducement claims because plaintiff failed to, and couldn’t, prove any of the allegations of those claims.
Outstanding Transp., Inc. v. Interagency Council of Mental Retardation & Dev. Disabilities, Inc., Sup Ct, Kings County, January 13, 2012, Demarest, J, Index No. 8338/11.
Questions of Fact and Automatic Stay Prohibit Motion for Summary Judgment: Tomlinson v Degannes
In a December 2, 2011 decision by Justice Schmidt, the court denied the defendant/third-party defendant, Chan’s, motion for summary judgment pursuant to CPLR 3212 which sought to dismiss the complaints of both the plaintiff, Tomlinson, and the intervening defendant/third-party plaintiff, BNC Mortgage, Inc. The case stemmed from a sale of real property in which Tomlinson was the seller and Chan was the settlement agent representing BNC, who was the lender. After the closing, Tomlinson commenced the action for recision of the contract of sale and for damages resulting from an alleged “mortgage rescue scheme.”
In the instant motion, Chan asserted that: 1) with respect to Tomlinson’s complaint, he was not a party to the transaction and, notwithstanding, there were no irregularities in the disbursements of the loan proceeds because "simple arithmetic" and the HUD-1 statement verified that the loan proceeds were accounted for; and 2) with respect to BNC’s complaint, the claims were unsupported by the record and BNC failed to properly plead their causes of action. The court found that material questions of fact existed related to Tomlinson’s allegations about irregularities in the disbursements at the closing, precluding summary judgment as to Tomlinson’s complaint. The court then dismissed without prejudice the branch of Chan’s motion seeking summary judgment against BNC because BNC was under Chapter 11 bankruptcy protection and subject to the automatic stay. The court noted that Chan could renew that part of the motion when BNC emerged from bankruptcy or when the automatic stay was lifted.
Tomlinson v. Degannes, et al, Sup Ct, Kings County, December 2, 2011, Schmidt, J., Index No. 41418/2007
Court Denies Motion for Leave to Amend Where Proposed Allegations Were Reviewed and Dismissed as Part of Cross-Motion for Summary Judgment: Ferghana Partners Inc. v Bioniche Life Sciences Inc.
In an October 5, 2011, decision by Justice Schweitzer, the court granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiff’s motion for leave to amend. Plaintiff-investment firm sued defendant-biotechnology company for breach of contract under a finder’s agreement in connection with defendant’s partnership with a pharmaceutical company to market and sell one of defendant’s drugs. Defendant moved for summary judgment dismissing the complaint, proffering evidence that plaintiff admittedly failed to comply with the specific finding process set forth in the agreement. Plaintiff ultimately contended that it was entitled to its finder’s fee under the agreement because the third-party pharmaceutical company had subsequently acquired another company – a potential candidate – with which plaintiff previously had contact regarding defendant’s drug. The court granted defendant’s motion finding that plaintiff failed to comply with the agreement, particularly with the provisions requiring plaintiff to identify potential candidates for partnership with defendant “in conjunction with defendant” and to “obtain defendant’s approval” with respect to any such candidates. The court also denied plaintiff’s motion for leave to amend the complaint to allege facts related to the third-party pharmaceutical company’s acquisition of the potential candidate because the company “was acquired . . . nearly three years after plaintiff had contact with [it], and after the [finder’s] agreement had been terminated months before.”
Ferghana Partners Inc. v Bioniche Life Sciences Inc., Sup Ct, New York County, October 5, 2011, Schweitzer, J., Index No. 650747/2009
Motion for Partial Summary Judgment Granted, In Part: Comprehensive Care Mgt. Corp. v Utica Mutual Ins. Co.
In a December 15, 2011 decision by Justice Emerson, the court granted in part and denied in part the defendant’s motion for partial summary judgment. The case arose from a construction project entered to build a health-care treatment center on behalf of Comprehensive Care (“CCMC”). After a dispute arose between CCMC and the original construction manager (“NCI”), Utica, who issued payment and performance bonds under the contract, entered the “Takeover Agreement” with CCMC to complete the project. Pursuant to a letter agreement, Utica re-engaged NCI to complete the remaining work, but subsequently terminated NCI for allegedly breaching the letter agreement by failing to timely complete the project. CCMC then sued Utica for allegedly breaching the Takeover Agreement. The court denied that branch of the motion seeking to dismiss the first cause of action insofar as it sought attorney’s fees and liquidated damages, which Utica claimed were not provided for under the Takeover Agreement. The court found that: attorney’s fees and liquidated damages were permitted under both the original contract and the performance bond; that neither the contract nor bond was extinguished by the Takeover Agreement; and that CMCC met the performance bond’s requirements for such relief. Further interpreting the bond, the court limited CCMC’s recovery to attorney’s fees incurred in completing the work under the contract. Finally, the court granted the part of the motion to dismiss the second cause of action for a declaratory judgment that NCI’s mechanic’s lien was null and void and directing Utica to remove or satisfy it, and all other liens against the property. The court held that NCI was a necessary party to such a declaratory judgment but had not been joined it this action.
Comprehensive Care Mgt. Corp. v Utica Mut. Ins. Co., Sup Ct, Suffolk County, December 15, 2011, Emerson, J, Index No. 24923/09
Numerous Affirmative Defenses Fail to Stop Foreclosure Proceeding, La Jolla Bank, FSB v. Whitestone Jewels, LLC et al.
In a December 7, 2011 decision by Justice Kitzer the court granted a bank’s motion for summary judgment against a corporate borrower and the loan’s guarantors. The bank also sought to amend the caption to replace the named lender with the current lender, who assumed the note under an agreement with the FDIC which acted as receiver for the names plaintiff which had gone out of business. The guarantors raised a number of affirmative defenses and attempted to create issues of fact, all of which the court rejected. This included an argument that a bank employee made oral representations to the guarantors which created a “joint venture.” The court rejected that argument stating “it is well settled under State and Federal Law that borrowers are estopped from asserting claims or defenses that are based on any unwritten or oral agreement by the original lender that would tend to diminish the interest of the FDIC, or its assignee, in any asset (e.g., a loan) acquired by the FDIC.” The court rejected the argument that it could not find that the guarantors were liable under the loan because the amount of the damages have not been ascertained, because the amount of damages could (and would) be determined by a referee after liability was established. The court also granted the motion to change the name of the plaintiff to the current holder of the loan.
La Jolla Bank, FSB v. Whitestone Jewels, LLC et al., Sup Ct, Queens County, December 7, 2011, Kitzes, J, Index No/ 13920/09
Court Decides Motions for Summary Judgment arising from Fraudulent Financial Advice and Resultant Mortgage Default: Mauro v Countrywide Home Loans, Inc.
In an October 17, 2011 decision by Justice Warshawsky, the court: 1) denied in part and granted in part both Kaplan’s and Countrywide’s motion for summary judgment to dismiss the complaint; and 2) denied Mauro’s cross-motion for summary judgment against Countrywide. On the advice of Dawson, who held himself out as an experienced financial manager, Mauro mortgaged two previously unencumbered properties for investment purposes. Mauro alleged that she did not receive complete information about the loans, including how the proceeds would be disbursed, and that nothing was explained to her at the closing, where Kaplan was the attorney for Countrywide. Although the HUD-1 Settlement Statements indicated that the proceeds would be distributed to Mauro, all proceeds were delivered to Dawson or entities he controlled, including the defendant BMG. BMG initially made the mortgage payments on both loans but eventually defaulted and Dawson was arrested for grand larceny.
The court denied parts of Kaplan’s motion for summary judgment holding that material issues of fact existed as to: 1) the elements of fraud with respect to whether and for what purpose Kaplan made the representation that the loan funds were to be directed to Mauro alone; 2) breach of fiduciary duty, because while it was unlikely that Kaplan entered into an attorney-client relationship with Mauro by drafting two deeds, it was still a factual possibility; and 3) Countrywide’s cross-claims for professional negligence, breach of contract and indemnity. Kaplan’s motion to dismiss the claim for intentional tort was granted because the actions giving rise to the claim occurred beyond the one-year statute of limitations period.
On Countrywide’s motion, the court held that: 1) there were factual issues precluding the dismissal of the claims for breach of contract and fraud, and Countrywide’s cross-claims against Kaplan that it could be only be liable due to its agent’s (i.e., Kaplan’s) negligence and breach of contract; 2) because Mauro could not establish a likelihood of success on the merits and was seeking economic damages, the claim for injunctive relief was inappropriate and therefore dismissed; 3) the claims seeking a declaration that loans were void because obtained under false pretenses were dismissed because Mauro’s cooperation in their placement established their validity; and 5) because there were no factual issues with respect to Dawson’s criminal wrongdoing through BMG, summary judgment was granted on Countrywide’s cross-claim for indemnification against Dawson and BMG.
Finally, the court denied each part of Mauro’s motion for summary judgment against Countrywide finding that: 1) issues of material fact with respect to the direction of proceeds to BMG precluded the claims for breach of contract, fraud, and declaratory relief; and 2) Mauro had not established a likelihood of success on the merits, precluding injunctive relief.
Mauro v Countrywide Home Loans, Inc., Sup Ct, Nassau County, October 17, 2011, Warshawsky, J., Index No. 000191/2011.
Equipment Rental Company Dismissed From Action, No Evidence It Employees Worked at the Job Site, Hudson Meridian Constr. Group, LLC v. Kingdom Assoc., Inc.
In an October 3, 2011 decision by Justice Demarest the court granted summary judgment and dismissed from the case a dewatering equipment rental company because it demonstrated that it could not be held liable for the damages which occurred on the construction site. The suit arose from a large construction project which required dewatering (pumping water from the construction site). A neighboring land owner claimed that the dewatering damaged his property because the dewatering cause the ground to shift (or settle). The property owner paid the neighboring landowner his alleged damages and withheld that amount from the payments due the general contractor. The general contractor then brought suit against the various sub-contractors and vendors seeking to recoup those monies.
The dewatering rental equipment company moved to dismiss arguing that it only rented equipment for the project, had no employees physically working at the project and had no control over how the equipment was operated. The company also demonstrated that under its rental contract the subcontractor was required to indemnify the rental company in the event of a lawsuit. The court found that the rental company carried its prima facie burden of proof and the contractor’s attorneys’ affirmation was insufficient to rebut that showing rather the contractor “merely relies solely upon surmise, speculation and conjecture in an effort to create a feigned issue of fact.” The court further found that the contractor did not demonstrate how discovery would have changed this analysis because “mere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient to warrant denial of a motion for summary judgment.”
Hudson Meridian Constr. Group, LLC v. Kingdom Assoc., Inc., Sup Ct, Kings County, October 3, 2011, Demarest J, Index No. 16846/09.
Court Rejects Claim that Christie's was Liable for Sale of Counterfeit Jean-Michel Basquiat Painting
In a November 22, 2011 decision by Justice Kornreich, the court granted the defendant’s motion for summary judgment and dismissed plaintiff Guido Orsi’s complaint. Orsi purchased a painting by artist Jean-Michel Basquiat from the Tony Shafrazi Gallery 20 years ago, which had previously acquired the painting from an auction at Christie’s. In 2006, Orsi learned that the painting was counterfeit and sued Christie’s alleging that it knew or was reckless in representing that the painting was not an original work. In granting Christie’s motion, the court found that Christie’s established that it had no knowledge that the painting was not authentic at the time of the auction or intended to defraud. Specifically, the court found that deposition testimony of several former Christie’s employees established Christie’s practices for obtaining information about art work and there was no evidence that Christie’s strayed from that practice with respect to the Basquiat painting. The court found that Orsi failed to establish a triable issue fact because his only evidence was deposition testimony Basquiat’s father who told an anonymous and unidentified man that he thought the painting was “not right.” However, the court found that the record as a whole failed to show that this man, Basquiat’s father, or anyone else ever conveyed to any Christie’s employee or agent that the painting was not authentic. The court found that at most, Orsi created a “shadowy semblance of an issue” which was insufficient to defeat summary judgment. Furthermore, the court rejected Orsi’s argument that Christie’s should have followed up an inquired as to the authenticity of the painting, because while those allegations may support a claim for negligence, they cannot support a fraud claim.
Tony Shafrazi Gallery Inc. v Christie’s Inc., Sup Ct, New York County, November 22, 2011, Kornreich, J, Index No. 112192/07
Issue of Fact Exist, Complaint Sufficiently Supports Claim, Motion For Summary Judgment and to Dismiss Cause of Action Denied: Long Is. Med. v Lligam Assoc., Inc.
In a November 1, 2011 decision by Justice Driscoll, the court denied defendant TeamPositions Inc.’s motion for summary judgment dismissing the plaintiff’s complaint and to dismiss the second cause of action sounding in gross negligence. TeamPositions argued that it was neither a party to, nor an intended beneficiary of the contract (“Contract”), which lays at the heart of the action, because it was between the plaintiffs and Magill Associates, Inc. (“Magill”), the former identity of named-defendant Lligam Associates, Inc., so TeamPositions could not be held liable under it. At issue was a transaction that was labeled as an asset purchase agreement, through which the plaintiffs asserted TeamPositions acquired Magill’s business, including the Contract. While the purchaser of a corporation’s assets ordinarily does not become liable for the debts of its predecessor, an exception exists for de facto mergers, including where a transaction structured as a purchase of assets is deemed an attempt to fraudulently escape debt obligations. The court denied TeamPositions’ motion for summary judgment, finding that issues of fact existed regarding the application of the de facto merger doctrine, and therefore whether TeamPositions should be held liable under the Contract. On the gross negligence cause of action, TeamPositions argued that a breach of contract cannot be considered a tort unless a legal duty, existing independent of the contract, has been violated. TeamPositions asserted the plaintiffs failed to allege such a duty, but the court held that allegations in the complaint sufficiently supported such a conclusion. Therefore, the court denied the motion to dismiss this cause of action.
Long Is. Med. v. Lligam Assoc., Inc., Sup Ct, Nassau County, November 1, 2011, Driscoll, J, Index No. 005500 /10.
Motions for Summary Judgment Denied: Quoizel, Inc. v Hartford Fire Ins. Co.
In a November 14, 2011 decision by Justice Oing, the court denied both the plaintiff’s and the defendant’s motions for summary judgment. Quoizel, in the business of manufacturing lighting and home décor accessories, brought suit against Hartford, its commercial liability insurance provider, after a sprinkler system leak damaged its South Carolina warehouse and inventory therein. Quoizel argued that it was a manufacturer of the damaged inventory since it had an ownership interest in the Chinese factories where it was manufactured. Therefore, Quoizel argued, under the policy Hartford owed it additional amounts, representing the selling price value of the damaged inventory, beyond the replacement cost value of the damaged inventory, which had already been paid and accepted. The court denied Quoizel’s motion holding that although it was clear under the circumstances that “Quoizel ha[d] some relationship” with the Chinese factories, factual issues existed with respect to whether those “relationships [we]re sufficient to support a finding that Quoizel ha[d] ownership interests for it to be deemed a de facto manufacturer of the damaged inventory.” In its own motion for summary judgment, Hartford argued that the fact that the damaged inventory was set forth in purchase orders was conclusive proof Quoizel was not a manufacturer. The court found this argument unavailing and denied the motion.
Quoizel, Inc. v Hartford Fire Ins. Co., Sup Ct, New York County, November 14, 2011, Oing, J, Index No. 601321/2009
$400,000 Note is Not the Same as $400,000 Payment, Strict Compliance Required to Exercise Option: Sag Harbor Land, LLC v Sag Development Partners, LLC
In a September 8, 2011 decision by Justice Emerson the court granted a mortgage holder summary judgment on its foreclosure claim and for the appointment of a referee. The claim arose from a $16 million real estate purchase, $8 million of which was originally contingent upon the purchaser receiving certain environmental and other approvals. The purchaser had the option to seek a reduction in the amount of the mortgage if the approvals were not received within three years of the closing. The parties later entered into a number of modification agreements which eliminated the purchaser’s right to a reduction of the mortgage but extended the loan’s maturity date. The last of these agreements extended the maturity date to January 6, 2011 and gave the purchaser the option of further extending the maturity date upon the payment of $400,000 by December 6, 2010.
The purchaser attempted to execute the option by sending the mortgage holder a $400,000 note on January 3, 2011. Plaintiff mortgage holder rejected the purchaser’s attempt to exercise the option and declared the loan due on its maturity date, January 6, 2011. The purchaser defaulted and the plaintiff mortgage holder commenced this foreclosure action and moved for summary judgment. The court granted the plaintiff summary judgment, rejecting the mortgage holder’s argument that it validly exercised the option, holding that strict compliance is required to validly exercise an option. The court also denied defendant’s motion for leave to amend its answer to assert fraud in the inducement and promissory estoppel because those defenses were unavailable to the defendant as a matter of law.
Sag Harbor Land, LLC v Sag Development Partners, LLC, Sup Ct, Suffolk County, September 8, 2011, Emerson, J, Index No. 2799-11.
Client's Termination of "General Retainer" Can Be A Breach of Contract: National Grid Cop. Serv., LLC v. LeSchak & Grodensky, P.C.
In an October 26, 2011 decision by Justice Bucaria the court denied cross-motions for summary judgment finding that issues of fact precluded dismissing either parties’ claims. The dispute arose from National Grid’s retention of the defendant law firm to commence replevin actions to seize and recover utility meters from non-paying customers, in addition to other legal work. National Grid agreed to pay the law firm a set monthly retainer for this work, over a set period of time. National Grid terminated the retainer agreement during its term. Normally a client can terminate an attorney’s employment without cause and not be subject to a claim for breach of contract. An exception to this general rule is when the parties have entered into a “general retainer” agreement – an agreement “for a fixed period of time to perform legal services in relation to matters that may arise during the period of the contract.” A client will be held liable for breaching a “general retainer” unless it terminated the attorney for cause. The court found that there were issues of fact as to whether National Grid terminated the law firm for cause because it had a good faith reasonable basis to doubt the law firm’s capacity to perform the work contemplated under the retainer or whether National Grid terminated the retainer because they wanted to retain other counsel at a reduced cost.
National Grid Cop. Serv., LLC v. LeSchak & Grodensky, P.C. Sup Ct, Nassau County, October 26, 2011, Bucaria, J, Index No. 8330/09.
Rock Star Liable for Failure to Return $150K in Jewelry Provided on Consignment for Charity Event: Diamond Quasar Jewelry, Inc v Courtney Love Cobain
Although not venued in the Commercial Division, in an October 11, 2011, decision by New York County Justice Ling-Cohen, the court granted in part plaintiffs’ motion for summary judgment on its claim for breach of contract. Plaintiff, a New York jewelry merchant, provided rocker/actress Courtney Love with approximately $150,000 in jewelry under a consignment contract in connection with a Manhattan charity event that she attended in September 2010. When Love failed to return the jewelry, plaintiff sued for the retail value of the jewelry and moved for summary judgment on its claims before discovery was completed. The court considered the motion despite its pre-mature nature, finding that “a lack of note of issue is not a bar to [a] motion [under CPLR 3212]” and that Love’s outstanding demands for information related to the value of the jewelry and mitigation of damages were not “facts essential to justify opposition” under CPLR 3212 (f). The court then granted plaintiff’s motion for breach of contract as to liability only, finding that Love failed to dispute the fact that she did not return the jewelry and failed to raise any other factual issues regarding liability. Because a bailee is not liable for the retail value of lost property under the law, the court referred the matter for a damages trial on the market value of the jewelry. Finally, because there was no dispute that the jewelry was “lost through negligence or stolen,” the court denied plaintiff’s motion as to its cause of action for conversion and dismissed the claim.
Diamond Quasar Jewelry, Inc. v Courtney Love Cobain, Sup Ct, New York County, October 11, 2011, Ling-Cohen, J., Index No. 115215/2010
No Material Fact Incorrect in Certificate of Readiness, Prima Facie Burden Not Met, Motions to Vacate and for Summary Judgment Denied: Betram v. Decicco
In an October 24, 2011 decision by Justice Pines, the court denied the defendant’s motions: 1) pursuant to 22 NYCRR § 202.21, and CPLR 3124 and 3126(2) for an order striking the plaintiff’s note of issue and certificate of readiness; and 2) pursuant to CPLR 3212 for summary judgment dismissing the complaint. This negligence action arose out of a motor vehicle accident wherein the truck operated by Deccico collided with the rear of the vehicle operated by Bertram, which, according to Bertram, caused him to suffer a herniated disc that impinged on a nerve root. In denying Decicco’s motion to vacate the note of issue, the court held that Deccio failed to establish “that a material fact in the certificate of readiness [wa]s incorrect,” and that there was no discovery outstanding, as Deicco claimed, because Bertram had complied with Decicco’s discovery demands. The court then denied Decicco’s motion for summary judgment, which was based on his assertion that Bertram did not sustain a “serious injury” as defined and understood for purposes of Insurance Law §5102(d). The court held that Decicco failed to meet his burden of establishing prima facie that Bertram did not sustain a serious injury, thereby precluding a shifting of the burden to Bertram to raise a triable issue of fact in his opposing papers. The court reasoned that Decicco’s own moving papers raised issues of fact with regard to the nature and extent of Bertram’s injury in that the expert opinions on which the motion relied were incomplete and contradictory, and were not accompanied, as required by CPLR 3212, by copies of the medical records and MRIs on which they were based.
Bertram v DeCicco, Sup Ct Suffolk County, October 24, 2011, Pines, J, Index No. 38897/07
Matter of Widespread Public Notice Not the Basis for Fraud or Misrepresentation: Khindri v. Getty Petroleum Mktg., Inc. and Albert Salib
In an October 11, 2011 decision by Justice Pines, the court granted defendant Getty’s motion for summary judgment dismissing the complaint against it, and dismissed the complaint against non-moving defendant Salib. Pursuant to a purchase agreement, the plaintiffs were to acquire a gas station business from Salib. Plaintiffs also entered into a lease of the real property on which the gas station was located with Getty, the owner thereof. The plaintiffs’ suit alleged that Getty defrauded them into purchasing the business, asserting two causes of action for fraud, and a third for negligent misrepresentation. The suit centered on a proposed public condemnation of part of the property that arose after the purchase agreement was signed but before the closing, which would have prevented its future use as a gas station. The plaintiffs alleged that they were never informed of the condemnation and that both defendants knew about and purposely concealed it from them.
The court held that Getty sustained its prima facie showing because the plaintiffs could have discovered the condemnation with the use of due diligence, as it was a matter of public record and part of a press release to numerous media outlets. The court then found that plaintiffs failed establish any material issues of fact because their allegation that Getty promised improvements to the property, including new gas tanks, could not have been justifiably relied upon in light of the pending condemnation. After searching the record pursuant to its ability under CPLR 3212(a), the court held that the plaintiffs also had no claims against Salib. The court again reasoned that even if Salib knew of and purposefully concealed the condemnation from the plaintiffs, it was a widely publicized matter of public record before the closing.
Khindri v. Getty Petroleum Mktg., Inc., Sup Ct, Sup Ct, Suffolk County, October 13, 2011, Pines, J, Index No. 39158/08
Insurer Fails to Demonstrate Material Misrepresentation, Cannot Void Insurance Policy: BW Sportswear, Inc. v. Those Certain Underwriters at Lloyd's of London, Subscribing to Certificate Number 34665
In an August 8, 2011 decision by Justice Oing the court denied an insurer’s motion for summary judgment for a declaration that an insurance policy was void and rescinded ab initio. The litigation stemmed from an insurance claim for water damage to a clothing store. The insurer performed an investigation after the claim was submitted. Based on the investigation the insurer argued that the insured made material misrepresentations on the insurance application when it failed to disclose prior insurance claims at the store’s location. The insurer also argued that the insured filed false documents in connection with the claim.
The court denied the insurer’s motion to declare the policy void because it failed to meet its “burden of providing clear and uncontradicted evidence of the materiality of the misrepresentation.” This included the insurer’s failure to provide evidence of its underwriting policies. The court further found that the insurer’s purported evidence that the insured filed false documents in support of his claim at best raised issues of fact which precluded summary judgment.
BW Sportswear, Inc. v. Those Certain Underwriters at Lloyd’s of London, Subscribing to Certificate Number 34665, Sup Ct, New York County, August 8, 2011, Oing, J, Index No. 603568/09.
RICO Claims Dismissed, Malicious Prosecution Claims Cannot Form Predicate Act: The Auto Collection et al v. Pinkow et al.
In an October 7, 2011 decision by Justice Demarest the court dismissed a RICO claim because after two years of discovery plaintiffs were still unable to prove the essential elements of their claim. The dispute arose from sales of luxury automobiles which were to shipped from the United States to the Soviet Union and Eastern Europe. One of the plaintiffs in this action, The Auto Collection, was a named defendant in over a half-dozen other cases where it was alleged that The Auto Collection took money for the cars but failed to deliver them and went out of business. The Auto Collection’s action claimed that the plaintiff purchasers in the other actions were engaged in a conspiracy to defraud The Auto Collection by, among other things, commencing baseless lawsuits against The Auto Collection.
This motion involved four of the defendants against whom The Auto Collection brought, among other things, RICO claims. The court granted those defendants’ motion to dismiss the RICO claim because: (i) plaintiffs’ allegations of predicate acts are “merely, artfully pleaded claims for malicious prosecution and cannot form the basis of a RICO claim”; (ii) plaintiffs failed to demonstrate any interstate communications because all of the alleged communications took place in New York; and (iii) the witness tampering claim under RICO alleged acts involving state court proceedings and RICO witness tampering only applies to federal proceedings.
The Auto Collection et al v. Pinkow et al., Sup Ct, Kings County, October 7, 2011, Demarest, J, Index No. 7847/09
Allegedly Defamatory Statements Fail to Support Tortious Interference Claim: Amaranth LLC et al. v. J.P. Morgan Chase & Co. et al
In an August 3, 2011 decision by Justice Sherwood the court granted defendants summary judgment dismissing a tortious interference with a potential contract claim, the final cause of action remaining in the case. The litigation stemmed from a number of last minutes deals attempting to save a failing hedge fund. Plaintiffs alleged that comments made by defendants’ officers killed one of those deals. The court reviewed the elements of a tortious interference with potential contract relations claim, including the elements required when the claim is based upon an allegedly defamatory statement. The court found that the defendants demonstrated that a number of the elements of the claim were missing, including evidence that the statement was actually made and evidence of “but for” causation. The court further found that even if the statements were made, they were likely true and therefore not defamatory.
Amaranth LLC et al. v. J.P. Morgan Chase & Co. et al, Sup Ct, New York County, August 3, 2011, Sherwood, J, Index No. 603756/2007
Impaired Right of Subrogation Entitles Insurer to Summary Judgment and Return of Advance Payment to Insured: Alpha Packaging Indus. Inc. v CNA Ins.
In a March 7, 2011 decision by Justice Kitzes, the court granted defendant CNA Insurance Co.’s motion for summary judgment on its counterclaim seeking the return of $60,000 advanced to the plaintiff insured and dismissed the complaint. The plaintiff brought a breach of contract action after CNA rejected the plaintiff’s insurance claim for business interruption loss arising out of a mechanical breakdown of its machinery. CNA had advanced the plaintiff $60,000 but had not made any other payments. In granting the defendant’s motion, the court found the that the plaintiff did sustain the business interruption due to the mechanical breakdown, received a $60,000 advance from CNA and, without providing CNA any notice, pursued the matter directly against the machine’s manufacturer which resulted in the plaintiff executing a release and a confidential settlement agreement whereby the plaintiff received a one-time payment from the manufacturer exceeding the amount of the business interruption loss. Because the release was incorporated into the settlement agreement, the one-time payment the plaintiff received constituted payment in full for all claims arising out of the mechanical failure, including business interruption loss. The court held that because the release did not reserve any rights of CNA, it impaired CNA’s right of subrogation for the $60,000 against the manufacturer, and CNA was relieved of any further liability under the policy. The court held that CNA’s inability to seek subrogation did not impair its right to seek a return of the $60,000 payment to the plaintiff as the plaintiff was not entitled to receive double payment for the same loss.
Alpha Packaging, Indus. Inc. v CNA, Ins., Sup Ct, Queens County, March 7, 2001. Kitzes, J, ndex No. 9810/2009
Use of Fictitious Names for Invoicing May Support a Piercing Claim but Does Not Constitute Fraud: FSA Fortex, AB v Universal Exports, Inc.
In a July 26, 2011, decision by Justice Pines, the court granted in part and denied in part defendant-sellers’ motion for summary judgment dismissing plaintiff-buyer’s causes of action alleging breach of contract, piercing the corporate veil, fraud, and punitive damages. The parties entered into a contract for the provision of a variation of pulp for making paper. After delivery of the product, a dispute arose about whether the delivered product constituted the pulp called for in the contract or wastepaper, and plaintiff sued. The court denied defendants’ motion seeking dismissal of plaintiff’s claim for breach of contract, finding that plaintiff raised issues of fact regarding the nature of the product called for in the contract. The court also found that plaintiff raised issues of fact regarding individual liability of the owner of the defendant companies, particularly in light of his failure to comply with corporate formalities and his use of “fictitious employees to execute invoices and engage in correspondence in the course of business.” The court, however, granted defendants’ motion seeking dismissal of the claims for fraud and punitive damages, finding that plaintiff failed to “show how these false statements induced plaintiff to engage in the transaction at issue.”
FSA Fortex, AB v Universal Exports, Inc., Sup Ct, Suffolk County, July 26, 2011, Pines, J., Index No. 30296/2009
Contracts Do Not Contain Condition Precedent to Accelerating Loan: Prompt Mortgage Providers of North America LLC v. Direct Realty, L.L.C. et al.
In an August 8, 2011 decision by Justice Oing the court granted plaintiffs partial summary judgment on a motion for a judgment of foreclosure. The plaintiffs served a default notice and brought suit seeking the entire principal due under a note at the default rate of 24% per annum. The defendants moved to dismiss arguing that plaintiffs failed to serve a notice of acceleration which was a condition precedent to bringing suit. Defendants based their argument, in part, on a decision in a different case which they claimed analyzed language identical to the language contained in the documents at issue. The court found that the documents at issue were not identical, in that they did not contain a provision that a notice of acceleration was a condition precedent to bringing suit. The court granted the plaintiffs summary judgment on liability and directed that the amount of damages be determined by a referee.
Prompt Mortgage Providers of North America LLC v. Direct Realty, L.L.C. et al., Sup Ct, New York County, August 8, 2011, Oing, J, Index No. 116889/09.
Right of Removal of Excess Excavation Material Not Bargained for in Land Deal: Circle Assoc., LP v Starlight Props., Inc.
In a July 25, 2011, decision by Justice Whelan, the court granted defendant-seller’s motion for summary judgment dismissing plaintiff-buyer’s fraud action and finding for defendant on its counterclaim for breach of contract. Defendant, owner of a large tract of subdivided real estate, sold plaintiff a 20-acre lot on which plaintiff planned to construct a concrete plant. In connection with the sale, the parties entered into a contract of sale, followed by certain infrastructure contracts involving the removal of excavation material to comply with certain grading and draining regulations, as well as a letter-agreement that 1) reduced the purchase price of the land to reflect any decreases in acreage and credited plaintiff for its affiliate-contractor’s work under the infrastructure contracts; and 2) required plaintiff to pay defendant for material removed from the site under the infrastructure contracts in excess of the grading indicated on the subdivision maps. The letter-agreement further provided that all additional excavation material “belong[ed] to [plaintiff] for disposal as it sees fit.” Unbeknownst to plaintiff, defendant previously had removed approximately 66,000 cubic yards of material from the site. Plaintiff brought suit claiming that had it known about the removal of additional material – which, allegedly could have been sold to a third party for $9 per cubic foot – it would not have entered into the agreements. Defendant counterclaimed in connection with plaintiff’s failure to complete its payment to defendant for removal of material under the infrastructure agreements. The court granted defendant’s motion dismissing plaintiff’s action, finding that there was no evidence in the record, including in the language of the agreements, that the right to remove excess material was part of the contract negotiations or otherwise bargained for by plaintiff. The court also found that plaintiff failed to present its material-breach defense to defendant’s counterclaim in its opposition papers, and granted defendant summary judgment on its claim for breach of contract.
Circle Assoc., LP v Starlight Props., Inc., Sup Ct, Suffolk County, July 25, 2011, Whelan, J., Index No. 41838/2008
LLC Managing Member Liable for Transferring Company's Sole Asset Without the Knowledge or Consent of the 50% Member: Gitlin v Chirinkin
In a June 29, 2011 decision by Justice Bucaria, the court granted the plaintiff’s motion for summary judgment on the causes of action for violating NY LLC Law § 402, breach of fiduciary duty, breach of contract, fraud, unjust enrichment, and violation of the Debtor Credit Law . The court determined that the plaintiff established that he was a 50% member of the LLC, the sole assets of which were two real properties in Nevada, and that the defendants, one of whom was the LLC’s managing member, transferred those properties to a third party without the plaintiff’s knowledge or consent, without the statutorily required vote of the majority interest of the members, and without paying any consideration to the plaintiff. The court found that the managing member’s representations to the plaintiff that he would manage the LLC’s day-to-day operations to the benefit of the company and its members were false and that after transferring the properties, he continued to counsel the plaintiff on those investments without divulging the transfers.
The court cancelled a notice of pendency which the plaintiff filed on one of the defendant’s personal home on the grounds that the defendant transferred the proceeds of the real property sales to his wife who used those funds to purchase their home. The court dismissed the notice of pendency upon finding that the complaint failed to establish an action for a constructive trust, necessary to file a notice of pendency, because the action was for money damages that would not affect the title to or the possession of the defendant’s home.
For a more in depth discussion of this decision, please go to Peter A. Mahler’s blog at www.nybusinessdivorce.com.
Gitlin v Chirinkin, Sup Ct, Nassau County, June 29, 2011, Bucaria, J, Index No. 12131/07
Court Revisits Foreclosure Action and Grants Summary Judgment for Unlicensed Foreign Bank: Greystone Bank v 15 Hoover St., LLC
In a June 22, 2011, decision by Justice Driscoll, the court granted plaintiff-mortgagee’s motion for summary judgment for foreclosure on and possession of the property in question, as well as for foreclosure on plaintiff’s security interests in personal property and recovery of rental proceeds as provided by the mortgage documents. Finding that the mortgage documents and proof of default submitted by plaintiff on the motion were sufficient to establish a prima facie foreclosure case, in opposition to which defendant-mortgagor failed to raise a triable issue of fact, the court granted plaintiff’s motion and its related application for the appointment of a referee to compute sums due upon the foreclosure sale. Continuing the relief granted in an earlier decision staying the plaintiff’s prosecution of a deficiency judgment under the related promissory note, the court denied plaintiff’s motion for summary judgment as to its causes of action for a deficiency judgment and for a money judgment against the guarantor on the note.
Greystone Bank v 15 Hoover St., LLC, Sup Ct, Nassau County, June 22, 2011, Driscoll, J., Index No. 7223/2010
Court Finds Corporation Liable for Breaching Employment Agreement But Not its Sole Shareholder: Kleinman v Blue Ridge Foods, LLC
In a July 7, 2011 decision by Justice Hinds-Radix, the court granted the plaintiff’s motion for summary judgment on his cause of action for breach of an employment agreement and claim under Labor Law § 198, and concluded the plaintiff was entitled to a declaratory judgment that his employment was terminated without cause, upon finding that the plaintiff established prima facie that his employment was not terminated “for cause” as defined in the parties’ contract and that the defendants’ failed to provide for the contractual notice and cure period. The court rejected the defendants’ argument that the employment contract was void and unenforceable because they were induced to enter into it by the plaintiff’s fraudulent misrepresentations as to his title and experience at his prior employment. The court ruled that the defendants failed to establish a justifiable reliance on the purported misrepresentations, and noted a crucial factor was that the defendant Sussman, a sophisticated businessman, failed to adequately verify the plaintiff’s experience even though the means to do so were at his disposal. The court did not determine the amount of compensation owed to the plaintiff under the Labor Law, finding no proof that the plaintiff was entitled to additional payments claimed and because the plaintiff incorrectly asserted that “wages” under the Labor Law included his executive severance.
The court granted the motion by defendant Sussman to dismiss the complaint against him in the entirety, which asserted that Sussman, the corporation’s sole shareholder, could not be liable for the corporation’s obligations and the employment agreement could not be imputed to him personally. The court agreed, finding that the plaintiff failed to establish the principal elements to pierce the corporate veil and hold Sussman liable because he did not establish that Sussman comingled the corporation’s assets with his own or used them for his personal benefit and, therefore, did not establish that Sussman was the “alter ego” of the corporation.
Kleinman v Blue Ridge Foods, LLC, Sup Ct, Kings County, July 7, 2011, Hinds-Radix, J, Index No. 9603/10
Issues of Fact Preclude Summary Judgment on Claims for Breaching Auto Dealer Agreement: Legend Autorama, Ltd. et al v. Audi of Amer., Inc. et al.
In a July 14, 2011 decision by Justice Emerson the court granted partial summary judgment dismissing claims against an automotive executive but finding that issues of fact precluded dismissal against an automotive manufacturer. In 2007 the automotive manufacturer created a new automotive dealership in Suffolk County, that bordered the market area assigned to two existing automotive dealerships. The two existing dealership sued the manufacturer and one of its executive alleging claims for, among other things, breaches of fiduciary duty and breach of contract. The defendants moved for summary judgment.
The court granted summary judgment dismissing the tortuous interference and aiding and abetting breach of fiduciary duty claims against the automotive executive. The court found that generally a corporate officer cannot be held liable for his actions on behalf of the corporation if he is acting in good faith; and while there are exceptions to that rule, the facts adduced during discovery did not demonstrate that the executive acted in bad faith, committed an independent tort or personally benefitted from his actions.
The court denied summary judgment dismissing the breach of fiduciary duty claim against the auto manufacturer, finding that there were issues of fact concerning the nature and extent of the manufacturer’s relationship with the plaintiff dealership which may have created a fiduciary relationship which would not otherwise ordinarily exist. The court further found that the breach of fiduciary duty claim was not duplicative of the breach of contract claim because a fiduciary duty may arise independent of the contract (which may have happened here). The court also denied summary judgment dismissing the breach of contract and breach of the implied covenant of good faith and fair dealing, because the auto manufacturer had discretion in how it treated the plaintiff dealerships and there was an issue of fact whether the manufacturer exercised its discretion in bad faith.
Legend Autorama, Ltd. et al v. Audi of Amer., Inc. et al., Sup Ct, Suffolk County, July 14, 2011, Emerson, J, Index No. 38667/08.
Attorney Affirmation in Opposition Utterly Fails To Raise an Issue of Fact or Otherwise Defeat Summary Judgment: General Elec. Capital Corp. v Miron Lbr. Co. Inc.
In a July 8, 2011, decision by Justice Ramos, the court granted plaintiff-lender’s motion for summary judgment on its claims for breach of contract and guaranty, as well as dismissed defendant-borrower’s counterclaim and affirmative defenses. Notably, the court began its analysis with a footnote admonishing both parties for violating a practice rule providing that “Memos of Law ARE REQUIRED on ALL motions” and that a failure to submit a separate memo of law “may result in the denial of the motion.” The court then rejected defendant’s argument that the loan was not personally guaranteed as “belied by the documentary evidence” – namely, the loan agreement and guaranty itself – and noted that the “fatal” attorney affirmation submitted on behalf of defendant failed to “make a representation that his clients deny signing the 2009 Guaranty . . . and offers nothing by way of documentary proof sufficient to raise an issue of fact or otherwise defeat summary judgment.” The court also found that the “unusually bare affirmation in opposition” effectively abandoned the affirmative defenses pleaded in defendant’s answer by failing to address plaintiff’s motion to strike them, and otherwise rejected defendant’s “new” defense that the guaranty was a contract of adhesion, raised for the first time on this motion, as “indiscernible, nonsensical, and unsubstantiated.” Specifically, the court held that unequal bargaining power and a lack of legal representation on one side of a contract, without more, does not render the contract one of adhesion, and that a contractual interest rate of 9.75% is hardly usurious given New York’s statutory maximum rate of 16%.
General Elec. Capital Corp. v Miron Lbr. Co. Inc., Sup Ct, New York County, July 8, 2011, Ramos, J., Index No. 650728/2011
Court Finds Fact Issues Regarding Engineer's Negligence on Construction Project and Allows Third-Party Indemnification Claims to Go Forward: RAE Realty Holdings, LLC v 643 E. 11th St. Realty, LLC
In a June 20, 2011, decision by Justice Bransten, the court addressed a third-party defendant’s motion for summary judgment dismissing indemnification claims brought by an owner and general contractor in connection with damages to an adjacent structure caused by a failure to properly excavate and underpin the structure during construction of a commercial condominium building. Third-party defendant, a structural engineer retained in connection with the excavation, contended that the relevant provisions of the New York City Building Code did not require it specifically to inspect the soil under the adjacent building prior to construction and that, in any event, it was not a proper party in a cause of action for loss of lateral support under the law because it was not the owner or excavator on the project. The court, however, largely denied third-party defendant’s motion, finding that it had misstated both the code and the law and that fact issues existed as to whether it was negligent in its underpinning inspections. The court granted third-party defendant’s motion only as to the claim for contractual indemnification because it was not supported by a written contract containing an indemnity provision.
RAE Realty Holdings, LLC v 643 E. 11th St. Realty, LLC, Sup Ct, New York County, June 20, 2011, Bransten, J., Index No. 102264/2007
Motions for Summary Judgment Granted in Part, Denied in Part, in Action Brought by Hospital Against Insurer to Recover for Breach of Contract for Premiums Drawn Down from Letter of Credit: Lenox Hill Hosp. v. Amer. Int'l Group, Inc.
In a June 7, 2011 decision by Justice Fried, the Court granted in part and denied in part cross-motions for summary judgment. Defendant Lexington issued two consecutive excess healthcare professional liability insurance policies with plaintiff as the first named insured. The Court concluded that plaintiff and Lexington entered into two contracts, i.e., the 2004 and 2005 policies, and that plaintiff paid the standard premiums for each contract. The Court also found that there was no question that a Letter of Credit was issued after the first retrospective rating adjustment. As a result of the 2008 retrospective rating adjustment, defendants claimed additional premium was due. Plaintiff sued, claiming breaches of contract and fiduciary duty by the insurer. In addition, plaintiff sought injunctive relief barring draw downs from the Letter of Credit.
Both plaintiff and Lexington contend that the other party breached the contracts. Lexington and AIG by making retrospective rating adjustments outside of what was agreed upon between the parties and memorialized in the contract; and plaintiff by failing to pay the additional premium that Lexington determined and thereafter billed to plaintiff.
The Court dismissed the breach of fiduciary duty claim, since plaintiff failed to establish the existence of a fiduciary relationship between it and AIG or Lexington. As to the breach of contract claims, the Court concluded, after analyzing the parties’ agreement, that it could not determine, as a matter of law, the intentions of the parties concerning undefined terms in the Retrospective Rating Endorsement, thus denied the motions for summary judgment on those claims.
Plaintiff also moved for leave to amend the complaint to add fraud claims against both defendants and tortuous interference claim against AIG. The Court rejected the defendants’ argument that plaintiff’s delay in seeking leave should preclude amendment, since there appears to have been no prejudice to defendants. However, after analyzing the proposed amendments, the Court allowed plaintiff leave to amend only to add one cause of action for fraud against AIG.
Finally, the Court considered defendants’ motion, pursuant to CPLR 3126, to strike portions of plaintiff’s summary judgment submission on the ground that plaintiff was relying on actuarial reports not produced during discovery. The Court held there was no proffered evidence that plaintiff failed to disclose the requested documents and therefore denied the motion to strike.
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Court Declares Obligation to Reinsure under the Plain Meaning of Unambiguous Contract Terms: CIFG Assur. N. Am., Inc. v Assured Guar. Corp.
In a June 14, 2011, decision by Justice Kapnick, the court granted plaintiff-insurer’s motion for summary judgment declaring that, under a reinsurance agreement between the parties, defendant-reinsurer was obligated to reinsure plaintiff’s insured in connection with a financial guarantee insurance policy. A schedule attached to the parties’ reinsurance agreement itemized some 1300 insurance policies covered under the agreement. A provision in the agreement allowed for the exclusion of a policy if it did not meet certain rating standards as established by S & P, Moody’s, or certain internal standards established by plaintiff as of the effective date of the agreement. Defendant contended, among other things, that because plaintiff’s internal rating was not static, discovery was necessary to determine whether the financial guaranty policy was “below investment grade” according to plaintiff’s standards. The court rejected defendant’s contention, finding that the exclusion provision in the reinsurance agreement was unambiguous and plainly excluded the financial guaranty policy whose rating as of the effective date of the agreement was not in dispute. The court also dismissed defendant’s counterclaims as necessarily failing by virtue of its interpretation of the reinsurance agreement. The court, however, neglected to find that defendant engaged in bad faith by refusing to attend to its payment obligations under the agreement in connection with the financial guaranty policy.
CIFG Assur. N. Am., Inc. v Assured Guar. Corp., Sup Ct, New York County, June 14, 2011, Kapnick, J., Index No. 651090/2010
Collateral Estoppel From Divorce Arbitration Undermines Subsequent Claim of Ownership: Glazer v Webster et al
In a June 23, 2011 decision by Justice Demarest the court granted part of a motion for partial summary judgment, finding that a decision from a divorce arbitration barred subsequent attempts to litigate ownership in a number of nursing homes. During plaintiff’s marriage with one of the defendants he and his spouse invested in a number of nursing homes through his wife’s sister. Twenty-five percent of that investment was funded by their son. Subsequently the parties separated and divorced. The parties agreed to adjudicate their divorce including equitable distribution in a private arbitration. The panel issued an arbitration award that was confirmed in the Supreme Court. The confirmation of the award was affirmed in an appeal to the Appellate Division, Second Department.
The arbitration decision found that the wife disclaimed any ownership in the nursing homes and therefore awarded to the husband any interest the parties may have had in the nursing homes. The husband then brought an action for, among other things, a declaratory judgment that he owned a 2% interest in one of the nursing homes, naming as parties his wife, her sister, the nursing homes and others (but not their son). The court found that while certain of the wife’s arguments were precluded because of judicial estoppel, the parties’ son was a necessary party. The court directed the husband to join their son as a party before a final decision could be made. The court also rejected the nursing home’s claim that the husband is not entitled to any distributions from the nursing home because he was not approved as an owner by the New York State Department of Health.
Glatzer v Webster et al, Sup Ct, Kings County, June 23, 2011, Demarest, J, Index No. 39025/06.
Madoff Losses May Be Covered Under Insurance Policy, United States Fire Insurance Company v. Nine Third FEF Investments LLC et al.
In a June 16, 2011 decision by Justice Lowe the court found there were a number of issues of fact which precluded awarding summary judgment to an insurer declaring that it was not obligated to cover Madoff loses. The insurer used a multi-pronged attack arguing that the insurance policy was void and should be rescinded, that the Madoff loses fell under a policy exclusion and that the losses should be limited to the monies actually paid to Madoff minus any redemptions (i.e. no coverage for fictitious gains in the account).
The court found that the insureds did not have to disclose Madoff’s fraud in their insurance applications because they were not aware of the fraud. The court, nevertheless, found there were certain contractual ambiguities which precluded summary judgment on the issue of over-all coverage. The court did grant summary judgment to the insurer on one issue, finding that the insureds’ loss did not include fictitious profits allegedly lost by Maddof and the loss was restricted to the monies invested minus the monies withdrawn from Madoff accounts.
United States Fire Insurance Company v. Nine Third FEF Investments LLC et al. Sup Ct, New York County, June 16, 2011, Lowe, J, Index No. 603284/09.
Court Rules Wu-Tang Clan Member's Summary Judgment Motion is Premature: Coles v Wu-Tang Prod., Inc.
In a June 20, 2011 decision in a case originating in the commercial division (Lowe, J.) and on remand from the First Department, Justice Saliann Scarpulla denied the motion for summary judgment by Dennis Coles, a/k/a “Ghostface Killah”, a member of the Wu-Tang Clan, which sought unpaid royalties and unpaid damages stemming from an earlier trial in which Coles successfully challenged the defendants’ respective 25% and 50% withholdings. The First Department modified that earlier decision, by finding that defendant Wu-Tang Productions could continue to receive its 25% deductions and remanded the case for a new calculation of damages. In the new complaint, Coles alleged that he had not received any damages from the first action, nor any royalties that were accounted after the first suit. The court denied the motion for summary judgment as premature because: (1) defendant Diggs had not answered the complaint and, therefore, issue had not been joined; and (2) the damages calculation ordered by the First Department on the remand had not yet been determined and therefore, it was not yet apparent that Wu-Tang Productions had any liability to Coles.
Coles v Wu-Tang Prods., Inc, Sup Ct New York County, June 20, 2011, Scarpulla, J, Index No. 602896/09
Car Manufacturer's Dealer Incentives Violate NY's Franchised Motor Dealer Act: Audi of Smithtown, Inc. v Volkswagen Group of Am., Inc.
In a May 26, 2011 decision by Justice Pines the Court granted summary judgment to two automobile dealers who successfully argued that an automotive manufacturer’s incentive program was treating newer franchisors better than older franchisors. The Court’s review of two different incentive programs offered through the manufacturer’s captive financial arm provides insight into the relationship between automotive manufacturers and dealers. Based in part on the legislative history of the statute, the Court concluded that because the programs made it easier for a new franchisor to reach certain milestones the programs were providing disparate treatment in violation of the New York Franchised Motor Vehicle Dealer Act.
Audi of Smithtown, Inc. v Volkswagen Group of Am., Inc., Sup Ct, Suffolk County, May 26, 2011, Pines, J, Index No. 12372-2008
Majority Shareholder Liable for Breach of Fiduciary Duty for Failing to Disclose Sale of Corporation's Sole Asset to Minority Shareholder: Berger v Pavlounis
In an April 14, 2011 decision by Justice Bransten, the court granted the plaintiff’s motion for partial summary judgment on an individual claim asserted in a shareholder derivative action brought by a minority shareholder against a judicially dissolved corporation’s majority shareholder. Because the defendants failed to submit a responsive Rule 19-A Statement, the court deemed all of the plaintiff’s material facts admitted, and found that the plaintiff established that the defendants breached both statutory fiduciary duties under BCL § 909(a) and common law fiduciary duties by concealing from the plaintiff that they sold the corporation’s sole asset, a parking lot, while falsely representing to the purchaser of the property that the sale was approved by an affirmative vote of 2/3 of the corporation’s shareholders, and thereby depriving the plaintiff of his share of the sale proceeds. While the court granted partial summary judgment as to liability, it declined to enter a judgment on the grounds that the plaintiff could be entitled to additional damages from his individual cause of action, which could be foreclosed if judgment was entered.
Farrell Fritz represented the plaintiff in this action.
Berger v Pavlounis, Sup Ct, New York County, April 14, 2011, Bransten, J, Index No. 103170/08
Failure to Attach Rule 19-a Statement Does Not Doom Motion: North River Restaurant LLC v Paratore et al.
In a March 28, 2011 decision by Justice Bransten the Court denied plaintiff’s motion to amend and partially granted defendants’ motion for summary judgment. The case arose from a leasing dispute over a restaurant. Defendant Paratore originally operated a restaurant in New York City. After his restaurant went out of business plaintiffs sought to open a new restaurant at the same location, with some of the same personnel, including Paratore. Paratore allegedly told plaintiff that he would either negotiate a lease for the restaurant on the same terms as his old lease or assign his old lease to plaintiff. That didn’t happen and plaintiff brought suit.
Defendants moved for summary judgment and plaintiff moved to amend the complaint. The Court denied the motion to amend because: (i) it was untimely and (ii) it was not supported by any real evidence of merit (the supporting attorney’s affirmation was insufficient as was a client “affidavit” which was not notarized). The Court also granted defendants summary judgment on the fraudulent misrepresentation and negligent misrepresentation claims but allowed the common law fraud and unjust enrichment claims continue because there were issues of fact.
Of note, the Court granted the summary judgment motion even though defendant did not to include in his submission a statement pursuant to Commercial Division Rule 19-a; finding “there is no requirement that the court must deny a motion for summary judgment to dismiss on this ground.”
North River Restaurant LLC v Paratore et al, Sup Ct, New York County, March 28, 2011, Bransten, J, Index No. 110410/2008
Shorter Period of Limitations in Contract Unreasonable Where Internal Dispute Procedure Deprived Plaintiff of Course of Action: Structural Contr. Servs., Inc. v URS Corp. - NY
In an April 4, 2011, decision by Justice Scheinkman, the court considered cross motions to dismiss and for summary judgment in connection with a waterproofing job at the former Shea and Yankee Stadiums. The parties, plaintiff-contractor and defendant-subcontractor, agreed to a shorter, six-month statute-of-limitations period within which to assert contract-related claims. The court found that the shorter period was reasonable with respect to plaintiff’s claims for breach of contract, account stated, and conversion and granted defendant’s motion to dismiss these claims as untimely. As to plaintiff’s claims based on defendant’s failure timely to submit plaintiff’s labor-rate disputes to the City of New York as required under the subcontracts, however, the court found that the shorter limitations period was unreasonable because plaintiff was contractually precluded from bringing its claims in the Supreme Court until it received an unfavorable disposition from the City. Thus, the shorter period of limitations as to these claims “unreasonably deprive[d] the plaintiff of a course of action.” The court otherwise found triable issues of fact with respect to the merits of plaintiff’s labor-rate disputes.
Structural Contr. Servs., Inc., Sup Ct, Westchester County, April 4, 2011, Scheinkman, J., Index No. 22579/09.
Court Dismisses CPLR 3213 Motion for Lack of Subject Matter Jurisdiction Based on Plaintiff's Failure to Serve and File Summons: Giaquinto v Long Island Rubbish Removal E. Corp.
In a May 2, 2011, decision by Justice Emerson, the court dismissed defendant’s motion for summary judgment in lieu of complaint for lack of subject matter jurisdiction. Defendant moved under CPLR 3213 but failed to serve and file the summons with its accompanying motion papers. Because it is the service and filing of the summons that invokes the court’s jurisdiction on a motion under CPLR 3213, and because the non-filing of papers required for the commencement of an action is a non-waivable defect under CPLR 2001, the court dismissed defendant’s action.
Giaquinto v Long Island Rubbish Removal E. Corp., Sup Ct, Suffolk County, May 2, 2011, Emerson, J., Index No. 14873/10.
Court Upholds Law on Brokers' Limited Duties Toward Insurers Finding No Special Relationship Between the Parties: Consolidated Bus Transit, Inc. v The Treiber Group
In an April 22, 2011 decision by Justice Schmidt, the court granted defendant-insurance brokers’ motion for summary judgment dismissing plaintiff-employers’ complaint. Defendants placed plaintiffs into a worker’s compensation self-insurance program that ultimately became insolvent, resulting in plaintiffs being assessed by the Worker’s Compensation Board more than $2.5 million as a participant in the program. Plaintiffs sued asserting claims based on, among other things, breach of fiduciary duty and fraud. The court dismissed the breach of fiduciary duty claims, finding no evidence of the requisite “special relationship” between the parties in that defendant received no compensation for insurance advice, had no exclusive contract with plaintiff, and was not otherwise delegated any special decision-making responsibility. The court also dismissed the fraud claims, finding that defendants’ alleged representations regarding the insurance program’s financial state constituted “representations of opinion or predictions for the future,” which are not actionable as fraudulent, and which, in any event, were made after plaintiffs’ decision to participate in the program.
Consolidated Bus Transit, Inc., et. al. v The Treiber Group, LLC, et. ano., Sup Ct, Kings County, April 22, 2009, Schmidt, J., Index No. 2825/09
Court Interprets Agreement as One to Pay Finder's Fee Rather than Assignment Fee and Rejects Argument Based on Lack of Assignable Interest: Blatt v Ashkenazi
In a December 2, 2010, decision by Justice Bucaria, the court decided the parties’ cross-motions for summary judgment in connection with a commercial real estate deal. Plaintiff-real estate broker sued defendant-buyers for breach of an agreement to pay a finder’s fee. Arguing that he agreed to pay an assignment fee rather than a finder’s fee, the individual defendant moved for summary judgment dismissing the complaint on the basis of the seller’s operating agreement, which indicated that plaintiff had no assignable interest in the underlying property. The LLC defendant separately moved for the same relief on the ground that it was not a party to the agreement. The court denied the individual defendant’s motion, finding that the agreement “may reasonably be construed as providing for a finder’s fee” because plaintiff had introduced him to the seller and brought the parties together. The court, however, also denied plaintiff’s motion finding triable issues of fact regarding the precise nature of the parties’ intentions. Finally, because oral finder’s agreements are barred by the statute of frauds, the court rejected plaintiff’s assertion that the individual defendant had represented himself as a member of the LLC defendant and granted the LLC defendant’s motion based on lack of privity.
Blatt v Ashkenazi, Sup Ct, Nassau County, December 2, 2010, Bucaria, J., Index No. 9556/07
Based on NJ Law, Court Allows Claims to Proceed Against a Bank for Moneys Stolen By Employee: DMDB Adults Inc. and DMDB Kids Inc. v. Bank of American Corp. d/b/a Bank of America
In an October 7, 2010 decision by Justice Kapnick the Court granted partial summary judgment to the defendant bank on claims brought by a customer stemming from the customer’s employee’s cashing forged checks.
The former employee cashed almost $1 million of checks from two different corporate bank accounts. Citing New Jersey law, the Court granted the motion to dismiss some claims under NJ UCC 4-406(f) which provides a limited statute of limitations but let other claims continue because there was an issue of fact whether one of the plaintiffs had executed a contract with the bank. The Court also granted the motion to dismiss the fraud claims, but allowed the conversion claims to proceed because a bank may be held strictly liable under the UCC for conversation.
DMDB Adults Inc. and DMDB Kids Inc. v. Bank of American Corp. d/b/a Bank of America, Sup Ct, New York Count, October 7, 2010, Kapnick, J, Index No. 103977/09
Court Reads Clear Condition Precedent to Coverage In Owner Controlled Insurance Policy: Zurich Am. Ins. Co. v Illinois Natl. Ins. Co.
In a December 23, 2010, decision by Justice Fried, the court granted defendant’s motion for summary judgment and denied plaintiff’s cross-motion for the same relief. Plaintiff-subcontractor and its carrier sued defendant-general liability insurer for coverage under an “owner controlled insurance policy” (OCIP). Defendant had declined coverage due to plaintiff’s failure to obtain a written subcontract and to enroll in the OCIP program before the loss, both requirements under the policy. The court granted defendant’s motion and dismissed the complaint, finding that requirements were “unambiguous” conditions precedent to coverage under the policy – namely, that “the language is clear: no enrollment, no coverage.” The court rejected plaintiff’s equitable estoppel argument, finding no evidence that defendant took actions to mislead plaintiff into believing that coverage was available or that plaintiff had relied on such allegedly-misleading activity.
Zurich Am. Ins. Co. v Illinois Natl. Ins. Co., Sup Ct, New York County, December 23, 2010, Fried, J., Index No. 105533/09
Evidence of Corporate Informalities and Fraudulent Transfer Bars Summary Judgment on Shareholder's Entitlement to Stock Certificate and Transferability of Shares: Tulino v Tulino
In a December 2, 2010, decision by Justice Bucaria, the court denied defendant-50% shareholder’s motion to dismiss but granted his motion to compel discovery. The court also denied plaintiff-50% shareholder’s motion for summary judgment but granted him leave to amend the complaint. Plaintiff entered into an agreement with a third party to sell his interest in defendant-corporation, and defendant refused to consent to the sale as required under the agreement. Plaintiff sought relief with respect to his entitlement to a stock certificate and the alienability of his shares, and defendant moved to dismiss. Notwithstanding the individual nature of plaintiff’s claims against the corporation, the court denied defendant’s motion to dismiss based on standing because the complaint did not confuse plaintiff’s derivative and individual rights. And notwithstanding the lack of any stock certificates, the court also denied defendant’s motion based on failure to state a claim because the corporation’s by-laws provided that its shares would be represented by certificates, justifying plaintiff’s proceeding to compel the corporation to issue certificates. The court, however, denied plaintiff’s motion for summary judgment based on evidence that the shareholders agreed informally that the corporation’s shares would be uncertified and that plaintiff’s sale of his interest to the third party would constitute a fraudulent transfer. Finally, the court granted defendant’s motion to compel discovery related to informal meetings of the directors or shareholders and granted plaintiff’s motion for leave to amend the complaint in his individual capacity.
Tulino v Tulino, Sup Ct, Nassau County, December 2, 2010, Bucaria, J., Index No. 007081/09
Claim for Rescission of Patent Assignment Agreement Fails Due to Reliance on Parol Evidence and Belief Agreement Was a License: Ark Patent Int'l, LLC v Tarksol Int'l, LLC
In a December 11, 2009 decision by Justice Fischer, the court found that the defendants established prima facie that a patent Exclusive License Agreement constituted an assignment, and not a license, based on: (a) provisions defining the transfer as a “sale, assignment, and transfer in full … for any and all current and future rights acquired,” and providing that the agreement “grants transfers and assigns to [defendant], an exclusive and irrevocable right with no restrictions or reservations”; and (b) state law holding that an agreement transferring all substantial rights to a patent qualifies as an assignment, and requiring a contact clear on its face to be enforced a written. The court rejected the plaintiff’s argument that contract provisions entitling the plaintiff to receive perpetual royalties, to inspect the transferee’s books and records to verify monthly payments, and to demand indemnification and defense of infringement claims, rendered the agreement a license. The court was persuaded by law holding that the nomenclature used in a agreement has little impact on whether it constitutes an assignment or license, and that the rights the plaintiff maintained were minimal and provided only a policing mechanism to ensure that amounts owed were being paid. The court then dismissed the plaintiff’s cause of action for rescission, determining that it was premised on misperceiving the agreement as a license, and based on a claim of fraudulent inducement which was supported only by parol evidence.
Ark Patent Int’l, LLC v Tarksol Int’l, LLC, Sup Ct Monroe County, December 11, 2009, Fischer, J, Index No. 11921/07
Agreement to Agree Bars Breach of Contract Claim: Anschel v Neurology Assoc. of Stony Brook
In a December 14, 2010 decision by Justice Pines, the court granted the defendant’s motion for summary judgment and dismissed the complaint in its entirety upon finding that the defendant established prima facie that the employment letter agreement from the defendant to the plaintiff setting forth the plaintiff’s starting salary and addressing the possibility of future salary increases was not an enforceable contract, but rather only an “agreement to agree.” The court found the plaintiff’s repeated statements as to his beliefs evidenced only that there was an agreement concerning additional compensation, but not that there was a meeting of the minds on clear and unambiguous compensation terms. Therefore, the court found that the plaintiff could not state claims for breach of contract, promissory estoppels or unjust enrichment.
Anschel v Neurology Assoc. of Stony Brook, Sup Ct, Suffolk County, December 14, 2010, Pines, J, Index no. 13849/08
Complaint in Action for Goods Sold and Delivered Dismissed Against Individual, Since Piercing Corporate Veil Not Established: Lecce Penn Co., S.P.A. v. Adrenaline Marketing & Promotions, Inc.
In a July 27, 2010 decision by Justice Pines, plaintiff sued corporate and individual defendants for recovery of amounts due for goods sold and delivered to defendant in the amount of $317,294.87. The Complaint alleged claims for goods sold and delivered, fraudulent inducement, unjust enrichment, quantum meruit and punitive damages. Individual defendant Adam Cohen answered and moved for summary judgment. In considering the motion, the Court noted that the Second Department had recently reaffirmed the general principle that a corporation exists independent of its owners who are not personally liable for its obligations. The Court went on to conclude that plaintiff had not established sufficient evidence to pierce the corporate veil to hold Mr. Cohen individually liable. Accordingly, the Court dismissed the Complaint against the individual.
Lecce Penn Co., S.P.A. v. Adrenaline Marketing & Promotions, Inc., Sup Ct, Suffolk County, July 27, 2010, Pines, J, Index No. 14531-2008.
Claims By Insured Against Insurance Broker for Late Notice to Carrier Survive Summary Judgment: Sorbara Constr. Corp. v. Romeo
In a December 8, 2010 decision by Justice Warshawsky, the Court considered the parties’ motions for summary judgment in an action brought by a contractor against its retail insurance broker. The action was brought against the broker based upon an excess carrier’s disclaimer of coverage because of late notice. Although defendants did not dispute they had the responsibility to notify the excess carrier, the facts surrounding the communications between the parties was in sharp dispute. The Court first dismissed the claims based on the breach of implied covenant of good faith and fair dealing as duplicative of the contract claims. Next, the Court considered the statute of limitations defense, and whether the doctrine of equitable estoppel tolled the running of the statute. After reviewing the parties’ submissions, the Court held issues of fact indeed existed, and denied defendants’ motion for summary judgment on several claims. Finally, the Court considered the motion for summary judgment to dismiss the Third-Party Complaint, granting the motion in its entirety, concluding that neither claims for indemnity nor contribution existed.
Sorbara Constr. Corp. v. Romeo, Sup Ct, Nassau County, Dec. 8, 2010, Warshawsky, J, Index No. 001238/2008.
Jim Beam Wins Liability Against Cuervo: Jim Beam Brands Co. v Tequila Cuervo La Rojena S.A. De C.V.
In a January 27, 2011 decision by Justice Lowe, the court found that defendant Tequila Cuervo was liable for breaching a 1997 agreement with Jim Beam which resolved a dispute pending before the U.S. Patent and Trademark Office concerning Tequila Cuervo’s unauthorized use of Jim Beam’s trademarked “crow” design. The court granted summary judgment on liability upon finding that Tequila Cuervo admitted to using certain designs beyond the limitations set forth in the 1997 agreement. The court rejected Tequila Cuervo’s contention, that Jim Beam is not entitled to damages because any breach was not material because Jim Beam did not lose any sales as a result of any Tequila Cuervo’s use of the designs, finding that New York law permits an aggrieved party to seek damages for both material and minor immaterial breaches.
Jim Beam Brands Co. v Tequila Cuervo La Rojena S.A. De C.V., Sup Ct, New York County, January 27, 2011, Lowe, J, Index No. 600122/08
Court Refuses to Pierce Corporate Veil and Disposes of Various Business Torts and Quasi-Contract Claims as Duplicative of Claim for Breach of Contract: J.E.K.A., Inc. v Maggie & Faith Flowers, Inc.
In a November 16, 2010, decision by Justice Emerson in connection with an action by plaintiff-buyer against defendant-sellers relative to the sale of a flower shop alleging breach of contract and various business torts, and on the parties cross-motions for summary judgment, the court 1) granted defendants’ motion dismissing the claim for breach of contract as to the individual defendant because she signed the purchase agreement as a representative of the corporate flower shop and because plaintiff failed to establish a course of conduct sufficient to pierce the corporate veil; 2) granted defendants’ motion dismissing the claims for trademark infringement and common law unfair competition because plaintiff failed to establish the requisite bad faith and actual confusion; and 3) granted defendants’ motion dismissing the claims for implied covenant of good faith and fair dealing, tortious interference with prospective business or economic relations, unfair competition, and unjust enrichment all as duplicative of plaintiff’s breach-of-contract claim. The court otherwise denied summary judgment as to plaintiff’s breach of contract claim against the corporate defendant based on “[s]harply disputed issues of fact.”
J.E.K.A., Inc. v Maggie & Faith Flowers, Inc., Sup Ct, Suffolk County, November 16, 2010, Emerson, J., Index No. 032138-07
Lack of Employment Contract Dooms Commission Claim and Requires Return of Commission Overpayments: Clifford v Remco Maintenance, LLC et al
In a December 1, 2010 decision by Justice Kitzes, the Court, on summary judgment, dismissed all of plaintiff’s claims and granted defendant summary judgment on its claim against the plaintiff for overpayment of commissions.
Plaintiff brought his claims for allegedly unpaid commissions. Plaintiff, however, did not have a written employment agreement with his employer. Nor did he have an oral agreement. The Court found that, instead, plaintiff was an employee at will. The Court further found that plaintiff was negotiating an employment arrangement with his employer during time in question, but that the employer had only agreed to pay a 3% sales commission during that time period.
Based on those conclusions, the Court dismissed plaintiff’s claims for breach of contract claim predicated on his being fire. The Court also dismissed plaintiff’s claims for failure to pay commissions above the 3% agreed upon rate. The Court further found that the defendant had overpaid commissions during the relevant time period and granted it summary judgment on its claim seeking the return of those monies.
Clifford v Remco Maintenance, LLC et al., Sup Ct, Queens County, December 1, 2010, Kitzes, J, Index No. 3095/08
Piercing the Corporate Veil Claims Survive Summary Judgment: Utility Audit Group v. Flanagan
In a December 17, 2010 decision by Justice Bucaria, the Court granted in part and denied in part cross-motions for summary judgment. Plaintiff Utility Audit Group (“UAG”) is in the business of consulting with commercial tenants with regard to alleged overcharges by their landlords. Individual defendants were owners of Apple Mac & R Corp., later dissolved by proclamation of the State in 1994. Notwithstanding the dissolved status, in 2003 Apple Mac entered into an agreement with UAG to review rent charges and negotiate with the landlord. A settlement was reached with the landlord in 2004. Ultimately, UAG tendered a bill for $367,612 to Apple Mac, and later brought an action to collect on amounts owed. Judgment on liability was ultimately granted. UAG then commenced the instant action against the individuals on the theory they were personally liable for the fee.
In support of their motion for dismissal, Defendants argue that the nunc pro tunc reinstatement of Apple Mac by the Department of State shields them from personal liability or piercing the corporate veil. The Court considered whether the implied warranty of authority had been breached by the defendants. To avoid a claim of breach, the Court concluded that defendants had the burden to establish that they had no knowledge of Apple Mac’s dissolution or that their actions in entering into the contract with UAG were done so in good faith. Having failed to meet that burden, the court denied defendants’ motions for summary judgment for personal liability on the contracts. However, as to the claims for quantum meruit, the Court granted the motion of defendants, dismissing those claims. The Court also denied UAG’s motion for summary judgment on the ground that UAG did not establish that it conferred benefits on defendants personally.
Utility Audit Group v.Flanagan, Sup Ct, Nassau County, December 17, 2010, Bucaria, J, Index No. 016605-09.
Fraud Claim Fails In Light of Express Terms of Marital Divorce Settlement Agreement: TPR Inv. Assoc., Inc. v Fischer
In a December 9, 2010 decision by Justice Ramos, the court dismissed the plaintiff’s fraud claim against the defendant law firm because: (1) the plaintiff could not establish her justifiable reliance on alleged misrepresentations that her ex-husband’s net worth statement was complete in light of a martial divorce settlement agreement which expressly carved out the plaintiff’s right to investigate representations made in that net worth statement and contemplated the existence of additional assets; and (2) the plaintiff failed to establish how the alleged omission of assets from the net worth statement caused her any out-of-pocket damages. The court also dismissed the claim that the defendant law firm violated Judiciary Law § 487 upon finding that the plaintiff failed to submit any evidence that the defendant intentionally sought to deceive the court in the divorce proceedings.
TPR Inv. Assoc., Inc. v Fischer, Sup Ct NY County, December 9, 2010, Ramos, J, Index no. 603509/07
Court Grants Motion for Summary Judgment in Lieu of Complaint Based on Guaranty: GSO RE Onshore LLC v Sapir
In a November 24, 2010, decision by Justice Fried in connection with an action by plaintiff-lender against defendant-guarantor to recover under a personal guaranty after a default on a construction loan, the court granted plaintiff’s motion for summary judgment in lieu of complaint and denied defendant’s cross-motion to dismiss for lack of personal jurisdiction. The court found that despite the fact that proper documentation was not filed with the county clerk as prescribed by CPLR 318, service of plaintiff’s motion on an agent designated in the guaranty was sufficient because “parties can contractually agree to other methods of service beyond those set forth in the CPLR, and a contract provision designating a party’s service agent is valid.” Because a motion for summary judgment in lieu of complaint may be based on a guaranty, and because the law recognizes waiver-of-defenses provisions in guaranties as valid and enforceable, the court found that plaintiff was entitled to summary judgment as a matter of law and granted the motion. The court also denied defendant’s motion to supplement the record with a medical report suggesting that defendant “lacked the requisite contractual capacity” to enter the guaranty for lack of good cause shown because the motion, initially proposed informally during oral argument, clearly was an afterthought motivated by defendant’s perception that plaintiff was going to prevail.
GSO RE Onshore LLC v Sapir, Sup Ct, New York County, November 24, 2010, Fried, J., Index No. 650367/10
Contract's Merger Clause Bars Fraud Claims Based On Alleged Misrepresentations: Casano v New 19 W. LLC et al
In an October 18, 2010 decision by Justice Bransten, the Court granted Defendant summary judgment dismissing the complaint. The parties’ dispute arose out of a contract for the sale of a condominium loft. Plaintiff refused to close on sale and brought claims for rescission and fraud, seeking the return of his deposit, claiming that he was misled as to the ability to build a sleeping loft in the apartment.
Plaintiff and defendant both moved for summary judgment in their favor. The court granted Defendant’s motion for summary judgment finding (i) the contract did not contain any misrepresentation regarding the ability to build a sleeping loft, (ii) the contract contained a “general merger clause” (stating that the contract contained the parties’ entire agreement) and (iii) the contract contained a specific merger clause attesting to the fact that Plaintiff had not relied upon anyone representations other than those contained in the contract and Plaintiff reviewed the condominium’s by-laws and regulations and the contract of sale was “as-is.” The Court also found that, even if the contract did not contain those provisions, Plaintiff failed to adequately plead a fraud cause of action because he did not particularize any allegedly fraudulent statements made by defendant.
Casano v New 19 W. LLC et al, Sup Ct New York County, October 18, 2010, Bransten J, index No. 650220/10
Summary Judgment on a Corporate Guaranty Granted, But Denied as to Personal Guaranty: Colarossi v. Daly
In an August 3, 2010 decision by Justice Warshawsky the Court granted a motion for summary judgment on a corporate guaranty, but denied summary judgment as to a personal guaranty, stemming from the purchase of a truck with a cesspool vacuum tank.
In 2003, both the corporation and its principal guaranteed the monthly payments for the truck; under an agreement that contained an acceleration clause (i.e. if there was a default all of the remaining payments were immediately due). In 2005, the principal lost control over the business and all of its equipment, including the truck. The new business advised the financing company that it had purchase the assets of the old company and began making the monthly payments on the truck. After three years the new business stopped making the monthly payments for the truck and it was repossessed. The financing company then sued the old company and its principal, seeking the difference between the sale price on the repossession and the amount due on the loan (as well as its costs and attorneys’ fees).
The financing company moved for summary judgment on its claims against both the old company and its principal. The Court granted summary judgment against the old company, but denied summary judgment against its principal finding there was an issue of fact whether the transaction whereby the new company took possession of the truck and began making payment on the loan released the principal from his obligations under the guaranty.
Colarossi v. Daly, Sup Ct, Nassau County, August 3, 2010, Warshawsky, J, Index No. 3334/2008
Twenty Year Old "Letter Agreement" is an Enforceable Contract, Not an Agreement to Agree: Martin v Southern Container Corp.,
In an October 19, 2010 decision by Justice Pines the court partially granted defendants’ motion for summary judgment. The parties’ dispute arose from a twenty year old “letter agreement” which outlined plaintiff’s employment terms with defendant. Plaintiff alleged that defendant breached the contract by not assigning him all of his father’s accounts when his father retired and by not appropriately paying him for vacation pay in accordance with defendant’s employee manual.
Plaintiff brought causes of action for breach of contract and unjust enrichment. The parties both moved for summary judgment and plaintiff moved to amend the complaint to add a cause of action for breach of the implied covenant of good faith and fair dealing. The court denied plaintiff’s motion and granted defendant’s motion dismissing one of the breach of contract claims, finding that the “letter agreement” was not an agreement to agree, but rather was an enforceable unambiguous contract that defendant did not breach. Specifically, when plaintiff’s father retired plaintiff received all of his father’s then active accounts (and his father’s accounts which were previously distributed to other employees were not covered by the letter agreement).
The court also granted defendant summary judgment on the unjust enrichment claim because it was duplicative of the failed breach of contract claim. The court denied plaintiff’s motion to amend to add a breach of the implied covenant of good faith and fair dealing claim because that claim would also be subsumed by the failed breach of contract claim. Last, the court denied defendants’ motion to dismiss the breach of contract claimed for the unpaid vacation pay because there were issues of fact whether the employee manual’s rules concerning vacation pay were applicable to plaintiff who was a commission sales person.
Martin v Southern Container Corp., Sup Ct, Suffolk County, October 19, 2010, Pines J, index no. 20192/08
Claim to Set Aside Property Conveyance Fails For Lack of Notice: Del Pozo v Impressive Homes
In a September 28, 2010 decision by Justice Kitzes, the Court granted the defendants’ motion for summary judgment and dismissed the complaint which sought specific performance of a real estate contract and to set aside a conveyance of real property. The plaintiff argued that he filed a Notice of Pendency on March 2004, but admitted that it had not been properly entered in the lien system by the County Clerk, and had not been so indexed until April 30, 2007, after the conveyance was made. In granting summary judgment, the Court held that the defendants did not have actual or constructive notice of the plaintiff’s claims until April 30, 2007, because only the filing and indexing of a Notice of Pendency can apprise a prospective purchaser or encumbrancer of the pendency of an action, and even then, the filing of a lis pendens does not create a substantive right, but merely preserves an existing right, nor precludes a party from conveying real property.
Del Pozo v Impressive Homes, Sup Ct Queens County, September 28, 2010, Kitzes, J, Index No. 5345/04
Klenosky v. David Lerner Assoc., Inc., Sup Ct, Nassau County, October 28, 2010, Bucaria, J., Index No. 007367/08
In an October 28, 2010 decision by Justice Bucaria, the Court considered motions to dismiss the complaint for failure to state a claim and statute of limitations. The case arises out of plaintiff’s exchange of a whole life insurance policy issued by United States Life Insurance Company for a Flexible Premium Variable Universal Life insurance policy issued by Nationwide Insurance on November 29, 2001. While the death benefit under the United States Life policy was fixed at $125 000, the death benefit for the Nationwide policy varies with the investment experience of the policy. The exchange of the policies was handled by defendant Moss, who was at the time an insurance agent with defendant David Lerner Associates. Plaintiff claims he requested a whole life policy from defendants with a $125 000 death benefit equivalent to the one he then had with United States Life, namely, that he wanted a similar replacement whole life policy with a different company. He alleges that defendants made the change to a variable premium life insurance policy without his knowledge or consent and he did not learn of the change until March 18, 2009.
The Court granted defendants David Lerner Associates and Martin Lerner’s motion to dismiss the breach of contract and conversion causes of action based on statute of limitations, but denied the motion as to the fraud and misrepresentation claims. As to defendants’ motion to dismiss for failure to state a claim, the Court granted the motion as to claims for forgery, collusion and violation of Insurance Department regulations, but denied that branch as to the fraud and misrepresentation claims. The Court also denied plaintiff’s cross-motion for summary judgment.
Central Suffolk Hosp. Found. V North Fork Radiology, P.C., Sup Ct. Suffolk County, Nov. 8, 2010, Pines, J, Index No. 10768/10
In a November 8, 2010 decision by Justice Pines, the court granted the plaintiffs’ motion for summary judgment which sought an order directing the defendant to pay the balance on a written charitable pledge the defendant made in connection with the plaintiffs’ hospital expansion and modernization project. The court rejected the defendant’s argument that no consideration was given for its pledge and the plaintiffs did not rely on it, turning to the well-settled law that a charitable pledge constitutes an enforceable contract, as it is viewed as a unilateral offer which, when accepted by the charitable organization in reliance thereon, becomes a binding obligation. The court found that because the plaintiffs produced a written pledge agreement signed by the defendant which was given in connection with an expansion project that was on-going for years, the plaintiffs established entitlement to summary judgment. It further determined that the defendant failed to defeat summary judgment by arguing that it was given a verbal release for its pledge, because such verbal release was unenforceable as a matter of law in light of the written pledge agreement.
Essex Ins. Co. v Barillaro, et al., Sup Ct Queens County, July 21, 2010, Kitzes, J, Index No. 558/07
In an October 22, 2010 decision by Justice Kitzes, the court granted an insurance company summary judgment declaring that it did not have to provide a defense or indemnification to a contractor who subcontracted certain of the work.
In 2005 an employee of a plumbing contractor allegedly was injured on the construction project. Over one year later he brought suit against the property owner (who was also the general contractor). The owner brought a third-party indemnification action against DMP Contracting Corp, allegedly the subcontractor responsible for the excavation (who subcontracted work to the injured worker’s employer).
The insurer was granted summary judgment because the express and unambiguous language in the insurance contract provided no coverage for injured worker, because it excluded bodily injury to any of the insured’s contractor or subcontractor.
Lafarge Bldg. Materials, Inc. v. Pozament Corporation, Sup Ct, Albany County, August 24, 2010, Platkin, J., Index No. 3333/04
In an August 24, 2010, decision by Justice Platkin in connection with a breach-of-contract action between plaintiff-cement manufacturer and defendant-fly ash supplier, and on the parties’ cross-motions for summary judgment on the issue of plaintiff’s performance under the parties’ service agreement, the court granted plaintiff’s motion and dismissed defendant’s counterclaim, finding that plaintiff had performed its obligations under the agreement in all material respects. Specifically, the court found that defendant’s supply obligations were not limited by plaintiff’s obligation to provide defendant with consumption forecasts, which the court interpreted as a mere duty and not a condition precedent under the agreement, especially considering the fact that defendant was aware of future quantity increases from plaintiff, never raised a formal objection with plaintiff, and elected to continue to perform under the agreement and take advantage of its benefits. The court also found that the agreement’s exclusivity clause was not an unconditional right of first refusal but merely provided defendant with an opportunity to manage an alternate supplier and that, while plaintiff violated this clause by failing first to give notice to defendant of its intention to obtain fly ash from another supplier, the breach did not rise to the level of material breach and excuse defendant’s own performance under the agreement. Because defendant failed to demonstrate that it sustained monetary damages as a result of plaintiff’s violation of the exclusivity clause, the court dismissed defendant’s counterclaim.
Union Carbide Corp. v Affiliated FM Ins. Co., Sup Ct, New York County, September 9, 2010, Ramos, J, Index No. 600804/04
In a September 9, 2010, decision by Justice Ramos in connection with an insurance-coverage dispute between plaintiff-asbestos provider and defendant-insurers, and on cross-motions for summary judgment regarding a loss-of-fortuity exclusion in the related insurance policy, the court, “on weighing the public policy that . . . contracts for insurance based upon a known loss should not be enforced, against the right to establish private contracts,” granted plaintiff’s motion and denied defendants’ motion, finding that the exclusion based on intended or expected harms did not apply because there was no evidence of bad faith or concealment of risks on the part of plaintiff who in fact habitually disclosed such risks to its customers. The court also denied defendants’ motion based on collateral estoppel for lack of specificity, finding that defendants did not sufficiently establish that the same issue was raised in a previous litigation.
Oakwood Care Ctr., Inc. v Oakwood Operating Co., LLC, Sup Ct, Suffolk County, September 20, 2010, Emerson, J, Index No. 15823/07
In an September 20, 2010, decision by Justice Emerson in connection with plaintiff-seller’s action for breach of an asset-purchase agreement relative to a skilled nursing facility against defendant-buyer, and on defendant’s motion for summary judgment on its counterclaim for reimbursement of certain Medicaid start-up costs, the court denied defendant’s motion finding that the express language of the parties’ agreement contemplated only a prospective remedy for defendant and did not require plaintiff to refund start-up costs overpaid by the Department of Health. “To allow a refund,” stated the court, “would give [defendant] an additional remedy that the parties neglected to include in their agreements.” The court also held that defendant’s claims under the theory of quantum meruit were not viable “when . . . it is undisputed that the parties entered into an express agreement.”
Bruno v. Gerber, Sup Ct, Nassau County, Sept. 20, 2010, Warshawsky, J., Index No. 024915/2009
In a September 20, 2010 decision by Justice Warshawsky, the Court granted plaintiffs’ motion, pursuant to CPLR 3217, to discontinue the action, without prejudice, in favor of allowing plaintiffs to litigate the issues in an action pending in the federal district court in the District of New Jersey. The court also granted defendants leave to apply to the Court for an order fixing terms as to statutory costs, disbursements, legal fees and additional expenses incured from the inception of the action to the date of the Order. The case arose out of a failed effort to form a corporation under a Shareholders’ Agreement for the purpose of consolidating the parties' individual companies into a single entity involved in the home mortgage business. Defendants objected to the discontinuance, claiming undue prejudice, which the court rejected.
Five Star Mechanical Corp. v Mainco Elevator Corp., Sup Ct, NY County, Aug. 10, 2010, Bransten, J, Index No. 600691/08
In an August 10, 2010, decision by Justice Bransten in connection with plaintiff-subcontractor’s action against defendant-general contractor to recover money due on a construction contract, and on plaintiff’s motion for summary judgment, the court granted plaintiff’s motion finding that it had made a prima facie showing of entitlement to judgment as a matter of law based on account stated by submitting evidence that it had sent defendant seven invoices for services rendered, some of which defendants had made partial payment and all of which defendant had assured full payment. The court found that defendant’s submission of an attorney affirmation asserting a defense based on condition precedent was without merit because the affirmation was not accompanied by admissible documentary evidence and because plaintiff had submitted contrary evidence that defendant had imposed no such conditions on payment under the parties’ contract. The court also found defendant’s letter objecting to the invoices, sent a year and a half after the last invoice, was not timely for purposes of defeating a claim based on account stated.
United States Fid. & Guar. Co. v American Re-Insurance Co., Sup Ct, N.Y. County, Aug. 17, 2010, LowJ., Index No. 604517/02
In an August 17, 2010 decision by Justice Lowe, the court considered various motions for summary judgment between the parties concerning coverage under policies of reinsurance. This action followed the settlement of an underlying coverage action, whereby plaintiffs agreed to pay $987.4 million in satisfaction of all asbestos injury related claims made against a USF&G policyholder. USF&G now seeks to recover a portion of its losses under reinsurance treaties issued by defendant carriers. In short, American Re sought a declaration of no coverage; in turn, USF&G sought judgment for breach of contract, good faith and fair dealing, and an award of damages. The court denied defendants’ motions, and granted summary judgment to plaintiffs under the reinsurance policies.
Bajan Group, Inc. v Consumers Interstate Corp., Sup Ct, Albany County, August 12, 2010, Platkin, J., index No. 1099/07
In an August 12, 2010 decision by Justice Platkin, the Court granted a motion for summary judgment on a breach of contract claim alleging the non-payment of invoices the plaintiff submitted to the defendant for products the defendant received. The court then assessed whether the plaintiff’s damages were off-set by the defendant’s numerous counterclaims.
The defendant’s first counterclaim alleged that the plaintiff breached a commission sharing agreement. The court rejected that claim upon finding that there was no binding and definite contract that the plaintiff agreed to pay the commissions alleged because the plaintiff only agreed to “do what it could” which was insufficient to constitute a legal contract. The court rejected the second counterclaim, which alleged that the plaintiff breached a non-solicitation agreement by engaging in direct contact with the defendants’ customer, based on the undisputed evidence that the customer initiated communications with the plaintiff, and that such action did not constitute the plain meaning of the term “solicit” as contemplated by the parties in their agreement. The court similarly rejected the defendant’s alternative argument that the plaintiff breached its non-solicitation covenant by selling products directly to the customer before the parties mutually terminated their agreement. In making that determination, the court found that (1) the plaintiff was making direct sales to the customer after the contact between the customer and defendant had terminated, and that those direct sales to a “former” customer were not prohibited by the non-solicitation agreement; (2) the agreement between the plaintiff and defendant did impose any post-termination restrictions against competition; and (3) it was not appropriate for the court to fill in contract terms as to post-termination obligations because the contract was not ambiguous.
The court rejected the counterclaim that the plaintiff engaged in tortious interference with the defendant’s prospective business advantage upon finding the defendant failed to establish that the plaintiff’s actions amounted to a crime or independent tort. It also rejected the assertion that the plaintiff breached a fiduciary duty finding that the defendant failed to establish the parties had any special relationship and, therefore, they were bound by the general rule that an arms-length contractual relationship between commercial parties does not give rise to fiduciary obligations.
Dismissing the fourth counterclaim for unjust enrichment, the court found that the defendant failed to establish that the plaintiff was enriched at the defendant’s expense or that it would be inequitable for the plaintiff to retain what is claimed by the defendant.
Finally, the court rejected the defendant’s promissory estoppel counterclaim upon finding it was grounded in the defective allegations of the existence of a commission sharing agreement.
Anglo Irish Bank Corp. Ltd. v Ashkenazy, Sup Ct., NY County, Aug. 4, 2010, Fried, J, Index No. 103006/10
In an August 4, 2010 decision by Justice Fried, the court granted the plaintiff’s motion for summary judgment in lieu of a complaint pursuant to CPLR § 3213 based on the defendants’ non-payment of a guaranty. The court found there was no genuine issue of fact because the plaintiff undisputedly established that: (1) the defendants executed an absolute and unconditional guaranty promising to pay all of the liabilities of a non-party under a note given by that non-party in favor of the plaintiff bank; (2) the defendants waived any right to notice of default under the note; (3) the plaintiff was not required to take action against the third-party before exercising its rights under the guaranty; (4) the non-party defaulted under the note; and (5) neither the third-party nor the defendants made the requisite payments.
The court also denied the defendants’ motion to dismiss the complaint which argued that the plaintiff lacked the capacity to sue because it was a foreign banking institution that could only foreclose on property, and because there was a prior action pending in Florida. The court rejected both arguments finding: (1) the Banking Law does not contain the defendants’ asserted restriction, but rather permits a foreign banking corporation which maintains an office in New York (as the plaintiff does) to enforce obligations it acquired in the transaction of business outside of the state; (2) dismissal was not required under CPLR § 3211(a)(4) because the Florida action was not between the same parties for the same cause of action; and (3) RPAPL §1301(3) was inapplicable because the property securing the note was located outside of New York.
Wells Fargo Bank NA v. Economic Realty Co., Sup. Ct., Queens County, July 29, 2010, Kitzes, J., Index No. 25597/08
In a July 29, 2010 decision by Justice Kitzes, plaintiff Wells Fargo sought summary judgment against the defendant LLC and a personal guarantor, arising out of the default in payment for credit charges and cash advances incurred on two credit card/business line of credit accounts. Plaintiff alleged causes of action for breach of contract, breach of guarantee and account stated. The court granted summary judgment in favor of plaintiff on the claims, and awarded attorney’s fees, amount to be determined later. The court rejected defendants’ belated attempt to claim improper service, since they have failed to make a motion to dismiss on service/jurisdictional grounds within sixty days of service of the Answer, and further did not allege any undue hardship warranting an extension of such time to do so.
Viahealth of Wayne v VanPatten, Sup Ct, Wayne County, 2010 NY Slip Op 20333, Aug. 12, 2010, Fisher, J
In an August 12, 2010, decision by Justice Fisher in connection with a special proceeding by petitioner-nonprofit against respondent-tax assessor, and on petitioner’s motion for summary judgment under the Real Property and Tax Law (RPTL), the court granted petitioner’s motion, holding that the term “hospital,” as defined in section 2801 of the Public Health Law (PHL), was applicable for purposes of determining the tax-exempt status of petitioner’s properties under section 420-a of the RPTL and that use of the properties 1) as an extension clinic; 2) to provide health care to migrant and seasonal farm workers; 3) to provide increased access to hospital services in Wayne County; 4) to provide accredited medical and dental services to the poor and underprivileged; and 5) to provide clinical laboratory collection and x-ray services, all fit within the meaning of “hospital” under section 2801 of the PHL and therefore were entitled to the exemption under section 420-a of the RPTL. The court denied petitioner’s motion with respect to properties used as vacant offices and/or for profit tenants.
Bridge Funding, Inc. v. Essex Market Development, LLC, Sup Ct, New York County, April 20, 2009, Lowe, J, Index No. 600236/07
In a decision dated April 20, 2009, Justice Lowe, in connection with an action by Plaintiff-lender against Defendant-developer involving an alleged breach of a loan agreement, and on cross-motions for summary judgment, as well as Plaintiff’s motion to strike Defendant’s answer and counterclaims, 1) denied Plaintiff’s motion on its breach-of-contract claim, finding that because the operative loan document merely constituted an offer by Defendant to enter into a loan agreement, which was not accepted by Plaintiff, Plaintiff had no right to recover the fees stated in the offer; 2) granted Defendant’s motion on its breach-of-contract claim, finding that because Plaintiff did not accept Defendant’s offer, Defendant was entitled to a return of its $55,000 deposit submitted with its offer; 3) dismissed Plaintiff’s unjust-enrichment claim, finding that Plaintiff failed to establish a value of services rendered for the benefit of and accepted by Defendant; 4) dismissed Defendant’s unjust-enrichment claim, finding that the subject of its claim was governed by the terms of the offer; 5) dismissed Defendant’s claim for conversion as duplicative of its breach-of-contract claim; 6) dismissed Defendant’s claim for declaratory judgment, finding that it had an adequate, alternative remedy in its breach-of-contract claim; 7) and denied Plaintiff’s motion for summary judgment on its claim for attorney’s fees, finding that because Plaintiff never accepted Defendant’s offer and because the parties never incurred expenses associated with making the loan, the attorney’s fee provision within the offer was not applicable.
Zemnovich v. 2729 Coney Is. Ave., LLC, Sup Ct, Kings County, June 22, 2009, Demarest, J, Index No. 7739/08
In a decision dated June 22, 2009, Justice Demarest, in connection with a breach-of-contract action by Plaintiff-buyer against Defendant-seller seeking the return of a deposit given under an agreement for the sale of commercial property, and on cross-motions for summary judgment, denied Defendant’s motion and granted Plaintiff’s motion, finding that the written contract reflected the parties’ clear intent regarding Plaintiff’s obligation to obtain financing as a condition to his purchase of the property, as well as Plaintiff’s obligation to receive approval from a lender by a certain commitment date and that if approval was not received and the commitment date not extended, Plaintiff had a right to cancel and recover his deposit. Because lender approval was received after the commitment date, which was not extended by Defendant, and because Plaintiff exercised his right to cancel within a reasonable period after the commitment date under the circumstances, the court found that Plaintiff was entitled to the return of his deposit.
Schneider v Rothstein, Sup Ct, Nassau County, July 8, 2009, Driscoll, J, Index No. 005546/08
In a decision dated July 8, 2009, Justice Driscoll denied Plaintiff’s motion for summary judgment which sought damages on Defendant’s alleged failure to repay under a promissory note in connection with a loan allegedly conditioned on the sale of Defendants’ dental practice, finding that the language in the promissory note regarding the date of repayment on the loan was ambiguous and that an issue of fact therefore existed as to whether Defendants were in breach of the promissory note.
Marques v. Wine Services, Inc., 2009 NY Slip Op 30602(U) [Sup Ct Suffolk County]
Industry: Real Estate
In a decision dated March 10, 2009, Justice Pines granted the defendants’ motion for summary judgment upon finding that the plaintiffs failed to raise a triable issue of fact supporting their claim that they entered into a real estate contract based on defendants’ misrepresentations regarding the zoning limitations where the defendants presented the clear and unambiguous contracts and riders which specifically stated that the plaintiffs did not rely on any representations by the defendants or their agents, and the agreements were subject to covenants and restrictions that were on file with the County Clerk, and the plaintiffs were entering into the agreements based on their own investigation of the subject property.
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Gotham Partners, L.P. v High Riv. Ltd. Partnership, 2009 NY Slip Op 50201(U)
In an action seeking indemnification for attorney’s fees under a purchase agreement, and on cross-motions for summary judgment, the Supreme Court, New York County, Bransten, J., 1) granted Plaintiff-seller’s motion, finding that the indemnification clause in the subject agreement “exclusively or unequivocally” referred to both party and third-party losses, including attorney’s fees, resulting from the underlying breach-of-contract action by Plaintiff against Defendant; and 2) denied Defendant’s motion, finding that because Plaintiff prevailed on its indemnification claim, Defendant was not entitled to costs and expenses related to defending the claim.
Choice Valet, Inc. v. Dang Doo Lee, 2008 NY Slip Op 52549(U), 21 Misc.3d 1148(A) [Sup Ct Nassau County]
In a decision dated December 4, 2008, Justice Austin denied the plaintiff’s motion for summary judgment in lieu of a complaint to set aside a stipulation of settlement on the grounds that the settlement was obtained by fraud on the grounds that the plaintiff failed to state a cause of action for fraud, which is necessary to set aside a judicially favored settlement because (1) the plaintiff’s allegation of reliance upon sworn statements made before the settlement was entered into was not reasonable; and (2) the plaintiff did not make use of means to discover whether the settlement was being obtained by fraud as he was required to do.
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Matter of Kurins v. Silverseal Corp., 2008 NY Slip Op 33328(U)
In a special proceeding for dissolution under BCL 1104-a and a subsequent election to purchase Petitioner-minority owner's shares, and on a joint application for partial summary judgment on the issue of the proper valuation date, the Supreme Court, New York County, Cahn, J. granted Petitioner partial summary judgment, holding that BCL section 1118 "is clear that the relevant date for determining the valuation of Petitioner's shares is the day prior to his filing the Petition" as opposed to the date prior to Petitioner's earlier filing of a demand for arbitration.
Sterling National Bank v. Ernst & Young LLP, 2008
Sterling bought a loan portfolio that included loans made to Allied Deals, Inc., whose business involved a Ponzi scheme to defraud banks. Sterling claims to have relied on unqualified audit reports of E & Y in continuing to make advances to Allied, notwithstanding that by 2001, 90% of Allied’s business was fictitious. Justice Chan denied defendant’s motion for summary judgment, finding issues of fact existed as to causation, damages, justifiability reliance and punitive damages.
