THIRD-PARTY BENEFICIARY OF A CONTRACT DEMONSTRATED BREACH OF CONTRACT, CRITERIA EXPLAINED, A HEARING WAS REQUIRED TO ASSESS DAMAGES, CONVERSION CAUSE OF ACTION CANNOT BE BASED UPON BREACH OF CONTRACT ALONE.

The Second Department determined that El Equity, which financed a line of credit, was a third-party beneficiary of a contract which required El Equity’s approval before funds could be deposited in any accounts other than those designated in the contract between SDS and GBL. El

Equity demonstrated the breach of contract, but was not entitled to summary judgment because the amount of damages was not proven. The Second Department further determined that the failure to deposit funds in violation of the contract will not also support a cause of action for conversion:

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The evidence in admissible form submitted by El Equity demonstrated, prima facie, that it was an intended third-party beneficiary of the SDS Agreement, and that SDS breached that agreement. ” A non-party [to a contract] may sue for breach of contract only if it is an intended, and not a mere incidental, beneficiary'” …  However, ” the identity of a third-party beneficiary need not be set forth in the contract or, for that matter, even be known as of the time of its execution'”… . “A party asserting rights as a third-party beneficiary must establish (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [its] benefit and (3) that the benefit to [it] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [it] if the benefit is lost”…  ” In determining third-party beneficiary status it is permissible for the court to look at the surrounding circumstances as well as the agreement,'” and ” the obligation to perform to the third party beneficiary need not be expressly stated in the contract'” … .

Here, El Equity was not a party to the SDS Agreement. However, El Equity established, prima facie, that the SDS Agreement was a valid and binding contract between GBL and SDS, and that El Equity was an intended third-party beneficiary of the SDS Agreement… . * * *

El Equity also demonstrated, prima facie, that SDS breached the SDS Agreement. The SDS Agreement required SDS to “pick up all” MMIS checks “and deposit them into the Escrow Account,” and SDS admittedly did not deposit four MMIS checks into the Escrow Account, but gave those checks directly to GBL. Contrary to SDS’s contention, El Equity established, prima facie, that, to the extent that it sustained any damages, those damages were caused, at least in part, by SDS’s breach of the SDS Agreement … . Greater Bright Light Home Care Servs., Inc. v Jeffries-El, 2017 NY Slip Op 04821, 2nd Dept 6-14-17

 

CONTRACT LAW (THIRD-PARTY BENEFICIARY OF A CONTRACT DEMONSTRATED BREACH OF CONTRACT, CRITERIA EXPLAINED, A HEARING WAS REQUIRED TO ASSESS DAMAGES)/THIRD-PARTY BENEFICIARY (CONTRACT LAW, THIRD-PARTY BENEFICIARY OF A CONTRACT DEMONSTRATED BREACH OF CONTRACT, CRITERIA EXPLAINED, A HEARING WAS REQUIRED TO ASSESS DAMAGES)/CONVERSION (CONTRACT LAW, CONVERSION CAUSE OF ACTION CAN NOT BE BASED UPON BREACH OF CONTRACT ALONE)