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IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION.

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Gische, in an action stemming from the sale of defective residential mortgage backed securities, determined defendant’s (Morgan Stanley’s) alleged failure to notify plaintiff of the discovery of defective securities constituted an independent breach of contract claim. The First Department further determined, despite the purported “sole remedy” contractual provision, the cause of action for gross negligence was adequately pled and should not have been dismissed:

… [U]nder similar RMBS agreements, a seller’s failure to provide the trustee with notice of material breaches it discovers in the underlying loans states an independently breached contractual obligation, allowing a plaintiff to pursue separate damages … .

… Where parties contractually agree to a limitation on liability, that provision is enforceable, even against claims of a party’s own ordinary negligence … . The purpose of provisions that limit liability or remedies available in the event of breach is to “allocat[e] the risk of economic loss in the event that the contemplated transaction is not fully executed” … . Courts will generally honor the remedies that the parties have contractually agreed to … . There are exceptions to this rule of law, however, and as a matter of long standing public policy, a party may not insulate itself from damages caused by its “grossly negligent conduct” … . Used in this context, “gross negligence” differs in kind, and not only degree, from claims of ordinary negligence. “It is conduct that evinces a reckless disregard for the rights of others or smacks’ of intentional wrongdoing” … . Morgan Stanley Mtge. Loan Trust 2006-13ARX v Morgan Stanley Mtge. Capital Holdings LLC, 2016 NY Slip Op 05781, 1st Dept 8-11-16

CONTRACT LAW (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/SECURITIES (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/NEGLIGENCE  (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/GROSS NEGLIGENCE (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION)/RESIDENTIAL MORTGAGE BACKED SECURITIES (IN THIS ACTION STEMMING FROM DEFECTIVE RESIDENTIAL MORTGAGE BACKED SECURITIES, MORGAN STANLEY’S ALLEGED FAILURE TO NOTIFY PLAINTIFF OF THE DISCOVERY OF DEFECTIVE SECURITIES IS AN INDEPENDENT BREACH OF CONTRACT; GROSS NEGLIGENCE CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED DESPITE SOLE REMEDY CONTRACTUAL PROVISION

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DOCTRINE OF RES IPSA LOQUITUR PRECLUDED SUMMARY JUDGMENT IN THIS ELEVATOR ACCIDENT CASE.
BECAUSE PLAINTIFF WAS FOLLOWING THE DIRECTIONS OF HIS FOREMAN WHEN INJURED BY AN IMPROPERLY HOISTED LOAD, HE COULD NOT BE THE SOLE PROXIMATE CAUSE OF HIS INJURIES (FIRST DEPT).
PLAINTIFFS’ EXPERTS PRESENTED SUFFICIENT PROOF TO WARRANT A FRYE HEARING ON WHETHER A TUMOR MAY HAVE BEEN DETECTABLE BEFORE BIRTH.
PLAINTIFF MADE A SUFFICIENT START DEMONSTRATING NEW YORK HAS JURISDICTION OVER THE DEFENDANTS TO WARRANT JURISDICTIONAL DISCLOSURE AND A HEARING (FIRST DEPT).
Allegation Corporation Was Deliberately Rendered Judgment Proof by Parent Corporation Is Sufficient to Support Action in Equity to Pierce the Corporate Veil
PLAINTIFF ALLEGED THE LANDLORD’S FAILURE TO REPAIR SHOWER-CURTAIN BRACKETS CREATED THE DANGEROUS WATER-ON-THE-FLOOR CONDITION WHICH CAUSED THE SLIP AND FALL; AN OPEN AND OBVIOUS CONDITION CAN STILL BE A DANGEROUS CONDITION; LANDLORD’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).
DEFENDANT PROPERTY OWNERS PRESENTED NO EVIDENCE TO DEMONSTRATE WHEN THE STEPS WHERE PLAINTIFF SLIPPED AND FELL WERE LAST INSPECTED OR CLEANED; THEREFORE DEFENDANTS WERE NOT ENTITLED TO SUMMARY JUDGMENT (FIRST DEPT). ​
OUT OF POSSESSION LANDLORD NOT LIABLE FOR INJURY TO PLAINTIFF WHO WAS SHOT ON THE SIDEWALK OUTSIDE THE LESSEE’S BAR (FIRST DEPT).

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DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT; BOTH QUANTUM... OSTENSIBLE NON EMPLOYER WAS NOT A JOINT EMPLOYER SUBJECT TO EMPLOYMENT DISCRIMINATION...