You are here: / Contract Law
,

ISSUE OF FACT ABOUT MEANING OF AN EXCLUSION IN A FLOOD INSURANCE POLICY.

The First Department determined there was a question of fact about the meaning of an exclusion in a flood insurance policy. The policy excluded coverage for property in (FEMA) Flood Zone A. The plaintiff’s property was located in (FEMA) Flood Zone AE:

​

When it comes to exclusions from coverage, the exclusion “must be specific and clear in order to be enforced” … and ambiguities in exclusions are to be construed “most strongly” against the insurer … . As this Court has recognized, there are circumstances where extrinsic evidence may be admitted prior to an exclusion being strictly construed against an insurer … , and “[w]here [] ambiguous words are to be construed in the light of extrinsic evidence or the surrounding circumstances, the meaning of such words may become a question of fact for the jury” … .

Here, the language of FEMA’s flood zone regulations raises an issue of fact rendering the insurance policy’s exclusion of flood coverage ambiguous … . Heartland Brewery, Inc. v Nova Cas. Co., 2017 NY Slip Op 02908, 1st Dept 4-13-17

 

INSURANCE LAW (ISSUE OF FACT ABOUT MEANING OF AN EXCLUSION IN A FLOOD INSURANCE POLICY)/CONTRACT LAW (INSURANCE POLICY, ISSUE OF FACT ABOUT MEANING OF AN EXCLUSION IN A FLOOD INSURANCE POLICY)/EXCLUSION (INSURANCE LAW, ISSUE OF FACT ABOUT MEANING OF AN EXCLUSION IN A FLOOD INSURANCE POLICY)

​

, , , ,

DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED.

The Second Department, in a lawsuit stemming from the flooding of plaintiffs’ land, explained the differences between contribution and indemnification and noted that corporate officers may be personally liable for torts committed in their performance of corporate duties:

The plaintiffs commenced this action against the Village of East Hills after they experienced flooding on their property from rainwater. The plaintiffs asserted causes of action sounding in tort, alleging that the flooding resulted from the development of land near their property, which was authorized by the Village. The Village commenced a third-party action seeking indemnification and contribution against A to Z Transit Contracting Corp., the project manager that constructed the plaintiffs’ home, as well as its principal, David Ferdinand, architect Carl Majowka, who prepared plans for the construction of the plaintiffs’ home, and Scott Anderson, the principal of Scott Anderson Design, Inc., which performed landscaping work for the plaintiffs’ home. * * *

“[C]ontribution arises automatically when certain factors are present and [does] not requir[e] any kind of agreement between or among the wrongdoers'” … . ” Indemnity, on the other hand, arises out of a contract which may be express or may be implied in law “to prevent a result which is regarded as unjust or unsatisfactory”‘” … . “Further, “[w]here one is held liable solely on account of the negligence of another, indemnification, not contribution, principles apply to shift the entire liability to the one who was negligent.” . . . Conversely, where a party is held liable at least partially because of its own negligence, contribution against other culpable tort-feasors is the only available remedy'”… . “Whether indemnity or contribution applies depends not upon the parties’ designation but upon a careful analysis of the theory of recovery against each tort-feasor'”       * * *

Although “[c]orporate officers may not be held personally liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts” … , “corporate officers may be held personally liable for torts committed in the performance of their corporate duties'” … . Eisman v Village of E. Hills. 2017 NY Slip Op 02775, 2nd Dept 4-12-17

NEGLIGENCE (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/CONTRACT LAW (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/CORPORATION LAW  (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/MUNICIPAL LAW (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)

,

LIQUIDATED DAMAGES PROVISION IN THIS LEASE AGREEMENT WAS AN UNENFORCEABLE PENALTY.

The Second Department, reversing Supreme Court, determined the liquidated damages portion of a lease agreement was unenforceable. Here the complaint alleged that defendant did not vacate the leased premises on time and sought holdover damages:

“[W]hether a clause represents an enforceable liquidation of damages or an unenforceable penalty is a question of law, giving due consideration to the nature of the contract and the circumstances”‘ … . An enforceable liquidated damages clause is “an estimate . . . of the extent of the injury that would be sustained as a result of breach of the agreement,” thereby embodying “the principle of just compensation for loss” … .

Here, the defendant demonstrated, prima facie, that the amended agreement imposed an unenforceable penalty, and the plaintiff failed to raise a triable issue of fact in opposition. The damages section of the amended agreement provided the plaintiff with a remedy for the whole extent of any injury that would be sustained as a result of a holdover, “in addition to” the sum of $5,000 per day in liquidated damages. The liquidated damages clause therefore is not “an estimate . . . of the extent of the injury that would be sustained” … , but rather an unenforceable penalty … . 555 W. John St., LLC v Westbury Jeep Chrysler Dodge, Inc., 2017 NY Slip Op 02769, 2nd Dept 4-12-17

CONTRACT LAW (LIQUIDATED DAMAGES PROVISION IN THIS LEASE AGREEMENT WAS AN UNENFORCEABLE PENALTY)/LANDLORD-TENANT (LIQUIDATED DAMAGES, LIQUIDATED DAMAGES PROVISION IN THIS LEASE AGREEMENT WAS AN UNENFORCEABLE PENALTY)/LIQUIDATED DAMAGES (LIQUIDATED DAMAGES PROVISION IN THIS LEASE AGREEMENT WAS AN UNENFORCEABLE PENALTY)

,

CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT.

The First Department, over a two-justice dissent, determined that the child support provisions of a stipulation of settlement in this divorce action should not be enforced because the children’s right to child support was jeopardized. Because the stipulation put a cap on father’s child support obligations, it was possible payment of room and board (college) for one sibling could exceed the cap leaving the other siblings without support:

​

“[T]he parties cannot contract away the duty of child support. Despite the fact that a separation agreement is entitled to the solemnity and obligation of a contract, when children’s rights are involved the contract yields to the welfare of the children. The duty of a parent to support his or her child shall not be eliminated or diminished by the terms of a separation agreement, nor can it be abrogated by contract” … .

The agreement here violates this rule. The credit sought by the father takes away that portion of child support intended for the welfare of the other two children. Taken to its logical end, the agreement threatens to completely deprive the other children of any support whatsoever, if monthly room and board costs for one child were to exceed $2,500. Keller-Goldman v Goldman, 2017 NY Slip Op 02723, 1st Dept 4-6-17

 

FAMILY LAW (CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT)/CONTRACT LAW (STIPULATION OF SETTLEMENT, DIVORCE, CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT)/CHILD SUPPORT (STIPULATION OF SETTLEMENT, CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT)/STIPULATION OF SETTLEMENT (CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT)/DIVORCE  (CHILD SUPPORT PROVISIONS OF A STIPULATION OF SETTLEMENT WOULD NOT BE ENFORCED BECAUSE THE CAP ON CHILD SUPPORT MAY DEPRIVE CHILDREN OF THEIR RIGHT TO SUPPORT)

,

AFTER TERMINATION OF BANKRUPTCY PROCEEDINGS PLAINTIFF CANNOT SUE ON INVOICES NOT INCLUDED IN THE SCHEDULE OF ASSETS.

The Third Department determined plaintiff could not sue on invoices submitted for payment (which was refused) while plaintiff was in bankruptcy proceedings. Causes of action not listed in the bankruptcy proceedings cannot be sued upon after termination of the bankruptcy proceedings:

​

“Upon the filing of a voluntary bankruptcy petition, all property which a debtor owns, including a cause of action, vests in the bankruptcy estate” … . As such, a debtor’s failure to list a legal claim as an asset in its bankruptcy proceeding precludes the debtor from pursuing such claim on its own behalf inasmuch as the claim remains the property of the bankruptcy estate … . “The only property that may revest in the debtor in its individual capacity at the conclusion of the proceeding is property that was dealt with in the bankruptcy or abandoned” … . …

… [T]he claims asserted by plaintiff … accrued prior to the termination of the bankruptcy proceeding … . [T]he omission of these claims from the … schedule of assets in the bankruptcy proceeding precludes plaintiff from pursuing them on its own behalf because they were not “dealt with” in such proceeding … . Lightning Capital Holdings LLC v Erie Painting & Maintenance, Inc., 2017 NY Slip Op 02716, 3rd Dept 4-6-17

 

CONTRACT LAW (AFTER TERMINATION OF BANKRUPTCY PROCEEDINGS PLAINTIFF CANNOT SUE ON INVOICES NOT INCLUDED IN THE SCHEDULE OF ASSETS)/BANKRUPTCY (AFTER TERMINATION OF BANKRUPTCY PROCEEDINGS PLAINTIFF CANNOT SUE ON INVOICES NOT INCLUDED IN THE SCHEDULE OF ASSETS)

HOME RENOVATION CONTRACTOR, WHO PERFORMED WORK WITHOUT A WRITTEN CONTRACT, DID NOT DEMONSTRATE ENTITLEMENT TO QUANTUM MERUIT RELIEF, HOMEOWNERS ENTITLED TO DAMAGES TO COMPLETE OR REPAIR CONTRACTOR’S WORK.

The Second Department determined the dismissal of the quantum meruit action by the plaintiff home renovation contractor and the award of damages on the homeowners’ counterclaim was proper. The court noted that General Business Law 771 generally prohibits recovery by a home renovation contractor in the absence of a contract, however the contractor can bring an action in quantum meruit. Here the contractor did not prove entitlement to quantum meruit relief and the homeowners proved (by expert opinion) the damages related to needed corrections of the contractors’ work:

​

Although a contractor cannot enforce a contract that fails to comply with General Business Law § 771, a contractor may seek to recover based on the equitable theory of quantum meruit … . “The elements of a cause of action sounding in quantum meruit are (1) performance of services in good faith, (2) acceptance of services by the person to whom they are rendered, (3) expectation of compensation therefor, and (4) reasonable value of the services rendered” … .

Although an unenforceable writing may provide evidence of the value of services rendered in quantum meruit … , here, the record is devoid of evidence which would establish the reasonable value of the services [the contractor] may have provided to the defendants … . …

​

In contrast, the defendants, on their counterclaim, offered the testimony of experts regarding the cost they expended in completing or repairing roofing, flooring, brickwork, and other aspects of the project as set forth in the architectural plans. Home Constr. Corp. v Beaury, 2017 NY Slip Op 02628, 2nd Dept 4-5-17

 

CONTRACT LAW (HOME RENOVATION CONTRACTOR, WHO PERFORMED WORK WITHOUT A WRITTEN CONTRACT, DID NOT DEMONSTRATE ENTITLEMENT TO QUANTUM MERUIT RELIEF, HOMEOWNERS ENTITLED TO DAMAGES TO COMPLETE OR REPAIR CONTRACTOR’S WORK)/GENERAL BUSINESS LAW (HOME RENOVATION CONTRACTOR, WHO PERFORMED WORK WITHOUT A WRITTEN CONTRACT, DID NOT DEMONSTRATE ENTITLEMENT TO QUANTUM MERUIT RELIEF, HOMEOWNERS ENTITLED TO DAMAGES TO COMPLETE OR REPAIR CONTRACTOR’S WORK)/CONTRACTORS (HOME RENOVATION CONTRACTOR, WHO PERFORMED WORK WITHOUT A WRITTEN CONTRACT, DID NOT DEMONSTRATE ENTITLEMENT TO QUANTUM MERUIT RELIEF, HOMEOWNERS ENTITLED TO DAMAGES TO COMPLETE OR REPAIR CONTRACTOR’S WORK)/QUANTUM MERUIT HOME RENOVATION CONTRACTOR, WHO PERFORMED WORK WITHOUT A WRITTEN CONTRACT, DID NOT DEMONSTRATE ENTITLEMENT TO QUANTUM MERUIT RELIEF, HOMEOWNERS ENTITLED TO DAMAGES TO COMPLETE OR REPAIR CONTRACTOR’S WORK)

, ,

RACE TRACK WAIVER OF LIABILITY INVALID, PRIMARY ASSUMPTION OF RISK NOT APPLICABLE, IMPLIED ASSUMPTION OF RISK APPLICABLE, LAW OF THE CASE DID NOT PRECLUDE DIRECTED VERDICT AFTER DENIAL OF SUMMARY JUDGMENT ON THE SAME ISSUES.

The Fourth Department, in a substantive decision dealing with several liability and damages issues not summarized here, determined the trial court properly granted plaintiff’s motion for a directed verdict finding the liability waiver invalid and the doctrine of primary assumption of risk inapplicable. The Fourth Department concluded the doctrine of implied assumption of risk was applicable, however. The Fourth Department further held that the law of the case doctrine did not preclude the court from directing a verdict in plaintiff’s favor after denying plaintiff’s motion for summary judgment on the same issues. Plaintiff’s son was in an auto race at defendant race track. Plaintiff was in the pit area when defendant driver (Holland) backed his car into plaintiff:

Contrary to defendants’ contention, the court properly granted plaintiff’s motion for a directed verdict establishing that the liability waiver was invalid and that the action was not barred by the doctrine of primary assumption of the risk, inasmuch as there was “no rational process” by which the jury could have found in favor of defendants on those issues … . With respect to the waiver, General Obligations Law § 5-326 voids any such agreement entered into in connection with, as relevant here, the payment of a fee by a “user” to enter a place of recreation. Plaintiff testified at trial that he was a mere spectator on the night of the accident, thereby establishing that he was a user entitled to the benefit of section 5-326 … , and there was no evidence from which the jury could have rationally found that plaintiff was a participant in the event whose attendance was “meant to further the speedway venture” … . …

With respect to the doctrine of primary assumption of the risk, we conclude that the risk that a pedestrian will be struck by a driver backing up in the pit area, well before the driver is participating in a race, is not inherent in the activity of automobile racing … , and thus that the doctrine is inapplicable to this case … .

We reject defendants’ further contention that the doctrine of law of the case precluded the court from directing a verdict in plaintiff’s favor after it had denied prior motions by plaintiff directed at the issues of waiver and primary assumption of the risk, including a motion for partial summary judgment. ” A denial of a motion for summary judgment is not necessarily . . . the law of the case that there is an issue of fact in the case that will be established at the trial’ “… . …

We further agree with defendants that a charge on implied assumption of the risk should have been given because there was evidence that plaintiff “disregard[ed] a known risk by voluntarily being in a dangerous area” … . Inasmuch as the jury was properly instructed on comparative negligence and apportioned 20% of the liability for the accident to plaintiff, however, we conclude that this error did not prejudice a substantial right of defendants and thus does not warrant reversal … . Knight v Holland, 2017 NY Slip Op 02525, 4th Dept 3-31-17

 

,

LEASE PROVISION ALLOWING THE COLLECTION OF RENT AFTER EVICTION BY SUMMARY PROCEEDINGS VALID AND ENFORCEABLE.

The Second Department determined the clause in the lease which allowed the landlord to collect rent after eviction by summary proceedings was valid and enforceable:

“Although an eviction terminates the landlord-tenant relationship, the parties to a lease are not foreclosed from contracting as they please” … . “Where a lease provides that a landlord is under no duty to mitigate damages after its reentry by virtue of its successful prosecution of a summary proceeding, and that the tenant remains liable for damages, [the tenant] remain[s] liable for all monetary obligations arising under the lease'” … . Here, the lease did not obligate the plaintiff to mitigate damages after a dispossession by summary proceeding and specifically provided that [tenant] would remain liable for rent after eviction. In addition, the lease clearly stated that if [tenant] breached the lease, the plaintiff was not precluded from any other remedy in law or equity. Consequently, the lease did not limit the plaintiff to recovery of only pretermination rent in the event that it commenced a summary eviction proceeding to regain possession of the premises … . L’Aquila Realty, LLC v Jalyng Food Corp., 2017 NY Slip Op 02027, 2nd Dept 3-22-17

LANDLORD-TENANT (LEASE PROVISION ALLOWING THE COLLECTION OF RENT AFTER EVICTION BY SUMMARY PROCEEDINGS VALID AND ENFORCEABLE)/CONTRACT LAW (LANDLORD-TENANT, LEASE PROVISION ALLOWING THE COLLECTION OF RENT AFTER EVICTION BY SUMMARY PROCEEDINGS VALID AND ENFORCEABLE)

STATUTE OF FRAUDS (GENERAL OBLIGATIONS LAW) REQUIREMENTS FOR A CONTRACT TO NEGOTIATE A BUSINESS OPPORTUNITY NOT MET, PART PERFORMANCE NOT APPLICABLE.

The Second Department, reversing Supreme Court, determined summary judgment should not have been granted in favor of defendants’ counterclaim for a finder’s fee. General Obligations Law 5-701(a)(1) (Statute of Frauds) applies to contracts for services rendered in negotiating a business opportunity. In finding the writings did not satisfy the Statute of Frauds, the court explained the relevant criteria:

The memorandum necessary to satisfy the statute of frauds may be pieced together out of separate writings, connected with one another either expressly or by the internal evidence of subject matter and occasion … . In the event that one of the writings is unsigned, it may be read together with the signed writings, provided that they clearly refer to the same subject matter or transaction … . Here, the collective writings to which the defendants point, seeking to make out a written agreement sufficient to satisfy the statute of frauds … , are insufficient since there is no writing establishing a contractual relationship between the parties which bears the signature of the plaintiff, who is the party to be charged … .

Additionally, part performance does not take the matter out of the statute of frauds. The exception to the statute of frauds for part performance has not been extended to General Obligations Law § 5-701… . Kelly v P & G Ventures 1, LLC, 2017 NY Slip Op 02026, 2nd Dept 3-22-17

CONTRACT LAW (STATUTE OF FRAUDS (GENERAL OBLIGATIONS LAW) REQUIREMENTS FOR A CONTRACT TO NEGOTIATE A BUSINESS OPPORTUNITY NOT MET, PART PERFORMANCE NOT APPLICABLE)/STATUTE OF FRAUDS (GENERAL OBLIGATIONS LAW) REQUIREMENTS FOR A CONTRACT TO NEGOTIATE A BUSINESS OPPORTUNITY NOT MET, PART PERFORMANCE NOT APPLICABLE)/GENERAL OBLIGATIONS LAW (STATUTE OF FRAUDS, (GENERAL OBLIGATIONS LAW) REQUIREMENTS FOR A CONTRACT TO NEGOTIATE A BUSINESS OPPORTUNITY NOT MET, PART PERFORMANCE NOT APPLICABLE)

DEFENDANTS’ FAILURE TO INSIST ON PROMISED MONTHLY MINIMUM PURCHASES OF DEFENDANTS’ PRODUCTS CONSTITUTED A WAIVER OF THE CONTRACTUAL MINIMUM PURCHASE REQUIREMENTS, NOTWITHSTANDING A NO ORAL WAIVER CLAUSE.

The Second Department, in a full-fledged opinion by Justice Chambers, determined the failure of defendants to insist on the fulfillment of plaintiffs’ promise to make monthly minimum purchases of defendants’ product constituted a waiver of the minimum-purchases contract, notwithstanding the “no oral waiver” contractual provision:

… [W]e find that the Supreme Court properly concluded that … the affirmative conduct of [defendants] over the previous weeks and months evinced an unmistakable intent to waive the remaining 2006 minimum purchase requirements, including the 2006 annual minimum purchase requirement … . * * *

…[W]e agree with the Supreme Court that, under the facts presented, the agreements’ no-oral-waiver provision … does not compel a different result. As explained above, the [plaintiffs’] persistent and repeated failure to meet minimum purchase requirements, coupled with [defendants’] continued acceptance of such conduct without any reservation or protest until a few weeks before the expiration of the agreements (by which time it was, of course, too late to insist upon strict compliance with the terms of the agreements), equitably estops [defendants] from invoking the benefit of the no-oral-waiver provision … . Kamco Supply Corp. v On the Right Track, LLC, 2017 NY Slip Op, 02025, 2nd Dept 3-22-17

 

CONTRACT LAW (DEFENDANTS’ FAILURE TO INSIST ON PROMISED MONTHLY MINIMUM PURCHASES OF DEFENDANTS’ PRODUCTS CONSTITUTED A WAIVER OF THE CONTRACTUAL MINIMUM PURCHASE REQUIREMENTS, NOTWITHSTANDING A NO ORAL WAIVER CLAUSE)/WAIVER (CONTRACT LAW, (DEFENDANTS’ FAILURE TO INSIST ON PROMISED MONTHLY MINIMUM PURCHASES OF DEFENDANTS’ PRODUCTS CONSTITUTED A WAIVER OF THE CONTRACTUAL MINIMUM PURCHASE REQUIREMENTS, NOTWITHSTANDING A NO ORAL WAIVER CLAUSE)

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy