You are here: / Contract Law
,

LANDLORD DID NOT HAVE A DUTY TO DISCLOSE LOCAL LAWS RESTRICTING THE USE OF THE PROPERTY.

The Second Department determined the terms of the lease negated the claimed violation of an implied covenant of good faith and fair dealing. The plaintiffs leased defendants’ property to operate a car dealership. After learning that a local law prohibited parking cars without license plates on the property, the plaintiffs asked to be released from the lease. The landlord refused. The terms of the lease specifically stated (1) it was subject to any local law restrictions and (2) it made no representations the property was suitable to plaintiffs’ intended business:

The implied covenant of good faith and fair dealing is breached when a party acts in a manner that would deprive the other party of the right to receive the benefits of their agreement … . The implied covenant includes any promises which a reasonable promisee would be justified in understanding were included … . However, no obligation may be implied that would be inconsistent with other terms of the contractual relationship … . Here, a finding that the defendants breached the covenant of good faith and fair dealing would necessarily contradict explicit and unambiguous terms of the lease agreements and create additional obligations not contained in them. Specifically, the lease agreements, which the defendants submitted in support of their motion, provided that the written agreements superseded all “representations and understandings, written, oral or otherwise, between or among the parties with respect to the matters contained herein.” Additionally, the specific provisions in the lease agreements relating to parking were made subject to “any restrictions of local law, zoning or ordinance.” Finally, the lease agreements specifically provided that the landlord made no representation concerning the suitability of the premises for the plaintiffs’ intended business. Imposing a duty on the landlord to disclose zoning or local law restrictions would render those provisions ineffective … . These express and specific provisions in the lease itself conclusively establish a defense to causes of action alleging breach of the implied covenant of good faith and fair dealing … . 1357 Tarrytown Rd. Auto, LLC v Granite Props., LLC, 2016 NY Slip Op 05981, 2nd Dept 9-14-16

LANDLORD-TENANT (LANDLORD DOES NOT HAVE A DUTY TO DISCLOSE LOCAL LAWS RESTRICTING THE USE OF THE PROPERTY)/CONTRACT (LEASES, LANDLORD DOES NOT HAVE A DUTY TO DISCLOSE LOCAL LAWS RESTRICTING THE USE OF THE PROPERTY)/COVENANT OF GOOD FAITH AND FAIR DEALING (LEASES, LANDLORD DOES NOT HAVE A DUTY TO DISCLOSE LOCAL LAWS RESTRICTING THE USE OF THE PROPERTY)

,

QUESTION OF FACT WHETHER QUITCLAIM DEED WAS UNCONSCIONABLE; DOCTRINES OF PROCEDURAL AND SUBSTANTIVE UNCONSCIONABILITY DISCUSSED.

The First Department, over a two-justice dissent, determined there were questions of fact about whether plaintiff’s signing of a quitclaim deed was procedurally and substantively unconscionable. Plaintiff, who believed he no longer owned the land, signed the deed in return for $5000. The property was worth $1,000,000:

No one procedural factor can be relied upon to support or discount a claim of procedural unconscionability. Such claims are most often fact sensitive and dependent upon the particular circumstances surrounding a transaction, which, at the very least, mandate the opportunity for an evidentiary hearing … . Certainly, the factual allegations … raise material issues of fact as to whether plaintiff was afforded a “meaningful choice” in his decision to execute the quitclaim deed and whether the terms of the agreement are “unreasonably favorable” to [defendants]. These issues cannot be resolved by summary judgment.

With respect to the element of substantive unconscionability, we also find that there are material issues of fact. In order to determine if the agreement is substantively unconscionable, there must be an “analysis of the substance of the bargain to determine whether the terms were unreasonably favorable to the party against whom unconscionability is urged” … . …[D]espite the fact that plaintiff believed he no longer owned the property, there is nothing in this record to indicate that he was ever divested of title by either an in rem proceeding or direct sale … . Green v 119 W. 138th St. LLC, 2016 NY Slip Op 05955, 1st Dept 9-8-16

 

REAL PROPERTY (QUESTION OF FACT WHETHER QUITCLAIM DEED WAS UNCONSCIONABLE; DOCTRINES OF PROCEDURAL AND SUBSTANTIVE UNCONSCIONABILITY DISCUSSED)/CONTRACT LAW (QUESTION OF FACT WHETHER QUITCLAIM DEED WAS UNCONSCIONABLE; DOCTRINES OF PROCEDURAL AND SUBSTANTIVE UNCONSCIONABILITY DISCUSSED)/QUITCLAIM DEED (QUESTION OF FACT WHETHER QUITCLAIM DEED WAS UNCONSCIONABLE; DOCTRINES OF PROCEDURAL AND SUBSTANTIVE UNCONSCIONABILITY DISCUSSED)/UNCONSCIONABILITY (QUESTION OF FACT WHETHER QUITCLAIM DEED WAS UNCONSCIONABLE; DOCTRINES OF PROCEDURAL AND SUBSTANTIVE UNCONSCIONABILITY DISCUSSED)

,

SURROGACY CONTRACT DOES NOT DEPRIVE MOTHER OF HER PARENTAL RIGHTS.

In a proceeding related to Matter of Frank G… summarized above, the Second Department noted that the surrogacy contract did not deprive the mother of the child (Renee P.-F.) of her parental rights:

Renee P.-F.’s parental rights were not terminated by virtue of her entering into a surrogacy contract. Surrogate parenting contracts have been declared contrary to the public policy, and are void and unenforceable (see Domestic Relations Law § 122). Moreover, Domestic Relations Law § 124(1) expressly states that “the court shall not consider the birth mother’s participation in a surrogate parenting contract as adverse to her parental rights, status, or obligations.” Matter of Giavonna F. P.-G. (Frank G.–Renee P.-F.), 2016 NY Slip Op 05948, 2nd Dept 9-8-16

FAMILY LAW (SURROGACY CONTRACT DOES NOT DEPRIVE MOTHER OF HER PARENTAL RIGHTS)/CONTRACT LAW (FAMILY LAW, SURROGACY CONTRACT DOES NOT DEPRIVE MOTHER OF HER PARENTAL RIGHTS)/SURROGACY CONTRACT (FAMILY LAW, SURROGACY CONTRACT DOES NOT DEPRIVE MOTHER OF HER PARENTAL RIGHTS)/PARENTAL RIGHTS (SURROGACY CONTRACT DOES NOT DEPRIVE MOTHER OF HER PARENTAL RIGHTS)

,

QUESTION OF FACT WHETHER PROPERTY MANAGER LAUNCHED AN INSTRUMENT OF HARM WHEN A MINOR LEAK WAS REPAIRED.

The First Department, over an extensive dissent, determined the motion for summary judgment dismissing the negligence cause of action against defendant property manager was properly denied. Defendant contracted with the board of a cooperative to manage the property. Plaintiff alleged defendant’s attempt to fix a minor leak caused water to damage his unit:

Regardless of which party had the burden of proof on the Espinal exception, the evidence submitted on the motion established that defendant attempted to fix the leak or leaks on several occasions and that the problem persisted and culminated in a flood of water “cascading” into plaintiff’s apartment. Plaintiff testified that the leak began on March 8, 2010, and lasted a few days. The leak started again in May 2010, and reoccurred in August 2010 and December 2010, and finally, the “big finale” of water cascading into plaintiff’s unit occurred in August 2011. Defendant attempted to fix the leaks on several occasions. Invoices dated March 10, April 13, September 28, and December 30, 2010 indicate that plumbing work was done in response to plaintiff’s complaints about water leaks. The notations in these invoices do not definitively establish whether or not defendant’s plumbers “launched a force or instrument of harm.” Thus, contrary to the dissent’s contention, the evidence raises an issue of fact as to whether defendant’s attempts to fix the water leak exacerbated the condition that led to the more serious leak that occurred in August 2011. Karydas v Ferrara-Ruurds, 2016 NY Slip Op 05941, 1st Dept 9-1-16

NEGLIGENCE (ESPINAL EXCEPTION, QUESTION OF FACT WHETHER PROPERTY MANAGER LAUNCHED AN INSTRUMENT OF HARM WHEN A MINOR LEAK WAS REPAIRED)/CONTRACT LAW (NEGLIGENCE, ESPINAL EXCEPTION, QUESTION OF FACT WHETHER PROPERTY MANAGER LAUNCHED AN INSTRUMENT OF HARM WHEN A MINOR LEAK WAS REPAIRED)/TORT LIABILITY ARISING FROM CONTRACT (QUESTION OF FACT WHETHER PROPERTY MANAGER LAUNCHED AN INSTRUMENT OF HARM WHEN A MINOR LEAK WAS REPAIRED).ESPINAL EXCEPTION( QUESTION OF FACT WHETHER PROPERTY MANAGER LAUNCHED AN INSTRUMENT OF HARM WHEN A MINOR LEAK WAS REPAIRED)

,

ACTION SEEKING REFORMATION OF NOTE AND MORTGAGE PROPERLY DISMISSED UNDER DOCTRINE OF LACHES.

The Second Department determined plaintiffs’ action seeking reformation of a note and mortgage was properly dismissed under the doctrine of laches:

…[W]hile the plaintiffs may have, at one point, had a cause of action for reformation of the note and mortgage on the basis of mutual mistake … , the Supreme Court properly determined that such a cause of action is barred by the plaintiffs’ laches in asserting a right to reformation. ” The doctrine of laches is an equitable doctrine which bars the enforcement of a right where there has been an unreasonable and inexcusable delay that results in prejudice to a party'” … . Prejudice may be demonstrated “by a showing of injury, change of position, loss of evidence, or some other disadvantage resulting from the delay” … . The plaintiffs unreasonably delayed in asserting a right to reformation of the note and mortgage for almost six years, during which time they made payments in accordance with the terms of the note and mortgage. Further, the defendant would be prejudiced in defending the action at this time by the loss of evidence resulting from her husband’s death in 2012, approximately 4½ years after the note and mortgage were executed … . Diecidue v Russo, 2016 NY Slip Op 05907, 2nd Dept 8-31-16

 

CONTRACT LAW (ACTION SEEKING REFORMATION OF NOTE AND MORTGAGE PROPERLY DISMISSED UNDER DOCTRINE OF LACHES)/CIVIL PROCEDURE (ACTION SEEKING REFORMATION OF NOTE AND MORTGAGE PROPERLY DISMISSED UNDER DOCTRINE OF LACHES)/LACHES (ACTION SEEKING REFORMATION OF NOTE AND MORTGAGE PROPERLY DISMISSED UNDER DOCTRINE OF LACHES)

,

MAINTENANCE PORTION OF POSTNUPTIAL AGREEMENT UNCONSCIONABLE.

The Second Department, in an extensive decision covering several marital/separate property and equitable distribution issues not summarized here, determined the maintenance portion of a 1988 postnuptial agreement was unconscionable and therefore unenforceable:

Here, the Supreme Court properly determined that the maintenance provision of the 1988 postnuptial agreement, which provided the plaintiff with only $50,000 in full satisfaction of all claims, would be unconscionable by the time a final judgment would be entered in this action. At the time that the parties executed the 1988 postnuptial agreement, the defendant owned, among other things, a jewelry business worth at least $3 million, and he was in contract to buy a shopping center. Thereafter, during more than 25 years of marriage, the defendant’s jewelry business underwent tremendous growth while the plaintiff worked there, and the parties lived what can easily be described as a lavish lifestyle. Among other things, they owned numerous high-end automobiles and took numerous international vacations. For a time, they traveled regularly to the Bahamas on the defendant’s yacht. Under all the circumstances, the court properly determined that the maintenance provision in the 1988 agreement was unconscionable and, thus, unenforceable … . Maddaloni v Maddaloni, 2016 NY Slip Op 05851, 2nd Dept 8-24-16

FAMILY LAW (MAINTENANCE PORTION OF POSTNUPTIAL AGREEMENT UNCONSCIONABLE)/CONTRACT LAW (MAINTENANCE PORTION OF POSTNUPTIAL AGREEMENT UNCONSIONABLE)/UNCONSCIONABLE CONTRACT (MAINTENANCE PORTION OF POSTNUPTIAL AGREEMENT UNCONSCIONABLE)

DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE.

The Second Department determined the doctrine of mutual mistake applied and Supreme Court properly reformed the note and mortgage to correct the mistake:

“A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” … . “In a case of mutual mistake, the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement” … . “Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties” … .

Here, the Supreme Court properly determined that the plaintiff established the existence of a mutual mistake by clear and convincing evidence … . The parties’ contract of sale clearly and unambiguously provided that the purchase price for the subject property was $550,000, which was to be paid, in part, by a $350,000 purchase money mortgage. Based upon the proof at trial, it was clear that the $206,065.79 balloon payment calculated by the plaintiff’s attorney and mutually agreed upon by the parties was the product of an inadvertent error, as it was inconsistent with the parties’ agreement that the mortgage was to be in the amount of $350,000. “[I]f, by the mistake of the scrivener or by any other inadvertence, [a] writing does not express the agreement actually made, it may be reformed by the court” … . Gunther v Vilceus, 2016 NY Slip Op 05847, 2nd Dept 8-24-16

CONTRACT LAW (DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE)/MUTUAL MISTAKE (DOCTRINE OF MUTUAL MISTAKE APPLIED TO REFORM NOTE AND MORTGAGE)

,

PUBLICITY AGENT FOR A BROADWAY SHOW BREACHED THE COVENENT OF GOOD FAITH AND FAIR DEALING BY SENDING EMAILS TO AN INVESTOR DESIGNED TO SINK THE PRODUCTION.

The First Department, in a full-fledged opinion by Justice Friedman, determined a publicity agent for a broadway show breached the covenant of good faith and fair dealing implicit in the agent’s contract with the show’s producer. The agent, Thibodeau, sent emails to an investor which were intended to sink the project, and the investor pulled out. The defamation and tortious interference causes of action will go to trial. But the breach of contract cause of action was demonstrated as a matter of law. The plaintiff is a limited partnership formed to put on the show, RBLP:

The record establishes that Thibodeau, without RBLP’s authorization, and using confidential information he had obtained as a result of his employment as RBLP’s press representative, sent an email directly to Runsdorf, a key potential investor who had desired to remain anonymous, causing Runsdorf to withdraw his financial commitment, all of which resulted in the cancellation of rehearsals and the play’s failure to open. Even assuming that his conduct did not violate the express terms of his agreement to act as the play’s press representative, Thibodeau breached the implied duty of good faith and fair dealing by essentially defeating the purpose of the agreement by his actions … . Thibodeau was hired by RBLP to use his public relations skills to facilitate the production of a play; his actions, in which he made use of confidential information that RBLP had entrusted to him in the course of his employment, made it impossible for RBLP to produce the play as planned. It is difficult to imagine a plainer case of a party to a contract utterly defeating the purpose for which the other party had entered into that contract, or a more blatant example of an agent’s disloyalty to his principal .. . Rebecca Broadway L.P. v Hotton, 2016 NY Slip Op 05839, 1st Dept 8-18-16

CONTRACT LAW (PUBLICITY AGENT FOR A BROADWAY SHOW BREACHED THE COVENENT OF GOOD FAITH AND FAIR DEALING BY SENDING EMAILS TO AN INVESTOR DESIGNED TO SINK THE PRODUCTION)/COVENANT OF GOOD FAITH AND FAIR DEALING (PUBLICITY AGENT FOR A BROADWAY SHOW BREACHED THE COVENENT OF GOOD FAITH AND FAIR DEALING BY SENDING EMAILS TO AN INVESTOR DESIGNED TO SINK THE PRODUCTION)/DEFAMATION (PUBLICITY AGENT FOR A BROADWAY SHOW BREACHED THE COVENENT OF GOOD FAITH AND FAIR DEALING BY SENDING EMAILS TO AN INVESTOR DESIGNED TO SINK THE PRODUCTION)/TORTIOUS INTERFERENCE WITH CONTRACT (PUBLICITY AGENT FOR A BROADWAY SHOW BREACHED THE COVENENT OF GOOD FAITH AND FAIR DEALING BY SENDING EMAILS TO AN INVESTOR DESIGNED TO SINK THE PRODUCTION)

, ,

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

DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT; BOTH QUANTUM MERUIT AND BREACH OF CONTRACT PROPERLY PLED WHERE DEFENDANTS DENY EXISTENCE OF CONTRACT.

The First Department, reversing Supreme Court, determined questions of fact precluded summary judgment in favor of defendants. Plaintiff alleged breach of an oral contract and quantum meruit (unjust enrichment) causes of action. Although there was no express agreement that plaintiff was entitled to payment for work done before termination, the doctrine of indefiniteness should not have been applied to dismiss the breach of contract claim. In addition, because defendants alleged there was no enforceable contract, plaintiff’s quantum meruit cause of action should not have been dismissed. Plaintiff does not have to elect a remedy (breach of contract or quantum meruit) in that circumstance. With regard to the breach of oral contract cause of action, the court wrote:

An oral agreement may be enforceable as long as the terms are clear and definite and the conduct of the parties evinces mutual assent “sufficiently definite to assure that the parties are truly in agreement with respect to all material terms” … . However, not all terms of a contract need be fixed with absolute certainty, and courts will not apply the doctrine of indefiniteness to “defeat the reasonable expectations of the parties in entering into the contract” … . Where “there may exist an objective method for supplying the missing terms needed to calculate the alleged compensation owed plaintiff,” a claimed oral agreement is “not as a matter of law unenforceable for indefiniteness” … . Kramer v Greene, 2016 NY Slip Op 05776, 1st Dept 8-11-16

CONTRACT LAW (DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT; BOTH QUANTUM MERUIT AND BREACH OF CONTRACT PROPERLY PLED WHERE DEFENDANTS DENY EXISTENCE OF CONTRACT)/INDEFINITENESS DOCTRINE (CONTRACT LAW, DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT)/QUANTUM MERUIT (BOTH QUANTUM MERUIT AND BREACH OF CONTRACT PROPERLY PLED WHERE DEFENDANTS DENY EXISTENCE OF CONTRACT)/UNJUST ENRICHMENT (BOTH QUANTUM MERUIT AND BREACH OF CONTRACT PROPERLY PLED WHERE DEFENDANTS DENY EXISTENCE OF CONTRACT)/ORAL CONTRACT (DOCTRINE OF INDEFINITENESS IMPROPERLY APPLIED TO ORAL CONTRACT; BOTH QUANTUM MERUIT AND BREACH OF CONTRACT PROPERLY PLED WHERE DEFENDANTS DENY EXISTENCE OF CONTRACT)

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