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REVIEW CRITERIA FOR A SMALL CLAIMS RULING EXPLAINED; SMALL CLAIMS FINDING THAT A CONTRACT WAS UNENFORCEABLE AS UNCONSCIONABLE UPHELD.

Reversing the Appellate Term, the Second Department explained the review criteria for a Small Claims Court (District Court) ruling. The Second Department upheld the Small Claims determination a contract was unenforceable as unconscionable:

An appeal from a small claims judgment is permitted “on the sole ground that substantial justice has not been done between the parties according to the rules and principles of substantive law” (Uniform Dist Ct Act § 1807). ” Accordingly, a small claims judgment may not be overturned simply because the determination appealed from involves an arguable point on which an appellate court may differ; the deviation from substantive law must be readily apparent and the court’s determination clearly erroneous'” … .

Here, the District Court’s determination that the subject contract was unenforceable according to its literal terms because it was unconscionable was not clearly erroneous … . Tranquility Salon & Day Spa, Inc. v Caira, 2016 NY Slip Op 05637, 2nd Dept 7-27-16

 

CONTRACT LAW (REVIEW CRITERIA FOR A SMALL CLAIMS RULING EXPLAINED; SMALL CLAIMS FINDING THAT A CONTRACT WAS UNENFORCEABLE AS UNCONSCIONABLE UPHELD)/APPEALS (SMALL CLAIMS, CRITERIA FOR A SMALL CLAIMS RULING EXPLAINED; SMALL CLAIMS FINDING THAT A CONTRACT WAS UNENFORCEABLE AS UNCONSCIONABLE UPHELD)/SMALL CLAIMS (APPEAL, (REVIEW CRITERIA FOR A SMALL CLAIMS RULING EXPLAINED; SMALL CLAIMS FINDING THAT A CONTRACT WAS UNENFORCEABLE AS UNCONSCIONABLE UPHELD)

BOTH BREACH OF CONTRACT AND QUANTUM MERUIT WERE PLED, QUANTUM MERUIT CAUSE OF ACTION SHOULD HAVE GONE TO THE JURY.

The Second Department, reversing Supreme Court, determined plaintiff’s quantum meruit cause of action should have gone to the jury. A new trial was ordered. Although the complaint was deemed inartfully drafted, the Second Department found that the quantum meruit cause of action was pled and evidence presented at trial supported it. The court explained when both a breach of contract cause of action and a quantum meruit cause of action may be validly pled:

Where the existence of a contract is in dispute, the plaintiff may allege a cause of action to recover in quantum meruit as an alternative to a cause of action alleging breach of contract … . “[A] quasi-contractual obligation is one imposed by law where there has been no agreement or expression of assent, by word or act, on the part of either party involved. The law creates it, regardless of the intention of the parties, to assure a just and equitable result” … .

To be entitled to recover damages under the theory of quantum meruit, a plaintiff must establish: “(1) the performance of services in good faith, (2) the acceptance of services by the person or persons to whom they are rendered, (3) the expectation of compensation therefor, and (4) the reasonable value of the services rendered” … . Thompson v Horowitz, 2016 NY Slip Op 05561, 2nd Dept 7-20-16

 

CONTRACT LAW (BOTH BREACH OF CONTRACT AND QUANTUM MERUIT WERE PLED, QUANTUM MERUIT CAUSE OF ACTION SHOULD HAVE GONE TO THE JURY)/QUANTUM MERUIT (BOTH BREACH OF CONTRACT AND QUANTUM MERUIT WERE PLED, QUANTUM MERUIT CAUSE OF ACTION SHOULD HAVE GONE TO THE JURY)

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SNOW REMOVAL CONTRACTOR NOT LIABLE FOR SLIP AND FALL ON ICE, NO EVIDENCE CONTRACTOR CREATED OR EXACERBATED ICY CONDITION; FAILURE TO APPLY SALT NOT ENOUGH.

The Second Department, in a full-fledged opinion by Justice Dillon, resolving a question of first impression in the Second Department, determined a snow-removal contractor could not be held liable for plaintiff’s slip and fall on ice without proof the icy condition was created or exacerbated by the contractor. Here, the contractor had plowed the snow on the same day as the slip and fall. Proof that the area was not salted was deemed insufficient:

We are called upon to determine, for the first time in this judicial department, whether a snow removal contractor may be found liable in a personal injury action under Espinal v Melville Snow Contrs. (98 NY2d 136) on the ground that the snow removal contractor’s passive omissions constituted the launch of a force or instrument of harm, where there is no evidence that the passive conduct created or exacerbated a dangerous condition. We find that liability cannot be imposed under such circumstances. * * *

The trial record is devoid of any evidence regarding the cause, creation, or exacerbation of the icy condition. No evidence was presented as to when the ice first materialized or how long it had been present before the accident. There were no climatology records admitted into evidence regarding the nature of the recent storm, the air temperature prior, during, and after the storm, or potential snowmelt and refreeze. There was no evidence as to when the bullpen was plowed in relation to the time of the plaintiff’s accident, and there was no expert testimony regarding the standard of care that may have been violated if, contractual language aside, no salt or sand/salt mixture were applied under the circumstances present. Moreover, there was no evidence that the icy condition at the bullpen worsened between when it arguably should have been salted and the time of the plaintiff’s accident.

Absent at least some of the foregoing evidence, a determination that the failure to salt created or exacerbated the icy condition … would be speculative. Indeed, a failure to apply salt would ordinarily neither create ice nor exacerbate an icy condition, as the absence of salt would merely prevent a pre-existing ice condition from improving … . Santos v Deanco Servs., Inc., 2016 NY Slip Op 05489, 2nd Dept 7-13-16

 

NEGLIGENCE (SNOW REMOVAL CONTRACTOR NOT LIABLE FOR SLIP AND FALL ON ICE, NO EVIDENCE CONTRACTOR CREATED OR EXACERBATED ICY CONDITION; FAILURE TO APPLY SALT NOT ENOUGH)/CONTRACT LAW (NEGLIGENCE OF CONTRACTOR TO THIRD PARTY, SNOW REMOVAL CONTRACTOR NOT LIABLE FOR SLIP AND FALL ON ICE, NO EVIDENCE CONTRACTOR CREATED OR EXACERBATED ICY CONDITION; FAILURE TO APPLY SALT NOT ENOUGH)/ESPINAL EXCEPTIONS (NEGLIGENCE OF CONTRACTOR TO THIRD PARTY, SNOW REMOVAL CONTRACTOR NOT LIABLE FOR SLIP AND FALL ON ICE, NO EVIDENCE CONTRACTOR CREATED OR EXACERBATED ICY CONDITION; FAILURE TO APPLY SALT NOT ENOUGH)/SLIP AND FALL (SNOW REMOVAL CONTRACTOR NOT LIABLE FOR SLIP AND FALL ON ICE, NO EVIDENCE CONTRACTOR CREATED OR EXACERBATED ICY CONDITION; FAILURE TO APPLY SALT NOT ENOUGH)

ALLEGED ORAL MODIFICATION OF A CONTRACT WHICH REQUIRED WRITTEN NOTICE UNENFORCEABLE.

The Third Department, reversing Supreme Court, determined the alleged oral modification of a contract which required written notice was not enforceable:

… [I]f an oral modification has not “been acted upon to completion” in a manner that “demonstrate[s], objectively, the nature and extent of the modification” … , it will be enforceable only upon a showing “of either partial performance . . ., which must be unequivocally referable to the oral modification, or equitable estoppel, based upon conduct which is not otherwise compatible with the agreement as written” … . * * *

The performance of the parties under [the] purported [oral] arrangement, in other words, was identical to that required under a renewed sales agreement. It cannot, as a result, be said that “there was [any] performance on [plaintiff’s] part that was unequivocally referable to the existence of an oral contract” … . Likewise, inasmuch as the behavior of the parties was “compatible with the agreement as written,” and given the absence of written notice of nonrenewal, there is no basis for estopping defendant from relying upon the agreement as written … . J. Triple S., Inc. v Aero Star Petroleum, Inc., 2016 NY Slip Op 05414, 3rd Dept 7-7-16

 

CONTRACT LAW (ALLEGED ORAL MODIFICATION OF A CONTRACT WHICH REQUIRED WRITTEN NOTICE UNENFORCEABLE)/MODIFICATION (CONTRACT LAW,  ALLEGED ORAL MODIFICATION OF A CONTRACT WHICH REQUIRED WRITTEN NOTICE UNENFORCEABLE)/ORAL MODIFICATION (CONTRACT LAW,  ALLEGED ORAL MODIFICATION OF A CONTRACT WHICH REQUIRED WRITTEN NOTICE UNENFORCEABLE)

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INSURER FAILED TO GIVE ADEQUATE NOTICE OF A CHANGE IN THE COVERAGE OF THE UNDERLYING AUTO LIABILITY POLICY REQUIRED BY ITS UMBRELLA POLICY, UMBRELLA POLICY REFORMED TO RESTORE THE RESULTING GAP IN COVERAGE.

The Second Department, in a full-fledged opinion by Justice Cohen, determined defendant insurer failed to notify plaintiff of an elimination of coverage as required by Insurance Law 3425. The insurance contract was reformed to include the eliminated coverage. Plaintiff had a $1,000,000 umbrella auto insurance policy with the defendant insurer (Allstate). When plaintiff purchased the umbrella policy it required $100,000/$300,000 coverage in the underlying policy. Although the limit of the umbrella policy did not change, the requirements for the underlying policy were increased to $250,000/$500,000. After an accident, Allstate paid the excess over $250,000, but refused to pay the difference between the $100,000 actual coverage of the underlying policy and the $250,000 required coverage:

Insurance Law § 3425 imposes restrictions on a liability insurer’s right to cancel, refuse to renew, or condition renewal of a policy, and requires the insurer to provide notice to the policyholder before any cancellation, nonrenewal, or conditional renewal occurs. At issue on this appeal is Insurance Law § 3425(d)(1), which requires an insurer to notify a policyholder, at least 45 days before the end of the coverage period, of its intention to condition renewal “upon change of limits or elimination of any coverages,” and to provide a specific reason for so conditioning renewal. … [W]e find that the notice requirement of Insurance Law § 3425(d)(1) applies where, as here, an insurer issues an umbrella policy providing the policyholder with additional coverage above the limits of his or her automobile coverage, and then increases the amount of underlying automobile liability insurance the policyholder must maintain before the additional coverage provided by the umbrella policy becomes available. We further find that an insurer’s failure to comply with Insurance Law § 3425(d)(1) provides a basis for reformation of the subject policy. Gotkin v Allstate Ins. Co., 2016 NY Slip Op 05359, 2nd Dept 7-6-16

INSURANCE LAW (INSURER FAILED TO GIVE ADEQUATE NOTICE OF A CHANGE IN THE COVERAGE OF THE UNDERLYING AUTO LIABILITY POLICY REQUIRED BY ITS UMBRELLA POLICY, UMBRELLA POLICY REFORMED TO RESTORE THE RESULTING GAP IN COVERAGE)/CONTRACT LAW (INSURANCE POLICY, INSURER FAILED TO GIVE ADEQUATE NOTICE OF A CHANGE IN THE COVERAGE OF THE UNDERLYING AUTO LIABILITY POLICY REQUIRED BY ITS UMBRELLA POLICY, UMBRELLA POLICY REFORMED TO RESTORE THE RESULTING GAP IN COVERAGE)/REFORMATION (INSURANCE POLICY, INSURER FAILED TO GIVE ADEQUATE NOTICE OF A CHANGE IN THE COVERAGE OF THE UNDERLYING AUTO LIABILITY POLICY REQUIRED BY ITS UMBRELLA POLICY, UMBRELLA POLICY REFORMED TO RESTORE THE RESULTING GAP IN COVERAGE)

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CONTRACTOR WHICH REPAIRED EXTERIOR STAIRS DID NOT OWE A DUTY OF CARE TO PLAINTIFF IN THIS SLIP AND FALL CASE.

The Second Department determined a slip and fall complaint against a contractor which repaired exterior stairs was properly dismissed. The court explained the three theories under which a contract can result in a duty of care owed to a third party and the requirements of a defendant-contractor’s motion for summary judgment in this context:

“Generally, a contractual obligation, standing alone, will not give rise to tort liability in favor of a third party” … . However, there are three exceptions to that general rule: “(1) where the contracting party, in failing to exercise reasonable care in the performance of his [or her] duties, launches a force or instrument of harm, (2) where the plaintiff detrimentally relies on the continued performance of the contracting party’s duties, and (3) where the contracting party has entirely displaced the other party’s duty to maintain the premises safely” … . ” As part of its prima facie showing, a contracting defendant is only required to negate the applicability of those Espinal exceptions that were expressly pleaded by the plaintiff or expressly set forth in the plaintiff’s bill of particulars'” … .

Here, the plaintiff alleged facts in his complaint and bills of particulars in support of his assertion that the defendants created or exacerbated the alleged dangerous conditions and, thus, launched a force or instrument of harm. Therefore, in support of their motion for summary judgment dismissing the complaint insofar as asserted against them, the defendants were required to establish, prima facie, that they did not create or exacerbate the alleged dangerous conditions … . The defendants met this burden and established their prima facie entitlement to judgment as a matter of law by demonstrating that they neither created nor exacerbated the dangerous conditions that allegedly caused the plaintiff to sustain injuries. The parties’ deposition testimony established, prima facie, that the defendants did not leave the subject step or the handrail in a condition more dangerous than they had found them … . Barone v Nickerson, 2016 NY Slip Op 05107, 2nd Dept 6-29-16

 

NEGLIGENCE (CONTRACTOR WHICH REPAIRED EXTERIOR STAIRS DID NOT OWE A DUTY OF CARE TO PLAINTIFF IN THIS SLIP AND FALL CASE)/CONTRACT LAW (CONTRACTOR WHICH REPAIRED EXTERIOR STAIRS DID NOT OWE A DUTY OF CARE TO PLAINTIFF IN THIS SLIP AND FALL CASE)/TORT LIABILITY ARISING FROM CONTRACT (CONTRACTOR WHICH REPAIRED EXTERIOR STAIRS DID NOT OWE A DUTY OF CARE TO PLAINTIFF IN THIS SLIP AND FALL CASE)/SLIP AND FALL (CONTRACTOR WHICH REPAIRED EXTERIOR STAIRS DID NOT OWE A DUTY OF CARE TO PLAINTIFF IN THIS SLIP AND FALL CASE)

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CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED.

The Third Department, reversing County Court, determined plaintiff was not required to file a notice of claim because the action against the city sounded in contract, not tort. Plaintiff alleged the city violated an easement when work was done on plaintiff’s property:

General Municipal Law § 50-e (1) (a) provides that a party seeking to bring a tort action against a municipality must file a notice of claim within 90 days of the date that the claim arises … . A similar provision is contained in Charter of the City of Glens Falls § 10.14.5. The notice of claim provisions of General Municipal Law § 50-e, however, apply only to actions sounding in tort, not to those premised upon breach of contract … . The same is true of City of Glens Falls City Charter § 10.14.5, as its terms make clear. Here, plaintiff’s small claims action is premised upon defendant’s alleged failure to comply with the provisions of the easement agreement resulting in damage to his property in the amount of $5,000. Inasmuch as plaintiff’s action sounds in breach of contract, not tort, the notice of claim provisions of General Municipal Law § 50-e and Charter of the City of Glens Falls § 10.14.5 are inapplicable. Strauss v City of Glens Falls, 2016 NY Slip Op 04750, 3rd Dept 6-16-16

 

MUNICPAL LAW (CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED)/REAL PROPERTY (CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED)/CONTRACT LAW (CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED)/EASEMENTS (CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED)/NOTICE OF CLAIM (CITY’S ALLEGED VIOLATION OF AN EASEMENT SOUNDS IN CONTRACT, NOT TORT, NOTICE OF CLAIM NOT REQUIRED)

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LIQUIDATED DAMAGES CLAUSE IN SEPARATION AGREEMENT CONSTITUTED AN UNENFORCEABLE PENALTY.

The Second Department determined the liquidated damages clause in a separation agreement constituted an unenforceable penalty. The clause provided that, upon a breach of any of the terms, child support would increase from $1500 per month to over $5000:

“[P]arties to an agreement may provide for the payment of liquidated damages upon its breach, and such damages will be upheld if (1) the amount fixed is a reasonable measure of the probable actual loss in the event of breach, and (2) the actual loss suffered is difficult to determine precisely. However, if the liquidated damages do not bear a reasonable proportion to the loss actually sustained by a breach, they will constitute an unenforceable penalty” … .

Here, the parties entered into a separation agreement … which was incorporated but not merged into the judgment of divorce. In relevant part, the agreement provided that … the defendant would pay $1,500 per month in child support until the date of the sale of the marital residence, and $5,076.29 per month thereafter. However, if at any time prior to the sale of the marital residence, the defendant was not in compliance with “all of the terms” of the agreement, then his child support obligation would be increased to $5,076.29 per month.

Contrary to the plaintiff's contention, the Supreme Court correctly determined that the subject provision, as drafted, constituted an unenforceable penalty clause … . Fitzpatrick v Fitzpatrick, 2016 NY Slip Op 04018, 2nd Dept 5-25-16

FAMILY LAW (LIQUIDATED DAMAGES CLAUSE IN SEPARATION AGREEMENT CONSTITUTED AN UNENFORCEABLE PENALTY)/CONTRACT LAW (LIQUIDATED DAMAGES CLAUSE IN SEPARATION AGREEMENT CONSTITUTED AN UNENFORCEABLE PENALTY)/DAMAGES  (LIQUIDATED DAMAGES CLAUSE IN SEPARATION AGREEMENT CONSTITUTED AN UNENFORCEABLE PENALTY)

ASSUMPTION OF RISK DOCTRINE NO LONGER APPLIES TO ANY ACTIONS OTHER THAN THOSE STEMMING FROM ATHLETIC AND RECREATIONAL ACTIVITIES.

The Second Department noted that the doctrine of assumption of the risk no longer applies in any context other than athletic or recreational activities. Defendant attempted to apply the doctrine to a breach of contract action:

The defendant moved for summary judgment dismissing the amended complaint insofar as asserted against her. Relying on Turcotte v Fell (68 NY2d 432), she contended that the plaintiff, by agreeing to enter into the joint annuity contract, necessarily assumed the risk of pecuniary injury. The Supreme Court denied the motion.

The defense of assumption of risk was abolished in 1975 with the adoption of CPLR 1411 … . Nevertheless, the Court of Appeals has explained “that a limited vestige of the assumption of the risk doctrine—referred to as primary’ assumption of the risk—survived the enactment of CPLR 1411 as a defense to tort recovery in cases involving certain types of athletic or recreational activities” … .

Here, as the allegations in the amended complaint have nothing to do with athletic or recreational activities contemplated by the primary assumption of risk doctrine … , it follows that the defendant’s reliance on Turcotte v Fell (68 NY2d 432) is misplaced, and her purported assumption of risk defense is barred by CPLR 1411. Ballow v Lincoln Fin. Corp., 2016 NY Slip Op 04009, 2nd Dept 5-25-16

 

CONTRACT LAW (ASSUMPTION OF RISK DOCTRINE NO LONGER APPLIES TO ANY ACTIONS OTHER THAN THOSE STEMMING FROM ATHLETIC AND RECREATIONAL ACTIVITIES)/ASSUMPTION OF THE RISK (ASSUMPTION OF RISK DOCTRINE NO LONGER APPLIES TO ANY ACTIONS OTHER THAN THOSE STEMMING FROM ATHLETIC AND RECREATIONAL ACTIVITIES)

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CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT.

The Second Department determined a letter from counsel, together with other correspondence, established an enforceable settlement agreement of a real property dispute:

CPLR 2104 governs the enforceability of settlement agreements … . Pursuant to CPLR 2104, a settlement agreement is binding upon a party if it is in a writing subscribed either by the party or by his or her attorney. To be enforceable, a settlement agreement must set forth all material terms, and there must be clear mutual accord between the parties … .

Here, the material terms of the settlement agreement were set forth in a letter by the plaintiff's then attorney, who had apparent authority to settle the case on her behalf based on the plaintiff's actions … . The exchange of correspondence between the attorneys for the parties, in conjunction with the defendants' completion of the tasks demanded in the settlement without any objection by the plaintiff, was sufficient to constitute an enforceable settlement agreement between the parties … . Martin v Harrington, 2016 NY Slip Op 04027, 2nd Dept 5-25-16

CIVIL PROCEDURE (CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT)/CONTRACT LAW (CORRESPONDENCE ESTABLISHED AN ENFORCEABLE SETTLEMENT AGREEMENT)

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