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UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT.

The Second Department affirmed the dismissal of plaintiff contractor’s complaint seeking quantum meruit and recovery under the lien law because the contractor did not allege it was duly licensed in Nassau County when the home improvement services were rendered:

” An unlicensed contractor may neither enforce a home improvement contract against an owner nor seek recovery in quantum meruit'” … . “Pursuant to CPLR 3015(e), a complaint that seeks to recover damages for breach of a home improvement contract or to recover in quantum meruit for home improvement services is subject to dismissal under CPLR 3211(a)(7) if it does not allege compliance with the licensing requirement” … .

Here, the complaint did not allege that the plaintiff was duly licensed in Nassau County at the time of the services rendered (see Nassau County Administrative Code § 21-11.2). Moreover … the plaintiff conceded that it did not possess the necessary license. Therefore, the plaintiff was not entitled to enforce its contract against the defendant or to recover in quantum meruit … . Holistic Homes, LLC v Greenfield, 2016 NY Slip Op 02619, 2nd Dept 4-6-16

CIVIL PROCEDURE (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/CONTRACT LAW  (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/LIEN LAW (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/CONTRACT LAW (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/MECHANIC’S LIEN (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)/QUANTUM MERUIT (UNLICENSED CONTRACTOR CAN NOT RECOVER UNDER HOME IMPROVEMENT CONTRACT OR IN QUANTUM MERUIT)

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QUESTION OF FACT WHETHER SNOW-REMOVAL CONTRACTOR CREATED THE ICE CONDITION WHERE PLAINTIFF FELL.

The Third Department, in this slip and fall case, determined Inland, the owner of the shopping mall where plaintiff fell on ice, raised a question of fact whether the snow removal contractor, Hayes Paving, created the dangerous condition (i.e., launched an instrument of harm) by piling ice near a building which subsequently melted and refroze:

… [W]e conclude that a question of fact exists as to whether Hayes Paving negligently created a dangerous condition by piling chunks of ice against the Staples store building which, thereafter, melted and refroze into the patch of ice upon which plaintiff allegedly slipped … . Thus, Hayes Paving was not entitled to dismissal of Inland's third-party claim for contribution. Hannigan v Staples, Inc., 2016 NY Slip Op 02506, 3rd Dept 3-31-16

NEGLIGENCE (QUESTION OF FACT WHETHER SNOW-REMOVAL CONTRACTOR CREATED THE ICE CONDITION WHERE PLAINTIFF FELL)/SLIP AND FALL (QUESTION OF FACT WHETHER SNOW-REMOVAL CONTRACTOR CREATED THE ICE CONDITION WHERE PLAINTIFF FELL)/CONTRACT LAW (QUESTION OF FACT WHETHER SNOW-REMOVAL CONTRACTOR CREATED THE ICE CONDITION WHERE PLAINTIFF FELL)

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QUESTION OF FACT WHETHER GOVERNMENTAL OR PROPRIETARY ACTS WERE INVOLVED IN CONNECTION WITH A BURST WATER MAIN; QUESTION OF FACT WHETHER ROAD-WORK CONTRACTOR LIABLE IN TORT FOR LAUNCHING AN INSTRUMENT OF HARM.

The Third Depatment, in a full-fledged opinion by Justice Garry, determined questions of fact had been raised about governmental immunity and tort liability arising from contract in a property-damage case arising from road renovation work. Village officials and the contractor hired to do the road work (Merritt) decided to allow what was thought to be a small water leak to remain unaddressed temporarily. The leak was apparently created when a fire hydrant was removed to accommodate the road work. At some point the water main burst, causing flooding and a mudslide which damaged plaintiffs' property. The questions before the court were whether the village should be allowed to amend its answer with a governmental-immunity affirmative defense, and whether an indemnification cross-claim against the contractor (Merritt) by the village should have been allowed. The Third Department answered both questions in the affirmative. Although maintenance of a water system for fire protection is a governmental function to which immunity applies, maintenance of the water system generally is a proprietary function, to which immunity would not apply. With respect to Merritt, although tort liability does not usually arise from a contract, here there was a question of fact whether Merritt “launched an instrument of harm” which would trigger liability in tort. With respect to whether governmental immunity applied, the court explained:

A threshold inquiry in determining if a municipality is entitled to immunity in a negligence action is “whether the municipal entity was engaged in a proprietary function or acted in a governmental capacity at the time the claim arose” … . Where the alleged negligence arose out of proprietary, rather than governmental acts, no immunity will attach and a municipality will generally be liable to the same extent as a private actor … . The maintenance of a municipal water system to provide water for the private use of residents has been deemed to be a proprietary function … . However, where the alleged negligence stems from municipal efforts to protect the safety of the public by “aggregating and supplying water for the extinguishment of fires,” it is engaged in a government function entitled to immunity … . These established rules can present challenges as applied to modern municipal water systems that are used to provide water to both homes and hydrants … . In such cases, where a municipality can be seen to be serving dual governmental and proprietary roles, we must look to “the specific act or omission out of which the injury is claimed to have arisen and the capacity in which that act or failure to act occurred” … . Billera v Merritt Constr., Inc., 2016 NY Slip Op 02503, 3rd Dept 3-31-16

MUNCIPAL LAW (QUESTION OF FACT WHETHER GOVERNMENTAL OR PROPRIETARY ACTS WERE INVOLVED IN CONNECTION WITH A BURST WATER MAIN)/GOVERNMENTAL IMMUNITY (QUESTION OF FACT WHETHER GOVERNMENTAL OR PROPRIETARY ACTS WERE INVOLVED IN CONNECTION WITH A BURST WATER MAIN)/PROPRIETARY FUNCTION (QUESTION OF FACT WHETHER GOVERNMENTAL OR PROPRIETARY ACTS WERE INVOLVED IN CONNECTION WITH A BURST WATER MAIN)/NEGLIGENCE (MUNICIPAL LAW, QUESTION OF FACT WHETHER GOVERNMENTAL OR PROPRIETARY ACTS WERE INVOLVED IN CONNECTION WITH A BURST WATER MAIN)/TORT LIABILITY ARISING FROM CONTRACT (QUESTION OF FACT WHETHER ROAD-WORK CONTRACTOR LIABLE IN TORT FOR LAUNCHING AN INSTRUMENT OF HARM)/CONTRACT LAW (QUESTION OF FACT WHETHER ROAD-WORK CONTRACTOR LIABLE IN TORT FOR LAUNCHING AN INSTRUMENT OF HARM)/NEGLIGENCE  (QUESTION OF FACT WHETHER ROAD-WORK CONTRACTOR LIABLE IN TORT FOR LAUNCHING AN INSTRUMENT OF HARM)

LIABILITY UNDER CONTRACT CAN ARISE IN THE ABSENCE OF PRIVITY WHERE A PARTY IS A JOINT VENTURER OR PARTNER WITH A SIGNATORY TO THE CONTRACT.

The Third Department, reversing Supreme Court, determined there was a question of fact whether defendant Rock Solid was in a joint venture with defendant Catamount at the time Catamount entered a contract with plaintiffs. Plaintiffs sought specific performance of the contract. Supreme Court had dismissed the action against Rock Solid finding that Rock Solid was not in privity of contract with plaintiffs. However, because plaintiffs alleged Rock Solid and Catamount were joint venturers, and because Rock Solid did not address that issue in its motion for summary judgment, the motion should not have been granted:

Liability under a contract can arise in the absence of privity where it is established that the defendant is in a joint venture or partnership with a signatory to the contract (see Partnership Law § 28…). “A joint venture is an association of two or more persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge” … . “The essential elements of a joint venture are an agreement manifesting the intent of the parties to be associated as joint venturers, a contribution by the coventurers to the joint undertaking (i.e., a combination of property, financial resources, effort, skill or knowledge), some degree of joint proprietorship and control over the enterprise; and a provision for the sharing of profits and losses” … .

Here, Supreme Court concluded that Rock Solid established its prima facie entitlement to summary judgment as a matter of law by demonstrating that it was not a party to the 2005 agreement … . … [T]he court failed to address whether Rock Solid satisfied its additional burden to refute plaintiffs' assertions in the complaint that Rock Solid was Catamount's joint venturer or partner. Alper Rest., Inc. v Catamount Dev. Corp., 2016 NY Slip Op 02509, 3rd Dept 3-31-16

CONTRACT LAW (LIABILITY UNDER CONTRACT CAN ARISE IN THE ABSENCE OF PRIVITY WHERE A PARTY IS A JOINT VENTURER OR PARTNER WITH A SIGNATORY TO THE CONTRACT)/JOINT VENTURES (LIABILITY UNDER CONTRACT CAN ARISE IN THE ABSENCE OF PRIVITY WHERE A PARTY IS A JOINT VENTURER OR PARTNER WITH A SIGNATORY TO THE CONTRACT)

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SUPPLEMENTAL UNINSURED/UNDERINSURED MOTORIST PROVISIONS WERE UNAMBIGUOUS, RECOVERY LIMITED TO THE DIFFERENCE BETWEEN THE AMOUNT RECOVERED UNDER THE TORTFEASOR’S POLICY AND $50,000, HERE THE DIFFERENCE WAS ZERO.

The Second Department determined the relevant supplemental uninsured/underinsured motorist (SUM) provisions of appellant's policy were unambiguous and limited recovery for the death of appellant's daughter to a total of $50,000. Appellant argued the policy allowed recovery of the $50,000 limit, despite recovery of $50,000 under the tortfeasor's policy:

Based upon the … provisions of the policy, the Supreme Court properly found that the $50,000 recovered by the appellant from the tortfeasor was equivalent to the maximum SUM limit provided for in the policy. Therefore, the appellant had no possibility of an additional recovery, which rendered her SUM claim academic … . The language of the SUM endorsement was not ambiguous and must be enforced … . Matter of Ameriprise Auto & Home Ins. Co. v Savio, 2016 NY Slip Op 02358, 2nd Dept 3-30-16

INSURANCE LAW (SUPPLEMENTAL UNINSURED/UNDERINSURED MOTORIST PROVISIONS WERE UNAMBIGUOUS, RECOVERY LIMITED TO THE DIFFERENCE BETWEEN THE AMOUNT RECOVERED UNDER THE TORTFEASOR'S POLICY AND $50,000, HERE THE DIFFERENCE WAS ZERO)/SUPPLEMENATAL UNINSURED/UNDERINSURED MOTORIST (SUM) COVERAGE (SUPPLEMENTAL UNINSURED/UNDERINSURED MOTORIST PROVISIONS WERE UNAMBIGUOUS, RECOVERY LIMITED TO THE DIFFERENCE BETWEEN THE AMOUNT RECOVERED UNDER THE TORTFEASOR'S POLICY AND $50,000, HERE THE DIFFERENCE WAS ZERO)/CONTRACT LAW (INSURANCE POLICY, SUPPLEMENTAL UNINSURED/UNDERINSURED MOTORIST PROVISIONS WERE UNAMBIGUOUS, RECOVERY LIMITED TO THE DIFFERENCE BETWEEN THE AMOUNT RECOVERED UNDER THE TORTFEASOR'S POLICY AND $50,000, HERE THE DIFFERENCE WAS ZERO)

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FINANCIAL ADVISOR IS NOT A PROFESSIONAL WHO CAN BE HELD LIABLE IN TORT BASED UPON A CONTRACTUAL RELATIONSHIP.

The First Department noted that a “financial advisor” is not a professional who may be liable in tort based upon a contract:

While “[p]rofessionals … may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties” … , a financial advisor … is not a “professional” … . Thus, any duty owed by the … defendants to render financial advisory services to plaintiff in a competent manner must arise out of a contract. Indeed, the complaint alleges that plaintiff “retained” the … defendants and that [defendant] “agreed to act as [his] financial advisor” … . However, “claims based on negligent or grossly negligent performance of a contract are not cognizable” … . Starr v Fuoco Group LLP, 2016 NY Slip Op 02143, 1st Dept 3-24-16

NEGLIGENCE (FINANCIAL ADVISOR IS NOT A PROFESSIONAL WHO CAN BE HELD LIABLE IN TORT BASED UPON A CONTRACTUAL RELATIONSHIP)/CONTRACT LAW (FINANCIAL ADVISOR IS NOT A PROFESSIONAL WHO CAN BE HELD LIABLE IN TORT BASED UPON A CONTRACTUAL RELATIONSHIP)/FINANCIAL ADVISOR (FINANCIAL ADVISOR IS NOT A PROFESSIONAL WHO CAN BE HELD LIABLE IN TORT BASED UPON A CONTRACTUAL RELATIONSHIP)/PROFESSIONAL LIABILITY (FINANCIAL ADVISOR IS NOT A PROFESSIONAL WHO CAN BE HELD LIABLE IN TORT BASED UPON A CONTRACTUAL RELATIONSHIP)

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BAILEE CANNOT, PURSUANT TO THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, PURPORTED WAIVER OF SUBROGATION UNENFORCEABLE.

The First Department determined the relationship between the fine art dealer (Chowalski) and the defendant warehouse was that of bailor/bailee with respect to stored artworks.  Under the UCC the bailee (warehouse) cannot contract away liability for damage caused by lack of due care. Therefore, the waiver of subrogation in the bailment agreement was not enforceable. There was a question of fact whether the failure to move the stored artworks as Hurricane Sandy approached constituted a failure to exercise the level of care mandated by the UCC:

UCC 7-204(a) provides that a “warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances” and “is not liable for damages that could not have been avoided by the exercise of that care.” UCC 7-204(b) provides that “[d]amages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable.” However, such limitations on liability are limited by UCC 7-202(c), which provides that such terms must not “impair its . . . duty of care under Section 7-204. Any contrary provision is ineffective.”

Here there is a question of fact concerning whether defendant, in failing to move Chowaiki's goods to either another floor, or to a location above ground level on the floor they were on, was reasonable under the circumstances. If the trier of fact finds that defendant did not act reasonably, then defendant may be liable for damages to Chowaiki's goods .

… [T]he court erred in finding that the waiver of subrogation contained in the agreement's loss/damage waiver is enforceable and bars this action.

Provisions purporting to exempt the bailee from liability for damage to stored goods from perils against which the bailor had secured insurance, even when caused by the bailee's negligence have been held to run afoul of the statutory scheme of UCC Article 7. XL Specialty Ins. Co. v Christie's Fine Art Stor. Servs., Inc., 2016 NY Slip Op 01901, 1st Dept 3-17-16

INSURANCE LAW (BAILEE CANNOT, UNDER THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, WAIVER OF SUBROGATION UNENFORCEABLE)/UCC (BAILEE CANNOT, UNDER THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, WAIVER OF SUBROGATION UNENFORCEABLE)/CONTRACT LAW (BAILEE CANNOT, UNDER THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, WAIVER OF SUBROGATION UNENFORCEABLE)/BAILMENT   (BAILEE CANNOT, UNDER THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, WAIVER OF SUBROGATION UNENFORCEABLE)/SUBROGATION  (BAILEE CANNOT, UNDER THE UCC, CONTRACT AWAY LIABILITY FOR LACK OF CARE IN STORING GOODS, WAIVER OF SUBROGATION UNENFORCEABLE)

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TACIT MISREPRESENTATION BY STUDENT DURING ADMISSIONS PROCESS ENTITLED LAW SCHOOL TO REFUSE TO AWARD LLM DEGREE AFTER STUDENT HAD COMPLETED COURSE REQUIREMENTS.

The First Department, in a full-fledged opinion by Justice Saxe, determined respondent law school had the authority to refuse an LLM degree to a student who had completed the course requirements because of the student's (tacit) misrepresentation at the time of admission to the program. The LLM program was open to students with a law degree from a foreign school. However, the student's law degree was from an online law school—information the student should have provided when he realized the school representative was under the impression his degree was from a foreign school. The student's law school transcript was not provided until after he had begun courses in the LLM program:

With regard to the contract cause of action, petitioner relies on case law holding that “[t]here exists an implied contract between the institution and its students such that if the student complies with the terms prescribed by the institution, he will obtain the degree which he sought” … . However, even assuming that such an implied contract might have been formed here, a school has the authority to rescind a student's admission or to dismiss a student from the school, even after course work has begun or been completed, where there were material misrepresentations or omissions in the student's application … . … Although petitioner here did not affirmatively or explicitly misrepresent facts on his application, he omitted the critical fact that the school from which he had received his J.D. degree was not a foreign law school, which fact disqualified him from eligibility for entry into the LL.M. program. By submitting the application, petitioner was implicitly stating that he satisfied the program's prerequisites for attendance, in particular, the requirement that he had attended a foreign law school. Indeed, he did more than omit that information; he allowed respondents to proceed with his admission knowing that they harbored a misconception regarding the nature of the institution that had awarded him a J.D. degree. Petitioner knew or should have known from the outset that (1) to be eligible for the program to which he applied, he had to have graduated from a foreign law school, and (2) on the date he was admitted, Touro's administrators had incorrectly concluded that Novus was a law school located in the Philippines. Since petitioner's admission was based upon an omission of a material fact of which petitioner was aware, petitioner's conditional admission was falsely obtained. Pursuant to the school's code of conduct, the terms of the application and the law the school had no contractual obligation to award a degree under these circumstances. Matter of Salvador v Touro Coll., 2016 NY Slip Op 01924, 1st Dept 3-17-16

EDUCATION-SHCOOL LAW (TACIT MISREPRESENTATIONS BY STUDENT DURING ADMISSIONS PROCESS ENTITLED LAW SCHOOL TO REFUSE TO AWARD LLM DEGREE AFTER STUDENT HAD COMPLETED COURSE REQUIREMENTS)/CONTRACT LAW (EDUCATION-SCHOOL LAW, TACIT MISREPRESENTATIONS BY STUDENT DURING ADMISSIONS PROCESS ENTITLED LAW SCHOOL TO REFUSE TO AWARD LLM DEGREE AFTER STUDENT HAD COMPLETED COURSE REQUIREMENTS)

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ATTORNEYS’ FEES NOT AVAILABLE TO INSURED WHO BRINGS AFFIRMATIVE ACTION TO SETTLE RIGHTS UNDER A POLICY; CAUSE OF ACTION FOR BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING NOT DUPLICATIVE OF CAUSE OF ACTION FOR BREACH OF CONTRACT.

The Second Department, reversing Supreme Court, determined the insured's motion for summary judgment dismissing the demand for an attorney's fee should have been granted. When an insured brings an affirmative action to settle rights under an insurance policy, the insured cannot recover attorneys' fees. The court further held the action for breach of the covenant of good faith and fair dealing was not duplicative of the breach of contract cause of action and the insurer's motion for summary judgment on that ground was properly denied:

Implicit in every contract is a covenant of good faith and fair dealing which encompasses any promise that a reasonable promisee would understand to be included … . In the context of an insurance contract, “a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims” … . Here, the defendant failed to eliminate all triable issues as to whether it investigated the loss in good faith and timely paid covered claims … . Further, contrary to the defendant's contention, the cause of action alleging breach of the covenant of good faith and fair dealing is not wholly duplicative of the cause of action alleging breach of contract … .

“[A]n insured may not recover the expenses incurred in bringing an affirmative action against an insurer to settle its rights under the policy” … . The defendant established its prima facie entitlement to judgment as a matter of law dismissing so much of the complaint as sought an award of an attorney's fee by demonstrating that the plaintiffs were insureds under the policy and that they commenced this action to settle their rights under the policy … . Doody v Liberty Mut. Group, Inc., 2016 NY Slip Op 01798, 2nd Dept 3-16-16

INSURANCE LAW (ATTORNEYS FEES, INSURED CANNOT RECOVER ATTORNEYS FEES IN AFFIRMATIVE ACTION TO SETTLE RIGHTS UNDER A POLICY)/ATTORNEYS FEES (INSURANCE LAW, INSURED CANNOT RECOVER ATTORNEYS FEES IN AFFIRMATIVE ACTION TO SETTLE RIGHTS UNDER A POLICY)/INSURANCE LAW (CAUSE OF ACTION FOR BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING NOT DUPLICATIVE OF CAUSE OF ACTION FOR BREACH OF CONTRACT)/CONTRACT LAW (INSURANCE LAW, CAUSE OF ACTION FOR BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING NOT DUPLICATIVE OF CAUSE OF ACTION FOR BREACH OF CONTRACT)/COVENANT OF GOOD FAITH AND FAIR DEALING (INSURANCE LAW, CAUSE OF ACTION FOR BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING NOT DUPLICATIVE OF CAUSE OF ACTION FOR BREACH OF CONTRACT)

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COMPLAINTS ALLEGING THE DELIVERY OF FUEL OIL MIXED WITH WASTE OIL SHOULD NOT HAVE BEEN DISMISSED, THE COMPLAINTS STATED BREACH OF CONTRACT AND BREACH OF WARRANTY CAUSES OF ACTION.

The First Department, in a full-fledged opinion by Justice Saxe, determined two class action complaints alleging defendants supplied heating oil of lesser quality than that called for by the contracts should not have been dismissed. The complaints alleged waste oil had been mixed with the No. 4 and No. 6 fuel oil which was ordered. Certain detrimental effects of burning the mixed fuel were alleged. The First Department held that the “no injury” products liability cases relied upon by the motion court did not apply. Rather the case presented breach of contract/warranty issues:

Plaintiffs essentially allege that, consistent with the ASTM specifications, as well as common commercial usage, and pursuant to the UCC, customers purchasing goods described as No. 4 and No. 6 fuel oil are entitled to presume that they are receiving 100% fuel oil of the specified grade, and not a product consisting of a blend of No. 4 or No. 6 fuel oil with some other types of oil that do not meet the criteria of those ASTM specifications. * * *

Under UCC 2-714(2), the measure of damages for breach of warranty is the difference between the value of the goods delivered and the value of the goods warranted … . Since we must infer from the complaint that plaintiffs received nonconforming oil deliveries of lesser value than those they contracted and paid for, causes of action for breach of contract and breach of warranty — including plaintiffs' damages — are stated in each action. BMW Group, LLC v Castle Oil Corp., 2016 NY Slip Op 01790, 1st Dept 3-15-16

CONTRACT LAW (COMPLAINTS ALLEGING THE DELIVERY OF FUEL OIL MIXED WITH WASTE OIL STATED CAUSES OF ACTION FOR BREACH OF CONTRACT AND BREACH OF WARRANTY)/UCC (COMPLAINTS ALLEGING THE DELIVERY OF FUEL OIL MIXED WITH WASTE OIL STATED CAUSES OF ACTION FOR BREACH OF CONTRACT AND BREACH OF WARRANTY)/FUEL OIL  (COMPLAINTS ALLEGING THE DELIVERY OF FUEL OIL MIXED WITH WASTE OIL STATED CAUSES OF ACTION FOR BREACH OF CONTRACT AND BREACH OF WARRANTY)

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