You are here: / Contract Law
,

Question of Fact Whether Plaintiff Was Fraudulently Induced to Sign a Release—Relevant Law Explained

The Second Department determined plaintiff raised a triable issue of fact concerning whether plaintiff was fraudulently induced to sign a release re: a potential personal-injury action. The release was signed three days after the accident when the plaintiff was still on pain medication and it was alleged the insurance adjuster told her the offered funds were for plaintiff’s “inconvenience” and not to compensate for her injuries.  The court explained relevant law:

” A release is a contract, and its construction is governed by contract law'” … . “Generally, a valid release that is clear and unambiguous on its face constitutes a complete bar to an action on a claim which is the subject of the release absent fraudulent inducement, fraudulent concealment, misrepresentation, mutual mistake or duress'” … .

“A signed release shifts the burden of going forward . . . to the [plaintiff] to show that there has been fraud, duress or some other fact which will be sufficient to void the release'” … . “A plaintiff seeking to invalidate a release due to fraudulent inducement must establish the basic elements of fraud, namely a representation of a material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury'” … . Moreover, there is a requirement that a release covering both known and unknown injuries be ” fairly and knowingly made'” … . Powell v Adler, 2015 NY Slip Op 04466, 2nd Dept 5-27-15

 

,

Parol Evidence Demonstrated What Appeared to Be a Contract Was Not—There Was No Meeting of the Minds Re: the Consideration for the Contract

The Third Department, over a dissent, reversing Supreme Court, determined extrinsic evidence should have been considered on the issue whether a contract was ever formed, i.e., whether there was a “meeting of the minds.” Based upon that extrinsic evidence, the breach of contract complaint was dismissed by the Third Department. The defendant argued that the contract was premised upon the understanding plaintiff would execute a power of attorney, which plaintiff refused to do. The parol evidence, emails, demonstrated that defendant agreed to the terms of the contract in return for the power of attorney executed by the plaintiff.  The power of attorney was the consideration for the contract. Therefore, the parol evidence demonstrated no contract was ever formed:

In order “‘[t]o create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms’ and consideration” … . Defendant is not arguing that a valid agreement between the parties included an unstated commitment by plaintiff to execute the power of attorney; instead, she is asserting that she proposed an agreement upon that understanding, but that there was never a meeting of the minds on the issue sufficient to give rise to a valid agreement. Accordingly, she was entitled to use parol evidence “to show that what appears to be a contractual obligation is, in fact, no obligation at all”… . Libasci v Singares, 2015 NY Slip Op 04357, 3rd Dept 5-21-15

 

, ,

Release Null and Void Under the General Obligations Law–Plaintiff Paid a Fee to Participate in the Basketball Game In Which He Was Injured

Plaintiff paid a fee to participate in a basketball league and signed a release of liability.  He was injured during a game when his hand went through the glass of a door behind a basketball hoop. The defendants sought permission to amend their answer to assert the defense of release and Supreme Court allowed the amendment. The Second Department determined the motion for leave to amend the answer should have been denied because the affirmative defense was “patently devoid of merit.” General Obligations Law 5-326 nullifies any such release where the owner or operator of a sports facility charges a fee for use of the facility. Falzone v City of New York, 2015 NY Slip Op 04273, 2nd Dept 5-20-15

[General Obligations Law 5-326 provides: “Every covenant, agreement or understanding in or in connection with, or collateral to, any contract, membership application, ticket of admission or similar writing, entered into between the owner or operator of any pool, gymnasium, place of amusement or recreation, or similar establishment and the user of such facilities, pursuant to which such owner or operator receives a fee or other compensation for the use of such facilities, which exempts the said owner or operator from liability for damages caused by or resulting from the negligence of the owner, operator or person in charge of such establishment, or their agents, servants or employees, shall be deemed to be void as against public policy and wholly unenforceable.”]

 

,

Disagreement About the Meaning of a Term in the Shared-Fee-Agreement Did Not Render the Contract Ambiguous—No Need for Interpretation of the Term by the Court

The First Department, in an extensive decision, over a two-justice partial dissent, determined the shared-fee arrangements among attorneys were unambiguous and must be enforced as written, without reference to extrinsic evidence. The underlying personal injury case eventually settled for $8 million.  Along the way, plaintiff’s attorney, Menkes, entered into agreements with two attorneys for assistance with the case. Most of the decision addresses the agreement with an attorney, Golomb, concerning mediation and settlement negotiations. If the mediation resulted in a settlement, Golomb was entitled to 12% of the attorney’s fees.  If further work, beyond the mediation, were required, Golomb was entitled to 40% of the attorney’s fees. Menkes argued that, although the mediation session did not result in a settlement, the mediation was a “process” which continued beyond the initial session culminating in a settlement. The majority held that the term “mediation,” pursuant to the language of the contract, encompassed only the one session.  Once that session ended without a settlement, the 40% shared-fee-arrangement kicked in:

The issue before us is one of simple contract interpretation. Under well established precedent, agreements are to be generally construed in accord with the parties’ intent … . The best evidence of the parties’ intent is “what they say in their writing” … . “[W]hen parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms” … . This rule is particularly applicable where the parties are sophisticated and are negotiating at arm’s length … . Language in a written agreement is deemed to be clear and unambiguous where it is reasonably susceptible of only one meaning or interpretation … . Finally, “[e]xtrinsic evidence may not be introduced to create an ambiguity in an otherwise clear document” … .

Here, as the dissent agrees, the language of the contract is unambiguous. Menkes argues that she interpreted the term “mediation” to constitute an ongoing process that would not be limited to a single session but rather would continue until an impasse or other termination had occurred. However, the assertion by a party to a contract that its terms mean something to him or her “where it is otherwise clear, unequivocal and understandable when read in connection with the whole contract” is not sufficient to make a contract ambiguous so as to require a court to divine its meaning … . The specific fee language that Menkes now claims supports her position was added to the agreement at her request. She takes the untenable position that she was never advised that the mediation reached an impasse or had been terminated. Yet despite the fact that the agreement went through several revisions, neither party saw fit to add any language to that effect. Both parties to the agreement are attorneys and thus know the importance of precision in the words used … . These clear terms, under these circumstances, need no interpretation by the court. Marin v Constitution Realty, LLC, 2015 NY Slip Op 04225, 1st Dept 5-19-15

 

, ,

A Conditional Judgment May Be Rendered On the Issue of Contractual Indemnity—The Party Seeking Contractual Indemnity Must Be Free from Negligence

Plaintiff was injured at a construction site when he fell from a ladder. The construction manager commenced a third-party action against the general contractor seeking contractual indemnification in the event the construction manager is liable to the plaintiff,. The Second Department noted that a ” ‘court may render a conditional judgment on the issue of contractual indemnity, pending determination of the primary action so that the indemnitee may obtain the earliest possible determination as to the extent to which he or she may expect to be reimbursed’ … . The party seeking contractual indemnification must establish that it was free from negligence and that it may be held liable solely by virtue of statutory or vicarious liability …”. Arriola v City of New York, 2015 NY Slip Op 04079, 2nd Dept 5-13-15

 

,

Online Promotion Which Offered a Coupon to Persons Who Provided His or Her Email Address Did Not Constitute an “Offer” Which Could Be “Accepted” to Create a Contract/In Light of the Disclaimers the Promotion Was Not “Deceptive” and Plaintiff Suffered No “Actual Injury” within the Meaning of the General Business Law

Plaintiff brought a putative class action alleging an act of deception in an online business promotion.  Defendants “offered to provide to visitors to their website who entered their email address a $1 coupon toward the purchase of their products and further promotional materials.” The complaint alleged the members of the class provided their email addresses but never received a coupon. The Second Department determined the complaint, which alleged breach of contract and a violation of General Business Law 349, was properly dismissed. Because the website indicated the supply of coupons was limited, there was no clearcut “offer” which could form a contract upon acceptance. The online promotion constituted only an “invitation for offers.” Because of the disclaimers, the promotion was not “deceptive” within the meaning of General Business Law 349. Nor did the plaintiff suffer any “actual injury” within the meaning of General Business Law 349:

…[T]he defendants made a prima facie showing that the online promotion did not constitute an offer. Rather, it constituted only an invitation for offers, in light of the fact that the promotion expressly stated that the supply of coupons was “limited.” In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff’s contention, extrinsic evidence was not admissible to interpret the promotional materials under the circumstances herein … . The record thus showed as a matter of law that the promotion did not create the power of acceptance for consumers and, consequently, no unilateral contract was formed… . * * *

[Re: General Business Law 349], in addition to showing that the conduct was consumer oriented, “[a] prima facie case requires . . . a showing that [the] defendant is engaging in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof” … . “Whether a representation or an omission, the test is whether the allegedly deceptive practice is likely to mislead a reasonable consumer acting reasonably under the circumstances'” … . A plaintiff must also show that he or she suffered an actual injury, as a result of the deceptive act or practice… . …

…[T]he defendants … showed … that the plaintiff did not suffer any “actual injury,” for purposes of the General Business Law § 349 cause of action. To recover damages under General Business Law § 349, a plaintiff need not prove intent to defraud or justifiable reliance … . The plaintiff may not “set[ ] forth deception as both act and injury” … . Here, the record showed as a matter of law that the plaintiff suffered no actual injury, apart from the alleged deceptive act itself … . Amalfitano v NBTY, Inc., 2015 NY Slip Op 04077, 2nd Dept 5-13-15

 

, ,

“Bankruptcy” Exclusion in a Political Risk Insurance Policy Applied—Insurer Not Obligated to Cover Loss Occasioned by Bankruptcy Proceedings in Mexico

The First Department, in a full-fledged opinion by Justice Gonzalez, determined that the “bankruptcy” exclusion in a Political Risk Insurance Policy applied to court proceedings in Mexico and the insurer was therefore entitled to disclaim coverage for the related loss to plaintiff.  The core issue was the meaning of “bankruptcy.”  The plaintiff argued the term referred to a final adjudication of bankruptcy. But the court held the definition was much broader, and included the ongoing court proceedings in Mexico.  The fact that the plaintiff and defendant disagreed about the definition of “bankruptcy” did not render the policy-contract ambiguous.  Applying the plaintiff’s narrow definition would have rendered other provisions of the policy-contract superfluous:

We agree with defendant that plaintiff’s definition of bankruptcy (a final judgment of reorganization or liquidation) is overly narrow. Bankruptcy is generally understood to include being under the judicial protection of a bankruptcy court – or, according to dictionary definition – “a statutory procedure by which a (usu[ally] insolvent) debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation. . . for the benefit of creditors” (Black’s Law Dictionary 175 [10th ed 2014]; see Compact Oxford English Dictionary 934-935 [2d ed 1999][same]).

Plaintiff contends that since the parties have conflicting interpretations of the term “bankruptcy,” the policy must be ambiguous on this point, and points out that settled principles of interpretation of insurance contracts require resolution of any ambiguity in favor of the insured … . However, “provisions in a contract are not ambiguous merely because the parties interpret them differently” … . Here, common understanding supports interpreting the term bankruptcy as the court proceeding in which the debtor is afforded judicial protection while it reorganizes or liquidates.

Further, settled law requires that the terms of a contract be read in context … . Plaintiff’s definition of bankruptcy, i.e. the state of having been declared bankrupt, would render the accompanying alternatives in Section 4.12 of the policy (insolvency and financial default) superfluous. The redundancy can be eliminated only by accepting defendant’s definition, an interpretation that gives meaning to every “sentence, clause, and word of [the] contract of insurance” … . CT Inv. Mgt. Co., LLC v Chartis Specialty Ins. Co., 2015 NY Slip Op 04051, 1st Dept 5-12-15

 

,

120-Day Time Limit for Bringing a Summary Judgment Motion Properly Extended by Stipulation

The Fourth Department determined the 120-day time limit for making summary judgment motions (after the filing of a note of issue) was properly extended by stipulation.  The dissent felt that such a stipulation was invalid because it violated public policy: “While we agree with our dissenting colleague that the court was not required to accept the express stipulation of the parties to extend the 120-day deadline in CPLR 3212, we note that the court in fact did so in advance of the motion … . Moreover, unlike our dissenting colleague, we do not view the timing requirements applicable to motions for summary judgment as a matter of public policy that may not be affirmatively waived by a party …”. Bennett v St. John’s Home & St. John’s Health Care Corp., 2015 NY Slip Op 03952, 4th Dept 5-8-15

 

, ,

Fraud Cause of Action Against Merrill Lynch Re: Credit Default Obligations Sufficiently Pled/Disclaimers and Disclosures Did Not Preclude Claim of Fraud

The First Department determined a cause of action for fraud against Merrill Lynch had been sufficiently pled.  The underlying agreement related to credit default obligations (CDO’s).  The court noted that an unjust enrichment cause of action is not viable when the lawsuit is based on a written agreement:

…[The] factual allegations provide sufficient details to inform the …defendants … of the alleged fraudulent conduct, namely that the CDO was secretly designed by an undisclosed hedge fund, Magnetar, which was secretly placing massive short bets against the very same deals it was sponsoring. Defendants, however, argue that plaintiff cannot establish the element of reasonable reliance (an element of both affirmative misrepresentation and concealment) as a result of the disclosures and disclaimers for the Auriga CDO. We cannot agree.

The offering circular states, “All or most of the Collateral Debt Securities Acquired by the Issuer . . . will be Acquired from a portfolio of Collateral Debt Securities selected by the Collateral Manager . . . .” If Magnetar rather than 250 Capital was doing the selecting, the statement in the offering circular was misleading. The identity of the person selecting the collateral was material: The offering circular says, “The performance of the portfolio of Collateral Debt Securities depends heavily on the skills of the Collateral Manager in analyzing and selecting the Collateral Debt Securities.” * * *

Under the circumstances, it cannot be said that the disclaimers and disclosures in the offering circulars preclude a claim of fraud on the ground of a prior misrepresentation as to the specific matter, namely that the CDO’s collateral had been carefully selected by an independent collateral manager, in the interests of the success of the deal and for the benefit of Auriga’s long investors. Loreley Fin (Jersey) No 38 Ltd v Merrill Lynch …, 2014 NY Slip Op 03326, 1st Dept 5-8-14

Similar issues and result re: Citigroup in a full-fledged opinion by Justice Renwick.  Loreley Fin (Jersey) No 3 Ltd v Citigroup Global Mkts Inc, 2014 NY Slip Op 03358, 1st Dept 5-8-14

 

,

Contract to Share Commissions with Person Not Licensed to Sell Insurance is Illegal and Unenforceable

The Second Department determined an alleged oral agreement(with Tellkamp) to share commissions for the sale of insurance with plaintiff, who initially was not licensed to sell insurance, was unenforceable.  But, for those policies sold after plaintiff was licensed, he might be entitled to commissions under a quantum meruit theory.

At the time that the plaintiff allegedly contracted with Tellkamp and began providing services, the plaintiff was not licensed by the State of New York as an insurance broker or a licensed insurance agent appointed by Phoenix Life, and he was not licensed by the State of New Jersey as an insurance producer (see Insurance Law §§ 2103, 2104, 2112; NJ Stat Ann §§ 17:22A-29, 17:22A-28). Accordingly, he was not legally permitted to receive payment of insurance commissions, either directly from the insurers or indirectly from Tellkamp (see Insurance Law § 2114[a]; NJ Stat Ann § 17:22A-41; Ops Gen Counsel NY Ins Dept No. 07-05-23 [May 31, 2007]). The alleged contract was therefore illegal and is unenforceable … . Ziv v Tellkamp 2014 NY Slip Op 03261, 2nd Dept 5-7-14

 

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