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AN UNAMBIGUOUS CONTRACT PROVISION CONSTITUTES “DOCUMENTARY EVIDENCE” WHICH WILL SUPPORT A MOTION TO DISMISS PURSUANT TO CPLR 3211 (CT APP).

The Court of Appeals determined the provision of the contract which prohibited plaintiffs from bringing a breach of contract suit was unambiguous. An unambiguous contract constitutes “documentary evidence” which supports a motion to dismiss:

On a motion to dismiss based on documentary evidence pursuant to CPLR 3211 (a) (1), dismissal is warranted only if the documentary evidence conclusively establishes a defense as a matter of law … . A motion to dismiss based on a written agreement that contains a material ambiguity must be denied because such an agreement does not conclusively establish the asserted defense as a matter of law … . Ambiguity exists if the agreement, “read as a whole, fails to disclose its purpose and the parties’ intent . . ., or when specific language is ‘susceptible of two reasonable interpretations’ ” … . On the other hand, the agreement is unambiguous and should be enforced on its plain terms “if the language it uses has ‘a definite and precise meaning, unattended by danger of misconception . . ., and concerning which there is no reasonable basis for a difference of opinion’ ” … .

Contrary to plaintiffs’ contention, Section 8.05 unambiguously bars them from commencing an action on their own behalf to enforce their third-party beneficiary rights under the Agreement. Section 8.05 negates any right of the Holders except as “expressly set forth” therein, and it expressly sets forth the right of the Required Holders or the Holder Committee to commence certain types of actions or proceedings. Nothing in Section 8.05 expressly sets forth a right of the Holders to commence an action on their own behalf or otherwise. Mulacek v ExxonMobil Corp., 2024 NY Slip Op 02724, CtApp 5-16-24

Practice Point: Here the contract unambiguously limited the authority to bring a breach of contract action to a certain class of shareholders which did not include plaintiffs. The contract constituted “documentary evidence” which supported dismissal of the complaint pursuant to CPLR 3211(a)(1).

 

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A STIPULATIION OF SETTLEMENT DOES NOT IMPOSE A DUTY UPON A PERSON NOT A PARTY TO THE STIPULATION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a person who was not a party to the stipulation of settlement in a divorce action (Kamaras) cannot be sued for an alleged violation of the stipulation:

The plaintiff opposed Kamaras’s motion for summary judgment, contending, among other things, that Kamaras knew of the stipulation and its terms and that Kamaras had a “duty” to “have [Chantal] execute the transfer documents to the marital property and return same to [Walner’s counsel].” … .

“‘A stipulation of settlement which is incorporated but not merged into a judgment of divorce is a contract subject to principles of contract construction and interpretation'” … . “It is well-settled law that parties to a contract cannot, under its terms, impose any liability upon a stranger to that contract” … . “One cannot be held liable under a contract to which he or she is not a party” … .

Here, Kamaras demonstrated his entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against him by demonstrating that he was not a party to the stipulation and had not assumed any obligations under the stipulation … . Tema v Tema, 2024 NY Slip Op 02720, Second Dept 5-15-24

Practice Point: Even if a person is aware of the terms of a stipulation of settlement, if that person is not a party to the stipulation, the stipulation does not impose a duty to act on them.

 

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IN THIS CAR ACCIDENT CASE, PLAINTIFF RAISED A QUESTION OF FACT WHETHER THE RELEASE SHE SIGNED WAS THE RESULT OF MUTUAL MISTAKE CONCERNING THE EXTENT OF HER INJURIES (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court, determined there was a question of fact whether the release signed by plaintiff after a car accident was the result of mutual mistake. At the time plaintiff signed the release it appeared her injuries, including whiplash, involved only her cervical, thoracic and lumbar regions. After signing the release she was diagnosed as having suffered a mild traumatic brain injury:

… [I]nasmuch as the submissions indicate that plaintiff had been diagnosed with neck and back injuries only at the time she signed the release and that plaintiff’s symptoms were not medically attributed to postconcussive syndrome until after the execution of the release with additional uncertainty in the interim, we conclude that plaintiff raised an issue of fact whether, at the time the release was executed, the parties were under “[a] mistaken belief as to the nonexistence of [a] presently existing injury,” i.e., a traumatic brain injury … . We therefore … reinstate the complaint. DiDomenico v McWhorter, 2024 NY Slip Op 02634, Fourth Dept 5-10-24

Practice Point: A release signed when both parties are not aware of an existing injury may be invalid as the result of mutual mistake.

 

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ALTHOUGH PLAINTIFF WAS AWARDED SUMMARY JUDGMENT IN THIS QUANTUM MERUIT CASE. DEFENDANT DID NOT WAIVE A JURY TRIAL AND WAS THEREFORE ENTITLED TO A JURY TRIAL ON DAMAGES; BENCH-TRIAL VERDICT REVERSED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined defendant never waived a jury trial in this quantum-meruit action. Therefore, although plaintiff was granted summary judgment, defendant was entitled to a jury trial on damages:

… [T]he order awarding damages must be reversed, and the judgment vacated … . Upon granting plaintiff summary judgment for liability on its quantum meruit claim, Supreme Court conducted a hearing on attorneys’ fees. However, claims seeking recovery under the “quasi-contractual theory of quantum meruit” for “only money damages” are considered “actions at law” entitling parties to a trial by jury … . Defendant did not waive a jury trial, but instead filed his jury demand “within fifteen days after service of the note of issue,” and more than a year before the purported attorney fee hearing was held (CPLR 4102[a]). Defendant’s “right to a jury trial [wa]s not lost, when [the] motion [and cross-motion] for summary judgment [were] decided against [him]” … , yet Supreme Court deprived him of this right by conducting a bench trial on damages … . Hilton Wiener LLC v Zenk, 2024 NY Slip Op 02595, First Dept 5-9-24

Practice Point: Quantum meruit is an action at law entitling parties to a jury trial.

Practice Point: Here defendant never waived a jury trial and, although summary judgment was awarded to plaintiff, defendant was entitled to a jury trial on damages.

 

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THE COMPLAINT SUFFICIENTLY ALLEGED BOTH BREACH OF CONTRACT AND ANTICIPATORY REPUDIATION OF THE CONTRACT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Wilson, in a factually-complex case which cannot be fairly summarized here. determined the complaint adequately alleged both a breach and an anticipatory repudiation of a contract which encompassed the replacement by plaintiff developer of defendant’s single room occupancy building with a mixed-use residential and commercial building for a 40-year lease term:

” ‘An anticipatory breach of contract by a promisor is a repudiation of [its] contractual duty before the time fixed in the contract for . . . performance has arrived’ ” … . Under the doctrine of anticipatory repudiation or anticipatory breach, “if one party to a contract repudiates [its] duties thereunder prior to the time designated for performance and before [it] has received all of the consideration due . . . thereunder, such repudiation entitles the nonrepudiating party to claim damages for total breach” … . To constitute repudiation, “there must be some express and absolute refusal to perform” … that is “positive and unequivocal” … .

The first cause of action alleges [defendant] engaged in multiple acts that breached the ground lease agreement: a set of acts in refusing to sign the cure agreement tendered in 2015, and a 2021 statement that it would never sign any agreement. Contrary to the conclusions of the courts below, a claim for breach and a claim for anticipatory repudiation can both be stated on these facts at the pleading stage. * * *

Taking the facts alleged in the complaint as true, which we must do at this stage of the proceeding, [plaintiff] sufficiently demonstrated that [defendant’s] 2021 statement was both a new development and a distinct “material breach that escalated, for the first time, to an unequivocal repudiation” … . Audthan LLC v Nick & Duke, LLC, 2024 NY Slip Op 02223, CtApp 4-25-24

Practice Point: Here the complaint adequately alleged both a breach of contract and an anticipatory repudiation of the contract.

 

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PLAINTIFF IN THIS TRAFFIC ACCIDENT CASE ALLEGED DEFENDANT DRIVER WAS DEFENDANT COMPANY’S EMPLOYEE AND WAS ACTING WITHIN THE SCOPE OF EMPLOYMENT AT THE TIME OF THE ACCIDENT; DEFENDANT COMPANY FAILED TO DEMONSTRATE THE DRIVER WAS AN INDEPENDENT CONTRACTOR, NOT AN EMPLOYEE; THE FACT THAT THE EMPLOYMENT CONTRACT USES THE TERM “INDEPENDENT CONTRACTOR” IS NOT DISPOSITIVE OF THE ISSUE (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendant employer in this traffic accident case did not demonstrate the defendant driver was an independent contractor as opposed to an employee acting within the scope of employment:

… [Plaintiff] allegedly was injured when a vehicle he was operating collided with a vehicle owned and operated by the defendant Luis F. Leal. * * * The plaintiffs alleged … that Leal was [defendant] Publishers’ employee, and that Leal was acting within the scope of his employment at the time of the accident. …

“The doctrine of respondeat superior renders a master vicariously liable for a tort committed by his [or her] servant within the scope of employment. Conversely, the general rule is that an employer who hires an independent contractor is not liable for the independent contractor’s negligent acts” … . “[T]he critical inquiry in determining whether an employment relationship exists pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results” … . “Factors relevant to assessing control include whether the worker (1) worked at his [or her] own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer’s payroll and (5) was on a fixed schedule” … . “The fact that a contract exists designating a person as an independent contractor is to be considered, but is not dispositive” … . Whether an actor is an independent contractor or an employee is usually a factual issue for a jury … . Brielmeier v Leal, 2024 NY Slip Op 02163, Second Dept 4-24-24

Practice Point: An employer may be responsible for the negligence of an employee, but is not responsible for the negligence of an independent contractor. The fact that the employment contract uses the term “independent contractor” is not dispositive. The relevant criteria are explained.

 

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A BREACH OF CONTRACT ACTION SHOULD NOT BE CONSOLIDATED WITH A TORT ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the breach of contract action and the fraudulent conveyance action should not have been consolidated:

In 2016, plaintiff commenced a breach of contract action against defendant eCommission Solutions, LLC (eCommission). In 2022, plaintiff commenced a fraudulent conveyance action against eCommission and its president, Paul Hoffman, and his wife, alleging that Hoffman transferred millions from eCommission to himself with the intent to defraud creditors like plaintiff.

… When one action sounds in contract and the other in tort, it is inappropriate to grant consolidation … . Indeed, the breach of contract and fraudulent conveyance actions present different questions of law and fact … . Moreover, the fraudulent conveyance action will be moot if plaintiffs fail to win the breach of contract action … . Finally, the two actions are at different stages, so that consolidation would lead to delay in trying the breach of contract action … .

Discovery in the fraudulent conveyance action should be stayed until the breach of contract action is resolved … . 3B Assoc. LLC v Ecommission Solutions, LLC, 2024 NY Slip Op 02086, First Dept 4-18-24

Practice Point: A breach of contract action should not be consolidated with a tort action (here an action for fraudulent conveyance).

 

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A FORUM SELECTION CLAUSE IN AN INSURANCE POLICY WHICH VIOLATES NEW YORK LAW IS NOT ENFORCEABLE (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Miller, determined that the forum selection clause in an insurance policy which violates New York law is not enforceable. The opinion is comprehensive and discusses several substantive civil procedure, contract law, corporation law, insurance law, workers’ compensation law and public policy issues which cannot fairly be summarized here:

This action is just one of many such actions commenced across the country alleging that the defendant Applied Underwriters, Inc. (hereinafter Applied Underwriters), and affiliated entities, all subsidiaries of Berkshire Hathaway, Inc., deceptively circumvented state laws and regulations in the marketing and sale of an unlawful workers’ compensation insurance program. Here, the defendants seek to enforce a forum selection clause, in favor of Nebraska, contained in an insurance policy that New York State regulators have found violates New York law. While parties are generally free to select a forum in which to resolve their contractual disputes, here, where it is alleged by the plaintiff, and found by New York State regulators, that New York law has been violated, a foreign corporation may not profit from such violation to the detriment of New York employers and workers. The forum selection clause contained in an illegal insurance policy is not enforceable. As a matter of public policy, New York companies shall not be compelled to litigate in Nebraska to vindicate their rights. Air-Sea Packing Group, Inc. v Applied Underwriters, Inc., 2024 NY Slip Op 02032, Second Dept 4-17-24

Practice Point: A forum selection clause (designating Nebraska as the forum) in an insurance policy which violates New York law is not enforceable.

 

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PLAINTIFF’S COMPLAINT STATED CAUSES OF ACTION FOR FAILURE TO PAY WAGES UNDER THE “NO WAGE THEFT LOOPHOLE ACT” AND RETALIATION (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s claims for failure to pay wages and retaliation pursuant to Labor Law sections 193, 198 and  215 should not have been dismissed:

The court incorrectly dismissed plaintiff’s Labor Law claims on the ground that the dispute was governed solely by the parties’ contract. Contrary to defendants’ contention, Labor Law claims for unpaid wages can be asserted alongside claims for breach of an employment contract … . …

The complaint … adequately states a claim for “unauthorized failure to pay wages” under the No Wage Theft Loophole Act … . Plaintiff alleges that his employment contract entitled him to an annual salary of $425,000 per year, which would increase in six months to $450,000 per year unless his performance was deemed “unsatisfactory,” and a cash bonus incentive … .” These “earnings . . . for labor or services rendered” constituted “wages” within the meaning of Labor Law 190(1) … . …

The complaint also states a claim for retaliation. Plaintiff’s notice of resignation subject to cure constituted protected activity, as plaintiff “made a complaint” to defendants that they had “engaged in conduct that [plaintiff], reasonably and in good faith, believe[d]” constituted unlawful withholding of his earned wages, specifically his nondiscretionary annual bonus (Labor Law § 215[1][a]). Plaintiff’s characterization of the bonus as “formulaic and a nondiscretionary wage” evidences his belief that he had a legal entitlement to the bonus and that defendants’ withholding of it was unlawful … . Neu v Amelia US LLC, 2024 NY Slip Op 02019, First Dept 4-16-24

Practice Point: Here plaintiff alleged he was not paid the salary and bonuses called for in his employment contract. The complaint stated causes of action for “unauthorized failure to pay wages” and “retaliation” under the Labor Law.

 

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