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Ambiguity of Contract Is a Question of Fact Where Credibility of Extrinsic Evidence Must Be Assessed

The First Department determined there was question of fact whether defendant signed a note in his personal as well as corporate capacity. The court explained the relevant analysis where a contract is ambiguous:

A contract is ambiguous if “on its face [it] is reasonably susceptible of more than one interpretation” … . The determination whether a contract is ambiguous is a question of law for the court … . If the court deems a contract ambiguous, it may consult extrinsic evidence to resolve the ambiguity … . However, where “the determination of the parties’ intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact” … .  Chen v Yan, 2013 NY Slip Op 05957, 1st Dept 9-24-13

 

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Authenticity of Document Not Demonstrated

In finding the existence of a contract had not been demonstrated, the Second Department explained the relevant evidentiary rules concerning the authenticity of a document submitted as proof of a contract:

The general rule is that “[a] writing is ordinarily not relevant at trial unless evidence had been introduced to show that it was made, signed or adopted by a particular person” (Prince, Richardson on Evidence, § 9-101 [2008]). “A private document offered to prove the existence of a valid contract cannot be admitted into evidence unless its authenticity and genuineness are first properly established” … . The authenticity of a document may be established by submitting the document with a certificate of acknowledgment …, which was not done here. Nor was any other evidence submitted as to the validity of the documents in issue. Fairlane Fin Corp v Greater Metro Agency, Inc, 2013 NY Slip Op 05875, 9-18-13

 

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Question of Fact Whether General Releases Encompassed Environmental Damage from Leaking Fuel Tank

The Second Department determined that there was a question whether general releases contemplated damages related to environmental contamination and the action should not have been dismissed based on the releases. The action concerned gasoline which had leaked into the ground when defendant had leased the plaintiff’s property.  The court explained:

Generally, a valid release completely bars an action on a claim that is the subject of the release … . Principles of contract law govern the interpretation of a release; “a release that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms'” … . Nonetheless, as the Court of Appeals has recognized with respect to a general release, “[t]here is little doubt . . . that its interpretation and limitation by the parol evidence rule are subject to special rules. These rules are based on a realistic recognition that releases contain standardized, even ritualistic, language and are given in circumstances where the parties are sometimes looking no further than the precise matter in dispute that is being settled. Thus, while it has been held that an unreformed general release will be given its full literal effect where it is directly or circumstantially evident that the purpose is to achieve a truly general settlement …, the cases are many in which the release has been avoided with respect to uncontemplated transactions despite the generality of the language in the release form” … .

Further, “[t]he meaning and extent of coverage of a release necessarily depend, as in the case of contracts generally, upon the controversy being settled and upon the purpose for which the release was actually given'” … . A general release may not be construed to cover matters that the parties “did not desire or intend to dispose of” … .

Here, the two releases at issue, whether construed together or separately, are ambiguous regarding whether the parties intended that they cover unknown claims for environmental contamination… .  Burnside 711 LLC v Amerada Hess Corp, 2013 NY Slip Op 05869, 2nd Dept 9-18-13

 

No Evidence Release Invalidated by Fraud or Duress

In upholding the validity of a release, the Second Department explained the relevant principles:

” A release is a contract, and its construction is governed by contract law'” … . “A release may be invalidated . . . for any of the traditional bases for setting aside written agreements'” … . However, “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'” … .

Here, the plaintiff failed to demonstrate that there was fraud, duress, or some other fact sufficient to void the release. Davis v Rochdale Vil, Inc, 2013 NY Slip Op 05874, 2nd Dept 9-18-13

 

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Relationship of Prenuptial Agreement to Temporary Maintenance and Award of Attorneys Fees

The Second Department determined that temporary maintenance was not properly granted in light of the facts (where the prenuptial agreement did not expressly deal with the topic) and legal fees in excess of the limit in the prenuptial agreement were properly granted.  The court explained the relevant analyses as follows:

“As with all contracts, prenuptial agreements are construed in accord with the parties’ intent, which is generally gleaned from what is expressed in their writing” …. “Where a prenuptial agreement is clear and unambiguous on its face, the intent of the parties is gleaned from the four corners of the writing as a whole with a practical interpretation of the language employed so that the parties’ reasonable expectations are met” … .

Contrary to the plaintiff’s contention, the parties’ prenuptial agreement did not expressly preclude an award of temporary maintenance pendente lite, nor did the defendant expressly waive such an award under the terms of the agreement… .   On the record presented, including evidence of the defendant’s expenses, the defendant’s reasonable needs were more than adequately met. Accordingly, under the circumstances of this case, the Supreme Court improvidently exercised its discretion in directing the plaintiff to pay temporary maintenance in the sum of $1,000 per month… . * * *

Supreme Court properly awarded the defendant interim counsel fees, notwithstanding a provision in the prenuptial agreement limiting, to the sum of $10,000, the plaintiff’s obligation to pay such fees incurred by the defendant in any divorce action. Because of a strong public policy favoring the resolution of matrimonial matters on a level playing field …, the determination of whether to enforce an agreement waiving the right of either spouse to seek an award of an attorney’s fee is to be made “on a case-by-case basis after weighing the competing public policy interests in light of all relevant facts and circumstances both at the time the agreement was entered and at the time it is to be enforced” … . Here, the parties are involved in extensive litigation concerning child custody, a matter not expressly addressed in their prenuptial agreement. Moreover, the plaintiff’s net worth is more than $13 million and his monthly gross income exceeds $45,000, while the defendant has no income other than what she is receiving pursuant to the agreement. Abramson v Gavares, 2013 NY Slip Op 05861, 2nd Dept 9-18-13

 

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Summary Judgment Properly Granted to Snow-Removal Contractor—”Espinal” Exceptions Explained

In affirming the grant of summary judgment to defendant snow-removal contractor (Lemp) in a slip and fall case, the Second Department clearly explained the applicable law, including the “Espinal” exceptions to the rule a contractor is not liable to third parties:

As a general rule, a limited contractual obligation to provide snow removal services does not render the contractor liable in tort for the personal injuries of third parties … . However, in Espinal v Melville Snow Contrs. (98 NY2d 136, 140), the Court of Appeals recognized that exceptions to this rule apply (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 another party’s duty to maintain the premises safely.

Contrary to the plaintiffs’ contentions, the defendant Lemp Landscapers, Inc. (hereinafter Lemp), made a prima facie showing of its entitlement to judgment as a matter of law by offering proof that the injured plaintiff was not a party to its snow removal contract with the defendant Woodland Pond Condominium Association (hereinafter Woodland), and that it thus owed no duty of care to the injured plaintiff … . Since the plaintiffs did not allege facts in their complaint or bill of particulars which would establish the possible applicability of any of the Espinal exceptions, Lemp, in establishing its prima facie entitlement to judgment as a matter of law, was not required to affirmatively demonstrate that these exceptions did not apply … .

In opposition to Lemp’s prima facie showing, the plaintiffs offered no evidence to support their contentions that Lemp launched a force or instrument of harm by creating or exacerbating the icy condition that allegedly caused the plaintiff Ernest Rudloff’s fall … . By merely plowing the snow in accordance with the contract and leaving some residual snow or ice on the plowed area, Lemp cannot be said to have created a dangerous condition and thereby launched a force or instrument of harm. Moreover, a claim that a contractor exacerbated an existing condition requires some showing that the contractor left the premises in a more dangerous condition than he or she found them … . Therefore, even if Lemp failed to sand or salt the roadway on which the injured plaintiff fell, the plaintiffs have offered nothing more than speculation that the failure to perform that duty rendered the property less safe than it was before Lemp started its work … . Rudloff v Woodland Pond Condominium Assn, 2013 NY Slip Op 05812, 2nd Dept 9-11-13

 

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Question of Fact Raised About Whether Snow-Removal Contractor Created or Exacerbated the Dangerous Condition

The Second Department affirmed the denial of summary judgment to a snow-removal contractor (SCS) in a slip and fall case.  The plaintiff fell on a mound of snow between the street and a sidewalk. The court explained:

A contractor may be held liable for injuries to a third party where, in undertaking to render services, the contractor entirely displaces the duty of the property owner to maintain the premises in a safe condition, the injured party relies on the contractor’s continued performance under the agreement, or the contractor negligently creates or exacerbates a dangerous condition … . SCS demonstrated its prima facie entitlement to judgment as a matter of law dismissing the amended complaint insofar as asserted against it … by demonstrating that the injured plaintiff was not a party to the snow and ice removal contract, and that it did not owe a duty to him … . In opposition, however, the plaintiffs raised a triable issue of fact as to whether SCS’s alleged negligence created or exacerbated the hazard which was a proximate cause of the accident… . LaGuarina v Metropolitan Trans Auth, 2013 NY Slip Op 05800, 2nd Dept 9-11-13

 

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Certificates of Bond Insurance Are Insurance Policies to Be Interpreted Under Insurance and Contract Law—Restructuring in Bankruptcy and Reduction of Value of the Bonds Did Not Affect the Insurer’s Obligation to Cover the Bond Payments

In a full-fledged opinion by Justice Gische, the First Department determined the defendant, which issued certificates of bond insurance (CBI’s) insuring bonds against nonpayment, was obligated to cover payment on the bonds even after a bankruptcy restructuring in which the bonds were revalued:

Defendant acknowledges that it would have been contractually obligated to pay for any loss suffered by plaintiffs under the original bonds when they matured, in the event of the issuer’s bankruptcy, but it claims that as a result of the Restructuring Plan that was adopted, the original bonds were cancelled, completely relieving it of any obligation to pay under the CBIs. The court rejects this position because it is inconsistent with the terms of the policies and contrary to law.

The CBIs are financial guaranty insurance policies, which defendant is specially licensed to sell throughout the United States, including New York. …The policies are primarily governed by Article 69 of the Insurance Law. While they have some unique characteristics, they are generally subject to the same laws and principles underlying insurance policies in general (see Insurance Law § 6908). Thus, CBIs are policies of insurance that should be analyzed in accordance with general principles of contract interpretation and insurance law … .

Insurance policies are to be afforded their plain and ordinary meaning and interpreted in accordance with the reasonable expectations of the insured party… . Exclusions from policy obligations must be in clear and unmistakable language …, and if the terms of a policy are ambiguous, any ambiguity must be construed in favor of the insured and against the insurer … . …

The plain meaning of the contractual language contained in the CBI requires defendant to absolutely and unconditionally guarantee payment on the individual bonds in the event of the issuer’s nonpayment. Issuer insolvency is clearly a covered risk, as is bankruptcy, which is a societal hallmark of insolvency. These are the very risks for which defendant received payment of premiums. The CBIs were noncancellable, with a narrow exception not applicable here, and did not provide for any exclusion in the event of bankruptcy. … The restructuring occurred only after the default under the trust agreement had occurred. Confirmation of the restructuring plan made it a certainty that the issuer would not make any future payments to plaintiffs on the original bonds at their respective maturity dates. It is the restructuring of the bonds and their reissuance in a lower principal amount with a longer payment period that concretely represents that plaintiffs have sustained a loss. Neither the restructuring plan, nor the issuer’s discharge of debt in the bankruptcy proceeding, changed the obligations under the parties’ contracts of insurance. Oppenheimeer AMT-Free Municipals v ACA Fin. Guar. Corp., 2013 NY Slip Op 05768, 1st Dept 9-3-13

 

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A Contract Between a Hospital and a Security Company Was Not Invalidated by the Failure to Spell Out the Duties of the Security Personnel—Missing Element Filled in by Conduct; Interplay of Contract and Tort Liability to Third Parties Discussed

The First Department, in a full-fledged opinion by Justice Renwick, determined a security company (Burns), which had contracted to provide security at a psychiatric hospital (RUMC), was not liable, under contract or tort, to the family of a patient who escaped from the facility, engaged in a gun battle with police, and was killed. The opinion includes good discussions of contract liability to third parties versus tort liability to third parties. and the potential availability of contribution among joint tortfeasors that may apply even where no contractual or tort duty exists.  The First Department determined the contractual exclusion of liability to third parties was valid, the security company owed no duty to the plaintiff in tort, and contribution did not apply.  The central point of the opinion was that a security contract can be enforceable even if the precise duties of the security personnel are not spelled out in the contract. The missing element was not deemed essential and could be filled in by conduct:

…[C]ourts have consistently held that “where [as here] it is clear from the language of an agreement that the parties intended to be bound and there exists an objective method for supplying a missing term, the court should endeavor to hold the parties to their bargain”… . Under such circumstances, “[s]triking down a contract as indefinite and in essence meaningless is at best a last resort” …  .

In this case, there is a clear method for supplying the missing term, the parties’ course of conduct; all other terms were adopted directly from the written agreement. Thus, the only thing that was absent in this contract was a writing evincing the particulars of a non essential provision, which was later filled in by the parties’ mutual consent and course of conduct.  Aiello v Burns Intl. Sec. Servs. Corp., 2013 NY Slip Op 05767, 1st Dept 9-3-13

 

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Temporary Maintenance Award Not Waived by Prenuptial Agreement Waiving Only the Final Award of Alimony or Maintenance

The First Department held that Supreme Court properly awarded temporary maintenance to the wife (defendant) even though the wife waived alimony and maintenance in the prenuptial agreement:

We reject plaintiff’s argument that defendant waived temporary maintenance in the parties’ prenuptial agreement. Notwithstanding that defendant waived any claim to a final award of alimony or maintenance in the prenuptial agreement, the court was entitled, in its discretion, to award pendente lite relief in the absence of an express agreement to exclude an award of temporary maintenance… . Lennox v Weberman, 2013 NY Slip Op 05766, 1st Dept 9-3-13

 

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