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Consolidation and Assignment of Mortgages Does Not Affect Validity of Original Mortgages

The Second Department explained that the consolidation and assignment of mortgages did not affect the validity of the original mortgages:

In the instant matter, the plaintiff increased the outstanding balance of the first mortgage by borrowing the second mortgage loan and executing the CEMA [Consolidation, Extension and Modification Agreement].  Although the CEMA  created a single mortgage lien, “[a] consolidation of outstanding loans is a device intended for the convenience of only the contracting parties” and “cannot impair liens in favor of parties that are not the contracting parties, which retain their independent force and effect” … . Where, as here, balances of first mortgage loans are increased with second mortgage loans and CEMAs are executed to consolidate the mortgages into single liens, the first notes and mortgages still exist and may be assigned to other lenders … . Further, an assignment of a loan obligation means that the obligation has been transferred, not paid in full and, thus, contrary to the plaintiff’s allegation, does not render the obligation satisfied and discharged.  Benson v Deutsche Bank Natl Trust Inc, 2013 NY Slip Op 05606, 2nd Dept 8-14-13

 

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E-Mail Met All Criteria for a Stipulation of Settlement Including the “Subscribed Writing” Requirement

In a full-fledged opinion by Justice Sgroi, the Second Department determined an e-mail message satisfied the criteria of CPLR 2104 as a binding and enforceable stipulation of settlement.

The e-mail, written by plaintiff’s counsel, read:

“Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form.

“You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.”

The court determined the phrase “Thanks Brenda Greene” rendered the e-mail a subscribed writing:

…[W]e hold that where, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement. Forcelli v Gelco Corp, 2013 NY Slip Op 05437, 2nd Dept 7-24-13

 

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Court in Contract Action Does Not Have Power to Vary 9% Interest Rate

In a case with counterclaims sounding in contract and Labor Law 191-c (1) (re: payment of earned sales commissions after a contract is terminated), the Fourth Department noted that the court does not have discretion to vary the statutory 9% interest rate in a contract action:

…[W]e conclude that the court lacked discretion to vary the statutorily-prescribed interest rate of 9% per annum (see CPLR 5004). As this Court has previously recognized, interest at the rate of 9% per annum is mandatory for “sum[s] awarded because of a breach of performance of a contract” (CPLR 5001 [a]…).  Polyfusion Electronics, Inc v Promark Eletronics, Inc…, 635.1, 4th Dept 7-19-13

 

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Agent Owed No Special Duty to Insured; No Duty to Advise Insured of Unpaid Premiums for Policy Assigned to Insured

The Fourth Department dismissed a negligence cause of action as time-barred and a contract cause of action because the defendant insurance agent owed no special duty to advise the plaintiff.  The plaintiff asked for and received an assignment of a workers’ compensation policy which had been held by nonparty API. Unbeknownst to the plaintiff at the time of the assignment, API owed unpaid premiums. In reversing Supreme Court’s denial of defendant’s motion for summary judgment, the Fourth Department determined the statute of limitations for the negligence cause of action started when the assignment of the workers’ compensation insurance policy to plaintiff was signed, not when plaintiff learned of the unpaid premiums, and the contract between plaintiff and the defendant insurance agent did not impose a special duty on the agent to advise the plaintiff about the unpaid premiums:

…[U]pon the execution of the assignment, which shifted liability for arrears in policy premiums from API to plaintiff, plaintiff’s damages were “sufficiently calculable to permit plaintiff to obtain prompt judicial redress of that injury” and plaintiff therefore had a “complete cause of action” …. The fact that plaintiff may not have learned of the amount owed … on the date on which NYSIF commenced the action against it [for the unpaid premiums], does not alter the analysis for statute of limitations purposes… .  * * *

“ ‘[A]n insurance agent’s duty to its customer is generally defined by the nature of the customer’s request for coverage’ ” ….  “ ‘Absent a specific request for coverage not already in a client’s policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide[ ] or direct a client to obtain additional coverage’ ” …. “To set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy” ….  “A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage”… .

Here, plaintiff requested only that defendant procure the “best policy value” for plaintiff’s workers’ compensation coverage.  This is “the very kind of request that has been repeatedly held to be insufficient” to trigger a special duty requiring defendant to advise plaintiff concerning its insurance coverage… . Defendant procured workers’ compensation coverage for plaintiff through the assignment of API’s policy.  …[T]he assignment itself indicated that plaintiff would be responsible “for the payment of any premiums or additional premiums . . . which may become due on account of this policy up to the effective date of this assignment of interest agreement.”  Plaintiff has thus failed to state a breach of contract cause of action because there was no specific request for coverage that defendant failed to meet… .  5 Awnings Plus, Inc v Insurance Group, Inc, 678, 4th Dept 7-19-13

 

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Contract Between Town and Employer of Injured Employee Did Not Allow Indemnification of Town by Employer

In a Labor Law action seeking damages for a fall from the roof of a building under construction, the Fourth Department determined Supreme Court should have dismissed the town’s motion for contractual indemnification against plaintiff’s employer because the contract was not intended to be retroactive to the day of the injury.  The Fourth Department explained the applicable law as follows:

“Workers’ Compensation Law § 11 prohibits a third-party action against an employer unless the plaintiff sustained a grave injury or there is ‘a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution or indemnification of the [third party plaintiff]’ ”… .  The Town concedes that plaintiff did not suffer a “grave injury,” and that it is entitled to indemnification only if it can demonstrate the existence of a written contract.  “When a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed” … .  Meabon v Town of Poland…, 634, 4th Dept 7-19-13

 

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Release Precluded Civil Rights Action; No Showing Release Signed Under Duress; Releases Signed Under Duress Are Voidable Not Void

The Third Department affirmed the dismissal of plaintiff’s civil rights complaint based upon a release signed by the plaintiff.  The court determined that plaintiff’s allegations did not create a question of fact about whether the release was the product of duress.  The relevant legal principles, including the principle that contracts signed under duress are voidable, not void, were explained as follows:

Under  contract law, a signed release that is clear and unambiguous and knowingly and voluntarily entered into is binding on the parties unless cause exists to invalidate it on one of the recognized bases for setting aside written agreements, including illegality, fraud, mutual mistake, duress or coercion… .  A party such as plaintiff seeking to void a written contract on the ground of duress must meet her burden of demonstrating “(1) threats of an unlawful act by one party which (2) compel[] performance by the other party of an act which it had a legal right to abstain from performing”… .

Moreover, contracts executed under duress are, at most, voidable and not void and, by accepting and retaining the benefits of the second agreement for almost two years and not timely repudiating it, plaintiff affirmed or ratified that agreement, which is binding and no longer voidable on the grounds of duress, which objections are waived… .  Nelson v Lattner Enterprises of NY…, 515927, 3rd Dept 7-18-13

 

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Action Properly Brought by Third Party Beneficiary of Indemnity Agreement

The Second Department affirmed Supreme Court’s denial of a motion to dismiss brought by a defendant who had entered an indemnity agreement with a judgment debtor.  The Second Department explained that plaintiff had stated a cause of action based upon plaintiff’s being a third-party beneficiary of the indemnity agreement:

Pursuant to CPLR 5227, a special proceeding may be commenced by a judgment creditor “against any person who it is shown is or will become indebted to the judgment debtor.” Such a proceeding is properly asserted against one who agreed to indemnify the judgment debtor in the underlying proceeding. The judgment creditor stands in the judgment debtor’s shoes, and may enforce the obligations owed to the judgment debtor by the indemnifying party… * * *.

Here …the judgment debtor … was not a party to the indemnification agreement. However, the Supreme Court properly determined that [the judgment debtor] was an intended third-party beneficiary of the indemnification agreement. Parties asserting third-party beneficiary rights under a contract must establish: (1) the existence of a valid and binding contract between other parties; (2) that the contract was intended for their benefit; and (3) that the benefit to them is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate them if the benefit is lost…. Where performance is rendered directly to a third party, it is presumed that the third party is an intended beneficiary of the contract….

Indemnity contracts are to be strictly construed to avoid reading into them duties which the parties did not intend to be assumed…. Here, however, the intent … to benefit [the judgment debtor] is apparent from the face of the indemnification agreement… . Matter of White Plains Plaza Realty LLC, 2013 NY Slip Op 05220, 2nd Dept 7-10-13

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Written Notice of Defect Under Housing Merchant Implied Warranty Waived by Undertaking Repair

The homeowners (defendants) refused to pay the builder (plaintiff) the final payment under a custom home building contract because of alleged defects in the home.  The homeowners counterclaimed for breach of the housing merchant implied warranty.  The Fourth Department determined the written-notice-of-the-defect warranty-requirement was not an express condition precedent and the  builder had waived the requirement by undertaking the repairs in the absence of written notice:

…[W]e agree with plaintiff that defendants failed to provide written notice of the alleged defects, which is a constructive condition precedent to asserting such a counterclaim (see General Business Law § 777-a [4] [a];…, plaintiff waived the written notice requirement by addressing the defects after receiving defendants’ oral notification of those defects… .We reject plaintiff’s contention that written notice of the alleged defects was an express condition precedent that was bargained for by the parties and could therefore not be waived. Contrary to plaintiff’s contention, the requirements of General Business Law § 777-a, including the written notice req uirement, are implied in every contract for the sale of a new home as a matter of public policy (§ 777-a [5]) and thus may be applied by the courts “to do justice andavoid hardship”….  Rich v Orlando, 521, 4th Dept 7-5-13

 

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Collective Bargaining Agreement Unambiguous—Lifetime Health Benefits Mandated

In concluding the collective bargaining agreement (CBA) unambiguously provided lifetime health insurance coverage to the petitioners pursuant to the CBA in effect upon their retirement, the Third Department wrote:

A  written agreement that is clear and complete on its face must  be  enforced  according  to the  plain meaning  of its terms  …Extrinsic evidence may  be considered to discern the  parties’ intent only  if the  contract is ambiguous,  which  is a question of law for the court to resolve…. In  determining  whether  an  ambiguity  exists, “‘[t]he court  should examine  the  entire contract and  consider the relation of the parties and the circumstances under which it was executed. Particular words  should be  considered, not as if isolated from the context, but in the light of the obligation as a whole  and the intention of the parties as manifested thereby'”… . Pursuant to the CBAs in effect at the time each petitioner retired, an employee who had completed 10 years of service was entitled to health insurance coverage  “in retirement.”    In order to receive that coverage at a rate of 100% per individual and 75% per dependent, the only requirement was that the individual “retire during the term of the contract.”    Matter of Warner, 516038, 3rd Dept 7-3-13

 

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Arbitrator Exceeded Powers Afforded by Collective Bargaining Agreement Re: Time Limitations for Filing Grievances

In affirming Supreme Court’s determination that an arbitrator had exceeded a limitation on his power enumerated in the collective bargaining agreement (CBA), the Third Department explained:

It is well established that an arbitrator’s award is largely unreviewable….  However, such an award may be      vacated upon a showing that it “‘violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on  the arbitrator’s power'” ….  Here, Supreme Court properly concluded that the arbitrator exceeded a specifically enumerated limitation on his power by failing to recognize the grievance and arbitration procedures as outlined in the CBA and, more particularly, the time limitation for filing grievances that is contained therein.  Matter of Adirondack Beverages Corporation…, 516022, 3rd Dept 7-3-13

 

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