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Wife’s Concealment of Terminal Cancer Did Not Warrant Rescission of Divorce Settlement Agreement

The Second Department determined the wife’s concealment of the condition of her health (terminal cancer) during the negotiation of a divorce did not constitute actionable fraud.  The husband sought to rescind the agreement after learning of his wife’s illness (after her death), alleging he would not have entered the agreement had he been aware of it:

While a party’s health is material to the equitable distribution of marital assets (Domestic Relations Law § 236[B][5][d][2]…), the plaintiff does not challenge the manner in which the parties agreed to distribute the marital assets … . Rather, the plaintiff only claims that he would not have agreed to settle with the wife at all had he known of her condition. Contrary to the plaintiff’s contention, the wife’s alleged misrepresentations or omissions concerning her health were not material to the plaintiff’s decision as to whether to enter into any settlement agreement at all with the wife and, thus, would not warrant the equitable remedy of rescission … . To hold otherwise would be to recognize, contrary to public policy favoring settlement and fair dealing …, that the plaintiff was entitled to a “fair” opportunity to stall in settling the action with the goal of retaining all of the marital assets upon the wife’s death. Equity is not served by permitting the plaintiff to rescind the separation agreement for lack of this opportunity.  Petrozza v Franzen, 2013 NY Slip Op 05739, 2nd Dept 8-28-13

 

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Snow Removal Contractor Owed Duty to Slip and Fall Plaintiff

The Second Department determined plaintiff in a slip and fall case was owed a duty of care by a snow-removal contractor.  The Second Department explained the relevant law and its application to the facts of the case as follows:

“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), the Court of Appeals identified three situations where a party who enters into a contract to render services may be said to have assumed a duty of care and thus be potentially liable in tort to third persons: (1) where the contracting party, in failing to exercise reasonable care in the performance of its duties, launches an instrument of harm or creates or exacerbates a hazardous condition, (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 the other party’s duty to maintain the premises safely (id. at 140)” … .

Here, the plaintiff demonstrated her prima facie entitlement to judgment as a matter of law on the issue of liability… [—-] the defendant’s oral agreement with the property owner constituted a comprehensive and exclusive contractual obligation for the defendant to maintain the exterior of the subject premises and to clear the parking lot and walkways of snow and ice. This was sufficient to support a duty of care running from the defendant to the plaintiff based on the defendant’s displacement of the property owner’s duty to maintain the premises safely… . Sarisohn v Plaza Realty Servs Inc, 2013 NY Slip Op 05741, 2nd Dept 8-28-13

 

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Constructive Condition Precedent Properly Fashioned by Court

In a full-fledged opinion by Justice Friedman, the First Department agreed with Supreme Court’s fashioning of a constructive condition precedent for the collection of additional rent under a lease. The First Department quoted the controlling law from the Court of Appeals:

“A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises’ … . Most conditions precedent describe acts or events which must occur before a party is obliged to perform a promise made pursuant to an existing contract, a situation to be distinguished conceptually from a condition precedent to the formation or existence of the contract itself . . . .

“Conditions can be expressed or implied. Express conditions are those agreed to and imposed by the parties themselves. Implied or constructive conditions are those imposed by law to do justice’ … . Express conditions must be literally performed, whereas constructive conditions, which ordinarily arise from language of promise, are subject to the precept that substantial compliance is sufficient. The importance of the distinction has been explained by Professor Williston:

Since an express condition . . . depends for its validity on the manifested intention of the parties, it has the same sanctity as the promise itself. Though the court may regret the harshness of such a condition, as it may regret the harshness of a promise, it must, nevertheless, generally enforce the will of the parties unless to do so will violate public policy. Where, however, the law itself has imposed the condition, in absence of or irrespective of the manifested intention of the parties, it can deal with its creation as it pleases, shaping the boundaries of the constructive condition in such a way as to do justice and avoid hardship’. (5 Williston, Contracts § 669, at 154 [3d ed].)” Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co. (86 NY2d 685, 690-691 [1995]).  Mount Sinai Hosp v 1998 Alexander Karten Annuity Trust, 2013 NY Slip Op 05667, 1st Dept 8-20-13

 

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Employment Contract Deemed Hiring “At Will”—No Fixed Duration

The Second Department affirmed the dismissal of a breach of contract cause of action which alleged defendant breached an employment contract when the position which was the subject of the contract was withdrawn. In finding the agreement described a hiring “at will,” the court described the applicable principles as follows:

“New York adheres to the traditional common-law rule that absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party” … . In support of their motion to dismiss the complaint, the defendants submitted the … employment contract, setting forth the terms of the employment relationship. The … employment contract contained a merger clause reciting that the writing encompassed the entire agreement between the parties. Contrary to the plaintiffs’ contention, the …employment contract did not provide for a fixed or definite term of employment, as it expressly provided that [plaintiff] was to be employed “for an indefinite period of time.” Moreover, the …employment contract provided that either party could, without notice, terminate the employment relationship with immediate effect during the first two months after its execution, and thereafter with certain notice. Further, the plaintiffs themselves alleged in the complaint that, pursuant to the … employment contract, [plaintiff’s] employment was “to continue without any specific date for termination.” Thus, [plaintiff] was presumptively an at-will employee …. The plaintiffs failed to allege facts that would rebut the at-will presumption or limit [defendants’] right to freely terminate [plaintiff’s] employment.  Minovici v Belkin BV, 2013 NY Slip Op 05618, 2nd Dept 8-14-13

 

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Choice of Law Criteria Re: Insurance Contracts Explained

The Second Department, in reversing Supreme Court’s finding that New York, not New Jersey, law applied to a disclaimer of insurance coverage based on late notice, explained the relevant choice of law principles:

The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved”…. Here, there is a clear conflict inasmuch as New Jersey law requires insurers asserting a disclaimer based on late notice to show that they were prejudiced by the untimely notice…, while, with respect to an identical disclaimer made under an insurance policy that, like the one in dispute here…, New York law does not ….

In contract cases, the court then applies a “center of gravity” or “grouping of contacts” analysis in order to determine which State has the most significant relationship to the transaction and the parties … . The court considers significant contacts such as the place of contracting, the place of negotiation and performance, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties … .”In the context of liability insurance contracts, the jurisdiction with the most significant relationship to the transaction and the parties’ will generally be the jurisdiction which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other [jurisdiction] has a more significant relationship’ “…. Where the covered risks are spread over multiple states, “the state of the insured’s domicile should be regarded as a proxy for the principal location of the insured risk” … . Jimenez v Monadnock Constr Inc, 2013 NY Slip Op 05616, 2nd Dept 8-14-13

 

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Extrinsic Evidence Properly Considered to Determine Intent of Parties Re: Ambiguous Deed

In an action to quiet title, the Second Department determined a deed was ambiguous on its face and extrinsic evidence was therefore admissible to ascertain the intent of the parties:

Real Property Law § 240(3) provides that “[e]very instrument creating [or] transferring . . . real property must be construed according to the intent of the parties, so far as such intent can be gathered from the whole instrument, and is consistent with the rules of law.” Where the language used in a deed is ambiguous such that it is susceptible of more than one interpretation, the courts will look beyond the written instrument to the surrounding circumstances … . Moreover, ” courts may as a matter of interpretation carry out the intention of a contract by transposing, rejecting, or supplying words to make the meaning of the contract more clear . . . However, such an approach is appropriate only in those limited instances where some absurdity has been identified or the contract would otherwise be unenforceable either in whole or in part'” … .  Here, …the 1989 deed purporting to convey the subject property to IDI was ambiguous on its face. Under such circumstances, it was proper for the court to look to extrinsic evidence in order to effectuate the intent of the parties.  Al’s Atl Inc v Shatma, LLC, 2013 NY Slip Op 05604, 2nd Dept 8-14-13

 

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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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