You are here: / Contract Law
, , ,

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

 

, ,

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

 

, ,

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

,

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

 

, ,

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

 

, ,

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

 

, ,

Consent Order Not Appealable; Open Court Stipulation Valid

The Second Department noted that an order made on consent is not appealable and affirmed Family Court’s determination that a stipulation entered into in open court was valid:

Stipulations of settlement are favored by the courts and a stipulation made on the record in open court will not be set aside absent a showing that it was the result of fraud, overreaching, mistake, or duress”…. Here, the Family Court conducted a proper allocution of the mother, determining that she understood the terms of the stipulation, that she had sufficient time to consult with her attorney, and that she consented to the terms of the stipulation, and thus properly determined that she voluntarily and knowingly accepted the terms of the stipulation…. The mother’s contentions in support of her motion that she felt “forced into settling” and “misle[]d” by her attorney, and that she “did not fully understand what [she] was agreeing to” are insufficient to establish a claim of mistake or duress so as to warrant setting aside the stipulation of settlement… . Matter of Strang v Rathbone, 2013 NY Slip Op 05088, 2nd Dept 7-3-18

 

 

,

Contractual Relationship Did Not Preclude Causes of Action Sounding in Tort

In affirming most of Supreme Court’s denial of a defendant’s motion for summary judgment, the Fourth Department explained why the economic loss doctrine did not preclude plaintiff’s recovery in tort, in spite of the contractual relationship between plaintiff and defendant and the contract-based causes of action in the complaint.  Pursuant to two contracts, the defendant supplied electronics and fluorescent-tube recycling systems which allegedly failed resulting in mercury contamination:

…[T]he economic loss doctrine does not preclude plaintiff from recovering in tort as a matter of law.“ Pursuant to that doctrine, a plaintiff may not recover in tort against a manufacturer for economic loss that is contractually based, ‘whether due to injury to the product itself or consequential losses flowing therefrom’ ”…. Where, however, there is harm to persons or property other than the property that is the subject of the contract, a plaintiff is entitled to recover in tort… .  The factors to consider are “the nature of the defect, the injury, the manner in which the injury occurred, and the damages sought”…. We conclude that defendant failed to meet its initial burden on the motion with respect to the causes of action sounding in tort because the evidence submitted by defendant establishes that the mercury contamination of plaintiff’s facility, which was allegedly caused by defendant’s products, caused damage to persons and property other than the property that was the subject of the contracts.   Electrical Waste Recycling Group, Limited v Andela Tool & Machine, Inc…, 626, 4th Dept 6-28-13

 

,

The Term “Casualty” In Lease Covered Flooding Due to Malfunctioning HVAC System

The First Department determined Supreme Court should have denied plaintiff’s motion for summary judgment. Plaintiff was the owner and landlord of a building and defendant was a commercial tenant.  Section 7.04 of the lease stated: “each party releases the other with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damage or destruction with respect to its property by fire or other casualty . . . occurring during the terms of this Lease” … .  A gauge in the HVAC system burst, causing flooding. Plaintiff sued defendant for the cost of repair, alleging defendant failed to maintain the HVAC system.  The issue was whether the word “casualty” in the lease meant “act of god” only, or included damage from human error.  The First Department (reversing Supreme Court) determined human error was included in the meaning of “casualty:”

[W]here a clause is unambiguous, contract language and terms are to be given their plain and ordinary meaning…. Here, the lease provides that the parties agreed on mutual releases in case of damage “by fire or other casualty.” In light of this phrasing, in which “other casualty” is placed in the same category as “fire,” it cannot be said that the word “casualty” excludes events resulting from human error. On the contrary, a fire might have myriad causes, many of which do result from human error. However, the parties did not restrict the types of fires that would fall under the release — for example, by stating that only fires caused by severe weather or other natural causes would trigger a release from liability. Accordingly, the phrase “fire or other casualty,” as construed by an ordinary business person, would describe an event, rather than the cause of that event. 45 Broadway Owner LLC v NYSA-ILA Pension Trust Fund, 2013 NY Slip Op 04895, 1st Dept 6-27-13

 

Exceptions to “No-Damage-for-Delay” Clause in Construction Contract Explained

The defendant library was sued by the plaintiff contractor which claimed the library caused a delay in the performance of a contract by failing to secure access to an adjacent property which was necessary before plaintiff could complete the work.   In affirming the denial of summary judgment to the defendant library, the Second Department listed the exceptions to the enforceability of a “no-damage-for-delay” clause:

“A clause which exculpates a contractee from liability to a contractor for damages resulting from delays in the performance of the latter’s work is valid and enforceable and is not contrary to public policy if the clause and the contract of which it is a part satisfy the requirements for the validity of contracts generally”…. However, “even with such a clause, damages may be recovered for: (1) delays caused by the contractee’s bad faith or its willful, malicious, or grossly negligent conduct, (2) uncontemplated delays, (3) delays so unreasonable that they constitute an intentional abandonment of the contract by the contractee, and (4) delays resulting from the contractee’s breach of a fundamental obligation of the contract”….  Aurora Contrs Inc v West Babylon Pub Lib, 2013 NY Slip Op 04762, 2nd Dept 6-26-13

 

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