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Company Hired on On-Call Basis for Elevator Repair Not Liable for Allegedly Faulty Elevator Door Interlock Where Last Repair Made 13 Months Before Accident

Plaintiff’s decedent fell down an elevator shaft, allegedly due to the condition of a door interlock.  The First Department determined the wrongful death complaint against New York Elevator and Electrical Corporation (NYE) should have been dismissed because the company was retained only on an on-call basis for repairs and there was no evidence NYE was negligent when it inspected the elevator 13 months before the accident:

The amended complaint should have been dismissed as against defendant/third-party plaintiff NYE in its entirety. NYE did not have an exclusive agreement with Broadway to maintain or service the freight elevator…. It was merely retained on an on-call basis to make specific repairs and inspections and, therefore, did not have a duty to inspect or repair unrelated defects…. Indeed, NYE may only be held liable if it failed to exercise reasonable care in making any requested repairs or inspections….  Casey v New York El & Elec Corp, 2013 NY Slip Op 04745, 1st Dept 6-25-13

 

Procedure for Applying to be a “Defender” in America’s Cup Regatta, as Alleged in Complaint, Constitutes an “Offer” and “Acceptance”

The First Department, in a full-fledged opinion by Justice Acosta, in the context of whether the complaint stated a cause of action sufficient to withstand a motion to dismiss, determined that the procedures in a Deed of Gift and Protocol for the America’s Cup sailing regatta constituted and “offer” and “acceptance” resulting in an enforceable contract with the plaintiff which had applied to be a “Defender Candidate” in the regatta.  A lengthy and well-reasoned dissent by Justice Tom argued that the procedures did not amount to an offer because the defendant was free to accept or reject any applicant in the exercise of judgment.  The opinion and dissent discuss the most basic “offer” and “acceptance” criteria for an enforceable contract.  African Diaspora Mar Corp v Golden Gate Yacht Club, 2013 NY Slip Op 04752, 1st Dept 6-25-13

 

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Cause of Action for Fraud Based Upon Alleged Misrepresentation of Insurance Coverage Not Stated

The First Department determined plaintiff had not stated a cause of action for fraud.  The fraud cause of action was based upon defendant’s alleged misrepresentation that it had procured insurance to protect plaintiff against default by the largest subcontractor on the construction project.  It was not disputed that no such insurance was procured:

…[P]laintiff’s fraud claim fails, because “merely alleging that the breach of a contract duty arose from a lack of due care will not transform a simple breach of contract into a tort”…. Plaintiff’s “subjective claims of reliance on defendants’ expertise” do not give rise to a “confidential relationship” whose “requisite high degree of dominance and reliance” existed prior to the alleged fraud…. Defendants had no advisory capacity as to plaintiff, and a special relationship of trust and confidence does not arise merely from an arm’s-length business transaction…. In any event, to maintain a claim for fraud, plaintiff must show that its reliance on an alleged misrepresentation was justifiable or reasonable…. Here, plaintiff neither inquired of the subcontractor nor of the subguard provider if the subcontractor was covered… .Moreover, “[a]n actionable fraud claim requires proof that defendant made a misrepresentation of fact which was false and known to be false”…. A defendant’s knowledge of an allegedly false representation ….must be established…, and plaintiff’s affidavit stating that “it is inconceivable that [defendants] were unaware …was insufficient to establish scienter in this case. Waterscape Resort LLC v McGovern, 2013 NY Slip Op 04709, 1st Dept, 6-20-13

 

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Allegation Release Procured by Fraud Precluded Dismissal of Complaint

In reversing Supreme Court’s dismissal of a slip and fall complaint which was founded on plaintiff’s signing a release, the First Department determined plaintiff had sufficiently alleged the release was procured by fraud:

Under the particular facts of this case, dismissal of the causes of action against the owners at the pleading stage was premature because plaintiff has alleged facts showing that her release may have been fraudulently obtained. To make out the basic elements of a fraudulent inducement claim, a plaintiff must establish that the reliance on the false representation was justified…. Whether the plaintiff could justifiably rely on the false representation is an issue of fact…. “The question of what constitutes reasonable reliance is always nettlesome because it is so fact-intensive”…. Moreover, “[w]here fraud . . . in the procurement of a release is alleged, a motion to dismiss should be denied”….  A plaintiff’s reliance on a misrepresentation may be justified even if the plaintiff is represented by counsel … .  Gonzalez v 40 W Burnside Ave, LLC, 2013 NY Slip Op 04685, 1st Dept, 6-20-13

 

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Conversion Action Can Not Be Based Upon Funds Which Came Into Party’s Possession Lawfully (Down Payment)

In a breach of (purchase) contract action, the Second Department explained that a conversion cause of action could not be based upon the down payment in seller’s possession, and an unjust enrichment cause of action could not be based on the same facts as the breach of contract cause of action:

The Supreme Court properly granted that branch of Smith’s motion which was for summary judgment dismissing the cause of action alleging conversion, since he was rightfully in possession of the down payment …. “Where one is rightfully in possession of property, one’s continued custody of the property and refusal to deliver it on demand of the owner until the owner proves his [or her] right to it does not constitute a conversion”…. The Supreme Court also properly granted that branch of the motion which was for summary judgment dismissing the cause of action alleging unjust enrichment as duplicative of the breach of contract cause of action….  Green Complex, Inc v Smith, 2013 NY Slip Op 04575, 2nd Dept, 6-19-13

 

Ambiguity Precluded Summary Judgment Based Upon Guarantee

In determining the motion for summary judgment based upon a guarantee was properly denied because of ambiguity about which obligations were guaranteed, the Second Department explained:

A written agreement that is complete, clear, and unambiguous on its face must be enforced so as to give effect to the meaning of its terms and the reasonable expectations of the parties, and the court should determine the intent of the parties from within the four corners of the contract without looking to extrinsic evidence to create ambiguities…. An agreement “is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion'”…  Furthermore, “[a] guaranty is a contract, and in interpreting it we look first to the words the parties used”…. “A guaranty must be construed in the strictest manner’”…, and a guarantor should be bound to the express terms of the written guaranty….  The document at issue, prepared by the plaintiff, is entitled “Personal Guaranty.” The “Guarantor” is defined as “Tony Melillo.” There is language in the body of the document indicating that the Guarantor is personally guaranteeing the payment and performance of the obligations of the “Importer.” The “Importer” is variously defined in the document as either “Tony Melillo, LLC,” or as “Tony Melillo.” Thus, there is an ambiguity in the document as to whose obligations Melillo was guaranteeing.  Wider Consl, Inc v Tony Melillo, LLC, 2013 NY Slip Op 04597, 2nd Dept, 6-19-13

 

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Oral Evidence in Quantum Meruit Case Rejected by Appellate Court

In vacating a damages award in a quantum meruit case, the Fourth Department concluded the self-serving oral proof offered by plaintiff should not have been accepted as sufficient by the trial court and that the defendants’ proof of the value of plaintiff’s work should be the basis of damages award:

Plaintiff is correct that “[p]roof of damages may be based upon oral testimony alone, so long as the witness has knowledge of the actual costs”…, and that the customary means of calculating damages on a quantum meruit basis in a construction case is actual job costs plus profit minus amount paid…. Nevertheless, we cannot conclude that the court’s award of $31,720 is supported by a fair interpretation of the….    That award was based on plaintiff’s self-serving testimony and invoice, while defendants presented the testimony and estimates of three nonparty witnesses establishing that plaintiff’s work was not worth more than $8,290.    Under the unique circumstances of this case, i.e., the seven-month lapse between the time that plaintiff completed the project and the time that he drafted and tendered the invoice to defendants, we conclude that the proper remedy is to adopt the highest of the project estimates from defendants’ trial witnesses as the basis for the award of damages … SJ Kula, Inc v Kevin Carrier…, 520, 4th Dept, 6-14-13

 

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Court Is Powerless After Release Signed and Filed

The Fourth Department noted that a court loses jurisdiction over a case after a release has been signed and filed:

Supreme Court erred in granting the motion of … (defendant) to compel plaintiff to comply with the release agreement between plaintiff and defendants. Defendant brought his motion after the related third-party action was settled and an unconditional stipulation of discontinuation as to him with respect to this action was signed by the attorneys for plaintiff and defendant and filed. Although a trial court has the power “to exercise supervisory control over all phases of pending actions an proceedings”…, it lacks jurisdiction to entertain a motion after the action has been “unequivocally terminated . . . [by the execution of] an express, unconditional stipulation of discontinuance”….  Cambridge Integrated Services Group, Inc v Johnson…, 723, 4th Dept, 6-14-13

 

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Court’s Limited Role Re: Contract with Arbitration Clause Explained

In determining a dispute involving a lease must be resolved in arbitration, the Fourth Department explained the court’s limited role in this context:

Plaintiff …. commenced this action pursuant to RPAPL article 15 seeking, inter alia, “to compel the determination of claims to the real property described herein,” and defendant moved to compel arbitration under the lease and to stay the action. Supreme Court properly granted the motion. “Where parties have entered into an agreement containing a broad arbitration provision, the question of whether the arbitration clause governs a particular aspect of the controversy, as well as the determination of the merits of the dispute, are matters within the exclusive province of the arbitrator”….“Once it appears that there is, or is not[,] a reasonable relationship between the subject matter of the dispute and the general subject matter of the underlying contract, the court’s inquiry is ended. Penetrating definitive analysis of the scope of the agreement must be left to the arbitrators whenever the parties have broadly agreed that any dispute involving the interpretation and meaning of the agreement should be submitted to arbitration”…. Thus, contrary to plaintiff’s contention, it is not entitled to a judicial determination with respect to the continued force and effect of the lease, i.e., “the ultimate issue in this case” …, before submitting the matter to arbitration.  Gray v Talisman Energy USA Inc, 534, 4th Dept, 6-14-13

 

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Teacher Wrongly Denied Hearing Allowed by Education Law

The Fourth Department annulled a determination which suspended a tenured teacher for 30 days without pay finding she was wrongly denied a hearing:

[Under the collective bargaining agreement (CBA)] petitioner was entitled to choose whether to be disciplined under the procedures set forth in the CBA or those set forth in section [Education Law] 3020-a, which allowed petitioner to elect a hearing (see § 3020-a [c]). Respondents, however, incorrectly denied petitioner’s written request for a section 3020-a hearing. We therefore reverse the judgment, grant the petition, annul the determination, and we direct respondents to reinstate petitioner with back pay and benefits retroactive to the date of her suspension, and to remove all references to the discipline imposed from petitioner’s personnel file… .  Matter of Kilduff v Rochester City School District, 518, 4th Dept, 6-14-13

 

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