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THE LAWSUIT SOUGHT RETURN OF A DOWN PAYMENT UNDER A REAL ESTATE CONTRACT; BECAUSE THE LAWSUIT DID NOT AFFECT TITLE, POSSESSION, USE OR ENJOYMENT OF THE PROPERTY A NOTICE OF PENDENCY IS NOT APPROPRIATE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the notice of pendency should have been cancelled because the lawsuit, which sought the return of a down payment under a real estate contract, did not affect title, possession, use or enjoyment of the real property:

Pursuant to CPLR 6501, “[a] notice of pendency may be filed only when ‘the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property'” … . “When the court entertains a motion to cancel a notice of pendency in its inherent power to analyze whether the pleading complies with CPLR 6501, it neither assesses the likelihood of success on the merits nor considers material beyond the pleading itself; ‘the court’s analysis is to be limited to the pleading’s face'” … .

Here, the complaint, on its face, only asserts causes of action to recover monetary damages and does not seek relief that would affect the title to, or the possession, use, or enjoyment of, the property. Mallek v Felmine, 2024 NY Slip Op 02808, Second Dept 5-22-24

Practice Point: A notice of pendency is appropriate only when the underlying lawsuit involves title, possession, use or enjoyment of real property. A suit for the return of a down payment does not warrant a notice of pendency.

 

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CITY RETIREES THREATENED WITH ELIMINATION OF THEIR EXISTING HEALTH INSURANCE AND AUTOMATIC ENROLLMENT IN A MEDICARE ADVANTAGE PLAN ENTITLED TO RELIEF UNDER THEIR PROMISSORY ESTOPPEL CAUSE OF ACTION (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gesmer, determined the doctrine of promissory estoppel justified a permanent injunction prohibiting the city from “eliminating … retirees’ existing health insurance, automatically enrolling them in a new Aetna Medicare Advantage Plan, enforcing a June 30, 2023 deadline for retirees to opt out of the new plan, and implementing any other aspect of the City’s new retiree healthcare policy:”

… [T]he record shows a clear and unambiguous promise, made for more than 50 years, that upon an employee’s retirement, Medicare would provide the first level of hospital and medical insurance benefits and the City’s benefits program would provide the second level to fill in the gaps. * * *

… [T]he record shows detrimental reliance on the promise. * * *

… [P]etitioners have demonstrated injury. Many City retirees stated that their chosen providers and hospitals, like many healthcare providers, do not accept the MAPs [Medicare Advantage Plans]. The City’s plan to automatically enroll petitioners in the Aetna MAP and terminate their current Medigap coverage would result in injury to retirees whose medical providers do not accept the Aetna MAP. * * *

The particular manner in which the parties chose to litigate this action before Supreme Court resulted in a record with significant evidentiary support for petitioners’ position and very little support for respondents’ position. That record and the arguments the parties chose to make on appeal lead to the conclusion that petitioners are entitled to relief under their promissory estoppel cause of action. Matter of Bentkowski v City of New York, 2024 NY Slip Op 02771, First Dept 5-21-24

Practice Point: Here the promissory estoppel doctrine was applied to permanently enjoin the city from eliminating city retirees’ health insurance and automatically enrolling them in a Medicare Advantage Plan.

 

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AN UNAMBIGUOUS CONTRACT PROVISION CONSTITUTES “DOCUMENTARY EVIDENCE” WHICH WILL SUPPORT A MOTION TO DISMISS PURSUANT TO CPLR 3211 (CT APP).

The Court of Appeals determined the provision of the contract which prohibited plaintiffs from bringing a breach of contract suit was unambiguous. An unambiguous contract constitutes “documentary evidence” which supports a motion to dismiss:

On a motion to dismiss based on documentary evidence pursuant to CPLR 3211 (a) (1), dismissal is warranted only if the documentary evidence conclusively establishes a defense as a matter of law … . A motion to dismiss based on a written agreement that contains a material ambiguity must be denied because such an agreement does not conclusively establish the asserted defense as a matter of law … . Ambiguity exists if the agreement, “read as a whole, fails to disclose its purpose and the parties’ intent . . ., or when specific language is ‘susceptible of two reasonable interpretations’ ” … . On the other hand, the agreement is unambiguous and should be enforced on its plain terms “if the language it uses has ‘a definite and precise meaning, unattended by danger of misconception . . ., and concerning which there is no reasonable basis for a difference of opinion’ ” … .

Contrary to plaintiffs’ contention, Section 8.05 unambiguously bars them from commencing an action on their own behalf to enforce their third-party beneficiary rights under the Agreement. Section 8.05 negates any right of the Holders except as “expressly set forth” therein, and it expressly sets forth the right of the Required Holders or the Holder Committee to commence certain types of actions or proceedings. Nothing in Section 8.05 expressly sets forth a right of the Holders to commence an action on their own behalf or otherwise. Mulacek v ExxonMobil Corp., 2024 NY Slip Op 02724, CtApp 5-16-24

Practice Point: Here the contract unambiguously limited the authority to bring a breach of contract action to a certain class of shareholders which did not include plaintiffs. The contract constituted “documentary evidence” which supported dismissal of the complaint pursuant to CPLR 3211(a)(1).

 

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A STIPULATIION OF SETTLEMENT DOES NOT IMPOSE A DUTY UPON A PERSON NOT A PARTY TO THE STIPULATION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a person who was not a party to the stipulation of settlement in a divorce action (Kamaras) cannot be sued for an alleged violation of the stipulation:

The plaintiff opposed Kamaras’s motion for summary judgment, contending, among other things, that Kamaras knew of the stipulation and its terms and that Kamaras had a “duty” to “have [Chantal] execute the transfer documents to the marital property and return same to [Walner’s counsel].” … .

“‘A stipulation of settlement which is incorporated but not merged into a judgment of divorce is a contract subject to principles of contract construction and interpretation'” … . “It is well-settled law that parties to a contract cannot, under its terms, impose any liability upon a stranger to that contract” … . “One cannot be held liable under a contract to which he or she is not a party” … .

Here, Kamaras demonstrated his entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against him by demonstrating that he was not a party to the stipulation and had not assumed any obligations under the stipulation … . Tema v Tema, 2024 NY Slip Op 02720, Second Dept 5-15-24

Practice Point: Even if a person is aware of the terms of a stipulation of settlement, if that person is not a party to the stipulation, the stipulation does not impose a duty to act on them.

 

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IN THIS CAR ACCIDENT CASE, PLAINTIFF RAISED A QUESTION OF FACT WHETHER THE RELEASE SHE SIGNED WAS THE RESULT OF MUTUAL MISTAKE CONCERNING THE EXTENT OF HER INJURIES (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court, determined there was a question of fact whether the release signed by plaintiff after a car accident was the result of mutual mistake. At the time plaintiff signed the release it appeared her injuries, including whiplash, involved only her cervical, thoracic and lumbar regions. After signing the release she was diagnosed as having suffered a mild traumatic brain injury:

… [I]nasmuch as the submissions indicate that plaintiff had been diagnosed with neck and back injuries only at the time she signed the release and that plaintiff’s symptoms were not medically attributed to postconcussive syndrome until after the execution of the release with additional uncertainty in the interim, we conclude that plaintiff raised an issue of fact whether, at the time the release was executed, the parties were under “[a] mistaken belief as to the nonexistence of [a] presently existing injury,” i.e., a traumatic brain injury … . We therefore … reinstate the complaint. DiDomenico v McWhorter, 2024 NY Slip Op 02634, Fourth Dept 5-10-24

Practice Point: A release signed when both parties are not aware of an existing injury may be invalid as the result of mutual mistake.

 

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ALTHOUGH PLAINTIFF WAS AWARDED SUMMARY JUDGMENT IN THIS QUANTUM MERUIT CASE. DEFENDANT DID NOT WAIVE A JURY TRIAL AND WAS THEREFORE ENTITLED TO A JURY TRIAL ON DAMAGES; BENCH-TRIAL VERDICT REVERSED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined defendant never waived a jury trial in this quantum-meruit action. Therefore, although plaintiff was granted summary judgment, defendant was entitled to a jury trial on damages:

… [T]he order awarding damages must be reversed, and the judgment vacated … . Upon granting plaintiff summary judgment for liability on its quantum meruit claim, Supreme Court conducted a hearing on attorneys’ fees. However, claims seeking recovery under the “quasi-contractual theory of quantum meruit” for “only money damages” are considered “actions at law” entitling parties to a trial by jury … . Defendant did not waive a jury trial, but instead filed his jury demand “within fifteen days after service of the note of issue,” and more than a year before the purported attorney fee hearing was held (CPLR 4102[a]). Defendant’s “right to a jury trial [wa]s not lost, when [the] motion [and cross-motion] for summary judgment [were] decided against [him]” … , yet Supreme Court deprived him of this right by conducting a bench trial on damages … . Hilton Wiener LLC v Zenk, 2024 NY Slip Op 02595, First Dept 5-9-24

Practice Point: Quantum meruit is an action at law entitling parties to a jury trial.

Practice Point: Here defendant never waived a jury trial and, although summary judgment was awarded to plaintiff, defendant was entitled to a jury trial on damages.

 

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THE COMPLAINT SUFFICIENTLY ALLEGED BOTH BREACH OF CONTRACT AND ANTICIPATORY REPUDIATION OF THE CONTRACT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Wilson, in a factually-complex case which cannot be fairly summarized here. determined the complaint adequately alleged both a breach and an anticipatory repudiation of a contract which encompassed the replacement by plaintiff developer of defendant’s single room occupancy building with a mixed-use residential and commercial building for a 40-year lease term:

” ‘An anticipatory breach of contract by a promisor is a repudiation of [its] contractual duty before the time fixed in the contract for . . . performance has arrived’ ” … . Under the doctrine of anticipatory repudiation or anticipatory breach, “if one party to a contract repudiates [its] duties thereunder prior to the time designated for performance and before [it] has received all of the consideration due . . . thereunder, such repudiation entitles the nonrepudiating party to claim damages for total breach” … . To constitute repudiation, “there must be some express and absolute refusal to perform” … that is “positive and unequivocal” … .

The first cause of action alleges [defendant] engaged in multiple acts that breached the ground lease agreement: a set of acts in refusing to sign the cure agreement tendered in 2015, and a 2021 statement that it would never sign any agreement. Contrary to the conclusions of the courts below, a claim for breach and a claim for anticipatory repudiation can both be stated on these facts at the pleading stage. * * *

Taking the facts alleged in the complaint as true, which we must do at this stage of the proceeding, [plaintiff] sufficiently demonstrated that [defendant’s] 2021 statement was both a new development and a distinct “material breach that escalated, for the first time, to an unequivocal repudiation” … . Audthan LLC v Nick & Duke, LLC, 2024 NY Slip Op 02223, CtApp 4-25-24

Practice Point: Here the complaint adequately alleged both a breach of contract and an anticipatory repudiation of the contract.

 

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PLAINTIFF IN THIS TRAFFIC ACCIDENT CASE ALLEGED DEFENDANT DRIVER WAS DEFENDANT COMPANY’S EMPLOYEE AND WAS ACTING WITHIN THE SCOPE OF EMPLOYMENT AT THE TIME OF THE ACCIDENT; DEFENDANT COMPANY FAILED TO DEMONSTRATE THE DRIVER WAS AN INDEPENDENT CONTRACTOR, NOT AN EMPLOYEE; THE FACT THAT THE EMPLOYMENT CONTRACT USES THE TERM “INDEPENDENT CONTRACTOR” IS NOT DISPOSITIVE OF THE ISSUE (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendant employer in this traffic accident case did not demonstrate the defendant driver was an independent contractor as opposed to an employee acting within the scope of employment:

… [Plaintiff] allegedly was injured when a vehicle he was operating collided with a vehicle owned and operated by the defendant Luis F. Leal. * * * The plaintiffs alleged … that Leal was [defendant] Publishers’ employee, and that Leal was acting within the scope of his employment at the time of the accident. …

“The doctrine of respondeat superior renders a master vicariously liable for a tort committed by his [or her] servant within the scope of employment. Conversely, the general rule is that an employer who hires an independent contractor is not liable for the independent contractor’s negligent acts” … . “[T]he critical inquiry in determining whether an employment relationship exists pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results” … . “Factors relevant to assessing control include whether the worker (1) worked at his [or her] own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer’s payroll and (5) was on a fixed schedule” … . “The fact that a contract exists designating a person as an independent contractor is to be considered, but is not dispositive” … . Whether an actor is an independent contractor or an employee is usually a factual issue for a jury … . Brielmeier v Leal, 2024 NY Slip Op 02163, Second Dept 4-24-24

Practice Point: An employer may be responsible for the negligence of an employee, but is not responsible for the negligence of an independent contractor. The fact that the employment contract uses the term “independent contractor” is not dispositive. The relevant criteria are explained.

 

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A BREACH OF CONTRACT ACTION SHOULD NOT BE CONSOLIDATED WITH A TORT ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the breach of contract action and the fraudulent conveyance action should not have been consolidated:

In 2016, plaintiff commenced a breach of contract action against defendant eCommission Solutions, LLC (eCommission). In 2022, plaintiff commenced a fraudulent conveyance action against eCommission and its president, Paul Hoffman, and his wife, alleging that Hoffman transferred millions from eCommission to himself with the intent to defraud creditors like plaintiff.

… When one action sounds in contract and the other in tort, it is inappropriate to grant consolidation … . Indeed, the breach of contract and fraudulent conveyance actions present different questions of law and fact … . Moreover, the fraudulent conveyance action will be moot if plaintiffs fail to win the breach of contract action … . Finally, the two actions are at different stages, so that consolidation would lead to delay in trying the breach of contract action … .

Discovery in the fraudulent conveyance action should be stayed until the breach of contract action is resolved … . 3B Assoc. LLC v Ecommission Solutions, LLC, 2024 NY Slip Op 02086, First Dept 4-18-24

Practice Point: A breach of contract action should not be consolidated with a tort action (here an action for fraudulent conveyance).

 

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