You are here: / Contract Law
,

Negligence and Fraudulent Misrepresentation Causes of Action Can Not Be Based on Allegations of Breach of Contract 

In determining Supreme Court should have dismissed the negligence and fraudulent misrepresentations cause of action in a complaint based upon breach of contract, the Third Department wrote:

“[A] simple breach of contract claim is not to be considered a tort unless a legal duty independent of the contract itself has been violated . . .[, which] legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract” ….  Plaintiffs have not demonstrated any special relationship or legal duty aside from the contractual relationship….   The  negligence and  fraudulent misrepresentation claims are based upon  the same  alleged wrongful conduct as the breach of contract claim, rendering them duplicative … . Rorok v Moore’s Flatwork…, 515459, 3rd Dept, 5-30-13

 

 

,

Defective Acknowledgment Rendered Prenuptial Agreement Invalid

In a full-fledged opinion by Judge Graffeo, the Court of Appeals determined that a defective acknowledgment on a prenuptial agreement was the type of defect that could be cured but that the notary’s affidavit was not sufficient to cure the defect.  Therefore, the prenuptial agreement was invalid.  The opinion includes an extensive discussion of the statutory requirements for acknowledgments and the limited circumstances in which defects can be cured.  With regard to the specific defect at issue, the Court of Appeals wrote:

In the certificate of acknowledgment relating to the husband’s signature, the “to me known and known to me” phrase was inexplicably omitted, leaving only the following statement: “On the 8 [sic] day of July, 1997, before me came Gary Galetta described in and who executed the foregoing instrument and duly acknowledged to me that he executed the same.” Absent the omitted language, the certificate does not indicate either that the notary public knew the husband or had ascertained through some form of proof that he was the person described in the prenuptial agreement. New York courts have long held that an acknowledgment that fails to include a certification to this effect is defective. Thus, we agree with the Appellate Division, which unanimously concluded that the certificate of acknowledgment did not conform with statutory requirements.  Galetta v Galetta, No 94, CtApp, 5-30-13

 

,

Provision Which Violates General Business Law 395-a (Re: Maintenance Agreements) Did Not Render Contract Null and Void

In a full-fledged opinion by Judge Read (with a dissent by Judge Smith) the Court of Appeals determined that a contract provision which violated General Business Law 395-a (2) did not render the contract null and void and a private right of action pursuant to General Business Law section 349 did not lie for the violation.  Section 395-a provides that a maintenance agreement covering parts and/or service can not be terminated by the party offering the agreement during the term of the agreement.  The maintenance agreement at issue included a “store closure” provision which allowed the defendant to terminate the maintenance agreement in the event of closure of the store issuing the agreement.  The Court assumed that the “store closure” provision violated the General Business Law but held the violation did not render the contract null and void.  The Court further determined the violation did not constitute a deceptive practice within the meaning of General Business Law 349.  Schlessinger…v Valspar Corporation, No 66, CtApp, 5-30-13

 

Contract Provision Protected Contractee from Damages for Delay Caused by Regulators​

In a full-fledged opinion by Justice Mazzarelli, the First Department determined, among many other contract-issues, that delays allegedly caused by regulators (re: asbestos-removal) were included in the contract provision which insulated the contractee from delay-related damages:

“A clause which exculpates a contractee from liability to a contractor [Bovis] 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, such a clause may be disregarded under certain recognized exceptions, including one for delays that are “uncontemplated” …. Delays are not considered uncontemplated when they “are reasonably foreseeable, arise from the contractor’s work during performance, or . . . are mentioned in the contract” …. Further, a party seeking to invoke any of the exceptions to the general rule that no damages for delay clauses are enforceable bears a heavy burden … .

Here, Bovis failed to carry its heavy burden. The contract specifically anticipated the possibility that the involvement of regulators would delay the process. Again, Bovis expressly acknowledged that it assumed the “risk of all regulatory and other Governmental Authority delays.” Certainly this lifted the no damages for delay clause out of the exception for uncontemplated delays. There is no basis for Bovis to argue that by alleging that the extent of the regulatory delays was extreme and unprecedented it stated a claim for delay damages. As this Court has stated in finding a no damages for delay clause enforceable, “[W]hile the conditions themselves may not have been anticipated, the possibility, however unlikely, of their arising was contemplated and addressed by the parties in their agreement” … .  Bovis Lend Lease (LMB), Inc v Lower Manhattan Dev Corp, 2013 NY Slip Op 03804, 1st Dept, 5-28-13

CONSTRUCTION CONTRACT

,

Retainer Agreement in Divorce Action Which Addressed Only Work “Up To” Trial Did Not Allow Recovery of Attorney’s Fees for Trial​

The First Department determined that a retainer agreement for work “up to” a trial in a divorce action precluded the law firm from recovering any fees for the trial.  To cover those fees a second retainer agreement was required:

The plain language of the retainer states that the law office’s representation of Blisko includes work leading “up to” a trial, “but not including an actual trial.” Indeed, the law office acknowledges that the retainer did not include representation at trial. Following the commencement of the trial on August 18, 2009, the retainer between the law office and Blisko terminated and plaintiff was representing Blisko without a written retainer …. Law Off of Sheldon Eisenberger v Blisko, 2013 NY Slip Op 03802, 1st Dept,. 5-28-13

 

,

Doctrine of Continuous Representation/Retainer Agreement in Estate Proceeding “Unconscionable”​

In a case involving “gifts” and a 40% contingency fee for three defendant attorneys’ work on an estate worth several tens of millions, the First Department applied the “doctrine of continuous representation” to toll the statute of limitations and found the fee arrangement(s) “unconscionable:”

The claims relating to the gifts the widow made to the three individual defendants are not time-barred. Rather, they were tolled under the doctrine of continuous representation …. Contrary to the individual defendants’ contention, the doctrine applies where, as here, the claims involve self-dealing at the expense of a client in connection with a particular subject matter….  * * *

The revised retainer agreement is both procedurally and substantively unconscionable…. The evidence shows that the widow believed that under the contingency arrangement, she would receive the “lion’s share” of any recovery. In fact, as it operated, the law firm obtained over 50% of the widow’s share of proceeds. Thus, the law firm failed to show that the widow fully knew and understood the terms of the retainer agreement–an agreement she entered into in an effort to reduce her legal fees … .

In considering the substantive unconscionability of the revised retainer agreement, the Referee correctly considered such factors as the proportionality of the fee to the value of the professional services rendered… , and the risks and rewards to the attorney upon entering into the contingency agreement … .

The amount the law firm seeks ($44 million) is also disproportionate to the value of the services rendered (approximately $1.7 million) … .Matter of Lawrence, 2013 NY Slip Op 03759, 1st Dept, 5-22-13

 

,

Question of Fact About Whether Release Procured by Fraud or Duress

In upholding the denial of defendant’s (Countrywide’s) motion for summary judgment based upon the execution of a release, the Second Department determined that the allegations of fraud and duress in procurement of the release raised a question of fact:

 The Countrywide defendants’ motion was properly denied. Although the plaintiff’s execution of the release in favor of the defendants was “a jural act of high significance” …, “a motion to dismiss should be denied where fraud or duress in the procurement of the release is alleged”… . Here, the plaintiff sufficiently alleged that the Countrywide defendants procured the release by means of fraud or duress, so as to warrant denial of their motion.   Warmhold v Zagarino, 2013 NY Slip Op 03668, 2nd Dept, 5-22-13

 

Theory of Damages in Contract Action​

The Second Department explained the theory underlying damages for breach of contract and noted that damages are usually ascertained as of the date of the breach:

It has long been recognized that the theory underlying damages for breach of contract is to make good or replace the loss caused by the breach… . Damages are intended to return the parties to the point at which the breach arose and to place the nonbreaching party in as good a position as it would have been had the contract been performed (…Restatement [Second] of Contracts §§ 347, comment a; § 344). Thus, damages for breach of contract are ordinarily ascertained as of the date of the breach… .. Seidman v Industrial Recycling Props, Inc, 2013 NY Slip Op 03659, 2nd Dept, 5-22-13

 

Unambiguous Release Is a Jural Act of High Significance Which Must Be Enforced

In explaining the legal principles underlying the enforcement of releases, the Second Department wrote:

Public policy favors the enforcement of settlements …, and a release is “a jural act of high significance without which the settlement of disputes would be rendered all but impossible” ….. Generally, a valid release constitutes a complete bar to an action on a claim which is the subject of the release…, and should not “be converted into a starting point for renewed litigation” …


“[A] release is governed by principles of contract law”…, and a release “that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms”…. “Whether or not a writing is ambiguous is a question of law to be resolved by the courts” … . Inter-Reco, Inc v Lake Park 175 Froehlich Farm, LLC, 2013 NY Slip Op 03637, 2nd Dept, 5-22-13

 

,

Wife’s Stipulation Waiving Claim to Benefits Valid Even though Law Unclear at Time of Stipulation and Benefits Later Determined by Court of Appeals to Be Marital Property

The Second Department determined that plaintiff-wife’s stipulation that variable supplement fund (VSF) benefits were not marital property should be upheld, even though the law was unclear at the time of the stipulation and the Court of Appeals subsequently determined the benefits were marital property:

The Referee was correct in noting that, at the time of the parties’ stipulation of settlement, the law on the issue of whether VSF benefits were subject to equitable distribution was unclear. The law was later clarified when the Court of Appeals held that VSF benefits were marital property subject to equitable distribution …. However, the fact that the plaintiff did not have definitive guidance on the issue of whether VSF benefits were subject to equitable distribution is not a sufficient basis upon which she may avoid the effects of her otherwise knowing and voluntary waiver. Thus, it was error to permit the defendant to avoid the consequences of her waiver of any interest in the VSF. Lamassa v Lamassa, 2013 NY Slip Op 03639, 2nd Dept, 5-22-13

 

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