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Limitation of Liability Clause in House-Design Contract Valid

he defendant designed plaintiffs’ residence and the first floor was built two feet below what the regulations required resulting in increased flood insurance premiums.  In the contract between the parties, it was agreed to limit defendant’s liability to the amount of the fees paid by plaintiffs.  After noting that contractual liability-limit clauses are valid and enforced except in cases of “gross negligence,” the Third Department determined “gross negligence” had not been demonstrated:  In describing “gross negligence,” the Third Department wrote:

In this context, it is settled  that  “gross negligence differs in kind, not only in degree, from claims of ordinary negligence.  It is conduct  that evinces a reckless disregard for the rights of others or smacks of intentional wrongdoing” … .  Soja v Keystone Tozze, LLC, 515422, 3rd Dept 5-2-13

 

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The Term “Release” (Re Hazardous Substances) Did Not Apply to Migration of Hazardous Substance to Neighbor’s Property Underground​

The Third Department determined there were two equally plausible interpretations of the term “sellers” as used in the contract, rendering the contract ambiguous.  Therefore, the motion to dismiss the complaint prior to discovery was properly denied. In addition, the Third Department determined that the term “release” (re: hazardous substances) did not extend to the migration of hazardous substances to neighboring properties under ground:

…[The provision] requires  indemnification  for environmental  claims  related  to, among other things, a “Release” of hazardous substances “at locations other than [500 Beech].” “Release”  is defined  to include  “any  spilling, leaking, pumping,  pouring,  emitting, emptying, discharging, injecting, dumping  or disposing of any Hazardous  Material  into  the  environment.” In its Canadian action, the neighbor alleged that contaminants – which would be classified as “Hazardous Materials” under the agreement – in the ground  at 500 Beech migrated into the soil and  groundwater at 606 Beech. There is no allegation that hazardous substances were spilled, leaked or otherwise disposed of directly onto the property at 606 Beech. Rather, the allegation is that the flow of underground water carried those substances from 500 Beech, where they had been spilled or leaked, to the neighboring property. Although the hazardous substances eventually wound up at 606 Beech, there is no support for an allegation that the “Release” of those substances occurred at a location other than 500 Beech. Vectron International, Inc, v Corning Oak Holding, Inc, 515408, 3rd Dept, 5-2-13

 

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Contract-Based Duty Owed to Non-Party Explained

In this case a stove that was not secured to the wall with a bracket tipped over as children either stood or jumped on the oven door. One of the children was killed.  One of the many issues in the case was whether the contractor who installed the stove without the bracket was liable to the surviving child.  In upholding the denial of the contractor’s motion for summary judgment, the Third Department explained when a contractual relationship can give rise to tort liability to a third party:

Defendant contends that, since he performed work as a contractor for the rental agent, he owed no duty to the surviving child and, thus, his motion for summary judgment in this regard should have been granted. “[A] contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party” …. The  three limited exceptions to this general rule include: “(1) where  the contracting party, in failing to exercise reasonable care in the performance  of his [or her] duties, launches a force or instrument of harm;  (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” …. Care must be taken in the application of the exceptions so that they do not “swallow up the general rule” …, and determining whether a duty exists is “a question of law for the courts” ….  Kelley…v Schneck…, 515645, 3rd Dept, 5-2-13

ESPINAL

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Question of Fact Raised About Whether Release Signed in Anticipation of a Skydiving Course Precluded Personal Injury Action

Plaintiff had signed a release of liability in connection with a one-hour skydiving course.  Before the course could be given, the plane crashed and plaintiff was injured.  In moving to dismiss the complaint, the defendants argued that General Obligations Law 5-326, which renders releases issued by “places of recreation” void, did not apply.  The motion court denied the motion to dismiss and the Fourth Department affirmed:

Defendants assert that section 5-326 does not apply here because [defendant] is an instructional facility, rather than a recreational facility. Where a facility is “used for purely instructional purposes,” section 5-326 is inapplicable even if the instruction that is provided relates to an activity that is recreational in nature … . “In assessing whether a facility is instructional or recreational, courts have examined, inter alia, the organization’s name, its certificate of incorporation, its statement of purpose and whether the money it charges is tuition or a fee for use of the facility” …. On a motion to dismiss pursuant to CPLR 3211, a court “may . . . consider affidavits and other evidentiary material to ‘establish conclusively that plaintiff has no cause of action’ ” … We conclude that [defendant’s] facility is not used purely for instructional purposes based upon our review of [defendant’s] certificate of incorporation, including the statement of purpose contained therein; the services for which plaintiff paid a fee, i.e., whether she paid for a course of instruction or for use of the facilities; as well as the other evidence submitted by defendants. Thus, defendants have failed to establish as a matter of law that General Obligations Law § 5-326 does not apply here …  and have failed to establish conclusively that plaintiff has no cause of action. Tiede v Frontier Skydivers, Inc, CA 12-01861, 216, 4th Dept, 4-26-13

 

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Contract Between Employer and Contractor Did Not Create a Duty Owed to Employee/Instrument of Harm Doctrine Not Applicable

Plaintiff was standing on a barrel performing work for his employer.  In reaching for a tool he grabbed onto some bricks on a column.  The bricks came loose and plaintiff lost his balance and fell.  Plaintiff sued the parties responsible for installing the bricks six years before (pursuant to a contract with the employer).  In affirming summary judgment to the defendants, the Fourth Department wrote:

Here, defendants established as a matter of law that they did not owe any duty to plaintiff, and plaintiff failed to raise a triable issue of fact. Although defendants had contractual obligations with respect to the construction of the project for plaintiff’s employer, as a general rule “a contractual obligation, standing alone, will . . . not give rise to tort liability in favor of a third party,” i.e., a person who is not a party to the contract …. There is an exception to that general rule, however, “where the contracting party, in failing to exercise reasonable care in the performance of [its] duties, ‘launche[s] a force or instrument of harm’ ” …, thereby “creat[ing] an unreasonable risk of harm to others, or increas[ing] that risk” …. Contrary to plaintiff’s contention, the instrument of harm doctrine does not apply to the facts of this case, and thus there was no duty of care running from defendants to plaintiff based on that doctrine ….  Spaulding v Loomis Masonry, Inc. et al, CA 12-01395, 32, 4th Dept, 4-26-13

 

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Product Warranty Does Not Extend Statute of Limitations

In finding that a 10-year warranty on windows and doors did not extend the relevant statute of limitations, the First Department wrote:

Although initially it may seem somewhat unfair for defendant to have given plaintiffs a 10-year warranty and then argue that plaintiffs cannot sue for breach of warranty at any time during that 10-year period, the case law is clear on when this cause of action accrues …. Katopodis v Marvin Windows & Doors, 2013 NY Slip Op 02817, 1st Dept, 4-25-13

 

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Forum Selection Clause Upheld; Not Shown to Be Unreasonable

In upholding the validity of a contractual forum selection clause, the Second Department wrote:

“Although once disfavored by the courts, it is now recognized that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract” … “A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court” … . Lifetime Brands, Inc v Garden Ridge, LP, 2013 NY Slip Op 02721, 2nd Dept, 4-24-13

 

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Contractual Shortened Statute of Limitations Okay

The Second Department held that a shortened statute of limitations agreed to in an employment contract was enforceable:

“The parties to a contract may agree to limit the period of time within which an action must be commenced to a period shorter than that provided by the applicable statute of limitations” (…see CPLR 201…). “ Absent proof that the contract is one of adhesion or the product of overreaching, or that [the] altered period is unreasonably short, the abbreviated period of limitation will be enforced” … . Hunt v Raymour & Flanigan, 2013 NY Slip Op 02715, 2nd Dept, 4-24-13

 

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Restitution Can Not Be Ordered When Not Addressed in Plea Agreement

The Second Department, in the interest of justice, determined the sentencing court should not have imposed restitution because restitution was not addressed in the plea agreement.  The matter was remitted for re-sentencing without restitution. People v Thompson, 2013 NY Slip Op 02770, 2nd Dept, 4-24-13

 

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Proof Submitted in Reply Papers Not Considered

In finding plaintiffs’ claim for indemnification was not supported by proof plaintiffs had actually paid the debts for which they sought reimbursement, the Second Department noted that the debt-payment-proof submitted in reply papers could not be considered:

With limited exceptions not applicable here, a cause of action seeking indemnification is not enforceable until payment is made or a loss is suffered by the party seeking indemnification …. Here, the plaintiffs failed to establish, prima facie, that they actually paid any of the debts … . The plaintiffs’ proof on that issue, which was submitted for the first time in their reply papers, may not be considered for purposes of establishing their prima facie entitlement to judgment as a matter of law … .  Gamparo v Mathai, 2013 NY Slip Op 02711, 2nd Dept, 4-24-13

 

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