In a lengthy opinion by Judge Read, the Court of Appeals determined that, where a purchase contract for real property has been breached, the measure of damages is the difference between the sale price and the market value of the property at the time of the breach. The price at which the property subsequently sells can be taken into consideration when determining what the value was at the time of the breach, but it is not the measure of damages. White v Farrell, et al, No. 43, CtApp, 3-21-13
In an action for breach of contract, waste, injury to real property, trespass, conversion and private nuisance, based upon clearing land of trees pursuant to an unrecorded easement, the Second Department wrote:
Pursuant to RPAPL 861(1), a property owner may maintain an action for damages against any person who, without the consent of the owner, removes or causes to be removed trees on the owner’s property … . “To recover damages based on the tort of private nuisance, a plaintiff must establish an interference with his or her right to use and enjoy land, substantial in nature, intentional or negligent in origin, unreasonable in character, and caused by the defendant’s conduct”… . “In order to establish a cause of action to recover damages for conversion, the plaintiff must show legal ownership or an immediate superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question . . . to the exclusion of the plaintiff’s rights” … . * * *
“[A]n unrecorded conveyance of an interest in real property is deemed void as against a subsequent good faith purchaser for value who acquires his interest without actual or constructive notice of the prior conveyance” … . However, “ [w]here a purchaser has knowledge of any fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim, to be considered as a bona fide purchaser’” …. “This presumption, however, is a mere inference of fact, and may be repelled by proof that the purchaser failed to discover the prior right, notwithstanding the exercise of proper diligence on his part” … . Schulz v Dattero, et al, 2013 NY Slip Op 01815, 2011-05813, 2012-02942, Index No 876/06, 2nd Dept. 3-20-13
The First Department, in affirming the dismissal of fraud and negligent misrepresentation claims in a contract action, described the flaws in the complaint as follows:
The court properly dismissed the fraud claim for failure to plead fraud with the particularity required by CPLR 3016(b) and for failure to plead loss causation … .
The court properly dismissed the negligent misrepresentation claim for failure to plead a special relationship. An arm’s length business relationship, as existed here, is not generally considered to be the sort of confidential or fiduciary relationship that would support a cause of action for negligent misrepresentation … . Nor did [defendants] “possess unique or specialized expertise” … . Greentech Reasearch LLC v Wissman, 2013 NY Slip Op 01787, 9561, 602477/09, 1st Dept. 3-19-13
The Fourth Department determined the Erie County Executive had the authority to bring a lawsuit alleging fraud on the part of a County Commissioner which resulted in the payment of more than $4,000,000 for goods and services that had not been provided. The defendant contended the County could not bring the suit absent a resolution by the County Legislature. The Fourth Department wrote:
There is no dispute that the County Legislature did not pass a resolution authorizing the commencement of this action. Contrary to defendant’s contention, however, we conclude that, notwithstanding the absence of such a resolution, the County Executive was empowered to commence this action on behalf of the County (see Matter of County of Rockland v Town of Clarkstown, 167 Misc 2d 367, 371). Under the County Charter, the County Executive is the Chief Executive Officer, the administrative head of the County government, and the Chief Budget Officer of the County.The County Charter grants the County Executive “all necessary incidental powers to perform and exercise any of the duties and functions specified . . . or lawfully delegated to him” (Erie County Charter § 302 [former (n)], now [m]).The County Executive is empowered by the County Charter to authorize the County Attorney to commence civil litigation to enforce any of the duties and functions lawfully designated to the County Executive (see § 602; see also § 302 [former (m)], now [l]; [former (n)], now [m]).Inasmuch as this action seeks to recover over $4 million dollars of the County’s funds that were allegedly improperly paid under the M/A-Com contract as a result of defendant’s alleged fraud, we conclude that the County Executive’s duties as Chief Executive Officer and Chief Budget Officer of the County clearly embrace the subject matter of this action and empower him to authorize the County Attorney to commence the litigation (see Rockland County, 167 Misc 2d at 371). Justices Sconiers and Whalen disagreed in a substantial dissent. County of Erie v M/A-Com, Inc., et al, 1184, CA 12-00075, 4th Dept. 3-15-13
This breach of contract case concerned the installation of “jet grout bottom seal” at a wastewater treatment plant. In the course of its discussion, the Fourth Department explained the difference between performance and design specification contracts:
We … conclude that there are issues of fact concerning whether the contract was one of performance or design specification, thus precluding summary judgment with respect to the additional expenses that plaintiff allegedly incurred in remediating the jet grout bottom seal. “A performance specification [contract] requires a contractor to produce a specific result without specifying the particular method or means of achieving that result” (Fruin-Colnon Corp. v Niagara Frontier Transp. Auth., 180 AD2d 222, 229).“In other words, the contractual risk of nonperformance is upon the contractor” (id.). In contrast, a design specification contract is one in which “the owner specifies the design, materials and methods and impliedly warrants their feasibility and sufficiency” (id.). “In that instance, the contractor’s guarantee . . . is limited to the quality of the materials and workmanship employed in following the owner’s design” (id. at 230). The proper characterization of a construction contract as one of either performance or design specification “depends upon the language of the contract as a whole,” and relevant factors in such an inquiry “include the nature and degree of the contractor’s involvement in the specification process, and the degree to which the contractor is allowed to exercise discretion in carrying out its performance” (id.).Here, the unresolved issues of fact with respect to those factors, particularly as to plaintiff’s ability to change the design without Falter’s approval, precludes a determination whether as a matter of law the subject contract is one of either performance or design specification, and thus whether plaintiff may recover expenses incurred in remediating the jet grout bottom seal. Howard Baker, Inc. v C.O. Falter Construction Corp., et al, 1441, CA 12-00398, 4th Dept. 3-15-13
The Fourth Department determined a purchase contract which contained a merger clause prohibiting oral modifications and which did not have a provision allowing a pre-closing inspection did not provide the buyer with the right to inspect the property. Under the rules for the interpretation of an unambiguous contract, “ ‘courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include’ . ..”. Thirty One Development, LLC v Jeffery Cohen, et al, 161 CA 11-02577, 4th Dept. 3-15-13
The contract for the sale of a parcel of real property included the following: “It is the understanding of the parties that at the present time, seller is not in title to the property. Seller is a first mortgage holder and the mortgage is in default. In the event that the title holder does not agree to signing over a deed in lieu of foreclosure, the seller will institute foreclosure proceedings with the courts. Seller shall be able to provide good and clear title in accordance with this contract.” The defendant-seller, however, was outbid at the foreclosure sale and could not provide the buyer with good and clear title. In the lawsuit brought by the buyer, the buyer sought so-called “loss of bargain” damages. In affirming the trial court’s denial of buyer’s request for “loss of bargain” damages, the Fourth Department explained:
It is well settled that “[t]he vendee in a contract for the sale of land is not ordinarily entitled, upon breach, on failure to convey, to recover of the vendor damages measured by the goodness of his bargain or the financial benefit which would result from performance, and it is only when the vendor is for some reason chargeable with bad faith in the matter that recovery beyond nominal damages on that account can be had” … .Thus, “[i]f a vendee knows of the inability of his vendor to convey the title he has undertaken to convey, the vendee’s damages are not measurable by the loss of his bargain” … . Khanjani v Schreiber, 141, CA 12-00494, 4th Dept. 3-15-13
In finding that an insurance company was required to defend, the Fourth Department explained the relevant criteria in the context of a summary judgment motion:
An insurer’s duty to defend is “ ‘exceedingly broad’ and an insurer will be called upon to provide a defense whenever the allegations of the complaint ‘suggest . . . a reasonable possibility of coverage’ ”.. .“If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be” ….Thus, the duty to defend exists “ ‘even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered’ ” ….
The insured has the initial burden of establishing coverage under an insurance policy while the insurer bears the burden of proving that an exclusion in the policy applies to defeat coverage … .“[E]xclusions are subject to strict construction and must be read narrowly” … .In order to establish that an exclusion defeats coverage, the insurer has the “heavy burden” of establishing that the exclusion is expressed in clear and unmistakable language, is subject to no other reasonable interpretation, and is applicable to the facts ….An insurer “will be required to ‘provide a defense unless it can “demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, [in toto], are subject to no other interpretation” ’ ” … . Georgetown Capital Group, Inc. v Everest National Insurance Company, 82, CA 12-01337, 4th Dept. 3-15-13
In a contract action, the Second Department laid out the black letter law on the interpretation of unambiguous language, the doctrine of “exclusio unius est exclusio alterious,” and the criteria for a declaratory judgment. The controversy concerned the amount of a bonus which was determined, according to the terms of the contract, by whether the plaintiff resigned or was fired, a disputed issue:
The defendant acknowledges that if the language of a written contract is free of ambiguity, the court must determine its meaning as a matter of law based upon the writing alone, without resort to extrinsic evidence …. Contrary to the defendant’s contention, the language of paragraph 4.2 clearly limits bonus compensation to a share of distributions based upon either the sale of all of RDL’s assets, or some of RDL’s assets. Pursuant to the doctrine of “exclusio unius est exclusio alterious,” which means that the expression of one thing is the exclusion of the other …, the references to the sale of assets implies that bonus compensation does not apply to distributions based upon something other than the sale of assets. If the parties had intended for bonus compensation to be based upon all distributions, these references to the sale of assets would have been unnecessary. * * * The courts may issue declaratory judgments declaring the rights of the parties only where there is a justiciable controversy …. There is no justiciable controversy warranting declaratory relief if the controversy is over a future event “beyond the control of the parties and may never occur” … . However, in the instant case, the future event is in the control of RDL …, and is likely to occur … . Therefore, the question of whether the defendant was discharged without cause or resigned constitutes a justiciable controversy, which must be resolved by the Supreme Court after a trial. Realtime Data, LLC v Melone, 2013 NY Slip Op 01540, 2011-11936, Index No 50021/10, 2nd Dept. 3-13-13
The record-keeping requirement in an insurance policy was a condition precedent. “Here, the defendant established its prima facie entitlement to judgment as a matter of law by submitting evidence that the plaintiff failed to comply with the record-keeping requirement set forth in the subject insurance policy, which was a clear condition precedent to coverage … “ Stars Jewelry…v Hanover Insurance Group, Inc., 2011-09098, Index No 5221/10, 2nd Dept. 3-6-13
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