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ALTHOUGH THE SPECIFIC CONTRACT WAS NOT IDENTIFIED IN THE COMPLAINT, THE NATURE OF THE BREACH OF CONTRACT CLAIM WAS SUFFICIENTLY ALLEGED BY REFERENCE TO THE NYC ADMINISTRATIVE CODE AND NYC DEPARTMENT OF TRANSPORTATION PERMITS (FIRST DEPT).

The First Department, reversing Supreme Court, determined the breach of contract cause of action was sufficiently alleged. Although the complaint did not specifically identify the breached contract, the reference to the relevant provisions of the NYC Administrative Code and the NYC Department of Transportation (DOT) permits gave sufficient notice of the nature of the claim:

… [P]laintiffs alleged that Con Edison failed to ensure payment of prevailing wages by codefendant … as required by the permits issued by the City Department of Transportation (DOT), in that it breached agreements required to be made, pursuant to Administrative Code of City of NY § 19-142, prior to obtaining such permits. Administrative Code § 19-142 required Con Edison “to agree that . . . the prevailing scale of union wages shall be the prevailing wage for similar titles as established by the fiscal officer pursuant to section [220] of the labor law, paid to those so employed,” and provides that “[n]o permit shall be issued until such agreement shall have been entered into with the” DOT. As required by the Administrative Code, the DOT permits issued to Con Edison stated that the permittee was required, “before such permit may be issued, to agree . . . that the prevailing scale of union wages shall be the prevailing wage for similar titles” established pursuant to Labor Law § 220 … …

… [T]he fact that the breach of contract cause of action in the complaint does not specifically identify the relevant contract but instead refers to “the promises required to be made pursuant to New York City Administrative Code § 19-142 prior to obtaining such permits,” does not require dismissal. Despite the non-specificity, the complaint “give[s] sufficient notice of the nature of the claim” by referencing Administrative Code § 19-142 and the DOT permits … . Ross v No Parking Today, Inc., 2024 NY Slip Op 00880, First Dept 2-20-24

Practice Point: Here the failure to identify the specific contract which was breached did not require dismissal of the breach of contract cause of action because the nature of the action was sufficiently alleged by reference to the applicable NYC Administrative Code provision and NYC Department of Transportation permits.

 

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FOLLOWING THE RE-ELECTION OF VENEZUELAN PRESIDENT NICOLAS MADURO, THE VENEZUELAN NATIONAL ASSEMBLY NAMED JUAN GUAIDO INTERIM PRESIDENT AND DECLARED THE EXCHANGE OF UNSECURED FOR SECURED NOTES OFFERED BY THE VENEZUELAN STATE-OWNED OIL COMPANY UNAUTHORIZED; VENEZUELAN LAW CONTROLS THE VALIDITY OF THE NOTES UNDER THE UCC, NEW YORK LAW CONTROLS ALL OTHER ASPECTS OF THE TRANSACTION (CT APP). ​

The Court of Appeals, in a comprehensive full-fledged opinion by Judge Troutman, answering questions posed by the Second Circuit, determined the extent to which the exchange of unsecured for secured notes offered to shareholders by the Venezuela’s state-owned oil company was controlled by the New York Uniform Commercial Code (UCC). The court concluded the validity of the notes under the UCC is governed by Venezuelan law and New York law governs the transaction in all other aspects. The opinion is far too detailed and complex to fairly summarize here. At the heart of the dispute is the 2018 re-election of Nicolas Maduro as President of Venezuela and the declaration by the Venezuelan National Assembly naming Juan Guaido as interim President, followed by the National Assembly’s declaration that the exchange of unsecured for secured notes was unauthorized:

In 2016, Venezuela’s state-owned oil company offered a bond swap through which its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. The United States Court of Appeals for the Second Circuit certified three questions to this Court concerning the extent to which New York law governs this transaction. … [W]e answer that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses within its scope plaintiffs’ arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution—i.e., whether there is a defect in the notes occasioned by the application of a constitutional provision bearing on the procedure through which the notes were issued. … New York law governs the transaction in all other respects, including the consequences if a security was “issued with a defect going to its validity” (UCC 8-202 [b] [1]-[2]). * * *

Plaintiffs are three related entities. Petróleos de Venezuela, S.A. (PDVSA) is an oil and gas company wholly owned by the Venezuelan government (Venezuelan Const art 303 [“the State shall retain all shares of” PDVSA]). PDVSA Petróleo S.A. (Petróleo) is incorporated in Venezuela and is a wholly owned subsidiary of PDVSA. PDV Holding, Inc. (PDVH), also a wholly owned subsidiary of PDVSA, is incorporated in Delaware and has its principal place of business in Houston, Texas. PDVH wholly owns CITGO Holding, Inc., which is the sole owner of CITGO Petroleum Corporation, a refiner and marketer of petroleum products in the United States. Nonparties CITGO Holding and CITGO Petroleum Corporation are both incorporated in Delaware with a principal place of business in Houston. Petróleos de Venezuela S.A. v MUFG Union Bank, N.A., 2024 NY Slip Op 00851, CtApp 2-20-24

Practice Point: Nicolas Maduro was re-elected President of Venezuela. Juan Guaido was subsequently named interim President of Venezuela by the Venezuelan National Assembly. The question at the heart of this dispute is whether actions taken by President Maduro (issuance of notes offered by the Venezuelan state-owned oil company) are valid in the face of a subsequent declaration by the Venezuelan National Assembly that the issuance of the notes was not authorized.

 

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A RETROCESSIONAL INSURER WHICH PAID OUT A SETTLEMENT ON BEHALF OF THE INSURED IN THE UNDERLYING LABOR LAW 240(1) LADDER-FALL CASE, IS ENTITLED TO BRING A LEGAL MALPRACTICE ACTION AGAINST THE LAWYERS FOR THE INSURED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kapnick, determined a retrocessional insurer (the reinsurer of a reinsurer) can maintain a legal malpractice claim against lawyers representing the insured in an underlying Labor Law 240(1) (ladder-fall) personal injury action. Plaintiff retrocessional insurer, having paid out on a settlement on behalf of the insured has standing to assert a claim for legal malpractice under a theory of equitable subrogation. (The opinion is too complex to fairly summarize here):

In New York, “[w]e recognize at once the fairness of the proposition that an insurer who has been compelled by his contract to pay to or in behalf of the insured claims for damages ought to be reimbursed by the party whose fault has caused such damages and the principle of subrogation ought to be liberally applied for the protection of those who are its natural beneficiaries” … . “As an equitable doctrine in the context of insurance, an insurance carrier, upon payment of a loss becomes subrogated to the rights and remedies of its assured to proceed against a party primarily liable without the necessity of any formal assignment or stipulation” … . Under the same equitable principles, “an insurer which has been compelled under its policy to pay a loss, ought in fairness to be reimbursed by the party which caused the loss” … . * * *

Where a reinsurer, or retrocessionaire, has paid a claim on behalf of an insured, equitable principles demand that the reinsurer be entitled to equitable subrogation on behalf of the insured. Having pleaded that it was contractually obligated to, and did, pay the majority of the [property owner/general contractor’s] settlement amount in the underlying personal injury action, and that it brings the instant action for legal malpractice as subrogee [of the property owner/general contractor], plaintiff can proceed with this action under the theory of equitable subrogation. Century Prop. & Cas. Ins. Corp. v McManus & Richter, 2024 NY Slip Op 00799, First Dept 2-15-24

Practice Point: Here the retrocessional insurer paid out a settlement on behalf of the insured in an underlying personal injury action. The retrocessional insurer was entitled to bring a legal malpractice action against the lawyers for the insured.

 

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PARTIAL PAYMENT OF A DEBT WITHIN THE STATUTE OF LIMITATIONS PERIOD MAY REVIVE OR TOLL THE STATUTE OF LIMITATIONS FOR AN ACTION BASED UPON THE DEBT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff in this suit against his employer seeking payment for work performed raised a question of fact whether the statute of limitations was revived by defendants’ partial payment:

There is a “long-standing common law rule” that partial payment of a debt, if made under “circumstances from which a promise to honor the obligation may be inferred,” will operate to start the statute of limitations running anew from the time the partial payment is made … . To show that the statute of limitations has been renewed by a partial payment, it must be shown that the payment was accompanied by circumstances amounting to “an absolute and unqualified acknowledgment by the debtor of more being due, from which a promise may be inferred to pay the remainder” … .

Here, the plaintiff alleged that, over a course of years, the defendants made repeated assurances that they would pay him salary and bonus money that he was owed pursuant to his employment arrangement. Further, he alleged that the defendants made a partial payment of outstanding bonus money to the plaintiff on July 17, 2015, within the statute of limitations. Under these circumstances, the plaintiff raised a question of fact as to whether the statute of limitations was tolled or revived … . Costello v Curan & Ahlers, LLP, 2024 NY Slip Op 00758, Second Dept 2-14-24

Practice Point: Partial payment of a debt made within the statute of limitations period may revive or toll the statute of limitations for an action based on the debt.

 

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THE FORUM SELECTION CLAUSE IN THE NURSING HOME ADMISSION AGREEMENT WAS VALID AND ENFORCEABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the forum selection clause in the nursing-home admission was valid and enforceable:

“‘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’ … . …

In opposition to the defendant’s prima facie showing of the parties’ agreement which includes a forum selection clause, the plaintiff was required to show that enforcement of the forum selection clause would be unreasonable, unjust, or would contravene public policy, or that the forum selection clause was the result of fraud or overreaching … . Here, the plaintiff failed to do so. Johnson v Seagate Rehabilitation & Nursing Ctr., 2024 NY Slip Op 00620, Second Dept 2-7-24

Practice Point: To contest a forum selection clause in a nursing home admission agreement, the plaintiff must show that enforcement of the forum selection clause would be unreasonable, unjust, or would contravene public policy, or that the forum selection clause was the result of fraud or overreaching.

 

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PLAINTIFF CONTRACTOR DID NOT POSSESS THE REQUIRED NYC HOME IMPROVEMENT CONTRACTOR’S LICENSE; THE CONTRACTOR’S BREACH OF CONTRACT ACTION SEEKING PAYMENT FOR THE RENOVATION WORK PLAINTIFF COMPLETED WAS PROPERLY DISMISSED (FIRST DEPT). ​

The First Department, in a full-fledged opinion by Justice Higgitt, determined the plaintiff contractor was required to have a home improvement contractor’s license by the New York City Administrative Code. Therefore plaintiff’s breach of contract, unjust enrichment, account stated and quantum meruit causes action against the owner of the property plaintiff worked on was correctly dismissed. The First Department determined the LLC which owned the property was an “owner” within the meaning of the Administrative Code, and the contract was a home improvement contract within the meaning of the meaning of the code:

Obtaining a home improvement contractor’s license is neither a ministerial act nor a mere technicality … . Rather, “strict compliance with the licensing statute [i.e. Administrative Code § 20-387] is required, with the failure to comply barring recovery regardless of whether the work performed was satisfactory, whether the failure to obtain the license was willful or, even, whether the homeowner knew of the lack of a license and planned to take advantage of its absence” … .

There is no dispute that plaintiff is a “contractor” for licensing purposes (see Administrative Code § 20-386[5]), and that plaintiff did not have a valid license. The controversy here essentially distills to whether defendant owners are “owners” within the meaning of Administrative Code § 20-387(a), and, if so, whether the agreement between the parties was a “home improvement contract” (Administrative Code § 20-386[6]). If the answer to both of those questions is yes, then plaintiff was required to have a home improvement contractor’s license to recover for the work; if the answer to either question is no, then plaintiff did not need a license. KSP Constr., LLC v LV Prop. Two, LLC, 2024 NY Slip Op 00356, First Dept 1-25-24

Practice Point: A contractor who does renovation work in New York City without a NYC Home Improvement Contractor’s license cannot sue for payment for the work.

 

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THE CONTRACT CALLED FOR LIQUIDATED DAMAGES AS THE “SOLE REMEDY” FOR BREACH; HOWEVER NOTHING IN THE CONTRACT LANGUAGE WAIVED THE NONBREACHING PARTY’S RIGHT TO PREJUDGMENT INTEREST PURSUANT TO CPLR 5001(A) (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kapnick, reversing Supreme Court, determined the contract language, which provided that liquidated damages constituted the “sole remedy” for breach, did not waive the nonbreaching party’s  right to prejudgment interest pursuant to CPLR 5001 (a):

At issue in this appeal is whether the parties’ contract language specifying that purchaser’s “sole remedy” in the event of sellers’ breach is the return of its downpayment constitutes a clear waiver of CPLR 5001 (a) as defined by the Court of Appeals in J. D’ Addario & Co., Inc. v Embassy Indus., Inc. (20 NY3d 113 [2012]) and requires denying the nonbreaching party statutory prejudgment interest. … [W]e conclude that it does not and hold that CPLR 5001 (a) requires that plaintiff …, the nonbreaching purchaser, be awarded prejudgment interest on its $626,250.00 downpayment, at the statutory rate of 9% … . IHG Harlem I LLC v 406 Manhattan LLC,2024 NY Slip Op 00164, First Dept 1-16-24

Practice Point: The contract provided that liquidated damages constituted the “sole remedy” for breach. However, nothing in the contract language indicated the nonbreaching party’s right to prejudgment interest pursuant to CPLR 5001 (a) was waived.

 

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THE ARBITRATION AWARD WAS “IRRATIONAL;” THE CORRECTIONS OFFICERS WERE TREATED ONLY ON THE DAY OF THEIR INJURIES, LOST NO WORK AND HAD NO OUT-OF-POCKET EXPENSES; THEY WERE NOT ENTITLED TO MEDICAL BENEFITS PURSUANT TO THE COLLECTIVE BARGAINING AGREEMENT (CBA) AND THE GENERAL MUNICIPAL LAW (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the arbitration award which found that the county corrections officers were entitled to medical benefits for work-related injuries pursuant to the collective bargaining agreement (CBA) and the General Municipal Law, was “irrational.” The officers were treated on the day of their injuries, received no further treatment, lost no work, and had no out-of-pocket expenses:

“An award is irrational only where there is no proof whatever to justify the award” … . Here, the union asserted that the County violated the CBA by improperly denying General Municipal Law § 207-c benefits to the claimants, and the parties agreed that the arbitrator would decide whether this [*3]assertion was correct. “General Municipal Law § 207-c(1) entitles corrections officers to certain enumerated benefits, including the payment of salary or wages and the cost of medical treatment and hospital care, where the officer ‘is injured in the performance of his [or her] duties or . . . is taken sick as a result of the performance of his [or her] duties'”… . By definition, an officer seeking benefits under the statute must demonstrate, among other things, that he or she requires payment of salary or wages, or payment for the cost of medical treatment, whether in the form of reimbursement for funds expended or direct payment to an unpaid provider … . Here, the claimants did not seek payment of salary or wages pursuant to the statute, since they were each paid their regular salary or wages for the time spent visiting a medical provider on the date of the occurrence and missed no time thereafter. The claimants also did not seek payment of, or reimbursement for, the cost of the medical treatment they each received on the day of their respective occurrences, conceding that they did not sustain any out-of-pocket medical expenses. The arbitrator’s decision to award the claimants a designation that their injuries or illnesses qualified for statutory benefits was therefore irrational, considering that there was no proof that any such benefits were required … . Matter of County of Nassau v Nassau County Sheriff’s Corr. Officers’ Benevolent Assn., 2024 NY Slip Op 00069, Second Dept 1-11-24

Practice Point: This case is rare example of a judicial finding that an arbitration award was “irrational.”

 

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PURSUANT TO THE ALCOHOLIC BEVERAGE CONTROL LAW THE DEFENDANT BEER IMPORTER IS OBLIGATED TO HONOR THE WHOLESALE DISTRIBUTION CONTRACT ENTERED INTO BY PLAINTIFF AND THE PRIOR BEER IMPORTER (SECOND DEPT). ​

The Second Department, in a full-fledged opinion by Justice Chambers, reversing Supreme Court, in a matter of first impression, determined defendant beer importer was obligated, pursuant to Alcoholic Beverage Control Act section 55-c, to honor the wholesale distribution contract entered into by the plaintiff and the prior beer importer:

We are asked on this appeal to determine whether section 55-c of the Alcoholic Beverage Control Law obligates a beer importer, which acquired its importation rights relating to a particular beer brand directly from the manufacturer, to honor a wholesale distribution agreement entered into by the prior importer of the same beer brand. Additionally, we note that this appeal presents a question of first impression.

We conclude that the generous protections afforded to beer wholesalers under Alcoholic Beverage Control Law § 55-c extend to circumstances such as the present one, and obligate an importer to honor a wholesale distribution agreement entered into by the prior importer of the same brand, even where, as here, there is no relationship or privity of contract between the prior importer and the new importer. For the reasons that follow, under the specific language of New York’s law, the defendant importer in this action is a “successor to a brewer” within the meaning of Alcoholic Beverage Control Law § 55-c, and the plaintiff wholesaler has demonstrated as a matter of law that the defendant importer failed to honor, without good cause, the wholesale distribution agreement entered into by the plaintiff and the prior importer. JRC Beverage, Inc. v K.P. Global, Inc., 2024 NY Slip Op 00067, Second Dept 11-11-24

Practice Point: Here the Alcoholic Beverage Control Law obligated the new beer importer to honor a wholesale distribution contract plaintiff entered into with the prior beer importer.

 

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PLAINTIFF IN THIS TRAFFIC ACCIDENT CASE RAISED QUESTIONS OF FACT WHETHER THE RELEASE WAS SIGNED BY PLAINTIFF UNDER UNFAIR CIRCUMSTANCES; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT BASED UPON THE RELEASE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff in this traffic accident case had raised questions of fact about when the release signed by plaintiff under unfair circumstances:

… [P]laintiff’s allegations were sufficient to raise questions of fact as to whether the release was signed by the plaintiff under circumstances that indicate unfairness, and whether it was not “fairly and knowingly” made … . The plaintiff averred, among other things, that shortly after the accident, an insurance representative for the defendants called him “repeatedly;” that he had difficulty understanding the defendants’ representative due to a language barrier; that the defendants’ representative, who had him sign the release to obtain money for medical bills, never explained that the document he signed was a release or had the legal effect of the release; and that the plaintiff was not represented by an attorney at the time he signed the release. Moreover, the plaintiff raised questions of fact as to whether there was mutual mistake as to the nature of the injuries sustained by plaintiff from the alleged accident … . Wei Qiang Huang v Llerena-Salazar, 2023 NY Slip Op 06772, Second Dept 12-27-23

Practice Point: Unfair circumstances surrounding the signing of a release, short of fraud, can invalidate it.

 

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