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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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HERE THE WRITTEN LOGGING CONTRACT WAS COMPLETE AND UNAMBIGUOUS; EVIDENCE OF AN ALLEGED ADDITIONAL ORAL AGREEMENT WAS PRECLUDED BY THE PAROL EVIDENCE RULE (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined the contract at issue was complete and any evidence of an alleged oral agreement was precluded by the parol evidence rule:

 “The parol evidence rule generally operates to preclude evidence of a prior or contemporaneous communication during negotiations of an agreement that contradicts, varies, or explains a written agreement which is clear and unambiguous in its terms and expresses the parties’ entire agreement and intentions” … . …

Defendants met their initial burden of establishing that the timber sale contract is a complete written instrument, and plaintiffs failed to raise a triable issue of fact in opposition … . The contract sets forth the parties, the address of the property, the contract period, the payment terms, and a description of the items sold … . There is no reference to any other document or map … . Inasmuch as the contract constituted a complete, integrated agreement, plaintiffs may not rely on an alleged oral agreement to permit logging on the southernmost section of the property, permit logging on the middle section of the property only upon additional payment, and prohibit logging on the northernmost section of the property, to vary the terms of the contract. Indeed, one would expect the contract to embody any such restrictions on logging, and “[s]uch a collateral agreement cannot be separately enforced” … . Lentner v Upstate Forestry & Dev., LLC, 2023 NY Slip Op 06626, Fourth Dept 12-22-23

Practice Point: Where a written contract is complete and unambiguous on its face, evidence of an additional oral agreement is precluded by the parol evidence rule.

 

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PLAINTIFF SUED AN ILLINOIS SCHOOL ALLEGING THAT THE ONLINE COURSES OFFERED BY DEFENDANT SCHOOL DURING THE PANDEMIC CONSTITUTED A TRANSACTION IN NEW YORK WITHIN THE MEANING OF THE LONG-ARM STATUTE; BUT PLAINTIFF DID NOT ALLEGE SHE WAS IN NEW YORK WHEN SHE TOOK THE ONLINE COURSES; DEFENDANT’S MOTION TO DISMISS FOR LACK OF JURISDICTION SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not raise a question of fact about whether defendant, an Illinois school, conducted a transaction in New York sufficient to confer long-arm jurisdiction. Because of the pandemic, the courses offered by the school were online. Plaintiff alleged a breach of contract by the school involving a grading issue. A major flaw in plaintiff’s case was that she did not allege she was in New York when she took the online courses:

… [T]he plaintiff failed to show that the defendants purposefully availed themselves of the privilege of conducting activities in New York so as to subject them to long-arm jurisdiction pursuant to CPLR 302(a)(1) … . While the plaintiff attests in her affidavit that since March 2020, she has not taken a class at the defendants’ Illinois location, that the only contact she had with the defendants since that date was either virtually or by telephone, and that none of the facts alleged in her complaint took place in person in Illinois, none of this demonstrates that the defendants were engaged in any activity in New York, let alone purposeful activity. Other than the plaintiff’s allegation that she is a New York resident, there is no other reference to New York in the complaint or in the plaintiff’s affidavit. Significantly, the plaintiff’s allegations are devoid of any indication that she was in New York during the time of the alleged communications with the defendants. Greenfader v Chicago Sch. of Professional Psychology, 2023 NY Slip Op 06513, Second Dept 12-20-23

Practice Point: It is not clear from the decision whether taking an online course in New York offered by a school in Illinois confers long-arm jurisdiction over the school. Granting the school’s motion to dismiss appears to be based upon the plaintiff’s failure to allege she was in New York when she took the online course.

 

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NONE OF THE ESPINAL EXCEPTIONS APPLIED TO THE DEFENDANT FIRE SAFETY AND SECURITY CONTRACTOR IN THIS SLIP AND FALL CASE; THEREFORE THE CONTRACTOR’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED; THE ISSUE WAS PROPERLY CONSIDERED ON APPEAL, DESPITE THE FAILURE TO RAISE IT BELOW, BECAUSE IT CONCERNED A QUESTION OF LAW (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the defendant fire safety and security contractor’s motion for summary judgment in this slip and fall case should have been granted. It was alleged the steps where plaintiff fell were in disrepair and were not sufficiently illuminated, which had nothing to do with defendant-contractor’s duties. Therefore the contractor did not “launch and instrument of harm,” plaintiff could not have relied upon the contractor to make the area safe, and the contractor’s contract with the owner did not displace the owner’s safety-related responsibilities:

Unity, the building’s fire safety and security contractor, should have been granted summary judgment. Even assuming that Unity’s contractual fire safety inspection duties extended to the identification of premises defects such as the broken step involved in plaintiff’s mishap, any failure by Unity to identify that defect would not have constituted the affirmative launching of a force or instrument of harm within the meaning of Espinal … . The same is true of any failure by Unity to call attention to insufficient lighting of the stairway. Further, Unity’s contract did not completely displace the duty of the owner or managing agent to maintain the safety of the premises … . Nor is there any evidence that plaintiff detrimentally relied on Unity to perform its contractual duties. Accordingly, on this record, none of the Espinal conditions for holding a premises contractor liable for an injury to a third party are satisfied with respect to Unity. Diamond v TF Cornerstone Inc., 2023 NY Slip Op 06473, First Dept 12-19-23

Practice Point: Here none of the Espinal exceptions applied such that the contractor could be held liable for the slip and fall.

Practice Point: Although the “Espinal” issue was not raised below, it could be raised on appeal because it presented a question of law.

 

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THE COMPLAINT IN THIS TRAFFIC ACCIDENT CASE STATED CAUSES OF ACTION (1) FOR FRAUDULENT INDUCEMENT TO SIGN A RELEASE AND (2) FOR RESCISSION OF THE RELEASE BASED UPON UNILATERAL MISTAKE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s complaint stated causes of action for fraudulent inducement (to sign a release) and for recsission of the release based on a unilateral mistake. Plaintiff in this traffic accident case alleged the defendant insurer fraudulently induced him to sign the release by telling him the release applied only to property damage, not to personal injury. Plaintiff alleged English was his second language, he did not have his reading glasses, and he relied on the insurance agent’s representations:

“To state a [cause of action to recover damages] for fraudulent inducement, there must be a knowing misrepresentation of material present fact, which is intended to deceive another party and induce that party to act on it, resulting in injury'” … . “The plaintiff must also establish that he or she reasonably relied upon the alleged misrepresentation” … . “A party is under an obligation to read a document before signing it, and cannot generally avoid the effect of the document on the ground that he or she did not read it or know its contents” … . However, “there are situations where an instrument will be deemed void because the signer was unaware of the nature of the instrument he or she was signing, such as where the signer is illiterate, or blind, or ignorant of the alien language of the writing, and the contents thereof are misread or misrepresented to him [or her] by the other party, or even by a stranger” … .

Here, the complaint stated a cause of action by Israel to recover damages for fraudulent inducement against Progressive and Roberts by alleging, inter alia, that English is Israel’s second language, his ability to read English is limited, and he justifiably relied on the misrepresentations made by Progressive’s agent, Roberts, as to the effect of the release, which has resulted in financial damages to him … .

Moreover, the complaint stated a cause of action by Israel, in effect, to rescind the release based on a unilateral mistake against Progressive and Roberts, as the complaint alleged that Israel’s mistake was induced by fraudulent misrepresentation … . Israel v Progressive Cas. Ins. Co., 2023 NY Slip Op 06357, Second Dept 12-13-24

Practice Point: Plaintiff alleged English was his second language, he didn’t have his reading glasses, he was told the release pertained only to property damage, not personal injury, and he relied on that representation. The complaint stated causes of action for fraudulent inducement and rescission of the release based on unilateral mistake.

 

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