Contract Law – Page 24 – New York Appellate Digest

THE SOLE MEMBER OF AN LLC WHICH OWNS THE PROPERTY HAS AN INSURABLE INTEREST IN THE PROPERTY; AN INSURER WHICH ACCEPTS PAYMENT ON A POLICY AFTER LEARNING OF THE INSURED’S ALLEGED MISREPRESENTATIONS WAIVES THE RIGHT TO RESCIND THE POLICY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined: (1) plaintiff, as the sole member of an LLC which owned the property, had an insurable interest in the property; and (2) defendant’s accepting payment on the policy after defendant was aware of plaintiff’s alleged misrepresentations waived defendant’s right to rescind the policy:

… [A]s the sole owner of the LLC, the plaintiff had an insurable interest in the subject property, since destruction of the subject property would necessarily cause economic detriment to the plaintiff (see Insurance Law § 3401 …).

… “The continued acceptance of premiums by an insurance carrier after learning of sufficient facts which allow for the rescission of the policy, constitutes a waiver of the right to rescind” … . Here, the plaintiff established his prima facie entitlement to judgment as a matter of law by demonstrating that the defendant waived its right to assert the plaintiff’s misrepresentations as a basis for rescinding the policy, since the defendant renewed the policy and accepted a premium payment after it discovered the misrepresentations. Sabharwal v Hyundai Mar. & Fire Ins. Co., Ltd., 2023 NY Slip Op 02690, Second Dept 5-17-23

Practice Point: The sole member of an LLC which owns real property has an insurable interest in the property.

Practice Point: An insurer which accepts payment on a policy after learning of the insured’s alleged misrepresentations waives the right to rescind the policy.

May 17, 2023

Arbitration, Contract Law

PLAINTIFF WAS DEEMED TO HAVE READ THE INFORMATION WHICH WAS HYPERLINKED; THEREFORE PLAINTIFF WAS DEEMED TO HAVE AGREED TO ARBITRATION (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff agreed to arbitrate based upon the hyperlinks in the document plaintiff reviewed:

Uber [defendant] sustained its burden of demonstrating that the parties had an explicit and unequivocal agreement to arbitrate. … [P]laintiff had agreed to be bound by the arbitration agreement when he affirmatively indicated and confirmed, by taking two separate actions, that he had reviewed and agreed to Uber’s updated terms of use, which were overtly hyperlinked as part of the pop-up screen and sufficient to form a binding contract … .

… [P]laintiff was on inquiry notice of the updated Terms of Use that required any disputes between the parties to be resolved by arbitration. Although a clickwrap agreement’s terms and conditions must be clear and conspicuous, they need not all be simultaneously and immediately visible; the terms may be binding and enforceable even if they are only accessible through a hyperlink … . The keys to enforceability are a reasonable indication of the existence of the additional terms and the user’s being required to manifest assent to them … . Brooks v Lang Yang, 2023 NY Slip Op 02610, First Dept 5-15-23

Practice Point: Here the plaintiff was deemed to have read information which was hyperlinked and therefore was deemed to have agreed to arbitrate.

May 16, 2023

Contract Law, Landlord-Tenant, Municipal Law, Negligence

ALTHOUGH THE NYC ADMININSTRATIVE CODE MAKES TENANTS RESPONSIBLE FOR REMOVING ICE AND SNOW FROM SIDEWALKS, IT DOES NOT IMPOSE TORT LIABILITY FOR FAILURE TO DO SO; THE ADMINISTRATIVE CODE ALSO MAKES PROPERTY OWNERS RESPONSIBLE FOR SNOW AND ICE REMOVAL; THE LEASE SPECIFICALLY STATED DEFENDANT WAS NOT RESPONSIBLE FOR CLEARING SNOW AND ICE FROM THE SIDEWALK; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the tenant, 185th Operating, was not liable for a sidewalk ice and snow slip and fall. Although the NYC Administrative Code makes tenants responsible for removing ice and snow from sidewalks, it does not impose tort liability for a failure to do so. Here the lease explicitly stated the tenant is not responsible for clearing ice and snow:

Although the applicable statute requires tenants to clear snow and ice from the sidewalks around their premises, the statute does not impose tort liability for noncompliance (Administrative Code of the City of New York § 16-123[a] …). Furthermore, Administrative Code § 7-210(a), which requires property owners to maintain the sidewalk abutting their property, does not impose liability on 185 Operating, as 185 Operating is a tenant of the premises, not the owner. Not only did 185th Operating’s lease with defendant owner … specifically state that 185th Operating was not responsible for maintaining the sidewalks adjacent to the premises, but [the owner’s] lease with defendant Staples …, a tenant occupying the same building as 185th Operating, expressly made Staples responsible for clearing snow and ice from the sidewalk where the icy condition had occurred.

The record does not present any evidence that 185th Operating’s earlier voluntary snow removal created or exacerbated a hazardous condition that then caused plaintiff’s injury … . Cruz v Heights Broadway, LLC, 2023 NY Slip Op 02612, First Dept 5-16-23

Practice Point: Here the lease specifically stated the defendant tenant was not responsible for removing ice and snow from the sidewalk. The NYC Administrative Code requires tenants to remove ice and snow but does not impose tort liability for the failure to do so. The code also requires owners to remove ice and snow. The tenant’s motion for summary judgment should have been granted.

May 16, 2023

Contract Law, Negligence

THE RELEASE SIGNED BY PLAINTIFF BEFORE TAKING A MANDATORY COLLEGE FITNESS-EDUCATION COURSE PRECLUDED HER LAWSUIT AGAINST THE COLLEGE ALLEGING INJURIES SUSTAINED TAKING THE COURSE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the release signed by the plaintiff precluded her suit against defendant community college (DCC) for alleged injuries sustained in a mandatory fitness education course:

The plaintiff enrolled in a wellness and fitness education course, which was a mandatory course that had to be taken as part of her general studies degree program at Dutchess Community College. The plaintiff informed the course instructor of her prior back injuries, and signed a release which, in relevant part, “discharge[d] Dutchess Community College from all liability for . . . any claim of injury to [the plaintiff’s] person . . . whether harm is caused by the negligence of the releasees or otherwise.” The release further provided that it was “intended to be broad and inclusive in keeping with state laws.” * * *

“Where the language of an exculpatory agreement expresses in unequivocal terms the intention of the parties to relieve a defendant of liability for its own negligence, the agreement will be enforced” … . “Although a defendant has the initial burden of establishing that it has been released from any claims, a signed release ‘shifts the burden of going forward . . . to the [plaintiff] to show that there has been fraud, duress or some other fact which will be sufficient to void the release'” … . Sjogren v Board of Trustees of Dutchess Community Coll., 2023 NY Slip Op 02551, Second Dept 5-10-23

Practice Point: An unambiguous release will preclude a lawsuit absent fraud sufficient to void the agreement.

May 10, 2023

Contract Law, Real Estate

THE PARTIAL PAYMENTS MADE TOWARD THE DOWN PAYMENT ON THE REAL ESTATE PURCHASE CONTRACT DID NOT CONSTITUTE PART PERFORMANCE OF THE ALLEGED ORAL MODIFICATION OF THE AGREEMENT; THE STATUTE OF FRAUDS RENDERED THE ALLEGED ORAL MODIFICATION UNENFORCEABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the alleged oral modification of the real estate purchase contract was unenforceable pursuant to he statute of frauds. The original contract called for a $750,000 down payment by a specified date. The payment was not made. Plaintiff argued defendant had orally agreed to take installment payments toward the down payment and two partial payments had in fact been made and accepted. Plaintiff sued for specific performance of the contract. The defendant asserted the statute of frauds affirmative defense. The Second Department held that the two payments did not constitute part performance which would excuse the absence of a writing:

While the statute of frauds empowers courts of equity to compel specific performance of agreements in cases of part performance (see General Obligations Law § 5-703[4]), “the claimed partial performance must be unequivocally referable to the agreement” … . Unequivocally referable conduct is conduct that is “inconsistent with any other explanation” … . It is insufficient “that the oral agreement gives significance to plaintiff’s actions” … . “Rather, the actions alone must be ‘unintelligible or at least extraordinary,’ explainable only with reference to the oral agreement” … . “Significantly, the doctrine of part performance is based on principles of equity, in particular, recognition of the fact that the purpose of the Statute of Frauds is to prevent frauds, not to enable a party to perpetrate a fraud by using the statute as a sword rather than a shield” … . S&G Golden Estates, LLC v New York Golf Enters., Inc., 2023 NY Slip Op 02548, Second Dept 5-10-23

Practice Point: In order to constitute part performance of a contract such that the statute of frauds does not apply, the part performance must be inconsistent with any other explanation. The actions must be explainable only with reference to the oral agreement (not the case here).

May 10, 2023

Contract Law, Tortious Interference with Contract

UNDER THE FACTS, PLAINTIFF CAN ASSERT A CLAIM FOR TORTIOUS INTERFERENCE WITH CONTRACT AGAINST DEFENDANT, EVEN THOUGH BOTH ARE SIGNATORIES TO THE MULTILATERAL CONTRACTS; THE PARTIES HAVE DIFFERENT RIGHTS AND DUTIES UNDER THE CONTRACTS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined that, under the facts, plaintiffs should be allowed to state a claim for tortious interference with contract against another signatory to the multilateral agreements:

We are asked to decide whether a party to multilateral contracts may be sued by its contracting counterparty for inducing a breach of those contracts. Here, we answer that question in the affirmative. The rights and duties of defendants are separate from those of the breaching party. Plaintiffs also lack a contractual remedy against defendants. Under this narrow set of circumstances, plaintiffs should be permitted to assert a cause of action for tortious interference with contract, despite defendants being signatories to the multilateral agreements. * * *

The general principle that only a nonparty to a contract can be liable for tortious interference derives from cases involving either bilateral contracts or contracts under which all defendants had the same or similar contractual obligations … . * * *

This reasoning does not apply, however, if the inducing party is subject to duties that are different from those it allegedly encouraged another party to the contract to breach. Given such facts, the plaintiff cannot assert that the offending defendant breached a contractual obligation to it. “[T]he fact that one may derive rights under the same agreement as two other contracting parties does not excuse interference with their contractual rights” … . When breaching and inducing parties have different rights and duties, if the plaintiff is unable to recover fully from the breaching party, a tortious interference claim against the inducing party may be necessary for the plaintiff to be made whole. Arena Invs., L.P. v DCK Worldwide Holding Inc., 2023 NY Slip Op 02476, First Dept 5-9-23

Practice Point: Usually only a nonparty to a contract can be liable for tortious interference. Here plaintiff and defendant were both signatories to multilateral contracts. Because both had different rights and duties under the contracts, plaintiff was allowed to assert a claim for tortious interference with contract against defendant.

May 9, 2023

Contract Law, Real Estate

THE TEXTS AND EMAILS WERE NOT SUBSCRIBED; THE BREACH OF CONTRACT ACTION BASED UPON THE EMAILS AND TEXTS WAS BARRED BY THE STATUTE OF FRAUDS (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the emails and texts did not meet the criteria for a written contract (here a purported agreement to purchase property). The breach of contract cause of action was therefore barred by the statute of frauds:

Initially, “[a]n e-mail sent by a party, under which the sending party’s name is typed, can constitute a [signed] writing for [the] purposes of the statute of frauds” … . Here, however, not one of the text messages or emails submitted by plaintiff contains a signature block or other electronic signature of defendant. Those communications are therefore “clearly inadequate, since [they were] not subscribed, even electronically, by the defendant[] who [is] the part[y] to be charged, or by anyone purporting to act in [his] behalf” … . We further agree with defendant that the doctrine of part performance does not apply to defeat the affirmative defense of the statute of frauds (see § 5-703 [4]; CPLR 3211 [a] [5]). Under the circumstances of this case, plaintiff’s actions in paying property taxes and related expenses, including making renovations to a sunroom on the property, “were not ‘unequivocally referable’ to an agreement to purchase the property to warrant invoking the doctrine of part performance … . Preston v Nichols, 2023 NY Slip Op 02408, Fourth Dept 5-5-23

Practice Point: Here the texts and emails which were alleged to constituted a valid property purchase agreement were not subscribed. The breach of contract action based upon the texts and emails was therefore barred by the statute of frauds.

May 5, 2023

Contract Law, Negligence

IN THIS PARKING-LOT-ICE SLIP AND FALL CASE, THE SNOW REMOVAL CONTRACTOR DID NOT DEMONSTRATE IT DID NOT LAUNCH AN INSTRUMENT OF HARM AND THE PROPERTY OWNERS DID NOT DEMONSTRATE THEY DID NOT HAVE CONSTRUCTIVE NOTICE OF THE DANGEROUS CONDITION; THE DEFENDANTS’ SUMMARY JUDGMENT MOTIONS SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant snow-removal company, Landscapes, and the defendant property owners, Nambar, were not entitled to summary judgment in this parking-lot-ice slip and fall case. Landscapes did not show it did not launch an instrument of harm by piling snow which melted and formed ice, and the Nambar defendants did not show they did not have constructive notice of the icy condition:

… [S]ince the plaintiff’s pleadings alleged that the Landscapes defendants, through their snow removal efforts, created the icy condition in the parking lot, thereby launching a force or instrument of harm that caused the plaintiff’s injuries, those defendants, in support of their motion for summary judgment, were required to establish, prima facie, that they did not create the alleged dangerous condition … . The Landscapes defendants failed to make such a showing, as they did not affirmatively establish that they did not create the icy condition by negligently piling snow in an elevated area in the parking lot, where it allegedly melted and created a stream of water that refroze … . …

… [T]he Namdar defendants failed to eliminate triable issues of fact as to whether they had constructive notice of the alleged ice condition. The deposition testimony of the Namdar defendants’ building engineer raised a triable issue of fact as to whether those defendants had notice of the condition that allegedly caused the ice to form, i.e., the stream of water flowing from the pile of snow in the elevated area of the parking lot … . In addition, the deposition testimony of [one of the Landscapes defendants] indicated that the building engineer had instructed him to pile snow in certain places, including the elevated area of the parking lot, thus raising a triable issue of fact as to whether the Namdar defendants were responsible for creating the alleged ice condition … . Tomala v Islandia Expressway Realty, LLC, 2023 NY Slip Op 02347, Second Dept 5-3-23

Practice Point: Here in this slip and fall case the snow-removal contractor did not demonstrate it did not launch an instrument of harm by piling snow such that it melted and formed ice and the property owners did not demonstrate they did not have constructive notice of or did not participate in the creation of the dangerous condition. The defendants should not have been granted summary judgment.

May 3, 2023

Contract Law, Employment Law, Negligence, Workers' Compensation

DEFENDANT COULD NOT SEEK INDEMNIFICATION FOR PLAINTIFF’S DAMAGES FROM THIRD-PARTY DEFENDANT BECAUSE PLAINTIFF WAS THE THIRD-PARTY DEFENDANT’S SPECIAL EMPLOYEE FOR WHOM WORKERS’ COMPENSATION WAS THE EXCLUSIVE REMEDY (FIRST DEPT).

The First Department, reversing (modifying) Supreme Count, determined the defendant, TIA, could not seek indemnification for plaintiff’s damages from third-party defendant, Freeman, because plaintiff was Freeman’s special employee for whom Workers’ Compensation is the exclusive remedy:

Supreme Court should have dismissed TIA’s common-law indemnification and contribution claims on the ground that plaintiff was Freeman’s special employee when his accident occurred and therefore, the claims are precluded by the Workers’ Compensation Law. “A worker may be deemed a special employee where he or she is ‘transferred for a limited time of whatever duration to the service of another'” … . “While the mere transfer does not compel the conclusion that a special employment relationship exists, a court is most likely to find that it does where the transferee ‘controls and directs the manner, details and ultimate result of the employee’s work'” … . Carey v Toy Indus. Assn. TM, Inc., 2023 NY Slip Op 02280, First Dept 5-2-23

Practice Point: If plaintiff’s sole remedy against a party is Workers’ Compensation, a defendant cannot seek indemnification from that party. Here plaintiff was the third-party defendant’s special employee so defendant could not seek indemnification from the third-party defendant.

May 2, 2023

Administrative Law, Consumer Law, Contract Law, Municipal Law

IN THIS SUIT BY YELLOW CAB MEDALLION OWNERS AGAINST THE NYC TAXI AND LIMOUSINE COMMISSION, PLAINTIFFS DID NOT STATE A CLAIM FOR BREACH OF AN IMPLIED COVENANT OF GOOD FAITH OR DECEPTIVE BUSINESS PRACTICES; PLAINTIFFS’ CLAIMS WERE BASED UPON DEFENDANTS’ ALLEGED FAILURE TO REGULATE COMPETING SERVICES LIKE UBER AND LYFT (CT APP).

The Court of Appeals determined the lawsuit against the NYC Taxi and Limousine Commission (TLC) and New York City by taxi services which purchased yellow cab medallions at an auction in 2013 failed to state a claim. The plaintiffs argued defendants breached an implied covenant of good faith by failing to regulate competing services like Uber and Lyft and engaged in deceptive business practices under General Business Law 349:

… [T]he covenant cannot be used to “imply obligations inconsistent with other terms of the contractual relationship,” and encompasses only those “promises which a reasonable person in the position of the promisee would be justified in understanding were included” … . * * *

… [P]laintiffs acknowledged in the bid forms that defendants made no representations or warranties “as to the present or future value of a taxicab medallion.” As plaintiffs concede on this appeal, that language is flatly inconsistent with any suggestion that defendants guaranteed the value of their medallions. …

… [P]laintiffs acknowledged in the bid forms that defendants made no representations or warranties “as to the present or future application or provisions of the rules of the [TLC] or applicable law.” The plain language of that disclaimer put plaintiffs on notice that they—not defendants—bore the risk that either TLC’s rules or its “application” thereof might change after the sale of the medallions. * * *

Section 349 prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state” (General Business Law § 349 [a] …). …. [T]he government’s issuance of a taxicab license is not a consumer-oriented transaction protected by section 349 … . Singh v City of New York, 2023 NY Slip Op 02141, CtApp 4-25-23

Practice Point: Yellow cab medallion holders, when the purchased the medallions at auction, agreed the bid included disclaimers stating the future value of the medallions was not guaranteed. Therefore the breach-of-a-covenant-of-good-faith cause of action failed. In addition, the deceptive business practices (General Business Law 349) cause of action the purchase of yellow cab medallions is not a consumer-oriented transaction subject to the statute.

April 27, 2023