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THE BREACH OF THE IMPLIED COVENANT OF GOOD FAITH SHOULD HAVE BEEN DISMISSED AS DUPLICATIVE OF THE BREACH OF CONTRACT CAUSE OF ACTION (THIRD DEPT).

The Third Department, modifying Supreme Court, determined the breach of the implied covenant of good faith should have been dismissed as duplicative of the breach of contract action:

Supreme Court … erred by denying that part of defendants’ motion seeking dismissal of the cause of action alleging breach of the implied covenant of good faith and fair dealing. A review of the allegations in the amended complaint discloses that this cause of action is based upon the same set of facts and seeks similar damages as the breach of contract cause of action. In view of this, the breach of the implied covenant of good faith and fair dealing cause of action is duplicative of the breach of contract cause of action and, therefore, it should have been dismissed … . Shmaltz Brewing Co., LLC v Dog Cart Mgt. LLC, 2022 NY Slip Op 01086, Third Dept 2-17-22

 

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PLAINTIFF REAL ESTATE BROKER DID NOT ESTABLISH IT WAS ENTITLED TO A BROKERAGE FEE; THE BROKERAGE AGREEMENT EXPIRED BY ITS OWN TERMS BEFORE THE LEASE TOOK EFFECT (SECOND DEPT).

The Second Department, reversing Supreme Court after a bench trial, determined plaintiff real estate broker was not entitled to a brokerage commission:

“In order to recover a real estate brokerage commission, [a] broker must establish: (1) that [it] is duly licensed, (2) that [it] had a contract, express or implied, with the party to be charged with paying the commission, and (3) that [it] was the procuring cause of the [transaction]” … . …

Although the agreement entitled the plaintiff to collect a commission “[i]f within 60 days after the expiration . . . of th[e] . . . agreement, a lease is signed or negotiations continue and ultimately lead to a signed lease of the Property to a person or entity” on a list of potential tenants to be provided by the plaintiff within 10 days of expiration of the brokerage agreement, the lease was not signed within 60 days of the expiration of the brokerage agreement, and the plaintiff did not present any evidence that it supplied a list of potential tenants to the defendant. Thus, the brokerage agreement, by its terms, expired months before the defendant entered into a binding lease … . Cpex Real Estate, LLC v Tomtro Realty Corp., 2022 NY Slip Op 00999, Second Dept 2-16-22

 

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SUPREME COURT, IN THE CONTEXT OF A MOTION TO DISMISS, SHOULD NOT HAVE DETERMINED AS A MATTER OF LAW THAT THE DEFENDANTS WERE NOT “AFFILIATES” WITHIN THE MEANING OF THE LANGUAGE OF A RELEASE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined Supreme Courts should have simply denied the motion to dismiss instead of deciding what parties were included in the term “affiliates” in the release at issue:

Supreme Court erred in finding, as a matter of law, that the word “affiliates” in the release entered into between plaintiffs and Siddiqui could not be read to include defendants Cernich and Huan Tseng … . The word “affiliates” may apply to individuals, and is “not commonly understood to apply only to entities” … . Furthermore, the arbitrator’s conclusion, in an earlier arbitration against different parties, that the release did not apply to nonparty Ming Dang does not serve as a conclusive basis for finding that the release did not apply to defendants. Accordingly, the scope of the release language with respect to Cernich and Tseng was ambiguous, and Supreme Court should have simply denied the motion to dismiss without determining the meaning of the release language as a matter of law. Apollo Mgt., Inc. v Cernich, 2022 NY Slip Op 00964, First Dept 2-15-22​

 

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THE NYC LOFT BOARD PROPERLY REMITTED THE MATTER FOR FURTHER PROCEEDINGS IN THIS ACTION CONCERNING A SETTLEMENT AGREEMENT IN WHICH THE TENANTS PURPORTED TO WITHDRAW THEIR APPLICATION FOR LOFT LAW COVERAGE (CT APP).

The Court of Appeals, reversing the Appellate Division, determined the NYC Loft Board properly remitted the matter for further proceedings in this proceeding involving a settlement agreement in which the tenants purported to withdraw their application for Loft Law coverage:

… [T]he matter [is] remitted to the Appellate Division with directions to remand to the New York City Loft Board for further proceedings in accordance with this memorandum.

In accordance with its regulations (see 29 RCNY § 1-06 [j] [5]), the Loft Board reviewed and rejected the parties’ proposed settlement agreement as perpetuating an illegal living arrangement. The rationality of that determination is not before us … . Under these limited circumstances, it was not irrational for the Board to remand for further proceedings, thereby declining to give effect to a provision of the settlement agreement in which tenants purported to withdraw their application for Loft Law coverage. Matter of Callen v New York City Loft Bd., 2022 NY Slip Op 00957, Ct App 2-15-22

 

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ANSWERING A CERTIFIED QUESTION FROM THE SECOND CIRCUIT, THE COURT OF APPEALS DETERMINED THE RELEVANT PROVISIONS OF THE CIVIL SERVICE COLLECTIVE BARGAINING AGREEMENTS (CBA’S) DID NOT PROVIDE RETIREES WITH A VESTED RIGHT SUCH THAT THE HEALTH INSURANCE BENEFITS AWARDED AT RETIREMENT WOULD NOT BE REDUCED BY THE PROVISIONS OF SUBSEQUENT CBA’S (CT APP).

The Court of Appeals, addressing certified questions from the US Court of Appeals, Second Circuit, determined the relevant provisions of the civil-service collective bargaining agreements (CBA’s) did not create a vested right in the health insurance benefits afforded retirees. In other words, the CBA’s did not provide that the coverage of health insurance premiums vested at retirement such that reductions in coverage in subsequent CBA’s would not apply:

… [N]one of the CBA provisions identified by the Second Circuit in the first certified question establish a vested right to lifetime fixed premium contributions, either singly or in combination. Donohue v Cuomo, 2022 NY Slip Op 00910, CtApp 2-10-22

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AFTER MAKING THE LIFE INSURANCE PREMIUM PAYMENTS FOR 15 YEARS ON THE PREMIUM DUE DATE (JANUARY 14), PAYMENT WAS NOT TIMELY MADE IN 2018 AND DECEDENT DIED ON FEBRUARY 18, 2018, AFTER THE EXPIRATION OF THE 31-DAY GRACE PERIOD; COVERAGE WAS PROPERLY DENIED; TWO DISSENTERS ARGUED THE POLICY WAS AMBIGUOUS AND SHOULD BE INTERPRETED SUCH THAT THE GRACE PERIOD HAD NOT EXPIRED AT THE TIME OF DEATH (CT APP).

The Court of Appeals, affirming the Appellate Division, over a two-judge dissent, determined the decedent’s life insurance policy was unambiguous about the date premiums were due–January 14 or at the end of the 31-day grace period thereafter. After paying the premiums by January 14 for 15 years, the premium was not paid on time in 2018. The insured died on February 26, 2018, just days after the grace period expired. The insurer denied the claim arguing the coverage had lapsed. The Court of Appeals agreed with the insurer. The dissent argued the policy was ambiguous because it also stated the term of the policy was annual and the very first payment was made on January 31, which would place the decedent’s death within the grace period:

Plaintiff is not entitled to benefits under the policy. The terms of the policy clearly and unambiguously tie the due date of the annual premium to the date of issue, January 14, 2002, and expressly state that January 14 is the premium due date. That the insurance policy uses the term “annual” but the premium payment period—which runs from January 14th, the “Date of Issue” and “premium due date”—may not cover a full year creates no ambiguity in light of the clear policy language identifying January 14th as the “premium due date” … . Furthermore, any claimed ambiguity in the definition of “policy date” is irrelevant inasmuch as the policy does not tie the premium due date to the “policy date” but, rather, the date of issue, which is January 14th. Because the insured failed to pay the 2018 premium by January 14, 2018 or within the 31-day grace period, the policy lapsed prior to the insured’s death. Bonem v William Penn Life Ins. Co. of N.Y., 2022 NY Slip Op 00908. CtApp 2-10-22

 

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THE SENTENCING COURT SHOULD NOT HAVE ENHANCED DEFENDANT’S SENTENCE BASED ON A POSITIVE DRUG TEST; DEFENDANT DID NOT VIOLATE ANY OF THE TERMS OF THE PLEA AGREEMENT AS IT WAS DESCRIBED ON THE RECORD BY THE COURT; DEFENDANT SUCCESSFULLY COMPLETED THE RESIDENTIAL DRUG TREATMENT PROGRAM, WHICH IS WHAT THE PLEA AGREEMENT CALLED FOR (SECOND DEPT).

The Second Department determined Supreme Court should not have imposed an enhanced sentence because there was no showing that defendant had violated any condition of the plea agreement:

It was undisputed that the defendant successfully completed the 90-day in-patient residential program, which was the only specific program identified by the court at the plea proceeding. Indeed, the court’s actual instruction to the defendant at the plea proceeding was to “complete the . . . residential program.” The court did not indicate at the plea proceeding that the defendant would be subject to continuous and open-ended treatment, or that a single positive drug test at any time would constitute a violation of the plea agreement. While the court referenced “the conditions of the program” at the beginning of the plea proceeding, there was no subsequent reference in the record to these conditions, and no allegation that the defendant breached any of them. Although the court could have directed the defendant to successfully engage in ongoing treatment up until the date of the sentence, it did not explicitly impose such a condition here … . The court “never stated” that the defendant was required to continue his treatment beyond the residential program identified on the record … , and “only the failure to comply with explicit conditions can form the basis of a violation” … . People v Martinez, 2022 NY Slip Op 00880, Second Dept 2-9-22

 

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QUESTION OF FACT WHETHER THE SALES COUNTER AND DISPLAY UNIT INSTALLED AT THE OUTSET OF THE LEASE WAS A TRADE FIXTURE WHICH COULD BE REMOVED BY THE TENANT OR A PERMANENT FIXTURE WHICH COULD NOT BE REMOVED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there was a question of fact whether the sales counter and display unit installed on the leased premises was a permanent or trade fixture. Supreme Court had ruled the counter and display unit was a trade fixture which was properly removed by the tenant at the end of the lease:

… [T]he defendants [tenants] failed to establish as a matter of law that the sales counter and customer display unit is a trade fixture that they properly removed from the premises at the end of the lease term. Contrary to the defendants’ contention, the fact that Medi-Fair [tenant], pursuant to the express and agreed upon terms of the lease regarding the tenant fit-up, paid extra for Wallkill [landlord] to construct and install the customized sales counter and customer display unit does not, under the circumstances, make it a trade fixture as a matter of law … . Rather, read together, the articles of the lease pertaining to the tenant fit-up, alterations, and redelivery of the premises at the end of the lease term raise a triable issue of fact as to whether the parties intended items such as the sales counter and customer display unit annexed to the premises by Wallkill [landlord] as part of the initial, interior construction and tenant fit-up, as compared with any post-occupancy alterations and/or additions of fixtures to the premises by Medi-Fair [tenant], to be permanent fixtures of the premises. Wallkill Med. Dev., LLC v Medi-Fair, Inc., 2022 NY Slip Op 00899, Second Dept 2-9-22

 

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THE FLORIDA DEFENDANTS ADVERTISED THROUGH A NATIONWIDE WEBSITE; THE NEW YORK PLAINTIFFS SOLICITED THE CONTRACT WITH DEFENDANTS; PLAINTIFFS DID NOT MAKE OUT A PRIMA FACIE CASE OF EITHER GENERAL OR SPECIFIC (LONG-ARM) JURISDICTION OVER DEFENDANTS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiffs did not make out a prima facie case of general or specific (long-arm) jurisdiction over the Florida defendants in this breach of contract and fraud action. Through email correspondence the New York plaintiffs entered a contract for the creation of a “Dating App” for which plaintiffs allegedly paid $100,000. Plaintiff alleged defendants never provided the Dating App and sued in New York. The jurisdiction over the breach of contract action was analyzed under the general jurisdiction criteria, and jurisdiction over the fraud (tort) action was analyzed under the specific jurisdiction (long-arm) criteria:

In opposing the separate motions of [defendants], the plaintiffs asserted that jurisdiction over both defendants was proper pursuant to CPLR 301 and 302(a)(1) and (3). “Under modern jurisprudence, a court may assert general all-purpose jurisdiction or specific conduct-linked jurisdiction over a particular defendant”… . Contrary to the plaintiffs’ contention, they did not make a prima facie showing of personal jurisdiction … . The complaint itself establishes that [the individual defendant] is domiciled in Florida and that [the corporate defendant] was incorporated in and has its principal place of business in Florida … . Further, the facts alleged, even if established, do not support a conclusion that [defendant corporation’s] contacts with New York were so “continuous and systematic” …  as to render it “essentially at home” in New York … .

Specific jurisdiction over a defendant is obtained through New York’s long-arm statute, CPLR 302. * * *

“The CPLR 302(a)(1) jurisdictional inquiry is twofold: under the first prong the defendant must have conducted sufficient activities to have transacted business in the state, and under the second prong, the claims must arise from the transactions” … . …

The affidavits … establish that [the corporate defendant] advertises its services nationwide through a website that is not specifically directed toward New York residents or businesses. It is undisputed that the plaintiff … initiated the contact between the parties and solicited the defendants’ services in designing the Dating App. Contrary to the plaintiffs’ contention, [the corporate defendant’s] website does not constitute transacting business within the State. Fanelli v Latman, 2022 NY Slip Op 00849, Second Dept 2-9-22

 

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THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE STANDING TO BRING THE ACTION AND DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF THE MORTGAGE AND RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank in this foreclosure action did not prove standing to bring the action and compliance with the notice requirements of the mortgage and RPAPL 1304:

Although the plaintiff attached to the complaint copies of the note and an undated purported allonge endorsed in blank, the plaintiff did not demonstrate that the purported allonge, which was on a piece of paper completely separate from the note, was “so firmly affixed thereto as to become a part thereof,” as required by UCC 3-202(2) … . …

… [T}he plaintiff failed to demonstrate, prima facie, that a notice of default in accordance with sections 15 and 22 of the mortgage was properly transmitted to the defendant prior to the commencement of this action … . …

… [T]he plaintiff failed to establish, prima facie, its strict compliance with RPAPL 1304. The plaintiff failed to provide proof of the actual mailing of the 90-day notice required by RPAPL 1304, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed … . Further, although Victoria Wolff, an assistant secretary for the plaintiff, stated in an affidavit that the notices required under RPAPL 1304 were mailed, she did not aver that she had mailed the notices herself or otherwise claim to have personal knowledge of the mailing … . Raymond James Bank, NA v Guzzetti, 2022 NY Slip Op 00888, Second Dept 2-9-22

 

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