You are here: / Contract Law
,

THE DETAILED STATUTORY SCHEME OF THE REVISED LIMITED PARTNERSHIP ACT (RLPA) PRECLUDED ENFORCEMENT OF THE UNSIGNED PURPORTED AMENDMENT TO THE PARTNERSHIP AGREEMENT (FIRST DEPT). ​

he First Department determined the 1999 partnership agreement controlled and the purported 2004 amendment to the agreement, which was not executed, could not be enforced. The decision is too detailed to fairly summarize here. Suffice to say that the detailed statutory scheme of the Revised Limited Partnership Act (RLPA) precluded ignoring the Statute of Frauds with respect to the unexecuted amendment:

By design, the RLPA sets forth a clear separation between general and limited partners. This separation is more defined than the division between managers and members in limited liability corporations. With few exceptions, the RLPA provides that a general partner has the liabilities of a partner in a non-limited partnership. In exchange for a more passive position, the limited partners are generally sheltered from personal liability to third parties who transact business with the limited partnership (see generally, Bruce A. Rich, Practice Commentaries, McKinney’s Cons. Laws of NY, Book 38, Revised Limited Partnership Act, at 317, 334-336). The RLPA’s default requirements of partner consent to substantive changes to a limited partnership agreement helps protect the passive limited partners from actions taken by general partners that might adversely affect the limited partners’ interests. That default protection would be undermined if we were to engraft on to the RLPA the equitable exceptions applicable to the Statute of Frauds. Accordingly, we decline to do so. A&F Hamilton Hgts. Cluster, Inc. v Urban Green Mgt., Inc., 2020 NY Slip Op 04440, First Dept 8-6-20

 

,

PLAINTIFF BANK’S ATTORNEY’S FEES IN THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN AWARDED ABSENT PROOF OF THE ATTORNEY’S EXPERIENCE AND ABILITIES AND THE NATURE OF THE SERVICES RENDERED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the court should not have awarded attorney’s fees to plaintiff bank in this breach of contract/guaranty action because the attorney’s experience and abilities and the nature of the services were not spelled out:

… [T]he Supreme Court should not have awarded the bank attorneys’ fees, costs, and disbursements based solely on the affirmation of legal services provided by the bank’s attorney. “An award of an attorney’s fee pursuant to a contractual provision may only be enforced to the extent that the amount is reasonable and warranted for the services actually rendered” … . “In determining reasonable compensation for an attorney, the court must consider such factors as the time, effort, and .skill required; the difficulty of the questions presented; counsel’s experience, ability, and reputation; the fee customarily charged in the locality; and the contingency or certainty of compensation” … . “While a hearing is not required in all circumstances, the court must possess sufficient information upon which to make an informed assessment of the reasonable value of the legal services rendered” … . “There must be a sufficient affidavit of services, detailing the hours reasonably expended . . . and the prevailing hourly rate for similar legal work in the community” … .

Here, the affirmation of services rendered submitted by the bank’s counsel “did not set forth counsel’s experience, ability, and reputation, and failed to detail the prevailing hourly rate for similar legal work in the community” … . Sterling Natl. Bank v Alan B. Brill, P.C., 2020 NY Slip Op 04418, Second Dept 8-5-20

 

EVEN THOUGH THE BREACH OF CONTRACT ACTION WAS TIME-BARRED, THE EXISTENCE OF A VALID CONTRACT PRECLUDED AN ACTION IN QUANTUM MERUIT OR QUASI CONTRACT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to dismiss the breach of contract cause of action should have been granted because it was time-barred. In addition, the quantum meruit cause of action should have been dismissed because a valid contract precludes recovery in quasi contract:

The defendants established, prima facie, that this action was not commenced within the limitations period set forth in the contract for breach of contract claims … . In opposition, the plaintiff failed to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the action was actually commenced within the period propounded by the defendants.

… [T]o the extent that the complaint seeks recovery in quantum meruit, it should have been dismissed since “the existence of a valid contract governing the subject matter generally precludes recovery in quasi contract for events arising out of the same subject matter” … . D. Gangi Contr. Corp. v City of New York, 2020 NY Slip Op 04378, Second Dept 8-5-20

 

, ,

THE SELLER WAS NOT OBLIGATED TO EXERCISE AN OPTION IN THE RESTRICTED REMEDIES CLAUSE OF THE REAL ESTATE PURCHASE CONTRACT BECAUSE THE BUYER NEVER DEMANDED SPECIFIC PERFORMANCE OF THE CONTRACT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Oing, affirming Supreme Court and noting that a motion to dismiss for failure to state a cause of action may be brought at any time, determined the motion to dismiss this action for specific performance of a real estate purchase agreement was properly granted. The buyer argued it was entitled to specific performance because the seller was required to exercise one of the remedies described in the restricted remedies clause of the purchase agreement. The court disagreed and held the buyer never in fact demanded specific performance. Rather, the buyer indicated it would not close unless the seller remedied a tax misclassification and lowered the purchase price:

Supreme Court properly considered the seller’s post note of issue CPLR 3211(a)(7) motion to dismiss for failure to state a cause of action because it can be made at any time (CPLR 3211[e]). Thus, CPLR 3212(a)’s requirement of demonstrating good cause for the delay does not apply … . * * *

… .[T]he buyer maintains that Supreme Court erred in dismissing that claim by misreading Mehlman v 592-600 Union Ave. Corp. (46 AD3d 338 [1st Dept 2007]) in applying the contract’s restricted remedy clause against it. That clause expressly and strictly limited the buyer to two remedies in the event the seller was unable to convey title to the premises pursuant to the terms of the contract: (i) terminate the contract and receive its down payment or (ii) consummate the transaction with a $25,000 credit to remedy any title issue. The buyer argues that our holdings in Mehlman and 101123 LLC v Solis Realty LLC (23 AD3d 107 [1st Dept 2005]) obligate the seller to concede the title defect and demand that the buyer exercise one of the options set forth in the restricted remedies clause at the closing, and that the seller’s failure to satisfy this obligation enables the buyer to maintain its specific performance claim. * * *

…  [A] seller unable to convey clear title for reasons contemplated in the parties’ contract is entitled to invoke the restricted remedies clause in response to a buyer’s demand for specific performance of the parties’ contractual terms. Here, the buyer’s allegations unmistakably demonstrate that it did not demand specific performance from the seller to convey title as alleged in the complaint, namely, by conveying title in accordance with the seller’s contractual representation that there were no negative tax issues associated with the premises. Instead, the buyer alleged in its complaint that it was ready, willing and able to close provided that the seller, inter alia, corrected the tax misclassification and reduced the purchase price to address the tax liabilities arising from the misclassification. In fact, the allegations underlying the claim demonstrate the complete absence of a demand for specific performance of the parties’ contract. Rather, according to those allegations, the buyer’s demand would result only if the seller did not comply with the buyer’s condition to close. These allegations, as a matter of law, demonstrate that the seller was not obligated to invoke the restricted remedies clause. Thus, under these circumstances, the buyer is precluded from seeking from the seller specific performance of their contract. M&E 73-75, LLC v 57 Fusion LLC, 2020 NY Slip Op 04372, First Dept 7-30-20

 

, ,

RESTITUTION ORDERED WAS GREATER THAN THAT AGREED TO IN THE PLEA AGREEMENT; ALTHOUGH THE ISSUE WAS NOT PRESERVED, THE APPEAL WAS CONSIDERED IN THE INTEREST OF JUSTICE; RESTITUTION VACATED AND MATTER REMITTED (THIRD DEPT).

The Third Department, vacating the restitution award in the interest of justice, determine the restitution ordered was not that agreed to in the plea agreement:

Defendant contends that Supreme Court improperly enhanced the sentence by ordering him to pay restitution in an amount greater than what was agreed to under the plea agreement. The record supports his claim, and the People concede that the restitution award should be reduced. Although defendant failed to preserve his claim by requesting a hearing or objecting to the amount of restitution at sentencing, we deem it appropriate to take corrective action in the interest of justice … . As defendant was not sentenced in accordance with the plea agreement, the matter must be remitted to Supreme Court to provide defendant with the opportunity to either accept the sentence with the enhanced restitution award or withdraw his guilty plea … . In addition, as Supreme Court failed to set forth the time and manner of payment of the amount of restitution in the restitution order, this omission must also be addressed upon remittal … . People v Gravell, 2020 NY Slip Op 04344, Third Dept 7-30-20

 

, ,

QUESTION OF FACT WHETHER THE CORPORATE VEIL SHOULD BE PIERCED IN THIS BREACH OF CONTRACT ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff had raised questions of fact about whether the corporate veil should be pierced in this breach of contract action:

The plaintiff alleged that it contracted with the defendant China Perfect Construction Corp. (hereinafter China Perfect) to perform certain construction work, and that China Perfect breached that contract by performing the work in a substandard manner. The plaintiff alleged that the defendants Rushang Zhao and May Lu … exercised complete dominion and control over the operations of China Perfect and used such dominion and control to commit a fraud or wrong against the plaintiff. In this regard, the plaintiff alleged that the individual defendants created the defendant New Empire Builder Corp. …  solely to avoid the debts and liabilities of China Perfect, and that they transferred the assets of China Perfect to New Empire in order to render China Perfect “judgment-proof.” * * *

… [T]he defendants failed to affirmatively establish, prima facie, that the individual defendants did not exercise dominion and control over China Perfect to commit a wrong or injustice against the plaintiff, such that the doctrine of piercing the corporate veil is inapplicable … . Sterling Park Developers, LLC v China Perfect Constr. Corp., 2020 NY Slip Op 04340, Second Dept 7-29-20

 

, , ,

MOTION TO VACATE THE NOTE OF ISSUE AND COMPEL DISCOVERY PROPERLY DENIED; MISAPPROPRIATION OF TRADE SECRETS AND BREACH OF A NON-COMPETITION CLAUSE CAUSES OF ACTION SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined: (1) plaintiff’s motion to vacate the note of issue and compel additional discovery was properly denied because the criteria of 22 NYCRR 202.21 were not met; (2) the misappropriation of trade secrets cause of action re: customer lists was properly dismissed; (3) the misappropriation of trade secrets cause of action re: development of a laser should not have been dismissed; and (4), the breach of the non-competition clause cause of action should not have been dismissed:

The elements of a cause of action to recover damages for misappropriation of trade secrets are: (1) possession of a trade secret; and (2) use of that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means (see Tri-Star Light. Corp. v Goldstein, 151 AD3d 1102, 1106). A trade secret includes any compilation of information which provides the company with an opportunity to obtain an advantage over competitors who do not know or use it … . …

… [T]he plaintiff raised triable issues of fact as to whether the defendant used its trade secrets in the manufacture of particular lasers … . …

A restrictive covenant will not be enforced if it is unreasonable in time, space, or scope  … . Thus, “a restrictive covenant will only be subject to specific enforcement to the extent that it is reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee” … . … [T]he plaintiff raised a triable issue of fact regarding whether the noncompetition clause should be partially enforced. A restrictive covenant may be partially enforced to the extent necessary to protect a company’s legitimate interests … . In particular, “restrictive covenants will be enforceable to the extent necessary to prevent the disclosure or use of trade secrets or confidential customer information” … .  Photonics Indus. Intl., Inc. v Xiaojie Zhao, 2020 NY Slip Op 04330, Second Dept 7-29-20

 

, , ,

UNDER THE CIRCUMSTANCES OF THIS CASE, WHETHER THE CONDITIONS PRECEDENT TO ARBITRATION OF A GRIEVANCE REQUIRED BY THE COLLECTIVE BARGAINING AGREEMENT WERE COMPLIED WITH IS A QUESTION FOR THE COURT, NOT THE ARBITRATOR (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined it was for the court, not the arbitrator, to determine whether the conditions precedent for arbitration were met in this action seeking General Municipal Law Section 207-a benefits for an injured firefighter:

… [T]he CBA [collective bargaining agreement] contains conditions precedent to arbitration within the provisions addressing the grievance procedure and … the court should have decided whether the conditions precedent had been met. “Questions concerning compliance with a contractual step-by-step grievance process have been recognized as matters of procedural arbitrability to be resolved by the arbitrators,” except in cases involving “a very narrow arbitration clause or a provision expressly making compliance with the time limitations a condition precedent to arbitration” … . Here, compliance with the requirements of steps one and two of the grievance procedure and the time limitations for serving a grievance were conditions precedent to arbitration. Under these circumstances, we conclude that “it was for the court, and not the arbitrator, to decide whether the grievance[] had been timely [served] and completed by the . . . employee at steps one and two of the grievance procedure” … . Therefore, we … remit the matter to Supreme Court for a hearing on the issue whether the conditions precedent to arbitration were met and thereafter for a new determination on the petition to stay arbitration … . Matter of Village of Manlius (Town of Manlius Professional Firefighters Assn., Iaff Local #3316), 2020 NY Slip Op 04251, Fourth Dept 7-24-20

 

,

DEFENDANT ARGUED THE INSURANCE COMPANY WHICH REPRESENTED THE PROPERTY OWNER AND THE GENERAL CONTRACTOR IN THIS CONSTRUCTION ACCIDENT CASE UNFAIRLY APPORTIONED THE PAYMENT OF THE SETTLEMENT BETWEEN THEM SUCH THAT THE NON-NEGLIGENT, VICARIOUSLY LIABLE PARTY PAID $2 MILLION, AND THE NEGLIGENT PARTY PAID $200,000; AFTER INDEMNIFYING THE PROPERTY OWNER IN THE AMOUNT OF $2 MILLION DEFENDANT SOUGHT TO BE INDEMNIFIED BY THE NEGLIGENT PARTY; THE ATTEMPT WAS REJECTED UNDER BOTH CONTRACTUAL AND COMMON LAW INDEMNIFICATION THEORIES (THIRD DEPT).

The Third Department, over a concurrence, determined Lamela & Sons, Inc. (Lamela), the employer of plaintiffs James and Robert Lamela, was required to indemnify the property owner, Satin, for Satin’s portion of the $3.2 million settlement in this construction accident case. The settlement agreement required payment of $2,199,999 by Satin and Verticon, the general contractor. Lamela paid Satin $2 million in satisfaction of its contractual indemnity obligation to Satin. The insurance company which represented both Verticon and Satin apportioned a larger portion of the settlement to Satin, which was not negligent but was vicariously liable, and a lesser portion to Verticon, which was negligent. Lamela argued that a larger portion of the settlement should have been apportioned to the negligent party, Verticon. Lamela’s indemnity obligation to Satin, therefore, should have been less. On that basis, Lamela sought indemnity from Verticon. Lamela’s argument was rejected:

Verticon submitted the construction contract … between Verticon and Lamela, which provides for indemnity flowing from Lamela to Verticon, specifically stating, “To the fullest extent permitted by law, [Lamela] shall indemnify, defend and save harmless [Verticon] . . . against any and all suits [or] actions . . . arising from the use or operation by [Lamela] of construction equipment, tools, scaffolding or facilities furnished to [Lamela] to perform the [w]ork.” The provision, as expected, does not provide for indemnification flowing the other way, from Verticon to Lamela, as is being sought by Lamela. Thus, as “the subject of indemnification [is] clearly contemplated and expressly addressed by [Lamela and Verticon] in their contract, . . . there [can] only be a one-way obligation to indemnify by [Lamela] as the indemnitor, and any reciprocal obligation is extinguished” … . * * *

… .[C]ommon-law indemnity is not the appropriate relief here because Lamela is not responsible by operation of law … ; rather, its payment to Satin was based solely upon a voluntarily assumed obligation that it undertook by virtue of the contract. There has been no case cited that permits common-law indemnity under this scenario. Although we are mindful that Lamela’s motivation for seeking common-law indemnity stems from its concern that the settlement was unfairly apportioned, to attempt to remedy this by way of common-law indemnity is unavailing. Lamela v Verticon, Ltd., 2020 NY Slip Op 04214, Third Dept 7-23-20

 

,

THE ACTION ALLEGING DEFECTIVE CONSTRUCTION OF A CONDOMINIUM ACCRUED WHEN THE WORK WAS COMPLETED, I.E., WHEN THE CERTIFICATE OF OCCUPANCY WAS ISSUED; THE ACTION WAS TIME-BARRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the action alleging defective construction of a condominium was time-barred. The action accrued the work was completed, i.e., when the certificate of occupancy was issued:

A claim for damages arising from defective construction accrues on the date of completion of the work … . “This rule applies no matter how a claim is characterized in the complaint’ because all liability’ for defective construction has its genesis in the contractual relationship of the parties'” … . Here, the corporate defendants demonstrated their prima facie entitlement to judgment as a matter of law dismissing the first through third and fifth through seventh causes of action insofar as asserted against them. The corporate defendants established that the causes of action accrued on October 5, 2007, the date the certificate of occupancy was issued … , and that this action was not commenced until June 2016, more than eight years later, at which time the applicable statutes of limitations had expired. Board of Mgrs. of the 23-23 Condominium v 210th Place Realty, LLC, 2020 NY Slip Op 04143, Second Deptp 7-22-20

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy