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QUESTION OF FACT WHETHER FLOODING, AS OPPOSED TO WIND, CAUSED THE PROPERTY DAMAGE PRECLUDED SUMMARY JUDGMENT IN FAVOR OF THE INSURER BASED UPON POLICY EXCLUSIONS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there were questions of fact whether the exclusions in the homeowner’s policy applied to damage caused during Superstorm Sandy. The expert opinion evidence did not demonstrate flooding, as opposed to wind, was the predominant cause of the damage:

The Homeowners Policy contains three exclusions which Allstate has raised here: the flood exclusion, the “weather conditions” exclusion, and the “predominant cause” exclusion. The Homeowners Policy states that Allstate does not cover losses caused by “[f]lood, including, but not limited to surface water, waves, tidal water or overflow of any body of water, or spray from any of these, whether or not driven by wind.” The “weather conditions” exclusion states that Allstate does not cover losses caused by “Weather Conditions that contribute in any way with a cause of loss excluded in this section to produce a loss.” The “predominant cause” exclusion states that Allstate will not cover loss to a covered property when “there are two or more causes of loss to the covered property” and “the predominant cause(s) of loss is (are) excluded” under other provisions of the Policy. Ain v Allstate Ins. Co., 2020 NY Slip Op 02042, Second Dept 3-25-20

 

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GENERAL BUSINESS LAW CAUSES OF ACTION ALLEGING DECEPTIVE PRACTICES AND FALSE ADVERTISING WERE SUFFICIENTLY ALLEGED AGAINST AN INSURER PROVIDING HEALTH INSURANCE TO NEW YORK CITY EMPLOYEES; PLAINTIFF, A RETIRED POLICE OFFICER, ALLEGED DECEPTIVE AND FALSE MARKETING BY THE INSURER INDUCED HIM TO CHOOSE THE INSURER’S PLAN (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, determined General Business Law sections 349 and 350 applied to a health insurance plan offered to New York City employees. Plaintiff, a retired NYC police officer brought the action in federal court alleging the insurer (GHI) engaged in “deceptive practices” and “false advertising.” The Third Circuit asked the Court of Appeals to rule on whether the General Business Law causes of action were applicable to plaintiff who was a third-party beneficiary of the insurance contract which had been negotiated by sophisticated parties. The insurer argued a contract between sophisticated parties did not raise a “consumer-oriented” issue:

We have explained that, to state a claim under sections 349 or 350, “a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct, that is (2) materially misleading, and that (3) the plaintiff suffered injury as a result of the allegedly deceptive act or practice” … . Thus, a plaintiff claiming the benefit of either section 349 or 350 “must charge conduct of the defendant that is consumer-oriented” or, in other words, “demonstrate that the acts or practices have a broader impact on consumers at large” … . * * *

Here, although there was an underlying insurance contract negotiated by sophisticated entities—only one of which is a party to this action—neither plaintiff, nor any of the other hundreds of thousands of employees and retirees who participated in the GHI Plan, were participants in its negotiation and, critically, that negotiation was followed by an open enrollment period, which exposed City employees and retirees to marketing resembling a traditional consumer sales environment. During the open enrollment period, the employees and retirees could select only one of 11 previously-negotiated health insurance plans offered as part of their compensation and retirement packages from the City, and the insurers were able to market their health care plans directly to the employees and retirees. Significantly, it is the allegedly misleading summary materials that are the subject of plaintiff’s case—not the contract between the City and GHI, which purportedly was never provided to City employees and retirees. Plavin v Group Health Inc., 2020 NY Slip Op 02025, CtApp 3-24-2020

 

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IN THE CONTEXT OF AN APPLICATION FOR A PRELIMINARY INJUNCTION SUPREME COURT SHOULD NOT HAVE GRANTED THE ULTIMATE RELIEF SOUGHT; THE CRITERIA FOR A PRELIMINARY INJUNCTION WERE NOT MET (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court should not have ordered the return of the down payment to the buyer (Berman) pursuant to the purchase contract in the context of granting a preliminary injunction. First, by granting the ultimate relief requested Supreme Court had effectively granted summary judgment before issue was joined. Second the criteria for a preliminary injunction were not met. The purchase contract allowed the termination of the agreement and the return of the down payment if three conditions were met. Berman alleged two of the conditions were met and the third was impossible:

Berman failed to demonstrate his entitlement to temporary injunctive relief pursuant to CPLR 6301, as he failed to establish any of the three required elements for such relief: (1) likelihood of ultimate success on the merits, (2) irreparable injury absent granting of a preliminary injunction, (3) and a balancing of equities in his favor … . …

Berman failed to demonstrate irreparable injury, as the loss of a down payment is not an irreparable harm since the injured party could be made whole by a money judgment … . …

While Berman contends that it was impossible to obtain a Phase II Assessment within the required time, he failed to demonstrate a likelihood of success in establishing that it was impossible to obtain the report. …

Finally, Berman failed to show that the balancing of equities was in his favor.  Berman v TRG Waterfront Lender, LLC, 2020 NY Slip Op 01902, Second Dept 3-18-20

 

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CONTRARY TO SUPREME COURT’S RULING, THE PURCHASE CONTRACT DID NOT INCLUDE A CLAUSE LIMITING PLAINTIFF’S REMEDY FOR A BREACH TO RETAINING THE DEPOSIT (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the purchase contract did not have a limitation of remedies clause restricting plaintiff’s damages for a breach to retaining the deposit:

A limitation of remedies “will not be implied and to be enforceable must be clearly, explicitly and unambiguously expressed in a contract”… . Indeed, “[s]uch clauses are . . . strictly construed against the party seeking to avoid liability” (id. at 219), and ” a provision must be included in the agreement limiting a party’s remedies to those specified in the contract in order for courts to find that th[o]se remedies are exclusive’ ” … . Here, nothing in the contract stated that plaintiff’s contractual right to retain the deposit upon defendant’s breach was plaintiff’s sole and exclusive remedy for such a breach. The court thus erred in granting the cross motion on that ground … . Lundy Dev. & Prop. Mgt., LLC v Cor Real Prop. Co., LLC, 2020 NY Slip Op 01751, Fourth Dept 3-13-20

 

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CORRESPONDENCE BETWEEN THE TOWN AND THE PROPERTY OWNER AMOUNTED TO AN AGREEMENT TO AGREE, NOT AN ENFORCEABLE SETTLEMENT AGREEMENT ALLOWING CONSTRUCTION; SUPREME COURT’S DIRECTIVES TO THE TOWN ENCROACHED UPON THE TOWN’S ADMINISTRATIVE AUTHORITY (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined: (1) the correspondence between the property owner (PCP) and the town concerning proposed construction created an agreement to agree, not an enforceable settlement agreement allowing construction; and (2), Supreme Court’s directing what the town could and could not consider with respect to the construction project encroached upon the town’s administrative authority:

… [T]he letters that the court found to have memorialized the settlement agreement did not contain all the material terms of the settlement and constituted no more than an agreement to agree … . [The town] stated therein only that it was “now in a position to agree to a settlement of the mass and scale issues,” but that first it would “need to receive, review and approve all of the items that it normally reviews in connection with any application it receives.” Any agreement was further conditioned on [the town’s] receipt of additional documentation from PCP, including “an accurate, to-scale site plan” and further roof specifications … .

We further conclude that, in the absence of an enforceable settlement agreement, the court’s hearing on the issues of mass and scale, subsequent decision rendering findings of fact related to PCP’s new application for a certificate of approval, and remittal to [the town] for consideration of that application with specific directives regarding what [the town] could and could not consider were impermissible intrusions into respondents’ administrative domain … . Matter of Pittsford Canalside Props., LLC v Village of Pittsford Zoning Bd. of Appeals, 2020 NY Slip Op 01812, Fourth Dept 3-13-20

 

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DEFENDANT WAS ENTITLED TO SPECIFIC PERFORMANCE OF THE PLEA AGREEMENT; COUNTY COURT SHOULD NOT HAVE ORDERED RESTITUTION WHICH WAS NOT ADDRESSED IN THE AGREEMENT (FOURTH DEPT).

The Fourth Department, amending defendant’s sentence, determined restitution should not have been ordered because it was not addressed in the plea agreement:

Restitution was not part of the plea bargain, and thus the amended sentence exceeded the sentence promised in the plea bargain … . Defendant objected to County Court imposing restitution … , but the court rejected defendant’s request for specific performance of the plea agreement and instead offered defendant the opportunity to withdraw his plea, which defendant declined. As defendant contends and the People correctly concede, defendant was entitled to specific performance of the plea agreement because he “placed himself in a no-return’ position by carrying out his obligations under” the agreement here, and there was “no significant additional information bearing upon the appropriateness of the plea bargain” … . People v Rosa, 2020 NY Slip Op 01793, Fourth Dept 3-13-20

 

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LETTER AGREEMENT REGARDING A LEASE WAS NOT AN ENFORCEABLE CONTRACT; RATHER IT WAS AN AGREEMENT TO AGREE (SECOND DEPT).

The Second Department determined a letter agreement regarding a lease was not an enforceable contract but rather was an agreement to agree:

In a document dated June 27, 2012 (hereinafter the 2012 letter agreement), the parties “consolidate[d] all existing letter agreements to the same expiration date” of February 28, 2015. The 2012 letter agreement also stated that the terms of the lease were “extended to now terminate on Feb. 28, 2030,” with “terms to be determined at the expiration of this initial lease consolidation period.” The 2012 letter agreement further stated that any annual percentage increase in rent will not be less than five percent and will not exceed eight percent. …

A “mere agreement to agree, in which a material term is left for future negotiations, is unenforceable” … . “This is especially true of the amount to be paid for the sale or lease of real property” … . An agreement is not enforceable as a lease unless all of the essential terms are agreed upon, and if “any of these essential terms are missing and are not otherwise discernible by objective means, a lease has not been created” … .

Here, the defendants established their prima facie entitlement to judgment as a matter of law by submitting, inter alia, a copy of the 2012 letter agreement, which demonstrated that the renewal provision was an unenforceable agreement to agree … . Reis v J.B. Kaufman Realty Co., LLC, 2020 NY Slip Op 01657, Second Dept 3-11-20

 

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THE LANGUAGE OF THE POLICY IS NOT AMBIGUOUS AND CAN NOT BE INTERPRETED TO MEAN THE POLICY COVERED A PREMISES AT WHICH THE INSURED DID NOT RESIDE (FIRST DEPT).

The First Department, reversing Supreme Court, determined the language of the policy was not ambiguous and could not be interpreted to mean the policy covered a premises at which the insured did not reside:

Plaintiff demonstrated, via defendant’s admission in a statement to its investigator and the investigator’s inspection of the insured premises, that defendant did not reside at the premises and was therefore not covered by the policy … .

Contrary to defendant’s argument, the policy endorsement that amends the definition of “residence premises” — previously, “[t]he one-family dwelling … where you reside” — to include three- and four-family dwellings without repeating the phrase “where you reside” is not ambiguous. The endorsement also states that “[a]ll other provisions of this policy apply,” which gives effect to those portions of the policy that define “residence premises” as the place “where [the insured] reside[s]” … . MIC Gen. Ins. Corp. v Campbell, 2020 NY Slip Op 01465, First Dept 3-3-20

 

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COMMUNICATIONS BETWEEN PLAINTIFFS’ FINANCIAL ADVISOR AND COUNSEL DURING THE SALE OF PLAINTIFFS’ BUSINESS TO DEFENDANT ARE PRIVILEGED (FIRST DEPT).

The First Department, reversing Supreme Court, determined communications between plaintiffs’ financial advisor (KDC) and plaintiffs’ counsel in connection with the sale of plaintiffs’ company to defendant were privileged:

It is true that KDC was not retained to assist plaintiffs’ counsel in providing legal advice. However, the unrebutted evidence reflects that KDC spent some portion of its time helping counsel to understand various aspects of the transaction for that purpose. As such, KDC’s presence was necessary to enable attorney-client communication … .

Plaintiffs also had a reasonable expectation that the confidentiality of communications between their counsel and KDC would be maintained. Plaintiffs’ counsel attested that KDC promised to keep all such communications confidential. The governing Purchase and Sale Agreement also specified that all privileged documents related to the transaction would remain protected from disclosure to defendant even after closing … .

Contrary to defendant’s contention, the Cooperation Clause in KDC’s engagement letter did not undermine the reasonableness of this expectation of confidentiality, as it only required “reasonabl[e]” assistance to the Company (now owned by defendant), and should thus not be read to require KDC to turn over privileged documents … . Spicer v GardaWorld Consulting (UK) Ltd., 2020 NY Slip Op 01448, First Dept 3-3-20

 

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