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DEFENDANTS BREACHED THE CONTRACT BY TERMINATING IT WITHOUT GIVING PLAINTIFF THE TIME TO CURE DEFICIENCIES CALLED FOR IN THE CONTRACT (FOURTH DEPT).

The Fourth Department determined defendants should not have terminated plaintiff’s contract to install a heating system without giving plaintiff the time to cure deficiencies called for by the contract:

… [W]e conclude that plaintiff met its initial burden of establishing that defendants failed to follow the termination for cause procedures in the contract when they, inter alia, did not provide plaintiff seven days to cure deficiencies before terminating the contract, and defendants failed to raise a triable issue of fact with respect thereto … . “Where a contract provides that a party must fulfill specific conditions precedent before it can terminate the agreement, those conditions are enforced as written and the party must comply with them” … . Here, defendants’ failure to allow plaintiff the requisite time to cure before terminating the contract rendered defendants’ termination wrongful, and therefore the court erred in denying that part of plaintiff’s motion with respect to liability on the breach of contract cause of action … . Black Riv. Plumbing, Heating & A.C., Inc. v Board of Educ. Thousand Is. Cent. Sch. Dist., 2019 NY Slip Op 06321, Fourth Dept 8-22-19

 

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THE SOIL CONSERVATION AND WATERSHED BOARD’S MOTION FOR SUMMARY JUDGMENT IN THIS DROWNING CASE WAS PROPERLY DENIED, PLAINTIFF’S DECEDENT DIED AFTER GOING OVER A SUBMERGED DAM; ALTHOUGH THE BOARD WAS NOT LIABLE PURSUANT TO A CONTRACT TO MAINTAIN AND OPERATE THE DAM UNDER AN ESPINAL EXCEPTION, THERE WAS A QUESTION OF FACT WHETHER THE BOARD OWNED THE DAM (A DANGEROUS CONDITION); THE BOARD IS SEPARATE AND DISTINCT FROM THE CONSERVATION DISTRICTS; THE ASSUMPTION OF THE RISK DOCTRINE IS NOT APPLICABLE (FOURTH DEPT).

The Fourth Department determined soil the soil conservation and watershed board’s motion for summary judgment in this wrongful death case was properly denied. The board operated and maintained a dam pursuant to a contract with a federal agency, the Natural Resources Conservation Service (NRCS). The dam was submerged and plaintiff’s decedent sustained drowning injuries which led to his death after he waded into the water and went over the dam. Supreme Court should not have held that the board had entirely displaced the NRCS responsibilities for operation and maintenance of the dam (and therefore was liable under contract pursuant the third Espinal exception). However the board did not demonstrate it did not own the dam and summary judgment was properly denied on that ground. In addition the board was separate and distinct from the conservation districts. So granting summary judgment to the districts did not require the same relief for the board. Finally the court noted that the assumption of risk doctrine applies only to sporting events and had no applicability to these facts:

… “[A] contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party” (Espinal, 98 NY2d at 138) although, as relevant here, the third exception to that rule applies where the contracting party has “entirely displaced the other party’s duty to maintain the premises safely” … . * * * We … conclude that “the contract between [the Board] and the [NRCS] was not so comprehensive and exclusive that it entirely displaced the [NRCS’s] duty to maintain the premises safely, such that [the Board] owed a duty to [decedent]” … . …

While the Board established that it did not own the creek or the banks adjacent thereto … , its submissions are insufficient to establish as a matter of law that it did not own the subject dam, which allegedly constituted and created the dangerous condition … .

The Court of Appeals has made clear that, “[a]s a general rule, application of assumption of the risk should be limited to cases appropriate for absolution of duty, such as personal injury claims arising from sporting events, sponsored athletic and recreative activities, or athletic and recreational pursuits that take place at designated venues” … . Here, decedent was not engaging in a sporting event or recreative activity that was sponsored or otherwise supported by the Board, nor was he wading and swimming at a designated venue … . Suzanne P. v Joint Bd. of Directors of Erie-Wyoming County Soil Conservation Dist., 2019 NY Slip Op 06343, 8-22-19

 

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ARBITRATION AWARD TERMINATING SCHOOL PRINCIPAL FOR ALCOHOL ABUSE SHOULD NOT HAVE BEEN VACATED, CRITERIA EXPLAINED (FOURTH DEPT).

The Fourth Department reversed Supreme Court and reinstated the arbitration award which terminated petitioner’s employment as a school principal for alcohol abuse. The school district had entered a “last chance” agreement with petitioner, which, the Fourth Department held, was not rendered unenforceable by the district’s commencement of the disciplinary proceedings. The court explained the criteria applied to review of arbitration awards:

Education Law § 3020-a (5) permits judicial review of a hearing officer’s decision but expressly provides that “the court’s review shall be limited to grounds set forth in” CPLR 7511. “An arbitration award may not be vacated unless it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power” … . Where, as here, the parties are “subject to compulsory arbitration, the award must satisfy an additional layer of judicial scrutiny—it must have evidentiary support and cannot be arbitrary and capricious’ ” … , and “it must be in accord with due process” … . Here, petitioner failed to meet his burden to show that the conduct findings were invalid … . Indeed, the record establishes that those findings were rational, had evidentiary support, and were not arbitrary and capricious, impermissibly based on uncharged conduct, or otherwise improper … . Matter of Bender (Lancaster Cent. Sch. Dist.), 2019 NY Slip Op 06297, Fourth Dept 8-22-19

 

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COMPLAINT DID NOT STATE CAUSES OF ACTION FOR BREACH OF CONTRACT, NEGLIGENT HIRING AND SUPERVISION OR PRIMA FACIE TORT (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff, the assignee of no-fault benefits, did not state valid causes of action against the insurer for breach of contract, negligent hiring and supervision, and prima facie tort. The claims were paid by the defendant and plaintiff alleged flaws and delays in the processing of the claims:

The amended complaint, however, failed to identify the specific insurance contracts that plaintiff had performed services under or the contract provisions that defendant allegedly breached. Inasmuch as bare legal conclusions without factual support are insufficient to withstand a motion to dismiss, we conclude that the amended complaint fails to state a cause of action for breach of contract. …

Although “[a]n employer may be liable for a claim of negligent hiring or supervision if an employee commits an independent act of negligence outside the scope of employment and the employer was aware of, or reasonably should have foreseen, the employee’s propensity to commit such an act”… , the amended complaint failed to allege that the acts of defendant’s employees were committed independent of defendant’s instruction or outside the scope of employment … . …

“There can be no recovery [for prima facie tort] unless a disinterested malevolence to injure [a] plaintiff constitutes the sole motivation for [the] defendant[‘s] otherwise lawful act” … . Here, the amended complaint alleged that defendant acted in “bad faith” and intentionally caused harm to plaintiff by requesting verifications and examinations under oath. Those conclusory allegations, however, failed to state that defendant had ” a malicious [motive] unmixed with any other and exclusively directed to [the] injury and damage of [plaintiff]’ ” … . Furthermore, it is “[a] critical element of [a prima facie tort] cause of action . . . that plaintiff suffered specific and measurable loss” … . Medical Care of W. N.Y. v Allstate Ins. Co., 2019 NY Slip Op 06243, Fourth Dept 8-22-19

 

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TRIAL EVIDENCE SUPPORTED THE RULING THAT TWO FACIALLY AMBIGUOUS RELEASES EXECUTED BY PRIOR OWNER OF THE GAS STATION APPLIED TO THE CONTAMINATION OF THE PROPERTY BY LEAKED GASOLINE; THE CURRENT OWNER OF THE GAS STATION COULD NOT, THEREFORE, RECOVER THE CLEANUP COSTS FROM THE DEFENDANT GASOLINE SUPPLIER (SECOND DEPT).

The Second Department determined the trial evidence supported the ruling that two facially ambiguous releases executed by the (a gasoline supplier) and the former owner of the gas station precluded an action by plaintiff, the current owner of the gas station, to recover from defendant plaintiff’s expenditures for the cleanup of leaked gasoline.:

Where a releasee asserts a lack of liability based upon a general release, the burden of proof is on the releasor to show that “the general language of the release, valid on its face and properly executed, is to be limited because of a mutual mistake, or otherwise does not represent the intent of the parties” … . ” [I]t is not a prerequisite to the enforceability of a release that the releasor be subjectively aware of the precise claim he or she is releasing'” … . Thus, at a trial encompassing an assertion by a defendant that it is not liable for the damages claimed by the plaintiff due to a general release that contains equivocal language, rendering it ambiguous on its face, the plaintiff must be afforded an opportunity to establish that the releases were not intended to deprive him or her of the claimed damages … .

Here, although the releases were ambiguous on their faces as to whether they encompassed unknown claims for environmental contamination, the plaintiff failed to adduce evidence at the trial sufficient to support a finding that they did not, whereas the defendant adduced evidence showing that the releases were intended to be general releases. Burnside 711, LLC v Amerada Hess Corp., 2019 NY Slip Op 06165, Second Dept 8-21-19

 

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A COURT MAY CONVERT A MOTION TO DISMISS TO A MOTION FOR SUMMARY JUDGMENT WITHOUT NOTICE WHERE A PURE QUESTION OF LAW IS INVOLVED; THE STRICTER STANDARDS FOR NON-COMPETITION AGREEMENTS IN THE EMPLOYMENT CONTEXT DO NOT APPLY IN THE CONTEXT OF THE SALE OF A BUSINESS (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, noted that Supreme Court properly dispensed with notice when it converted a motion to dismiss to a motion for summary judgment on a contractual-interpretation issue, and further noted the difference between non-competition agreements in the employment context and in the sale-of-a-business context. Here defendant sold his business, including goodwill, to plaintiff and then was employed by plaintiff:

… [A]lthough the court is normally required to give notice to the parties before converting a motion to dismiss to one for summary judgment … , the court properly dispensed with the statutory notice here inasmuch as the issue presented “rested entirely upon the construction and interpretation of an unambiguous contractual provision . . . [that] exclusively involve[d] issues of law which were fully appreciated and argued by the parties’ ” … . …

Because plaintiff sold his business to defendant, including the goodwill of that business, the enforceability of the restrictive covenants must be evaluated pursuant to the standard applicable to the sale of a business rather than the “stricter standard of reasonableness” applicable to employment contracts … . It is well settled that a covenant restricting the right of a seller of a business to compete with the buyer is enforceable if its duration and scope are “reasonably necessary to protect the buyer’s legitimate interest in the purchased asset” … . Frank v Metalico Rochester, Inc., 2019 NY Slip Op 05863, Fourth Dept 7-31-19

 

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DEFENDANT RAISED A QUESTION OF FACT WHETHER THE TERMS OF THE NOTE REFLECTED THE ACTUAL AGREEMENT BETWEEN THE PARTIES (MUTUAL MISTAKE) (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, over a dissent, determined defendant had raised a question of fact whether the note set forth the actual agreement between the parties:

“Because the thrust of a reformation claim is that a writing does not set forth the actual agreement of the parties, generally . . . the parol evidence rule . . . [does not] appl[y] to bar proof, in the form of parol or extrinsic evidence, of the claimed agreement” … . Nevertheless, “there is a heavy presumption that a deliberately prepared and executed written instrument manifest[s] the true intention of the parties’ . . . and a correspondingly high order of evidence is required to overcome that presumption” … . “The proponent of reformation must show in no uncertain terms, not only that mistake . . . exists, but exactly what was really agreed upon between the parties’ ” … . …

… [D]efendant here set forth, in detail, the basis for his contention that both parties reached an agreement different from that set forth in the note. The affidavits of the CIO [plaintiff’s chief investment officer] and defendant contain the identical assertion that both parties—plaintiff via the CIO and defendant—agreed that plaintiff’s right to secure repayment of the loan would be limited to defendant’s stock interest … . The affidavits of the CIO and defendant are based upon personal knowledge and state in detail their understanding of the negotiations and the resulting agreement. Moreover, the CIO averred that he negotiated the loan on behalf of plaintiff at the time he was its chief investment officer, and he concluded that the terms of the note did not reflect what the parties had intended. Thus, in opposition to plaintiff’s motion, we conclude that defendant submitted the requisite “high level” of proof required to raise a triable issue of fact regarding mutual mistake. Stache Invs. Corp. v Ciolek, 2019 NY Slip Op 05856, Fourth Dept 7-31-19

 

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THE REMAINDER BENEFICIARIES’ ACTION ALLEGING THE EXECUTOR’S VIOLATION OF A STANDSTILL AGREEMENT, WHICH REQUIRED THE EXECUTOR TO KEEP THE FUNDS FROM THE SALE OF THE DECEASED’S BUSINESS IN A SEGREGATED ACCOUNT UNTIL THE DAUGHTERS’ REMAINDER INTERESTS WERE DETERMINED, DID NOT VIOLATE THE IN TERROREM CLAUSE OF THE WILL WHICH PROHIBITED THE DAUGHTERS FROM CONTESTING THE WILL, SURROGATE’S COURT REVERSED (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the daughters of the deceased, remainder beneficiaries, did not violate the in terrorem clause of the will by bringing an action against the executor alleging the executor’s violation of a standstill agreement.  In the standstill agreement with the executor (Anna Marie, the deceased’s wife), Anna Marie agreed to hold the proceeds from the sale of the deceased’s interest in a business in a segregated bank account while Anna Marie and the daughters determined the daughters’ interests in the liquidated assets as remainder beneficiaries of Anna Marie’s life estate:

The will included an in terrorem clause which provided for the revocation of the interest of any beneficiary who “institute[s] . . . any proceedings to set aside, interfere with, or make null any provision of this Will, . . . or shall in any manner, directly or indirectly, contest the probate thereof.” The will left the “rest, residue, and remainder” of the decedent’s estate to Anna Marie, absolutely, “to the exclusion of any children of mine.” * * *

… [T]the daughters alleged in the Supreme Court action that Anna Marie breached her fiduciary duty as executor and holder of the life estate in the decedent’s interest in Brady Avenue by taking possession of the entire proceeds of the sale to the exclusion and detriment of the daughters as remainder beneficiaries. The daughters have not lodged any contest to the validity of the will, or otherwise interfered with its provisions granting Anna Marie discretion to dispose of estate assets in her capacity as executor. Moreover, the claim that Anna Marie violated the standstill agreement did not implicate any challenge to the will. Thus, we disagree with the determination of the Surrogate’s Court that the daughters violated the in terrorem clause of the will and forfeited their legacies under the will … . Matter of Sochurek, 2019 NY Slip Op 05987, Second Dept 7-31-19

 

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NEGLIGENCE, BREACH OF CONTRACT AND DISCRIMINATION CLAIMS BROUGHT BY A DISABLED FORMER POLICE OFFICER CONCERNING GENERAL MUNICIPAL LAW 207-c BENEFITS PROPERLY DISMISSED (FOURTH DEPT).

The Fourth Department affirmed the grant of summary judgment to all defendants in this action by a disabled former police officer concerning claims for General Municipal Law 207-c benefits:

With respect to the City defendants, … we conclude that the court properly dismissed the negligence and gross negligence causes of action against them inasmuch as they were entitled to governmental function immunity based on the discretion they are afforded in administering payments of General Municipal Law § 207-c benefits … . Although plaintiff’s negligence and gross negligence causes of action involved the health care services that he was receiving, the City defendants were engaged in a governmental function because they were merely administering the payment of General Municipal Law § 207-c benefits, i.e., they did not actually provide plaintiff with health care services ;;; . Moreover, the City defendants were entitled to immunity inasmuch as the administration of section 207-c benefits involved the exercise of their discretion and the record establishes that the City defendants denied payment of the disputed claims for benefits after actually exercising this discretion … .

… Plaintiff was not a party to the contracts between [the remaining] defendants and City defendants, and therefore liability may be established where, inter alia, “the contracting party, in failing to exercise reasonable care in the performance of [its] duties, launches a force or instrument of harm” (Espinal v Melville Snow Contrs., 98 NY2d 136, 140 [2002]). Here, the undisputed evidence established that the [defendants] did not have authority to deny payment of plaintiff’s claims for General Municipal Law § 207-c benefits. That authority rested, at all relevant times, with the City defendants. Thus, it cannot be said that these defendants launched any “instrument of harm” because they never made the decision to deny any of plaintiff’s claims for payment of medical care and treatment. …

… [W]e note that plaintiff, as a public employee, may not sue his employer under Title II of the ADA and the Rehabilitation Act, as plaintiff has done here … . Where, as here, plaintiff’s causes of action are “related to the terms, conditions and privileges of his employment[, i.e., his entitlement to benefits under General Municipal Law § 207-c, they] are covered by Title I” and not Title II of the ADA or the Rehabilitation Act … . Vassenelli v City of Syracuse, 2019 NY Slip Op 05878, Fourth Dept 7-31-19

 

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INSURER DID NOT TIMELY NOTIFY THE ADDITIONAL INSUREDS OF THE DISCLAIMER OF COVERAGE, INSURER MUST DEFEND AND INDEMNIFY THE ADDITIONAL INSUREDS IN THIS CONSTRUCTION ACCIDENT CASE (SECOND DEPT).

The Second Department determined defendant insurer (Utica) failed to timely disclaim coverage of the additional insureds and was therefore obligated to defend and indemnify the additional insureds in this construction accident case:

… [T]he plaintiff AVR-Powell C Development Corp. (hereinafter AVR-Powell), the owner of and general contractor at a construction site located on Lax Avenue in College Point, entered into a written agreement with nonparty Vinny Construction Corp. (hereinafter Vinny Construction), which was to perform masonry work in connection with the construction project. Pursuant to the agreement, Vinny Construction was required to procure and maintain a commercial general liability insurance policy naming AVR-Powell and the plaintiff Powell Cove Associates, LLC (hereinafter Powell Cove), as additional insureds. The defendant, Utica First Insurance Company (hereinafter Utica), issued a policy to Vinny Construction which included a “Blanket Additional Insured” endorsement specifying that an “[i]nsured also includes . . . [a]ny person or organization whom you are required to name as an additional insured on this policy under a written contract or written agreement.” …

Pursuant to Insurance Law § 3420 (d), an insurer is required to provide its insured and any other claimant with timely written notice of its disclaimer or denial of coverage on the basis of a policy exclusion, and will be estopped from disclaiming liability or denying coverage if it fails to do so … . Furthermore, where, as here, “a primary insurer . . . tenders a claim for a defense and indemnification to an insurer . . . which issued a certificate of insurance to the parties, indicating that they are additional insureds, that insurer must comply with the disclaimer requirements of Insurance Law § 3420(d)(2) by providing written notice of disclaimer of coverage to the additional insureds” … . …

The plaintiffs’ submissions showed that Utica did not provide a disclaimer of coverage directly to its additional insureds until March 20, 2015, approximately six years after the first demand for coverage from Utica. AVR-Powell C Dev. Corp. v Utica First Ins. Co., 2019 NY Slip Op 05758, Second Dept 7-24-19

 

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