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PLAINTIFF’S ACTION WAS NOT TIME-BARRED BECAUSE THE SIX-MONTH LIMITATION PERIOD IN THE SUBCONTRACT EXPIRED BEFORE SUIT COULD BE BROUGHT; THE TERMS OF THE ONE-YEAR LIMITATION PERIOD IN THE LABOR AND MATERIAL BOND CONFLICTED WITH THE REQUIREMENTS OF THE STATE FINANCE LAW; THE STATE FINANCE LAW CONTROLS (THIRD DEPT).

The Third Department, reversing Supreme Court, determined plaintiff-subcontractor’s breach of contract action against the general contractor and the insurance company (Liberty Mutual) which issued the labor and material payment bond for the construction work should not have been dismissed, and plaintiff was entitled to summary judgment on its action against the general contractor. The Third Department held that the six-month statute of limitations in the subcontract and the one-year statute of limitations in the bond did not render the actions time-barred:

“A ‘limitation period’ that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim” … . The conflict in the subcontractor agreement between the limitation period and the payment provisions had the effect of nullifying plaintiff’s breach of contract claim; thus, the six-month limitation period is unreasonable and unenforceable, and Supreme Court should not have dismissed plaintiff’s complaint as time-barred … . * * *

State Finance Law § 137 (4) (b) sets forth a later accrual date than the payment bond, providing that “no action on a payment bond furnished pursuant to [State Finance Law § 137] shall be commenced after the expiration of one year from the date on which the public improvement has been completed and accepted by the public owner” (emphasis added). The provisions of State Finance Law § 137 govern bonds furnished pursuant to that statute, and, although parties may agree to expand the statute’s protections, they may not limit them … . As the accrual date set forth in the first part of the contractual limitation provision conflicts with State Finance Law § 137 (4) (b), the second part of the provision must be given effect, and the bond agreement must be deemed to be amended to provide for the accrual date set forth in the statute … . The record does not reveal the date on which the project was accepted … for this purpose. Accordingly, there are issues of fact as to when plaintiff’s cause of action against Liberty Mutual accrued and whether it is time-barred, and summary judgment dismissing the complaint against Liberty should not have been granted … . Digesare Mech., Inc. v U.W. Marx, Inc., 2019 NY Slip Op 07668, Third Dept 10-24-19

 

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A CAUSE OF ACTION FOR SUB-PAR PERFORMANCE OF A CONTRACT SOUNDS IN CONTRACT LAW, NOT NEGLIGENCE; NEGLIGENCE CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined that the negligence cause of action was really a breach of contract action and therefore the negligence cause of action should have been dismissed. The underlying contract was for demolition and construction work and the complaint alleged damage by the diversion of water:

… [W]e agree with J. Luke [defendant demolition-construction contractor] that  [the negligence cause of action] should have been dismissed. Town Homes [defendant property owner] denominated that claim as one for negligence, alleging that J. Luke deviated from accepted standards of care by failing to perform contracted-for demolition and construction work “in a good workmanlike manner.” Supreme Court correctly categorized those assertions as a claim for negligent performance of contract; the problem is “that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated” … . A failure to plead a cognizable claim would not warrant summary judgment if Town Homes subsequently made out a viable cause of action … . Town Homes never suggested that J. Luke owed it a duty of care independent from the contract, however, and confirmed in its opposition to J. Luke’s motion that the issue was whether J. Luke rendered subpar performance under the contract. Accordingly, in the absence of any indication that J. Luke owed an independent duty to Town Homes arising “from circumstances extraneous to, and not constituting elements of, the contract” … . 517 Union St. Assoc. LLC v Town Homes of Union Sq. LLC, 2019 NY Slip Op 07461, Third Dept 10-17-19

 

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PURCHASE AGREEMENT DID NOT ALLOW BUYERS TO TERMINATE THE CONTRACT DURING THE CONTINGENCY PERIOD, BUYERS’ ACTION TO RECOVER THE DOWN PAYMENT PROPERLY DISMISSED (SECOND DEPT).

The Second Department determined the seller’s motion for summary judgment in this action by the buyers for return of the deposit was properly granted. The buyers purported to cancel the real estate purchase contract when the bank denied the mortgage application. But the purchase agreement did not allow the buyers to terminate the contract at that point:

Section 5.8 of the rider clearly and unambiguously provided that if the buyers were unable to obtain a mortgage commitment within 45 days of executing the contract, the seller had the unilateral right to either cancel the contract or extend the mortgage contingency period for an additional 30 days. The buyers were only entitled to cancel the contract upon the expiration of that 30-day period. Neither the rider nor the contract contained any provision permitting the buyers to cancel the contract during the mortgage contingency period upon receiving notice that their application had been denied … .

In opposition, the buyers failed to raise a triable issue of fact. The record does not support the buyers’ contention that their mortgage application was denied on the ground that the subject property constituted “unacceptable collateral,” and that, therefore, their performance under the contract was rendered impossible. Under these circumstances, the buyers willfully defaulted and anticipatorily breached the contract by purporting to cancel the contract during the mortgage contingency period. Federico v Dolitsky, 2019 NY Slip Op 07383, Second Dept 10-16-19

 

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PLAINTIFF BANK SUBMITTED EVIDENCE IN INADMISSIBLE FORM AND DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE CONDITIONS IN THE MORTGAGE; DEFENDANT’S SUMMARY JUDGMENT MOTION IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the evidence submitted by defendant in this foreclosure action was either not in admissible form or did not comply with the requirements of the mortgage:

In support of those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendant and to appoint a referee, the plaintiff submitted an affidavit of an employee of its loan servicer, Ocwen Loan Servicing, LLC (hereinafter Ocwen). The employee attested that she was familiar with business records of Ocwen but failed to lay a proper foundation for the admission of records concerning the defendant’s payment history and default. Accordingly, the plaintiff failed to demonstrate that the records relied upon in the affidavit were admissible under the business records exception to the hearsay rule … .

… [T]he defendant … failed to establish that the required notice of default was mailed by first class mail or actually delivered to the notice address if sent by other means, as required by paragraphs 15 and 22 of the mortgage. U.S. Bank N.A. v Kochhar, 2019 NY Slip Op 07439, Second Dept 10-16-19

 

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THE CITY DID NOT DEMONSTRATE THE SALARY PROMISED PLAINTIFF AT THE OUTSET WAS A MISTAKE WHICH HAD BEEN CORRECTED, THE CITY’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED; PLAINTIFF’S CROSS MOTION FOR SUMMARY JUDGMENT ON HER BREACH OF CONTRACT ACTION SHOULD HAVE BEEN GRANTED; SUPREME COURT’S ANALYSIS UNDER AN “AT-WILL EMPLOYEE” THEORY WAS NOT APPLICABLE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the city-employer’s motion for summary judgment in this salary dispute should have been denied, and plaintiff-employee’s cross motion for summary judgment should have been granted. When plaintiff applied for the job the Notice of Appointment provided by the city indicated her salary would be approximately $47,000. However plaintiff was being paid approximately $41,000. The city argued the $47,000 figure was a mistake, but the evidence submitted by the city did not support that argument. In addition the city argued that plaintiff was an at-will employ. But the Second Department noted that this is a contract action for unpaid salary to which the “at-will employee” concept was not applicable:

The elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff’s performance pursuant to the contract, the defendant’s breach of its contractual obligations, and resulting damages … . The Supreme Court’s reliance on the body of law concerning at-will employees was error. The plaintiff’s breach of contract cause of action solely seeks to recover unpaid, agreed-to compensation for services rendered while she was actually employed by the City, and thus, the at-will doctrine does not apply … . …

At best, the City’s evidence suggests that after the plaintiff was hired at the Step 4 level, some budgeting concern caused the City to seek to readjust the plaintiff’s salary to a Step 1 level. The City, however, produced no evidence demonstrating that there was any error in the Notice of Appointment or that there was any lawful change to the plaintiff’s salary. Rather, it appears that the City simply reduced the plaintiff’s salary to the Step 1 level, even though she was appointed at the Step 4 level. The City failed to demonstrate that it had any lawful basis for unilaterally changing the plaintiff’s salary. Since the City failed to make a prima facie showing of entitlement to judgment as a matter of law, the Supreme Court should have denied its motion for summary judgment dismissing the complaint. Ayers v City of Mount Vernon, 2019 NY Slip Op 07230, Second Dept 10-9-19

 

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PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON THE LABOR LAW 240 (1) CAUSE OF ACTION SHOULD HAVE BEEN GRANTED IN THIS CRANE-ACCIDENT CASE; THE ESPINAL ‘LAUNCHED AN INSTRUMENT OF HARM’ CAUSE OF ACTION AGAINST THE COMPANY WHICH REFURBISHED AND MAINTAINED THE CRANE SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined plaintiff’s motion for summary judgment on his Labor Law 240 (1) cause of action should have been granted in this crane-accident case. The First Department also held that the negligence action against the company (Hoffman) which refurbished and maintained the crane, based upon the Espinal “launched an instrument of harm” theory, should not have been dismissed:

The collapse of a crane constitutes a prima facie violation of Labor Law § 240(1) … . A plaintiff need not be directly injured by a portion of the crane for the Labor Law to apply — injuries that occur while trying to avoid being struck during a hoisting accident may qualify … . While plaintiff’s testimony at his deposition varied somewhat from his 50-h testimony, he repeatedly cautioned that the accident happened so fast it was difficult for him to describe exactly how it occurred. In any event, no matter which version is accepted, Labor Law § 240(1) applies to the … defendant … .

Hoffman refurbished the subject crane one year before the accident and performed maintenance on it several times thereafter. Although a contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third person … , an exception exists where a contractor who undertakes to perform services pursuant to a contract negligently creates or exacerbates a dangerous condition so as to have “launched a force or instrument of harm” (Espinal v Melville Snow Contrs., 98 NY2d 136, 141-142 [2002] …). Hoffman failed to adequately address the findings of the independent crane company that conducted the post-accident investigation, which concluded that several maintenance and repair issues contributed to over wear on the crane’s wire ropes … . DeGidio v City of New York, 2019 NY Slip Op 07218, First Dept 10-8-1

 

REMEDIES FOR BREACH OF CONTRACT WERE NOT CONFINED TO THE REMEDIES MENTIONED IN THE CONTRACT; THERE WAS NO INDICATION THE REMEDIES DESCRIBED WERE ‘SOLE AND EXCLUSIVE’ (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court, determined the breach of contract cause of action should not have been dismissed. Plaintiff provided a healthcare plan to defendant employer (ESC). Plaintiff alleged defendant extended healthcare coverage to an employee who was not qualified, and thereby breached the underlying contract:

… [D]ismissal under CPLR 3211 (a) (1) was not warranted. In granting the motion insofar as it sought dismissal of the breach of contract cause of action, the court determined that the provision of certain remedies in the Contract precluded plaintiff from seeking additional damages from ESC under the “canon of contract construction expressio unius est exclusio alterius, that is, that the expression of one thing implies the exclusion of the other” … . The court further determined that the indemnification provision in the Contract did not apply to disputes between the parties. We conclude that the court erred in determining that plaintiff was limited to the remedies set forth in the Contract.

“[I]t is a basic tenet of the law of damages that where there has been a violation of a contractual obligation the injured party is entitled to fair and just compensation commensurate with [the] loss” … . “Limitations on a party’s liability will not be implied and to be enforceable must be clearly, explicitly and unambiguously expressed in a contract” … . As a result, “[u]nder New York law, 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, the Contract provided that, in the event an ineligible person was enrolled in the health care plan, plaintiff “may elect” certain remedies. It also addressed the obligations of the person who had received such benefits. There was nothing in the Contract stating that the contractual remedies were plaintiff’s sole and exclusive remedies against ESC, i.e., the other party to the Contract … . HealthNow N.Y., Inc. v David Home Bldrs., Inc., 2019 NY Slip Op 07177, Fourth Dept 10-4-19

 

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DEFENDANT IN THIS FORECLOSURE ACTION WAS A ‘BORROWER’ AND THEREFORE WAS ENTITLED TO THE 90-DAY NOTICE REQUIRED BY RPAPL 1304; THE BANK HAD ARGUED SHE WAS NOT A BORROWER BECAUSE SHE DID NOT SIGN THE NOTE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant in this foreclosure action was a “borrower” within the meaning of RPAPL 1304 and therefore she was entitled to the required 90-day notice, which she did not receive. That bank argued that she was not a borrower because only her deceased husband signed the note. However she was named on the mortgage and she signed the mortgage:

While RPAPL 1304 provides that the notice shall be sent to the “borrower,” that term is not defined in the statute (see RPAPL 1304). It is undisputed that only the defendant’s deceased husband, Solomon Forman, is identified as a “borrower” in the note which is secured by the mortgage. That is not determinative in this case. In the mortgage instrument, the defendant is referred to as a borrower. On the first page of the mortgage instrument, under the heading entitled “Words Used Often in this Document,” the defendant is identified, along with her husband, as ” Borrower.'” The defendant is also designated as “Borrower” under her signature on the signature page of the mortgage instrument. While the plaintiff contends that this standard mortgage form mischaracterizes the defendant as a borrower, any ambiguities in the language of the document must be construed against the plaintiff, as the plaintiff is the party who supplied the document … . Bank of N.Y. Mellon v Forman, 2019 NY Slip Op 07045, Second Dept 10-2-19

 

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NO ESPINAL EXCEPTIONS WERE PLED SO THE SNOW REMOVAL CONTRACTOR’S MOTION FOR SUMMARY JUDGMENT IN THIS SLIP AND FALL CASE WAS PROPERLY GRANTED; QUESTIONS OF FACT WERE RAISED ABOUT WHETHER THE STORM IN PROGRESS RULE APPLIED AND WHETHER THE AREA WAS SLIPPERY BEFORE THE STORM, PRECLUDING SUMMARY JUDGMENT IN FAVOR OF THE OTHER DEFENDANTS (FOURTH DEPT).

The Fourth Department, modifying Supreme Court, in this slip and fall case, determined: (1) the snow removal contractor’s (Fitzgerald’s) motion for summary judgment was properly granted because no Espinal exception was pled; and (2) there were questions of fact whether there was a storm in progress at the time of the fall and whether there were slippery areas prior to the storm:

“[A] contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party” (Espinal v Melville Snow Contrs., 98 NY2d 136, 138 [2002]). Although there are three well-established exceptions to that rule (see id. at 140), plaintiff did not allege facts in his complaint or bill of particulars that would establish the applicability of any of those exceptions, and thus Fitzgerald was not required to affirmatively negate the possible application of any of them in order to meet her initial burden … . Instead, Fitzgerald had to demonstrate only that plaintiff was not a party to the snow removal contract and that she therefore owed no duty to him, which she accomplished by submitting a copy of the contract … . …

… [D]efendants submitted the deposition testimony of plaintiff, who testified that snow and rain had been predicted that day, but during the time leading up to his fall it was merely overcast. Thus, defendants’ own submissions raise an issue of fact whether there was a storm in progress at the time of the fall …. Furthermore, defendants submitted the deposition testimony of an assistant store manager, who testified that there were “a few” “different” “slippery spots” in the parking lot when she arrived for her shift at 2:00 p.m. on the day of plaintiff’s fall, thus raising issues of fact whether the slippery condition preexisted the alleged storm … , and whether defendants had actual or constructive notice of the slippery condition … . Govenettio v Dolgencorp of N.Y., Inc., 2019 NY Slip Op 06907, Fourth Dept 9-27-19

 

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OHIO TRUSTEE’S REQUEST FOR PAYMENT PURSUANT TO A ROYALTY AGREEMENT WITH THE NEW YORK PLAINTIFF DID NOT CONFER JURISDICTION UPON NEW YORK, DESPITE A NEW YORK CHOICE OF LAW PROVISION (FIRST DEPT).

The First Department, reversing Supreme Court, determined the Ohio trustee’s request for payment under a 1986 royalty agreement with the New York plaintiff  did not confer jurisdiction upon New York, even though the contract included a New York choice of law provision:

The trustee’s requests from Ohio, by letter, telephone, and/or email, to plaintiff in New York to send him monies due under the royalty agreement that plaintiff had entered into in 1986 with nonparty Denise Somerville …— which would merely continue plaintiff’s previous practice of sending royalties to Somerville in Ohio — do not constitute the transaction of business under CPLR 302(a)(1) … .

… [N]egotiating a contract from outside New York “is insufficient to constitute the transaction of business in New York” … . …

The fact that the contract chooses New York law does not “constitute a voluntary submission to personal jurisdiction in New York” … . ABKCO Music, Inc. v McMahon, 2019 NY Slip Op 06721, First Dept 9-24-19

 

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