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VOLUNTARY PAYMENT OF CERTAIN CHARGES ASSESSED IN CONNECTION WITH REFINANCING MULTI-MILLION DOLLAR LOANS WARRANTED DISMISSAL OF THE COMPLAINT WHICH ALLEGED THE CHARGES WERE UNENFORCEABLE PENALTIES AND WERE PAID UNDER DURESS (FIRST SEPT). ​

The First Department, in a full-fledged opinion by Justice Mazzarelli, affirmed the dismissal of a complaint alleging certain payments made in connection with refinancing multi-million dollar loans were unenforceable penalties and were paid under duress. The opinion is too detailed to fairly summarize here. The central issue was whether the voluntary payment of the charges in question without protest, i.e., the voluntary payment doctrine, warranted dismissal of the complaint. The issues were described as follows:

The relative sophistication of the parties is not a factor to be considered in assessing a claim of economic duress … . Economic duress exists where a party is compelled to agree to terms set by another party because of a wrongful threat by the other party that prevents it from exercising its free will. Accordingly, our analysis consists of two prongs: first, whether Blackrock’s [defendant’s] decision to demand the late charge and extra interest payment was lawful, that is, based on rights enumerated in the agreement; and second, if it was not, whether the demand placed plaintiff in a position such that it had no other choice but to accede. With respect to the first prong, Blackrock [argues] that, because the mezzanine loan agreement is part of the record, we can decide, even at this procedural posture, that, as a matter of law, the charges were not wrongful. … Defendant argues that … the agreement plainly establishes that it had the right to make the demand it did. Plaintiff, in contrast, asserts that the late charge provision is, at the very least, ambiguous with respect to how Blackrock was to calculate the charge, and that, even if the calculation was correct, it constitutes an unenforceable penalty. Beltway 7 & Props., Ltd. v Blackrock Realty Advisers, Inc., 2018 NY Slip Op 07844, First Dept 11-15-18

DEBTOR-CREDITOR (VOLUNTARY PAYMENT OF CERTAIN CHARGES ASSESSED IN CONNECTION WITH REFINANCING MULTI-MILLION DOLLAR LOANS WARRANTED DISMISSAL OF THE COMPLAINT WHICH ALLEGED THE CHARGES WERE UNENFORCEABLE PENALTIES AND WERE PAID UNDER DURESS (FIRST SEPT))/VOLUNTARY PAYMENT DOCTRINE (DEBTOR-CREDITOR, CONTRACT LAW, (VOLUNTARY PAYMENT OF CERTAIN CHARGES ASSESSED IN CONNECTION WITH REFINANCING MULTI-MILLION DOLLAR LOANS WARRANTED DISMISSAL OF THE COMPLAINT WHICH ALLEGED THE CHARGES WERE UNENFORCEABLE PENALTIES AND WERE PAID UNDER DURESS (FIRST SEPT))/CONTRACT LAW (DEBTOR-CREDITOR, VOLUNTARY PAYMENT OF CERTAIN CHARGES ASSESSED IN CONNECTION WITH REFINANCING MULTI-MILLION DOLLAR LOANS WARRANTED DISMISSAL OF THE COMPLAINT WHICH ALLEGED THE CHARGES WERE UNENFORCEABLE PENALTIES AND WERE PAID UNDER DURESS (FIRST SEPT))

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SIGNATORY TO AGREEMENT WITH AN ARBITRATION CLAUSE CANNOT AVOID ARBITRATION SIMPLY BECAUSE PARTIES ENTWINED IN THE PROCEEDINGS ARE NOT SIGNATORIES (SECOND DEPT).

The Second Department determined that a signatory to an agreement with an arbitration clause could not avoid arbitration because other parties entwined in the matter were not signatories:

… Supreme Court should have denied that branch of Garnick’s motion which sought a permanent stay of arbitration of the claims against him by Teitelbaum and Coluccio, derivatively on behalf of Axcess I, LLC, and Brooklyn Axcess, LLC, respectively. Axcess I, LLC, and Brooklyn Axcess, LLC, are not signatories to the Axcess, Inc., shareholders agreement that contains the arbitration clause. Nevertheless, Garnick is estopped from avoiding arbitration with them based on the relatedness between Axcess, Inc., and its subsidiaries, Axcess I, LLC, and Brooklyn Axcess, LLC, and the agreements and controversies at issue, which are intertwined with the Axcess, Inc., shareholders agreement containing the arbitration clause, to which Garnick is a signatory. Matter of DeNobile v Panetta, 2018 NY Slip Op 07722, Second Dept 11-14-18

ARBITRATION (CONTRACT LAW, SIGNATORY TO AGREEMENT WITH AN ARBITRATION CLAUSE CANNOT AVOID ARBITRATION SIMPLY BECAUSE PARTIES ENTWINED IN THE PROCEEDINGS ARE NOT SIGNATORIES (SECOND DEPT))/CONTRACT LAW (ARBITRATION, SIGNATORY TO AGREEMENT WITH AN ARBITRATION CLAUSE CANNOT AVOID ARBITRATION SIMPLY BECAUSE PARTIES ENTWINED IN THE PROCEEDINGS ARE NOT SIGNATORIES (SECOND DEPT))

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VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant employer should not have been allowed to amend its answer to assert a release from liability for plaintiff’s injury based on plaintiff’s signing a “Volunteer Agreement.” The Volunteer Agreement purported to release the employer from any liability for injury to plaintiff on the job. Plaintiff was struck by a forklift operated by defendant’s employee. The release violated public policy:

While leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit (see CPLR 3025[b] …), here, the proposed amendment was patently devoid of merit … . New York courts have long found agreements between an employer and an employee attempting to exonerate the employer from liability for future negligence whether of itself or its employees or limiting its liability on account of such negligence void as against public policy … .

As observed by the Court of Appeals more than a century ago, “[t]he state is interested in the conservation of the lives and of the healthful vigor of its citizens, and if employers could contract away their responsibility at common law, it would tend to encourage on their part laxity of conduct in, if not an indifference to, the maintenance of proper and reasonable safeguards to human life and limb” … . Contrary to the defendant’s contentions, the public policy considerations applicable to paid employees also apply to a volunteer employee, such as the plaintiff herein. The purported release contained in the “Volunteer Agreement” is void as against public policy. Richardson v Island Harvest, Ltd., 2018 NY Slip Op 07768, Second Dept 11-14-18

EMPLOYMENT LAW (VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CONTRACT LAW (EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/NEGLIGENCE (EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/RELEASE (NEGLIGENCE, EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/VOLUNTEER AGREEMENT (EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CIVIL PROCEDURE (AMEND ANSWER, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CPLR 3025 (AMEND ANSWER, (EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/ANSWER (AMEND, (EMPLOYMENT LAW, VOLUNTEER AGREEMENT, RELEASE FROM LIABILITY, VOLUNTEER AGREEMENT WHICH PURPORTED TO RELEASE DEFENDANT EMPLOYER FROM LIABILITY FOR PLAINTIFF’S ON THE JOB INJURY WAS VOID AS AGAINST PUBLIC POLICY, MOTION TO AMEND THE ANSWER TO ASSERT THE RELEASE AS A DEFENSE SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))

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DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court determined plaintiff should have given defendant the opportunity to cure an inadvertent failure to make a monthly payment pursuant to stipulation of settlement. Defendant had repaid much of the debt and, based on the default, would owe more than twice the amount that remained to be paid:

… Supreme Court should have granted the alternate branch of the defendant’s motion, which was, in effect, to preclude the plaintiff from enforcing the default provision of the stipulation without affording the defendant a reasonable opportunity to cure his default. “Under almost any given state of facts, where to enforce a stipulation would be unjust or inequitable or permit the other party to gain an unconscionable advantage, courts will afford relief” … .

Here, the defendant’s default was inadvertent and minor in nature when measured against the harsh result that would be obtained upon literal enforcement of the default provision in the stipulation… . Insofar as the plaintiff failed to offer the defendant any opportunity to cure his default before seeking to recover the full amount due under the judgment, the plaintiff’s conduct could be interpreted as an attempt to take advantage of a technical default to obtain payment of the far greater sum which the plaintiff had originally sought, but agreed to forgo as part of the settlement … . RCS Recovery Servs., LLC v Mensah, 2018 NY Slip Op 07766, Second Dept 11-14-18

DEBTOR-CREDITOR (DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))/STIPULATION OF SETTLEMENT (DEBTOR-CREDITOR, DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))/LOANS  (DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))/DEFAULT (LOAN PAYMENTS, DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))/CURE (LOANS, DEFAULT, DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))/CONTRACT LAW (STIPULATION OF SETTLEMENT, DEFENDANT SHOULD HAVE BEEN AFFORDED THE OPPORTUNITY TO CURE A DEFAULT IN MONTHLY PAYMENTS ON A LOAN BEFORE PLAINTIFF SOUGHT TO ENFORCE THE TERMS OF THE STIPULATION OF SETTLEMENT, WHICH WOULD RESULT IN DEFENDANT OWING MORE THAN TWICE WHAT REMAINED TO BE PAID (SECOND DEPT))

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PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the county’s motion to dismiss plaintiff’s complaint seeking specific performance, based on the language of the real estate purchase contract, should have been granted. Plaintiff was the highest bidder on real property and signed a purchase contract but did not appear on the closing dates:

… [W]e find that the terms and conditions of the contract of sale utterly refute the plaintiff’s allegations and establish a defense as a matter of law. The contract clearly provides that the plaintiff’s failure to close pursuant to the terms and conditions of sale will result in a forfeiture of the down payment; that in the event the closing is postponed at the plaintiff’s request, then the adjourned date shall be deemed the final law date; that the plaintiff’s failure to close on the final law date shall entitle the County to cancel the sale and to retain the down payment; and, in those circumstances, the plaintiff waives all claims of any right, title and interest in the subject property and the down payment. Additionally, the terms and conditions of the contract of sale demonstrate that a material fact claimed by the plaintiff—the alleged breach of contract by the County—is not a fact at all, and no significant dispute exists regarding it. Mahmood v County of Suffolk, 2018 NY Slip Op 07715, Second Dept 11-14-18

CONTRACT LAW (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/REAL ESTATE  (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/CIVIL PROCEDURE (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/MUNICIPAL LAW  (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))

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ARBITRATION AWARD SHOULD NOT HAVE BEEN VACATED, LIMITED COURT-REVIEW POWERS EXPLAINED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the arbitrator’s award should have been confirmed. The dispute concerned a broker’s fee provision in a lease. The arbitrator reasoned that the lease provision did not control because at the time the tenants bought the property the lease had expired and tenancy was month to month. The First Department explained the extremely limited court-review powers re: arbitration awards:

CPLR 7511 provides just four grounds for vacating an arbitration award, including that the arbitrator “exceeded his power” (CPLR 7511[b][1][iii]), which “occurs only where the arbitrator’s award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator’s power”… . Mere errors of fact or law are insufficient to vacate an arbitral award … . “[C]ourts are obligated to give deference to the decision of the arbitrator, … even if the arbitrator misapplied the substantive law in the area of the contract” … .

Here, the arbitrator’s conclusion that a sales commission was not due under the precise terms of the Agreement because the lease was not extended is neither wholly irrational nor contrary to any strong public policy … . Matter of NRT N.Y. LLC v Spell, 2018 NY Slip Op 07664, First Dept 11-13-18

ARBITRATION (ARBITRATION AWARD SHOULD NOT HAVE BEEN VACATED, LIMITED COURT-REVIEW POWERS EXPLAINED (FIRST DEPT))/CIVIL PROCEDURE (ARBITRATION AWARD SHOULD NOT HAVE BEEN VACATED, LIMITED COURT-REVIEW POWERS EXPLAINED (FIRST DEPT))/CONTRACT LAW (ARBITRATION AWARD SHOULD NOT HAVE BEEN VACATED, LIMITED COURT-REVIEW POWERS EXPLAINED (FIRST DEPT))

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PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT).

The First Department determined that a provision in a lease which required the petitioner tenant to pay the respondent landlord’s attorney’s fees even where the landlord was in default was unenforceable as unconscionable. Petitioner tenant had sued the landlord for failure to transfer shares in an apartment in accordance with petitioner’s husband’s wishes:

In 2012, petitioner’s husband, who owned the shares to another apartment in the building, agreed to transfer his shares to petitioner. Petitioner paid a transfer fee to respondent so that it would transfer the shares to her. She later sued respondent for default of the lease agreement and for statutory violations because respondent had not transferred the shares to her husband’s apartment to her. Respondent answered petitioner’s complaint and asserted a counterclaim for attorneys’ fees under paragraph 6(7)(c). * * *

… [W]we find that an attorneys’ fees provision which provides that the tenant must pay attorneys’ fees if it commences an action against the landlord based upon the default of the landlord is unconscionable and unenforceable as a penalty. Paragraph 6(7)(c) of the proprietary lease permits the landlord to recover attorneys’ fees when the tenant brings an action against the landlord even when the landlord is in default. To enforce such a provision would produce an unjust result because it would dissuade aggrieved parties from pursuing litigation and preclude tenant-shareholders from making meaningful decisions about how to vindicate their rights in legitimate instances of landlord default. Matter of Krodel v Amalgamated Dwellings Inc., 2018 NY Slip Op 07531, First Dept 11-8-18

LANDLORD-TENANT (CONTRACT LAW, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/CONTRACT LAW (LANDLORD-TENANT, LEASE, CONTRACT LAW, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/LEASE (CONTRACT LAW, UNCONSIONABILITY, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/UNCONSIONABILITY (LANDLORD-TENANT, CONTRACT LAW, LEASE, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))

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COMPLAINT DID NOT SUFFICIENTLY DESCRIBE THE GOODS FOR WHICH PLAINTIFF WAS SEEKING PAYMENT IN THIS BREACH OF CONTRACT ACTION AS REQUIRED BY CPLR 3016, THEREFORE DEFENDANT DID NOT HAVE TO SPECIFICALLY DISPUTE EACH ITEM, A GENERAL DENIAL WAS SUFFICIENT, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff’s motion for summary judgment in this breach of contract action should not have been granted. The criteria for a motion pursuant to CPLR 3016 (f) alleging the failure to pay for delivered goods were not met because the complaint did not sufficiently describe the goods and the prices. Therefore a general denial, as opposed to specific denials re: the items listed in the complaint, was sufficient. In addition defendant alleged the goods were not timely delivered, which is a valid defense that does not require specifically disputing each item described in the complaint:

In an action involving, inter alia, goods sold and delivered, CPLR 3016(f) permits a plaintiff to “set forth and number in his [or her] verified complaint the items of his [or her] claim and the reasonable value or agreed price of each.” “To meet the requirements of CPLR 3016(f), a complaint must contain a listing of the goods or services provided, with enough detail that it may readily be examined and its correctness tested entry by entry'” … . If the complaint meets these requirements, the defendant may not generally deny allegations of the complaint, but must, instead, specifically dispute the items on the plaintiff’s list … .

Here, the complaint failed to comply with CPLR 3016(f). The three invoices failed to state the price of each individual invoice item, or the date when each item was delivered. Although it was acknowledged that partial payment was made, the plaintiff did not specify what the partial payment was for. The plaintiff also alleged that the defendant made a partial payment toward one invoice without specifying to which of the invoiced items the defendant’s payment was applied … .

In any event, even assuming  CPLR 3016(f) was complied with, a general denial is sufficient where a defense to the cause of action pursuant to CPLR 3016(f) speaks to the “entirety of the parties’ dealings” … . In this case, the defense—that the plaintiff breached the contract by untimely delivering the items in the contract—goes to the entirety of the parties’ dealings. Further, damages awarded on the counterclaim may offset liability for goods sold and delivered if the circumstances warrant it … . SSG Door & Hardware, Inc. v APS Contr., Inc., 2018 NY Slip Op 07481, Second Dept 11-7-18

CIVIL PROCEDURE (COMPLAINT DID NOT SUFFICIENTLY DESCRIBE THE GOODS FOR WHICH PLAINTIFF WAS SEEKING PAYMENT IN THIS BREACH OF CONTRACT ACTION AS REQUIRED BY CPLR 3016, THEREFORE DEFENDANT DID NOT HAVE TO SPECIFICALLY DISPUTE EACH ITEM, A GENERAL DENIAL WAS SUFFICIENT, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CONTRACT LAW (COMPLAINT DID NOT SUFFICIENTLY DESCRIBE THE GOODS FOR WHICH PLAINTIFF WAS SEEKING PAYMENT IN THIS BREACH OF CONTRACT ACTION AS REQUIRED BY CPLR 3016, THEREFORE DEFENDANT DID NOT HAVE TO SPECIFICALLY DISPUTE EACH ITEM, A GENERAL DENIAL WAS SUFFICIENT, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/DEBTOR-CREDITOR (BREACH OF CONTRACT, CIVIL PROCEDURE, COMPLAINT DID NOT SUFFICIENTLY DESCRIBE THE GOODS FOR WHICH PLAINTIFF WAS SEEKING PAYMENT IN THIS BREACH OF CONTRACT ACTION AS REQUIRED BY CPLR 3016, THEREFORE DEFENDANT DID NOT HAVE TO SPECIFICALLY DISPUTE EACH ITEM, A GENERAL DENIAL WAS SUFFICIENT, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CPLR 3016 (COMPLAINT DID NOT SUFFICIENTLY DESCRIBE THE GOODS FOR WHICH PLAINTIFF WAS SEEKING PAYMENT IN THIS BREACH OF CONTRACT ACTION AS REQUIRED BY CPLR 3016, THEREFORE DEFENDANT DID NOT HAVE TO SPECIFICALLY DISPUTE EACH ITEM, A GENERAL DENIAL WAS SUFFICIENT, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))

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PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT). ​

The Second Department determined MasterCard’s motion to dismiss this equitable subrogation and unjust enrichment action by plaintiff (Jetro) stemming from the the alleged hacking or attempted hacking of MasterCard credit card information from Jetro computer systems was properly granted. MasterCard has a contract with PNC, a bank, which provided that MasterCard could recover assessments against PNC because of the hacking. Jetro was required to indemnify PNC for those assessments and sued MasterCard to recover the payments. There was no contract between MasterCard and Jetro, so the only possible viable causes of action were equitable subrogation, money had and received and unjust enrichment, which were rejected because of the terms of the relevant contracts:

Pursuant to the doctrine of equitable subrogation, where the ” property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder'” …

Here, Jetro’s indemnification obligation, set forth in its contract with PNC, was based on Jetro’s own “acts or omissions” relating to a data breach incident. The indemnification clause in the PNC-Jetro contract is broader than the obligation of PNC toward MasterCard with respect to data breaches. According to the complaint, the PNC-Jetro contract obligated Jetro to indemnify PNC for any penalties imposed by MasterCard, “even in cases when MasterCard violated the Standards or otherwise violated the law by imposing the assessment[s] in question.” In light of these contractual provisions, even accepting the allegations of the complaint as true … , in undertaking to indemnify PNC, Jetro satisfied its separate and distinct obligation to PNC, and it is not equitably subrogated to the rights of PNC as against MasterCard … . …

“The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money” … . ” The elements of a cause of action to recover for unjust enrichment are (1) the defendant was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'” … .

Here, the subject penalties were collected or retained by MasterCard pursuant to its contract with PNC, which then sought indemnification from Jetro pursuant to PNC’s separate contract with Jetro. We agree with the Supreme Court that the exercise by MasterCard of its purported contractual rights against PNC was independent of the determination by PNC to enforce its indemnification rights against Jetro. Therefore, it cannot be said that MasterCard unjustly benefitted from its action, or that it would be inequitable to allow it to retain the subject funds … . Jetro Holdings, LLC v MasterCard Intl., Inc., 2018 NY Slip Op 07418, Second Dept 11-7-18

CONTRACT LAW (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/EQUITABLE SUBROGATION (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/MONEY HAD AND RECEIVED  (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/UNJUST ENRICHMENT (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/CREDIT CARDS (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/HACKING (CREDIT CARDS, PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))

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CONSTRUCTIVE NOTICE OF LIQUID ON THE FLOOR IN THIS SLIP AND FALL CASE NOT DEMONSTRATED WITH RESPECT TO THE BUILDING OWNER, NO ESPINAL FACTORS ALLEGED WITH RESPECT TO THE CLEANING SERVICE, DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendants’ motions for summary judgment in this slip and fall case should have been granted. Constructive notice of the liquid on the floor was not demonstrated with respect to the building owner (Berkshire) and none of the Espinal factors were alleged with respect to the cleaning service (Temco):

Here, the evidence submitted by Berkshire in support of its motion, including the transcript of the plaintiff’s deposition testimony, was sufficient to establish, prima facie, that Berkshire did not create the alleged hazardous condition or have actual or constructive notice of its existence for a sufficient period of time to have discovered and remedied it … . The plaintiff testified that when he traversed the accident site approximately 20 minutes before the incident, he did not see the condition that had caused him to slip. In opposition, the plaintiffs failed to raise a triable issue of fact.

With respect to Temco’s motion, “[g]enerally, a contractual obligation, standing alone, will not give rise to tort liability in favor of a third party” … . However, there are three exceptions to this general rule: (1) where the contracting party, in failing to exercise reasonable care in the performance of its duties, launches a force or instrument of harm or creates or exacerbates a hazardous condition; (2) where the plaintiff detrimentally relies on the continued performance of the contracting party’s duties; and (3) where the contracting party has entirely displaced the other party’s duty to maintain the premises safely… .

Here, Temco established its prima facie entitlement to judgment as a matter of law by demonstrating, prima facie, that the plaintiff was not a party to its cleaning services contract, and that it, thus, owed him no duty of care … . Since the plaintiffs did not allege facts in the complaint or bill of particulars that would establish the applicability of any of the Espinal exceptions, Temco was not required to affirmatively demonstrate that these exceptions were inapplicable in order to establish its prima facie entitlement to judgment as a matter of law … . Hagan v City of New York, 2018 NY Slip Op 07415, Second Dept 11-7-18

NEGLIGENCE (SLIP AND FALL, CONSTRUCTIVE NOTICE OF LIQUID ON THE FLOOR IN THIS SLIP AND FALL CASE NOT DEMONSTRATED WITH RESPECT TO THE BUILDING OWNER, NO ESPINAL FACTORS ALLEGED WITH RESPECT TO THE CLEANING SERVICE, DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT))/SLIP AND FALL ( CONSTRUCTIVE NOTICE OF LIQUID ON THE FLOOR IN THIS SLIP AND FALL CASE NOT DEMONSTRATED WITH RESPECT TO THE BUILDING OWNER, NO ESPINAL FACTORS ALLEGED WITH RESPECT TO THE CLEANING SERVICE, DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT))/ESPINAL FACTORS (SLIP AND FALL, SLIP AND FALL, CONSTRUCTIVE NOTICE OF LIQUID ON THE FLOOR IN THIS SLIP AND FALL CASE NOT DEMONSTRATED WITH RESPECT TO THE BUILDING OWNER, NO ESPINAL FACTORS ALLEGED WITH RESPECT TO THE CLEANING SERVICE, DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT))/CONTRACT LAW (SLIP AND FALL, ESPINAL FACTORS, CONSTRUCTIVE NOTICE OF LIQUID ON THE FLOOR IN THIS SLIP AND FALL CASE NOT DEMONSTRATED WITH RESPECT TO THE BUILDING OWNER, NO ESPINAL FACTORS ALLEGED WITH RESPECT TO THE CLEANING SERVICE, DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT))

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