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CITY EMPLOYEE’S CONTRACTUAL RIGHT TO MEDICAL BENEFITS VESTED BEFORE THE COLLECTIVE BARGAINING AGREEMENT WAS TERMINATED (FOURTH DEPT).

The Fourth Department determined that plaintiff city employee’s medical benefits vested before the collective bargaining agreement (CBA) was terminated:

“As a general rule, contractual rights and obligations do not survive beyond the termination of a collective bargaining agreement . . . However, [r]ights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement’ . . . , and we must look to well established principles of contract interpretation to determine whether the parties intended that the contract give rise to a vested right. [A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms’ ”  … . …

… [W]e conclude that the court properly determined that the plain meaning of the provisions at issue in the … CBA establishes that plaintiff has a vested right to medical benefits, those rights vested when he completed his 20th year of service, and plaintiff became eligible to receive said benefits when he reached retirement age… . Plaintiff’s right to medical benefits vested when he satisfied the criteria in the … CBA, and there is no language in the … CBA indicating that employees would forfeit or surrender their vested rights if they transferred jobs or unions prior to reaching retirement age. We thus conclude that the court’s interpretation of the … CBA ” give[s] fair meaning to all of the language employed by the parties to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized . . . [and does] not . . . leave one of its provisions substantially without force or effect’ ” … . Timkey v City of Lockport, 2018 NY Slip Op 08792, Fourth Dept 12-21-18

 

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PROPERTY OWNER DID NOT DEMONSTRATE A LACK OF CONSTRUCTIVE KNOWLEDGE OF THE SNOW AND ICE CONDITION IN THIS SLIP AND FALL CASE, AND THE SNOW REMOVAL CONTRACTOR DID NOT OFFER ANY EVIDENCE OF THE STATE OF THE AREA WHERE PLAINTIFF FELL, DEFENDANTS’ SUMMARY JUDGMENT MOTIONS SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined that the property owner’s (PA’s) and snow removal contractor’s (Cristi’s) motions for summary judgment in this parking lot snow and ice slip and fall case. PA did not demonstrate a lack of constructive knowledge of the condition and Cristi offered no evidence of the actual state of the area where plaintiff fell:

To demonstrate lack of constructive notice, a defendant must “produc[e] evidence of its maintenance activities on the day of the accident, and specifically that the dangerous condition did not exist when the area was last inspected or cleaned” … . PA failed to produce such evidence. PA’s representative testified that PA’s logs for the day of and day prior to the accident did not identify any icy conditions in the parking lot. However, he also admitted that it would not necessarily be documented in these logs (or elsewhere) if a PA employee noticed an icy condition. Moreover, he testified that checking for icy conditions was not the focus of PA’s inspections. …

“[A] contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party” … . However, there are exceptions to this rule, including where “the contracting party, in failing to exercise reasonable care in the performance of [its] duties, launches a force or instrument of harm'” by “creat[ing] or exacerbat[ing]” a dangerous condition… . It is undisputed that Cristi performed snow removal and salting in the area of the accident and that it had a continuing obligation to inspect and maintain the area even after snow removal was complete, but it offered no evidence regarding the actual state of the area at issue prior to the accident. Its “silence with respect to the actual snow removal operations at issue” renders Cristi’s prima facie showing “patently insufficient” … . Barrett v Aero Snow Removal Corp., 2018 NY Slip Op 08753, First Dept 12-20-18

 

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LEASE INCLUDED AN EXPRESS PROVISION ALLOWING TENANT TO WITHHOLD RENT IF THE PREMISES IS DAMAGED AND NOT REPAIRED, THEREFORE WITHHOLDING RENT WAS NOT AN ELECTION OF REMEDIES AND THE TENANT COULD WITHHOLD RENT AND SUE FOR DAMAGES (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that an express lease provision allowed the tenant to withhold rent when the property is damaged, and therefore the withholding of rent did not constitute an election of remedies:

The second affirmative defense stated that the tenant elected a remedy by not paying rent, and therefore the tenant is not entitled to damages. However, the lease contained an express provision that the tenant could withhold rent if the premises were damaged and not repaired. Generally, a tenant’s duty to continue to pay rent is not suspended if the tenant remains in possession of the leased premises, even if the landlord breaches its obligations under the lease, unless there is an express provision in the lease declaring the circumstances under which the tenant may withhold rent … . Such an express provision was present here. Therefore, the withholding of rent was not an election of remedies. Fifth Line, LLC v Fitch, 2018 NY Slip Op 08630, Second Dept 12-19-18

 

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LOST NOTE AFFIDAVIT INSUFFICIENT BECAUSE UCC REQUIREMENTS NOT MET, PROOF OF RPAPL 1304 NOTICE INSUFFICIENT, PROOF OF COMPLIANCE WITH NOTICE CONDITION OF THE MORTGAGE INSUFFICIENT, SUPREME COURT SHOULD NOT HAVE GRANTED THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff’s motion for summary judgment in this foreclosure action should not have been granted for three reasons: (1) the lost note affidavit was insufficient pursuant to the requirements of the Uniform Commercial Code (UCC); (2) the proof of compliance with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304 was not sufficient; and (3) the plaintiff did not show it had complied the notice condition of the mortgage (a condition precedent ro foreclosure):

Pursuant to UCC 3-804, the owner of a lost note may maintain an action “upon due proof of [1] his [or her] ownership, [2] the facts which prevent his [or her] production of the instrument and [3] its terms” (UCC 3-804). The party seeking to enforce a lost instrument is required to “account for its absence” … .

Here, although the plaintiff came forward with evidence establishing that the note was assigned to it and establishing the note’s terms, the affidavit of lost note submitted in support of its motion failed establish the facts that prevent the production of the original note … . …

… [T]he affidavit of a representative of its loan servicer was insufficient to establish that the notice was sent to the defendant in the manner required by RPAPL 1304, as the representative did not provide proof of a standard office mailing procedure and provided no independent proof of the actual mailing … . …

… [T]the plaintiff failed to establish, prima facie, that it complied with the condition precedent contained in the mortgage requiring it to give notice of default prior to demanding payment in full … . The affidavit of a representative of the plaintiff’s loan servicer claiming that notice of default was sent to the defendant …  was conclusory and unsubstantiated and … was insufficient to prove that the notice was sent in accordance with the terms of the mortgage … . U.S. Bank N.A. v Cope, 2018 NY Slip Op 08709, Second Dept 12-19-18

 

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INSURER WAIVED THE CONTRACTUAL ISSUE WHETHER PETITIONER WAS A PASSENGER IN THE CAR BY NOT SEEKING A STAY OF ARBITRATION, THEREFORE THE ARBITRATOR EXCEEDED HIS POWERS BY FINDING PETITIONER WAS NOT A PASSENGER AT THE TIME OF THE HIT AND RUN ACCIDENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the insurer (GEICO) had waived the contractual issue whether petitioner was a “qualified person” entitled to uninsured motorist benefits in this hit and run accident by not moving to stay arbitration. Therefore the arbitrator exceeded his powers in finding petitioner was not a “qualified person” because he was not a passenger in the car at the time of the accident. The matter was remitted to be heard by another arbitrator to determine whether petitioner suffered “serious injury:”

…[T]he issue presented to the arbitrator was whether the claimants, the petitioner and his girlfriend, sustained serious injuries as a result of the negligence of the operator of the hit-and-run vehicle, and if so, the reasonable compensatory value thereof. With a hit-and-run cause of action, in order to proceed to arbitration, there must be “physical contact” by a hit-and-run vehicle to a “qualified person” (Insurance Law § 5217). Accordingly, the determination of whether the petitioner is a “qualified person” pursuant to the policy is a condition precedent to arbitration and therefore is a basis for an application to stay arbitration to be determined by the courts … . Here, since GEICO never moved to stay the arbitration, it waived the ability to litigate this issue and essentially conceded that the petitioner was a covered person under the policy … . Matter of Banegas v GEICO Ins. Co., 2018 NY Slip Op 08644, Second Dept 12-19-18

TRAFFIC ACCIDENTS

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BY ENTERING A STIPULATION SETTLING A FORECLOSURE ACTION, DEFENDANT WAIVED ANY DEFECT IN SERVICE OF THE COMPLAINT, THE STIPULATION WAS VALID EVEN THOUGH IT DID NOT OCCUR IN COURT, EMAILS AND PAYMENT OF A SETTLEMENT AMOUNT MEMORIALIZED THE STIPULATION (SECOND DEPT).

The Second Department, reversing Supreme Court, over a dissent, determined that defendant Campbell had waived any defect in service of process by entering into a stipulation of settlement in this foreclosure action. The court held that the stipulation settling the deficiency judgment, which did not occur in court, was memorialized by emails and the payment of an agreed settlement amount. The dissent argued there was insufficient evidence of a stipulation entered into by Campbell and therefore Campbell’s motion to vacate the default judgment on the ground she was never served with the complaint should have been granted:

… [I]n vacating the settlement of the deficiency judgment “in the interests of justice,” the Supreme Court incorrectly determined that Campbell was not represented by counsel. In fact, Campbell was represented by counsel when she settled and made payment on the deficiency judgment. As part of the settlement, the plaintiff agreed not to proceed in other pending foreclosure actions against Campbell. Additionally, Campbell retained the same attorney with respect to other actions arising out of the settlement. By settling the deficiency judgment, Campbell clearly submitted to the court’s jurisdiction and acknowledged the validity of the judgment… . Therefore, we disagree with the court’s determination granting Campbell’s motion to vacate the judgment of foreclosure and sale, the subsequent foreclosure sale, the order of reference, the referee’s deed, and the settlement of the deficiency judgment, the terms of which had been fully performed.

Contrary to the position of our dissenting colleague, a formal stipulation of settlement need not be contained in the record. Here, the terms of the settlement were contained in contemporaneous emails between the plaintiff’s attorney and Campbell’s attorney, and by a check in the amount on which they had agreed. Campbell does not deny that she paid the amount for which she agreed to settle the deficiency judgment. That fully performed settlement two years before Campbell moved to vacate her default effectively waived her defense that the court lacked personal jurisdiction over her … . Eastern Sav. Bank, FSB v Campbell, 2018 NY Slip Op 08465, Second Dept 12-12-18

CPLR 2104

ORAL AGREEMENTS BETWEEN PERSONS COHABITING TOGETHER ARE NOT PER SE REQUIRED TO BE IN WRITING, SEVERAL CAUSES OF ACTION SHOULD NOT HAVE BEEN DISMISSED BECAUSE THE UNDERLYING AGREEMENTS WERE NOT SUBJECT TO THE STATUTE OF FRAUDS (SECOND DEPT).

The Second Department, modifying Supreme Court, determined that certain causes of action based upon oral agreements between plaintiff and defendant, who lived together for thirteen years, should not have been dismissed pursuant to the statute of frauds:

We disagree with the Supreme Court as to the applicability of the statute of frauds to the plaintiff’s allegations as to … express oral agreements between the parties, namely those related to her provision of domestic and legal services in exchange for support and sharing of business profits. Agreements between persons cohabiting together are not per se required to be in writing … . Moreover, the plaintiff’s allegations as to the terms of the oral agreements do not otherwise fall within the statute of frauds (see General Obligations Law § 5-703 …). …

We also disagree with the Supreme Court’s determination granting that branch of the motion which was to dismiss the plaintiff’s third cause of action pursuant to the statute of frauds. The third cause of action seeks the return of certain personal items that allegedly were owned by the plaintiff separately prior to her relationship with the defendant. Thus, the property that was the subject of that cause of action was not within the statute of frauds. Baron v Suissa, 2018 NY Slip Op 08453, Second Dept 12-12-18

 

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GENERAL RELEASE WAS NOT LIMITED TO A 2007 ACTION AND THEREFORE PRECLUDED THE 2014 ACTION, A UNILATERAL MISTAKE DOES NOT INVALIDATE A CONTRACT (THIRD DEPT).

The Third Department determined that, although the release signed by plaintiff (Moore) mentioned a 2007 action, the release stated it was not limited to the 2007 action. Therefore it applied to the instant action. The fact that plaintiff may not have intended that it apply to the current proceedings, a unilateral mistake, does not invalidate a contract:

The general release, executed by Moore after he commenced the present action, released defendant “from all manner of . . . claims and demands . . . in law or in equity that against [defendant] he ever had, now has or which he . . . shall or may have for any reason from the beginning of the world to the date of this release.” Plaintiffs nonetheless argue that the release is limited by its terms to the 2007 action, noting that “where a release contains a recital of a particular claim . . . and there is nothing on the face of the instrument other than general words of release to show that anything more than the matters particularly specified was intended to be discharged, the general words of release are deemed to be limited thereby” … . The release, however, does not limit or otherwise restrict itself to the 2007 action. Rather, it clearly and unambiguously specifies that it “includes, but is not limited to,” the incident that led to the 2007 action … . Moore executed the release with full knowledge that this action was pending against defendant, and the “timing and unequivocal and unconditional language” of the release therefore demonstrates its applicability to the 2014 action at issue here … . …

Although plaintiffs claim that Moore did not intend for the release to encompass this action when he executed it, “the fact that [Moore] may have intended something else is irrelevant[, as] a mere unilateral mistake . . . with respect to the meaning and effect of the release . . . does not constitute an adequate basis for invalidating” it … . Stevens v Town of Chenango (Forks), 2018 NY Slip Op 08389, Third Dept 12-6-18

CONTRACT LAW (GENERAL RELEASE WAS NOT LIMITED TO A 2007 ACTION AND THEREFORE PRECLUDED THE 2014 ACTION, A UNILATERAL MISTAKE DOES NOT INVALIDATE A CONTRACT (THIRD DEPT))/RELEASES  (GENERAL RELEASE WAS NOT LIMITED TO A 2007 ACTION AND THEREFORE PRECLUDED THE 2014 ACTION, A UNILATERAL MISTAKE DOES NOT INVALIDATE A CONTRACT (THIRD DEPT))/CIVIL PROCEDURE (GENERAL RELEASE WAS NOT LIMITED TO A 2007 ACTION AND THEREFORE PRECLUDED THE 2014 ACTION, A UNILATERAL MISTAKE DOES NOT INVALIDATE A CONTRACT (THIRD DEPT))

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ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT). ​

The Second Department determined that the doctrine of incorporation by estoppel was properly applied in this  breach of contract (lease) case. Although plaintiff limited liability company did not exist at the time the lease was signed, defendant took possession of the property. Defendant was therefore estopped from escaping liability under the lease based on the nonexistence of plaintiff limited liability company:

“Since a nonexistent entity cannot acquire rights or assume liabilities, a corporation which has not yet been formed normally lacks capacity to enter into a contract”… . However, a corporation may be deemed to exist and possess the capacity to contract pursuant to the doctrine of incorporation by estoppel … . The doctrine of incorporation by estoppel, or corporation by estoppel, is based on the principle that “one who has recognized the organization as a corporation in business dealings should not be allowed to quibble or raise immaterial issues on matters which do not concern him [or her] in the slightest degree or affect his [or her] substantial rights” … . TY Bldrs. II, Inc. v 55 Day Spa, Inc., 2018 NY Slip Op 08345, Second Dept 12-5-18

CORPORATION LAW (INCORPORATION BY ESTOPPEL, ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT))/LIMITED LIABILITY COMPANY LAW (INCORPORATION BY ESTOPPEL, ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT))/CONTRACT LAW  (INCORPORATION BY ESTOPPEL, ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT))/LANDLORD-TENANT (INCORPORATION BY ESTOPPEL, ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT))/ESTOPPEL  (INCORPORATION BY ESTOPPEL, ALTHOUGH THE PLAINTIFF LIMITED LIABILITY COMPANY DID NOT EXIST AT THE TIME THE LEASE WAS SIGNED, DEFENDANT TOOK POSSESSION OF THE PROPERTY, UNDER THE DOCTRINE OF INCORPORATION BY ESTOPPEL, DEFENDANT CANNOT ESCAPE LIABILITY FOR BREACH OF THE LEASE (SECOND DEPT))

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