Contract Law – Page 84 – New York Appellate Digest

DOMESTIC RELATIONS ORDER WHICH CONFLICTED WITH THE STIPULATION OF SETTLEMENT IN THIS DIVORCE ACTION COULD NOT BE ENFORCED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the stipulation of settlement in this divorce action controlled, and a domestic relations order (DRO) which did not conform to the stipulation could not be enforced:

“A stipulation of settlement that has been incorporated but not merged into a judgment of divorce is a contract subject to principles of contract construction and interpretation” … . “A court may not write into a contract conditions the parties did not insert or, under the guise of construction, add or excise terms, and it may not construe the language in such a way as would distort the apparent meaning” … . “A domestic relations order entered pursuant to a stipulation of settlement can convey only those rights to which the parties stipulated as a basis for the judgment'” … .

Contrary to the plaintiff’s contention, the formula set forth in her proposed DRO conflicts with the stipulation of settlement, which provided for a “fifty/fifty division of all pension benefits accumulated from the date of this marriage … through the date of service of the summons and complaint … ,” and that the plaintiff is “to be the recipient of 50 percent of any and all benefits payable to the [defendant] upon his retirement which were accumulated during that period of time” … . The stipulation of settlement made no reference to the formula set forth in Majauskas v Majauskas (61 NY2d 481), nor can such a reference be implied from the unambiguous terms of the stipulation … . Since the stipulation is controlling, the Supreme Court should not have granted the plaintiff’s cross motion for leave to enter her proposed DRO … . McPhillips v McPhillips, 2018 NY Slip Op 06896, Second Dept 10-17-18

FAMILY LAW (DOMESTIC RELATIONS ORDER WHICH CONFLICTED WITH THE STIPULATION OF SETTLEMENT IN THIS DIVORCE ACTION COULD NOT BE ENFORCED (SECOND DEPT))/CONTRACT LAW (FAMILY LAW, DOMESTIC RELATIONS ORDER WHICH CONFLICTED WITH THE STIPULATION OF SETTLEMENT IN THIS DIVORCE ACTION COULD NOT BE ENFORCED (SECOND DEPT))/DOMESTIC RELATIONS ORDER (DRO) (DOMESTIC RELATIONS ORDER WHICH CONFLICTED WITH THE STIPULATION OF SETTLEMENT IN THIS DIVORCE ACTION COULD NOT BE ENFORCED (SECOND DEPT))/STIPULATION OF SETTLEMENT (DIVORCE, DOMESTIC RELATIONS ORDER WHICH CONFLICTED WITH THE STIPULATION OF SETTLEMENT IN THIS DIVORCE ACTION COULD NOT BE ENFORCED (SECOND DEPT))

October 17, 2018

Civil Procedure, Contract Law, Debtor-Creditor

FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT).

The Second Department determined Supreme Court properly searched the record and granted defendant’s summary judgment in this action on a promissory note. The agreement at issue was an illegal contract involving a fee-splitting arrangement between physicians and non-physicians which is prohibited by the Education Law:

We agree with the Supreme Court’s determination to deny those branches of the plaintiff’s motion which were for summary judgment on the causes of action to recover the balance due on the promissory note and for an award of costs and attorney’s fees, and, upon searching the record, to award the defendants summary judgment dismissing those causes of action. Contrary to the plaintiff’s contentions, the evidence submitted by the parties in connection with the motion for summary judgment established, prima facie, that the agreement and the promissory note were a pretext for an unlawful fee-splitting arrangement in violation of the Education Law because they circumvented New York’s prohibition on physicians splitting fees with nonphysicians (see Education Law §§ 6509-a, 6530[19] … ). “It is the settled law of this State (and probably of every other State) that a party to an illegal contract cannot ask a court of law to help him [or her] carry out his [or her] illegal object, nor can such a person plead or prove in any court a case in which he [or she], as a basis for his [or her] claim, must show forth his [or her] illegal purpose” … . “Where the parties’ arrangement is illegal the law will not extend its aid to either of the parties . . . or listen to their complaints against each other, but will leave them where their own acts have placed them'” … . Linchitz Practice Mgt., Inc. v Daat Med. Mgt., LLC, 2018 NY Slip Op 06891, Second Dept 10-17-18

CONTRACT LAW (FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))/DEBTOR-CREDITOR (FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))/CIVIL PROCEDURE (FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))/PHYSICIANS (FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))/FEE-SPLITTING (PHYSICIANS, FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))/EDUCATION LAW (PHYSICIANS, FEE-SPLITTING ARRANGEMENT BETWEEN PHYSICIANS AND NON-PHYSICIANS IS ILLEGAL UNDER THE EDUCATION LAW AND CANNOT BE ENFORCED BY THE COURTS, SUPREME COURT PROPERLY SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO DEFENDANTS IN THIS ACTION ON A PROMISSORY NOTE (SECOND DEPT))

October 17, 2018

Civil Procedure, Contract Law, Securities

WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a two-judge dissent, determined that the language of a mortgage loan purchase and warranties agreement (MLPWA) did not postpone the accrual of a breach of contract cause of action and, therefore, the statute of limitations had expired. This is another case arising out of the sale of residential mortgage-backed securities which were supported by allegedly defective mortgage loans that did not comply with the representations and warranties in the agreement:

… [P]laintiff did not dispute that the representations and warranties made by defendant in the MLPWA were effective as of the closing date. Instead, plaintiff argued that the statute of limitations had yet to lapse, relying upon a provision in the MLPWA that it refers to as the “accrual clause,” which states as follows: “Any cause of action against the Seller relating to or arising out of the breach of any representations and warranties made in Subsections 9.01 and 9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by the Seller to cure such breach, substitute a Qualified Substitute Mortgage Loan or repurchase such Mortgage Loan as specified above and (iii) demand upon the Seller by the Purchaser for compliance with this Agreement.” …

In New York, the default accrual rule for breach of contract causes of action is that the cause of action accrues when the contract is breached … . “[E]xcept in cases of fraud where the statute expressly provides otherwise, the statutory period of limitations begins to run from the time when liability for wrong has arisen even though the injured party may be ignorant of the existence of the wrong or injury”… . This Court has “repeatedly rejected accrual dates which cannot be ascertained with any degree of certainty, in favor of a bright line approach,” and for that reason, we do not “apply the discovery rule to statutes of limitations in contract actions” … . “To extend the highly exceptional discovery notion to general breach of contract actions would effectively eviscerate the Statute of Limitations in this commercial dispute arena” … . * * *

… [General Obligations Law 17-103] requires an agreement to extend the statute of limitations to be made “after accrual of the cause of action,” and it allows extension of the limitations period only for, at most, the time period that would apply if the cause of action had accrued on the date of the agreement, i.e., six years from the date that the agreement was made if the limitations period is six years … . An agreement to extend the statute of limitations that does not comply with these requirements “has no effect” … . In addition, CPLR 201 provides that an action “must be commenced within the time specified in this article unless a different time is prescribed by law or a shorter time is prescribed by written agreement,” and “[n]o court shall extend the time limited by law for the commencement of an action.” Deutsche Bank Natl. Trust Co. v Flagstar Capital Mkts., 2018 NY Slip Op 06851, CtApp 10-16-18

CONTRACT LAW (WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP))/CIVIL PROCEDURE (CONTRACT LAW, WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP))/SECURITIES (WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP))/RESIDENTIAL MORTGAGE BACKED SECURITIES (CONTRACT LAW, CIVIL PROCEDURE, WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP))/STATUTE OF LIMITATIONS (WARRANTIES AND REPRESENTATIONS CLAUSE IN RESIDENTIAL MORTGAGE-BACKED SECURITIES PURCHASE AGREEMENT DID NOT POSTPONE THE ACCRUAL OF A BREACH OF CONTRACT ACTION, THE ACTION WAS THEREFORE TIME-BARRED (CT APP))

October 16, 2018

Contract Law, Negligence

SNOW REMOVAL CONTRACTOR’S MOTION FOR SUMMARY JUDGMENT IN THIS PARKING LOT SLIP AND FALL CASE SHOULD HAVE BEEN GRANTED, NO QUESTION OF FACT ABOUT ANY OF THE ESPINAL FACTORS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the snow removal contractor's (O & M's) motion for summary judgment in this parking lot slip and fall case should have been granted:

“As a general rule, a limited contractual obligation to provide snow removal services does not render the contractor liable in tort for the personal injuries of third parties”… . However, the Court of Appeals has recognized three exceptions to the general rule: “(1) where the contracting party, in failing to exercise reasonable care in the performance of his duties, launche[s] a force or instrument of harm; (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” (Espinal v Melville Snow Contrs., 98 NY2d 136, 140 …).

Here, O & M made a prima facie showing of its entitlement to judgment as a matter of law by submitting evidence that the injured plaintiff was not a party to its snow removal contract and, thus, O & M owed her no duty of care … . Since the pleadings did not allege facts which would establish the applicability of any of the Espinal exceptions, O & M was not required to affirmatively demonstrate that these exceptions did not apply in order to establish its prima facie entitlement to judgment as a matter of law … .

In opposition to O & M's prima facie showing, the plaintiffs failed to raise a triable issue of fact as to whether O & M “created or exacerbated a dangerous condition” … . “A snow removal contractor cannot be held liable for personal injuries on the ground that the snow removal contractor's passive omissions constituted the launch of a force or instrument of harm, where there is no evidence that the passive conduct created or exacerbated a dangerous condition'” … . Reisert v Mayne Constr. of Long Is., Inc., 2018 NY Slip Op 06777, Second Dept 10-10-18

NEGLIGENCE (SNOW REMOVAL CONTRACTOR'S MOTION FOR SUMMARY JUDGMENT IN THIS PARKING LOT SLIP AND FALL CASE SHOULD HAVE BEEN GRANTED, NO QUESTION OF FACT ABOUT ANY OF THE ESPINAL FACTORS (SECOND DEPT))/CONTRACT LAW (SLIP AND FALL, SNOW REMOVAL CONTRACTOR'S MOTION FOR SUMMARY JUDGMENT IN THIS PARKING LOT SLIP AND FALL CASE SHOULD HAVE BEEN GRANTED, NO QUESTION OF FACT ABOUT ANY OF THE ESPINAL FACTORS (SECOND DEPT))/ESPINAL FACTORS (SLIP AND FALL, SNOW REMOVAL CONTRACTOR'S MOTION FOR SUMMARY JUDGMENT IN THIS PARKING LOT SLIP AND FALL CASE SHOULD HAVE BEEN GRANTED, NO QUESTION OF FACT ABOUT ANY OF THE ESPINAL FACTORS (SECOND DEPT))/SLIP AND FALL (ESPINAL FACTORS, SNOW REMOVAL CONTRACTOR'S MOTION FOR SUMMARY JUDGMENT IN THIS PARKING LOT SLIP AND FALL CASE SHOULD HAVE BEEN GRANTED, NO QUESTION OF FACT ABOUT ANY OF THE ESPINAL FACTORS (SECOND DEPT))

October 10, 2018

Contract Law, Labor Law-Construction Law, Negligence

PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT THE CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT).

The Second Department, modifying Supreme Court, determined that the contractual and common law indemnification causes of action against defendant STAT should have been dismissed, but the contribution cause of action properly survived summary judgment. Plaintiff alleged he slipped and fell on construction debris and brought actions under Labor Law 240 (1) and 241 (6). The indemnification causes of action should have been dismissed because the defendants (Granite and Kulka) would not be able to prove they were free from negligence. The contribution claim was viable because STAT employees played some role in the accumulation of the debris:

STAT demonstrated that Granite and Kulka had certain responsibilities with respect to the removal of the construction debris and, thus, that they would not be able to prove themselves free from negligence in the event that the injured plaintiff was successful on his claims against Granite (seeGeneral Obligations Law § 5-322.1 ,,,). For this same reason, STAT established its prima facie entitlement to judgment as a matter of law dismissing the common-law indemnification third third-party cause of action and cross claim against it … .

However, we agree with the Supreme Court's determination to deny those branches of STAT's motion which were for summary judgment dismissing Granite's third third-party cause of action for contribution and Kulka's cross claim for contribution. As opposed to indemnification, which shifts the entire liability to the negligent party, “where a party is held liable at least partially because of its own negligence, contribution against other culpable tort-feasors is the only available remedy” … . In the context of a construction site accident, where a plaintiff's injuries arise not from the manner in which the work was performed but rather due to an allegedly dangerous condition present thereat, liability under a common-law negligence theory “may be imposed upon a subcontractor where it had control over the work site and either created the allegedly dangerous condition or had actual or constructive notice of it” … . Fedrich v Granite Bldg. 2, LLC, 2018 NY Slip Op 06717, Second Dept 10-10-18

LABOR LAW-CONSTRUCTION LAW (PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT))/INDEMNIFICATION (LABOR LAW-CONSTRUCTION LAW, PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT))/CONTRIBUTION (LABOR LAW-CONSTRUCTION LAW, PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT))/CONTRACT LAW (INDEMNIFICATION, LABOR LAW-CONSTRUCTION LAW, PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT))/NEGLIGENCE (PLAINTIFF ALLEGEDLY TRIPPED OVER CONSTRUCTION DEBRIS IN THIS LABOR LAW 240 (1) AND 241 (6) ACTION, INDEMNIFICATION CAUSES OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THE DEFENDANTS COULD NOT DEMONSTRATE THEY WERE FREE FROM NEGLIGENCE, BUT CONTRIBUTION CAUSE OF ACTION PROPERLY SURVIVED, CRITERIA FOR INDEMNIFICATION AND CONTRIBUTION EXPLAINED IN SOME DEPTH (SECOND DEPT))

October 10, 2018

Contract Law, Insurance Law

OWNER OF PROPERTY WHERE THE EMPLOYEE SLIPPED AND FELL WAS NOT AN ADDITIONAL INSURED UNDER THE EMPLOYER’S POLICY, EMPLOYER FURNISHED THE CONDITION FOR THE SLIP AND FALL BUT DID NOT PROXIMATELY CAUSE THE SLIP AND FALL (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that Pioneer Middle School was not an additional insured under the policy which insured of the employer (Kleanerz) of Ayers, who slipped and fell on ice and snow in the Pioneer Middle School parking law:

We conclude that Pioneer is not an additional insured under the policy inasmuch as Ayers's injuries were not proximately caused by Kleanerz. The policy's additional insured endorsement provides that the injury must have been “caused, in whole or in part, by” Kleanerz's conduct, and thus it requires that the insured must have been a proximate cause of the injury, not merely a “but for” cause … . Here, it is undisputed that Kleanerz was not responsible for clearing ice and snow from the parking lot and that Ayers's fall resulted from her slipping on the ice or snow. Although Pioneer contends that Kleanerz caused the accident by instructing Ayers to exit Pioneer Middle School through a door located near the area where Ayers subsequently slipped, Kleanerz's instructions to Ayers “merely furnished the occasion for the injury” by “fortuitously plac[ing Ayers] in a location or position in which . . . [an alleged] separate instance of negligence acted independently upon [her] to produce harm” … , and were not a cause of the accident triggering the additional insured clause of the policy. Pioneer Cent. Sch. Dist. v Preferred Mut. Ins. Co., 2018 NY Slip Op 06682, Fourth Dept 10-5-18

INSURANCE LAW (OWNER OF PROPERTY WHERE THE EMPLOYEE SLIPPED AND FELL WAS NOT AN ADDITIONAL INSURED UNDER THE EMPLOYER'S POLICY, EMPLOYER FURNISHED THE CONDITION FOR THE SLIP AND FALL BUT DID NOT PROXIMATELY CAUSE THE SLIP AND FALL (FOURTH DEPT))/CONTRACT LAW (INSURANCE LAW, OWNER OF PROPERTY WHERE THE EMPLOYEE SLIPPED AND FELL WAS NOT AN ADDITIONAL INSURED UNDER THE EMPLOYER'S POLICY, EMPLOYER FURNISHED THE CONDITION FOR THE SLIP AND FALL BUT DID NOT PROXIMATELY CAUSE THE SLIP AND FALL (FOURTH DEPT))/ADDITIONAL INSURED (INSURANCE LAW, OWNER OF PROPERTY WHERE THE EMPLOYEE SLIPPED AND FELL WAS NOT AN ADDITIONAL INSURED UNDER THE EMPLOYER'S POLICY, EMPLOYER FURNISHED THE CONDITION FOR THE SLIP AND FALL BUT DID NOT PROXIMATELY CAUSE THE SLIP AND FALL (FOURTH DEPT))

October 5, 2018

Contract Law, Employment Law

THE FIRST EMPLOYMENT AGREEMENT INCLUDED A FORUM SELECTION CLAUSE, THE SECOND AGREEMENT REQUIRED ARBITRATION, THE SECOND AGREEMENT SUPERSEDED THE FIRST (FIRST DEPT).

The First Department, reversing Supreme Court, determined that an agreement signed after the employment agreement superseded the employment agreement. Therefore the dispute was subject to arbitration based upon the second agreement:

After [plaintiff] and defendant Mirae Asset Securities (USA) Inc. had entered into an employment agreement which contained a forum selection clause, plaintiff executed a “Uniform Application for Securities Industry Registration or Transfer” (Form U-4), which contains an arbitration provision. We find that the Form U-4 supersedes the employment agreement and therefore that the parties' dispute must be arbitrated.

This dispute is governed by state contract law principles … . The first principle is that “a subsequent contract regarding the same matter will supersede the prior contract” … . The determination whether a subsequent agreement is superseding is fact-driven … . Plaintiff's execution of a valid U-4 Form constituted an agreement to limit his contractual remedies when he signed the U-4 Form… . The U-4 Form encompasses the same employment-related disputes as were addressed in the employment agreement. Thus, the forum selection clause was effectively extinguished … . Hyuncheol Hwang v Mirae Asset Sec. (USA) Inc., 2018 NY Slip Op 06485, First Dept 10-2-18

EMPLOYMENT LAW (THE FIRST EMPLOYMENT AGREEMENT INCLUDED A FORUM SELECTION CLAUSE, THE SECOND AGREEMENT REQUIRED ARBITRATION, THE SECOND AGREEMENT SUPERSEDED THE FIRST (FIRST DEPT))/CONTRACT LAW (EMPLOYMENT LAW, THE FIRST EMPLOYMENT AGREEMENT INCLUDED A FORUM SELECTION CLAUSE, THE SECOND AGREEMENT REQUIRED ARBITRATION, THE SECOND AGREEMENT SUPERSEDED THE FIRST (FIRST DEPT))/FORUM SELECTION CLAUSE (THE FIRST EMPLOYMENT AGREEMENT INCLUDED A FORUM SELECTION CLAUSE, THE SECOND AGREEMENT REQUIRED ARBITRATION, THE SECOND AGREEMENT SUPERSEDED THE FIRST (FIRST DEPT))/ARBITRATION CLAUSE (THE FIRST EMPLOYMENT AGREEMENT INCLUDED A FORUM SELECTION CLAUSE, THE SECOND AGREEMENT REQUIRED ARBITRATION, THE SECOND AGREEMENT SUPERSEDED THE FIRST (FIRST DEPT))

October 2, 2018

Contract Law

BREACH OF DUTY CAUSE OF ACTION WAS DUPLICATIVE OF THE BREACH OF CONTRACT CAUSE OF ACTION AND WAS PROPERLY DISMISSED, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department noted that a breach of duty cause of action was duplicative of the breach of contract action and was properly dismissed:

The cause of action alleging breach of duty was duplicative of the breach of contract cause of action. “[A] simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated” … . Junger v John V. Dinan Assoc., Inc., 2018 NY Slip Op 06232, Second Dept 9-26-18

CONTRACT LAW (BREACH OF DUTY CAUSE OF ACTION WAS DUPLICATIVE OF THE BREACH OF CONTRACT CAUSE OF ACTION AND WAS PROPERLY DISMISSED, CRITERIA EXPLAINED (SECOND DEPT))/BREACH OF DUTY (CONTRACT LAW, BREACH OF DUTY CAUSE OF ACTION WAS DUPLICATIVE OF THE BREACH OF CONTRACT CAUSE OF ACTION AND WAS PROPERLY DISMISSED, CRITERIA EXPLAINED (SECOND DEPT))

September 26, 2018

Contract Law, Partnership Law

NOTICE PURPORTING TO DISSOLVE A PARTNERSHIP WAS A NULLITY BECAUSE IT DID NOT COMPORT WITH THE RELEVANT PROVISIONS OF THE PARTNERSHIP AGREEMENT (FIRST DEPT).

The First Department determined the notice issued by two partners purporting to dissolve the partnership was a nullity because the notice did not comport with the relevant provisions of the partnership agreement:

On October 15, 2015, two of the partners issued a notice purporting to withdraw from and dissolve the partnerships, pursuant to New York Partnership Law § 62(1)(b), “which,” the notice said, “provides that a partnership is terminable at will on notice.” * * *

“New York's Partnership Law creates default provisions that fill gaps in partnership agreements, but where the agreement clearly states the means by which a partnership will dissolve, or other aspects of partnership dissolution, it is the agreement that governs the change in relations between partners and the future of the business” … . Where, as here, a partnership agreement contains provisions governing the dissolution of the partnership by the will of the partners, ordinary contract principles apply … , and a notice by a partner or partners to dissolve a partnership in contravention of the partnership agreement's dissolution provisions is a legal nullity and does not effect a dissolution of the partnership. Wiener v Weissman, 2018 NY Slip Op 06205, First Dept 9-26-18

PARTNERSHIP LAW (NOTICE PURPORTING TO DISSOLVE A PARTNERSHIP WAS A NULLITY BECAUSE IT DID NOT COMPORT WITH THE RELEVANT PROVISIONS OF THE PARTNERSHIP AGREEMENT (FIRST DEPT))/CONTRACT LAW (PARTNERSHIP LAW, NOTICE PURPORTING TO DISSOLVE A PARTNERSHIP WAS A NULLITY BECAUSE IT DID NOT COMPORT WITH THE RELEVANT PROVISIONS OF THE PARTNERSHIP AGREEMENT (FIRST DEPT))

September 25, 2018

Contract Law

PLAINTIFF, AS A THIRD PARTY BENEFICIARY OF THE AGREEMENT, HAD STANDING TO BRING THE BREACH OF CONTRACT ACTION, DESPITE THE BOILERPLATE EXCLUSION OF THIRD PARTY BENEFICIARIES (SECOND DEPT).

The First Department, in a full-fledged opinion by Justice Singh too complex to fairly summarize here, reversing Supreme Court, determined that plaintiff was a third-party beneficiary to the contract, despite the boilerplate exclusion of third-party beneficiaries:

…[W]e reject defendant's contention that plaintiff does not have standing to sue for breach of the [agreement] because it is not a party to that agreement. Plaintiff is an intended third-party beneficiary of the [agreement], as that agreement explicitly refers to plaintiff and grants it enforceable rights. Accordingly, the [agreement's] boilerplate exclusion of third-party beneficiaries does not apply to plaintiff, and this action may not be properly dismissed for lack of standing … . MPEG LA, LLC v Samsung Elecs. Co., Ltd., 2018 NY Slip Op 06147, First Dept 9-19-18

CONTRACT LAW (PLAINTIFF, AS A THIRD PARTY BENEFICIARY OF THE AGREEMENT, HAD STANDING TO BRING THE BREACH OF CONTRACT ACTION, DESPITE THE BOILERPLATE EXCLUSION OF THIRD PARTY BENEFICIARIES (FIRST DEPT))/THIRD PARTY BENEFICIARY (CONTRACT LAW, PLAINTIFF, AS A THIRD PARTY BENEFICIARY OF THE AGREEMENT, HAD STANDING TO BRING THE BREACH OF CONTRACT ACTION, DESPITE THE BOILERPLATE EXCLUSION OF THIRD PARTY BENEFICIARIES (FIRST DEPT))

September 19, 2018