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HUSBAND ENTITLED TO REVOKE HIS CONSENT TO USE OF A FROZEN EMBRYO, EMBRYO AWARDED TO HUSBAND FOR SOLE PURPOSE OF DISPOSAL IN THIS DIVORCE ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff husband, in this divorce action, was entitled to the frozen embryo for the sole purpose of disposal:

… [Husband and wife] engaged the services of [New Hope Fertility Center, NHF] in the hope of conceiving a child via implantation of cryopreserved embryos in the wife’s uterus. … [T]hey signed an agreement with NHF entitled “Consent for the Cryopreservation of Human Embryo(s)” (the Consent Agreement). …

Paragraph 7 of the Consent Agreement is entitled “Voluntary Participation” and provides “I/We may withdraw my/our consent and discontinue participation at any time . . . .” Paragraph 16, entitled “Authorization,” provides, “This consent will remain in effect until such time as I notify NHF in writing of my/our wish to revoke such consent.” …

In Kass v Kass (91 NY2d 554 [1998]), the Court of Appeals determined that agreements between donors participating in IVF [in vitro fertilization] should be enforced pursuant to general rules of contract interpretation. … The Consent Agreement specifies that participation in the procedures involving cryopreservation of embryos is voluntary and that either party may withdraw consent at any time. … The provisions permitting either party to revoke consent are not limited to cryopreservation, but permit either party to withdraw consent to participation in the entire IVF process. … [T]he Consent Agreement does not indicate that the court has plenary authority to determine ownership of the embryo in the event of divorce … . Finkelstein v Finkelstein, 2018 NY Slip Op 03926, First Dept 6-5-18

​FAMILY LAW (IN VITRO FERTILIZATION, FROZEN EMBRYO, HUSBAND ENTITLED TO REVOKE HIS CONSENT TO USE OF A FROZEN EMBRYO, EMBRYO AWARDED TO HUSBAND FOR SOLE PURPOSE OF DISPOSAL IN THIS DIVORCE ACTION (FIRST DEPT))/CONTRACT LAW (FAMILY LAW, IN VITRO FERTILIZATION, FROZEN EMBRYO, HUSBAND ENTITLED TO REVOKE HIS CONSENT TO USE OF A FROZEN EMBRYO, EMBRYO AWARDED TO HUSBAND FOR SOLE PURPOSE OF DISPOSAL IN THIS DIVORCE ACTION (FIRST DEPT))/IN VITRO FERTILIZATION (FAMILY LAW. FROZEN EMBRYO, HUSBAND ENTITLED TO REVOKE HIS CONSENT TO USE OF A FROZEN EMBRYO, EMBRYO AWARDED TO HUSBAND FOR SOLE PURPOSE OF DISPOSAL IN THIS DIVORCE ACTION (FIRST DEPT))/EMBRYO, FROZEN (FAMILY LAW, IN VITRO FERTILIZATION, HUSBAND ENTITLED TO REVOKE HIS CONSENT TO USE OF A FROZEN EMBRYO, EMBRYO AWARDED TO HUSBAND FOR SOLE PURPOSE OF DISPOSAL IN THIS DIVORCE ACTION (FIRST DEPT))

PLAINTIFF’S FAILURE TO SATISFY A NON-MATERIAL CONDITION PRECEDENT DID NOT JUSTIFY THE AWARD OF SUMMARY JUDGMENT TO DEFENDANT (FIRST DEPT).

The First Department, reversing Supreme Court, determined the failure to satisfy a non-material condition precedent, which did not prejudice the defendant, did not justify summary judgment in favor of defendant:

It is undisputed that plaintiff failed to satisfy a condition precedent to recovering disputed costs for extra work on which defendant forced price reductions. Although plaintiff gave detailed written statements contesting defendant’s determinations of the fair and reasonable value of the extra work pursuant to section 8.01(B), it failed to give verified statements pursuant to section 11.03(A) of the contractual General Conditions.

Nevertheless, we conclude that plaintiff should be excused from the non-occurrence of that condition, because otherwise it would suffer a disproportionate forfeiture, and the occurrence of the condition was not a material part of the agreed exchange … . Defendant does not argue that plaintiff failed to document the costs of the claimed extra work, to provide timely notice of its claims for extra work, or to provide timely notice of its objections to defendant’s rejections of and price reductions on the claimed extra work. Nor does it contend other than in conclusory terms that plaintiff’s failure to submit verified written statements was prejudicial to it. Moreover, the cases on which defendant relies did not consider whether the failure to strictly comply with a condition precedent should be excused to avoid a disproportionate forfeiture under the circumstances of a case such as this, where the noncompliance is de minimis and defendant has shown no prejudice whatsoever … . Danco Elec. Contrs., Inc. v Dormitory Auth. of the State of N.Y., 2018 NY Slip Op 03935, First Dept 6-5-18

​CONTRACT LAW (PLAINTIFF’S FAILURE TO SATISFY A NON-MATERIAL CONDITION PRECEDENT DID NOT JUSTIFY THE AWARD OF SUMMARY JUDGMENT TO DEFENDANT (FIRST DEPT))/CONDITION PRECEDENT (CONTRACT LAW, PLAINTIFF’S FAILURE TO SATISFY A NON-MATERIAL CONDITION PRECEDENT DID NOT JUSTIFY THE AWARD OF SUMMARY JUDGMENT TO DEFENDANT (FIRST DEPT))

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EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT).

The Second Department determined the writing and execution requirements for an out-of-court stipulation of settlement were not met by an e-mail sent by the defendant in a slip and fall case:

To be enforceable, a stipulation of settlement must conform to the criteria set forth in CPLR 2104 … . Where, as in the instant case, counsel for the parties did not enter into a settlement in open court, an “agreement between parties or their attorneys relating to any matter in an action . . . is not binding upon a party unless it is in a writing subscribed by him or his attorney” … . The plain language of CPLR 2104 requires that “the agreement itself must be in writing, signed by the party (or attorney) to be bound” … . An email message may be considered “subscribed” as required by CPLR 2104, and, therefore, capable of enforcement, where it “contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature” … .

Here, the email confirming the settlement agreement was sent by counsel for the party seeking to enforce the agreement, [defendant]. There is no email subscribed by the plaintiff, who is the party to be charged, or by her former attorney. In the absence of a writing subscribed by the plaintiff or her attorney, the settlement agreement is unenforceable against the plaintiff … . Kataldo v Atlantic Chevrolet Cadillac, 2018 NY Slip Op 03669, Second Dept 5-23-18

​CIVIL PROCEDURE (STIPULATION OF SETTLEMENT, EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT))/STIPULATION OF SETTLEMENT (EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT))/SETTLEMENT, STIPULATION OF (EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT))/CPLR 2014 (STIPULATION OF SETTLEMENT, EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT))/NEGLIGENCE (STIPULATION OF SETTLEMENT, EMAIL DID NOT MEET THE REQUIREMENTS OF CPLR 2104 FOR AN OUT OF COURT STIPULATION OF SETTLEMENT, SETTLEMENT AGREEMENT NOT ENFORCEABLE (SECOND DEPT))

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DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT).

The First Department determined plaintiffs’ cause of action for conversion should not have been dismissed and the cause action for fraud in the inducement was based upon non-actionable future conduct or events and non-actionable opinion. Plaintiffs hired defendant for extensive renovation work. Plaintiffs terminated the contract based upon defendant’s allegedly fraudulent requests for payment which were not used for the claimed purposes. When plaintiffs terminated the contract they demanded the return of $400,000 of the $840,000 they had paid. Defendant returned only about $85,000 and did not provide an accounting:

When plaintiffs terminated the contract mid-construction and demanded a return of $400,000 of the $840,000 they had paid, defendant allegedly returned only $84,622.65, without providing an accounting, and allegedly diverted the balance of such monies to his personal use. These allegations sufficiently state a cause of action for conversion … .

Plaintiffs’ cause of action alleging fraud in the inducement was properly dismissed, as it is founded upon non-actionable promises of future conduct or events, rather than present fact … and non-actionable opinion of defendant as to his entity’s resources and capability of undertaking the luxury renovation work sought by plaintiffs … . Yablon v Stern, 2018 NY Slip Op 03650, First Dept 5-22-18

​CONTRACT LAW (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))/CONVERSION (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))/FRAUD IN THE INDUCEMENT (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))

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ALTHOUGH A PARTY WHO SIGNS AN AGREEMENT IS USUALLY DEEMED TO HAVE READ IT, A RELATIONSHIP OF TRUST AND CONFIDENCE BETWEEN THE PARTIES MAY ALLOW ONE PARTY TO RELY ON THE ASSURANCES OF THE OTHER, A CERTIFIED BUT UNSIGNED TRANSCRIPT OF A DEPOSITION WAS ADMISSIBLE BECAUSE IT HAD BEEN TIMELY MAILED TO OPPOSING COUNSEL (FIRST DEPT).

The First Department determined, although the usual rule is one who signs an agreement is deemed to have read it, the rule may not apply when there is a relationship of trust and confidence between the parties and reliance on the assurances of a party (here the parties to a trust agreement were father and son). Plaintiff alleged he was fraudulently induced to sign the agreement. The court noted that a certified, unsigned transcript of a deposition was admissible because the transcript had been mailed to opposing counsel more than 60 days before the motion was brought:

Plaintiff’s claim … is that defendant led him to believe that the documentation that defendant presented for his signature (a trust agreement and two deeds) was for the conveyance of [one condominium unit] only. In fact, the paperwork provided for the conveyance of [two condominium units] to the trust. Ordinarily a person is bound by the terms of an instrument he or she signs, and may not claim to have justifiably relied on false representations concerning the contents of a document that he or she failed to read without valid excuse … . In this case, however, whether this principle applies to bar plaintiff’s fraudulent inducement claim … cannot be determined as a matter of law because plaintiff alleges that he and defendant, his son, had a relationship of trust and confidence … . Tsai Chung Chao v Chao, 2018 NY Slip Op 03620, First Dept 5-17-18

​CONTRACT LAW (ALTHOUGH A PARTY WHO SIGNS AN AGREEMENT IS USUALLY DEEMED TO HAVE READ IT, A RELATIONSHIP OF TRUST AND CONFIDENCE BETWEEN THE PARTIES MAY ALLOW ONE PARTY TO RELY ON THE ASSURANCES OF THE OTHER, A CERTIFIED BUT UNSIGNED TRANSCRIPT OF A DEPOSITION WAS ADMISSIBLE BECAUSE IT HAD BEEN TIMELY MAILED TO OPPOSING COUNSEL (FIRST DEPT))/FRAUD (FRAUDULENT INDUCEMENT, ALTHOUGH A PARTY WHO SIGNS AN AGREEMENT IS USUALLY DEEMED TO HAVE READ IT, A RELATIONSHIP OF TRUST AND CONFIDENCE BETWEEN THE PARTIES MAY ALLOW ONE PARTY TO RELY ON THE ASSURANCES OF THE OTHER, A CERTIFIED BUT UNSIGNED TRANSCRIPT OF A DEPOSITION WAS ADMISSIBLE BECAUSE IT HAD BEEN TIMELY MAILED TO OPPOSING COUNSEL (FIRST DEPT))/CIVIL PROCEDURE (A CERTIFIED BUT UNSIGNED TRANSCRIPT OF A DEPOSITION WAS ADMISSIBLE BECAUSE IT HAD BEEN TIMELY MAILED TO OPPOSING COUNSEL (FIRST DEPT))/DEPOSITIONS (A CERTIFIED BUT UNSIGNED TRANSCRIPT OF A DEPOSITION WAS ADMISSIBLE BECAUSE IT HAD BEEN TIMELY MAILED TO OPPOSING COUNSEL (FIRST DEPT))

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PARTIES’ CONDUCT AFTER THE PURPORTED TERMINATION OF THE SHAREHOLDERS’ AGREEMENT COULD INDICATE THE PARTIES INTENDED THE CONTRACT TO CONTINUE (IMPLIED CONTRACT), DEFENDANT’S MOTION TO DISMISS THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the parties’ conduct after a purported termination of a shareholders’ agreement could indicate the parties intended the contract to continue (an implied contract). Defendant’s motion to dismiss this breach of contract action should not have been granted:

“On a motion to dismiss pursuant to CPLR 3211, we construe the pleadings liberally, accept the allegations in the complaint to be true, give [the] plaintiff[] the benefit of any favorable inferences and ‘determine only whether the facts as alleged fit within any cognizable legal theory'”… . Supreme Court held that defendant could not have breached the shareholders’ agreement in 2016, as the agreement explicitly terminated when he became the “only . . . remaining [s]hareholder” of the dealerships in 2007. It is true that “[w]hen a contract is terminated, such as by expiration of its own terms, the rights and obligations thereunder cease” … . Nevertheless, “the conduct of parties to a contract following its termination may demonstrate that they intended to create an implied contract to be governed by the terms of the expired contract, and whether there was a ‘meeting of the minds’ required for formation of such an enforceable agreement is generally a question of fact” … . It is undisputed that defendant continued to make monthly payments as required by the shareholders’ agreement after the shares were conveyed, and this ongoing compliance with the agreement’s terms required further inquiry into “the conduct of the parties to determine whether the terms of the [shareholders’ agreement] continue[d] to apply” … . Supreme Court accordingly erred in concluding, as a matter of law, that defendant could not have breached the terms of the shareholders’ agreement due to its termination. Harris v Reagan, 2018 NY Slip Op 03408, Third Dept 5-10-18

​CONTRACT LAW (PARTIES’ CONDUCT AFTER THE PURPORTED TERMINATION OF THE SHAREHOLDERS’ AGREEMENT COULD INDICATE THE PARTIES INTENDED THE CONTRACT TO CONTINUE (IMPLIED CONTRACT), DEFENDANT’S MOTION TO DISMISS THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT))/CIVIL PROCEDURE (MOTION TO DISMISS, PARTIES’ CONDUCT AFTER THE PURPORTED TERMINATION OF THE SHAREHOLDERS’ AGREEMENT COULD INDICATE THE PARTIES INTENDED THE CONTRACT TO CONTINUE (IMPLIED CONTRACT), DEFENDANT’S MOTION TO DISMISS THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT))/CPLR 3211(PARTIES’ CONDUCT AFTER THE PURPORTED TERMINATION OF THE SHAREHOLDERS’ AGREEMENT COULD INDICATE THE PARTIES INTENDED THE CONTRACT TO CONTINUE (IMPLIED CONTRACT), DEFENDANT’S MOTION TO DISMISS THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT))/IMPLIED CONTRACT (PARTIES’ CONDUCT AFTER THE PURPORTED TERMINATION OF THE SHAREHOLDERS’ AGREEMENT COULD INDICATE THE PARTIES INTENDED THE CONTRACT TO CONTINUE (IMPLIED CONTRACT), DEFENDANT’S MOTION TO DISMISS THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT))

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ALTHOUGH THE DEFENDANT NEW YORK COMPANY IS A WHOLLY OWNED SUBSIDIARY OF AN ISRAELI COMPANY, THE TWO ENTITIES OPERATED INDEPENDENTLY SUCH THAT NEW YORK COULD NOT EXERCISE JURISDICTION OVER THE ISRAELI COMPANY, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT).

The First Department found that a defendant company, IAI, which operates in Israel, was not subject to personal jurisdiction in New York under the theory that defendant IAINA, which operates in New York, was a department of IAI. The court explained the relevant criteria. The court further held that a common interest privilege (with respect to alleged defamatory remarks regarding the plaintiff, defendant IAINA’s employee) does not insulate defendant from the alleged breach of a contractual non-disparagement clause:

Defendants established that IAI North America, Inc. (IAINA), which does business in the State of New York, is not a mere department of IAI, which operates primarily in Israel, and therefore that jurisdiction over IAINA is not jurisdiction over IAI … . The key executive personnel of the subsidiary were not assigned to their positions by the foreign parent, the subsidiary trained its own personnel, the parent did not write and publish all of the sales literature used by the subsidiary, and the subsidiary prepared its own financial statements … . … While IAINA is a wholly owned subsidiary of IAI, common ownership is “intrinsic to the parent-subsidiary relationship and, by [itself], not determinative”… . IAINA showed that it observed corporate formalities. Nothing in plaintiff’s affirmation indicates that IAI interferes in the selection and assignment of IAINA’s executive personnel, and the CEO of IAINA denied this. He also denied that IAI controlled IAINA’s marketing and operational policies. Plaintiff claimed that IAI had control over the approval of IAINA’s annual budget during the 11 years he worked at IAINA. However, this does not suffice … . …

IAINA … contends that the cause of action for breach of a non-disparagement clause should be dismissed because, even if it made disparaging remarks about plaintiff (its former employee), the remarks were privileged. However, the common interest privilege it relies on — which is part of the law of defamation — does not apply to a claim for breach of a non-disparagement clause … . Wolberg v IAI N. Am., Inc., 2018 NY Slip Op 03321, First Dept 5-8-18

CIVIL PROCEDURE (ALTHOUGH THE DEFENDANT NEW YORK COMPANY IS A WHOLLY OWNED SUBSIDIARY OF AN ISRAELI COMPANY, THE TWO ENTITIES OPERATED INDEPENDENTLY SUCH THAT NEW YORK COULD NOT EXERCISE JURISDICTION OVER THE ISRAELI COMPANY, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/JURISDICTION (CIVIL PROCEDURE, CORPORATIONS, ALTHOUGH THE DEFENDANT NEW YORK COMPANY IS A WHOLLY OWNED SUBSIDIARY OF AN ISRAELI COMPANY, THE TWO ENTITIES OPERATED INDEPENDENTLY SUCH THAT NEW YORK COULD NOT EXERCISE JURISDICTION OVER THE ISRAELI COMPANY, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/CORPORATIONS (JURISDICTION, ALTHOUGH THE DEFENDANT NEW YORK COMPANY IS A WHOLLY OWNED SUBSIDIARY OF AN ISRAELI COMPANY, THE TWO ENTITIES OPERATED INDEPENDENTLY SUCH THAT NEW YORK COULD NOT EXERCISE JURISDICTION OVER THE ISRAELI COMPANY, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/DEFAMATION (NON-DISPARAGEMENT CLAUSE, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/QUALIFIED PRIVILEGE (DEFAMATION, NON-DISPARAGEMENT CLAUSE, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/NON-DISPARAGEMENT CLAUSE (DEFAMATION, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/CONTRACT LAW (DEFAMATION, NON-DISPARAGEMENT CLAUSE, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/PRIVILEGE (DEFAMATION, COMMON INTEREST,  A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))/COMMON INTEREST PRIVILEGE (DEFAMATION, A QUALIFIED PRIVILEGE RE DEFAMATORY REMARKS ALLEGEDLY MADE BY DEFENDANT DOES NOT INSULATE THE DEFENDANT FROM A CAUSE OF ACTION BASED UPON BREACH OF A CONTRACTUAL NON-DISPARAGEMENT CLAUSE (FIRST DEPT))

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COMPLAINT DID NOT SUFFICIENTLY ALLEGE DEFENDANT HAD WAIVED THE REQUIREMENT OF WRITTEN NOTICE TO EXERCISE THE OPTION TO RENEW THE LEASE, PROPOSED AMENDMENT OF THE COMPLAINT WAS PALPABLY WITHOUT MERIT, MOTION TO AMEND WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT).

The Second Department determined the allegations in the complaint were insufficient to allege there was a waiver of the requirement that the option to renew the lease be in writing. Therefore the complaint was properly dismissed for failure to state a cause of action. The motion to amend the complaint was properly denied because the amendment was palpably insufficient or patently devoid of merit. The proposed amendment did not allege the existence of a specific agreement with the defendant. However, the motion to amend was not frivolous conduct and Supreme Court should not have awarded sanctions to defendant:

“Although a party may waive his or her rights under an agreement or decree, waiver is not created by negligence, oversight, or thoughtlessness, and cannot be inferred from mere silence” … . Moreover, with respect to the plaintiff’s allegations that [defendant’s representative] stated that the defendant would not object to the assignment [of the lease to the prospective purchaser of plaintiff’s business], subject to, inter alia, a credit check, “a mere agreement to agree, in which a material term is left for future negotiations, is unenforceable” … . …

The plaintiff’s proposed amended complaint was palpably insufficient and devoid of merit. The plaintiff failed to allege that (1) it actually came to an agreement with the proposed purchaser six months prior to the expiration of the lease, (2) it gave the defendant notice of its intention to exercise the option within six months of the expiration of the lease, irrespective of whether it came to an agreement with the proposed purchaser, or (3) the proposed purchaser was creditworthy. …

… [T]he plaintiff’s conduct in moving for leave to amend the complaint and/or replead was not, under the circumstances, “frivolous” within the meaning of 22 NYCRR 130-1.1(c) … . NHD Nigani, LLC v Angelina Zabel Props., Inc., 2018 NY Slip Op 03135, Second Dept 5-2-18

​CONTRACT LAW (COMPLAINT DID NOT SUFFICIENTLY ALLEGE DEFENDANT HAD WAIVED THE REQUIREMENT OF WRITTEN NOTICE TO EXERCISE THE OPTION TO RENEW THE LEASE, PROPOSED AMENDMENT OF THE COMPLAINT WAS PALPABLY WITHOUT MERIT, MOTION TO AMEND WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT))/LANDLORD-TENANT (COMPLAINT DID NOT SUFFICIENTLY ALLEGE DEFENDANT HAD WAIVED THE REQUIREMENT OF WRITTEN NOTICE TO EXERCISE THE OPTION TO RENEW THE LEASE, PROPOSED AMENDMENT OF THE COMPLAINT WAS PALPABLY WITHOUT MERIT, MOTION TO AMEND WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT))/CIVIL PROCEDURE (SANCTIONS, FRIVOLOUS CONDUCT, MOTION TO AMEND THE COMPLAINT WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT))/SANCTIONS (FRIVOLOUS CONDUCT, MOTION TO AMEND THE COMPLAINT WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT))/FRIVOLOUS CONDUCT (MOTION TO AMEND THE COMPLAINT WAS NOT FRIVOLOUS CONDUCT WARRANTING SANCTIONS (SECOND DEPT))

DEFENDANTS’ OWN MOTION PAPERS RAISED A QUESTION OF FACT WHETHER THE PARTIES INTENDED TO BE BOUND BY AN UNSIGNED LLC OPERATING AGREEMENT, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT PROPERLY DENIED WITHOUT REFERENCE TO THE OPPOSING PAPERS (SECOND DEPT).

The Second Department determined defendants’ own motion papers raised a question of fact whether defendants intended to be bound by an unexecuted limited liability company operating agreement. Therefore defendants’ motion for summary judgment in this breach of contract action was properly denied without reference to the opposing papers:

Contrary to the defendants’ contention, the agreement does not, on its face, demonstrate that the parties did not intend to be bound absent formal execution … . Moreover, in support of their motion, the defendants submitted emails exchanged between the parties and their respective attorneys. The defendants failed to eliminate triable issues of fact as to whether the parties had agreed upon the major terms of the agreement and whether the parties began to perform the agreement. Accordingly, they failed to establish, prima facie, that the parties did not intend to be bound by the terms of the agreement … . Therefore, the defendants were not entitled to summary judgment, regardless of the sufficiency of the plaintiffs’ opposition papers … . 223 Sam, LLC v 223 15th St., LLC, 2018 NY Slip Op 03118, Second Dept 5-2-18

​CONTRACT LAW (UNEXECUTED AGREEMENT, DEFENDANTS’ OWN MOTION PAPERS RAISED A QUESTION OF FACT WHETHER THE PARTIES INTENDED TO BE BOUND BY AN UNSIGNED LLC OPERATING AGREEMENT, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT PROPERLY DENIED (SECOND DEPT))/UNEXECUTED CONTRACTS (DEFENDANTS’ OWN MOTION PAPERS RAISED A QUESTION OF FACT WHETHER THE PARTIES INTENDED TO BE BOUND BY AN UNSIGNED LLC OPERATING AGREEMENT, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT PROPERLY DENIED (SECOND DEPT))/UNSIGNED CONTRACTS (DEFENDANTS’ OWN MOTION PAPERS RAISED A QUESTION OF FACT WHETHER THE PARTIES INTENDED TO BE BOUND BY AN UNSIGNED LLC OPERATING AGREEMENT, DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT PROPERLY DENIED (SECOND DEPT))

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ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the arbitration award by a Rabbinical Court in this divorce proceeding should not have been vacated. The fact that the Equitable Distribution Law was not followed did not warrant vacation of the award because parties can elect to deviate from the Domestic Relations Law (no violation of public policy). The Second Department further held that unconscionability is not a statutory ground for reviewing or setting aside an arbitration award:

Judicial review of an arbitration award is extremely limited (see CPLR 7510, 7511…). “Outside of the narrowly circumscribed exceptions of CPLR 7511, courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact'” … .

“An award is irrational only where there is no proof whatever to justify the award” … . Moreover, that showing must be made by clear and convincing evidence … . Here, the very limited record does not even reveal what evidence was submitted to the arbitrators regarding, among other things, the parties’ assets and financial condition. Therefore, the Supreme Court lacked any basis upon which to conclude that the award was irrational.

“An arbitration award violates public policy only where a court can conclude, without engaging in any extended fact-finding or legal analysis, that a law prohibits the particular matters to be decided by arbitration, or where the award itself violates a well-defined constitutional, statutory, or common law of this state” … . …

… [W]e disagree with the Supreme Court’s determination that the … award was unconscionable on its face. Unconscionability is a doctrine grounded in contract law, which can be applied to invalidate an agreement to arbitrate …  or a marital agreement entered into before or during the marriage … . The doctrine, which requires proof of both procedural unconscionability in the formation of the contract, as well as substantive unconscionability in the terms of the contract  … , is not a statutory ground upon which an arbitration award may be reviewed, let alone set aside… . If the arbitral procedure was tainted by corruption, fraud, or misconduct, or the partiality of an arbitrator appointed as a neutral, the proper remedy is to move to vacate the award pursuant to CPLR 7511(b)(1)(i) or (ii).  Zar v Yaghoobzar, 2018 NY Slip Op 03170, Second Dept 5-2-18

​ARBITRATION (FAMILY LAW, RELIGION, ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/FAMILY LAW (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/CONTRACT LAW (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/RELIGION (RABBINICAL COURT, ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/RABBINICAL COURT (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))

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