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IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT).

The Third Department explained the concept of a design-build “turnkey” project, noting that the property owner is generally not a third-party beneficiary of the contracts entered into by the entity in charge of the design-build “turnkey” project (here RBG):

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It is undisputed that neither plaintiff entered into a contract with RZA nor RDI. Rather, RBG entered into contracts with each of those entities, as would be expected in a turnkey project. “In turnkey or design-build construction projects, an owner contracts with one entity to both design and build the project and the turnkey builder is responsible for every phase of the construction from final design through subcontracting, construction, finishing, and testing. The design-builder generally cannot shift liability and is the single point of responsibility under a design-build contract, because” the design-builder is responsible for all phases of construction, including “the responsibility for holding the contracts with its trade contractors” … .

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Generally, a party may not assert a cause of action for breach of contract against a person or entity with whom it is not in privity … . Without a contractual relationship and the resulting privity, plaintiffs could proceed against RZA or RDI only if plaintiffs were third-party beneficiaries of RBG’s contract with those entities or had the functional equivalent of privity… .”[O]rdinarily, construction contracts are not construed as conferring third-party beneficiary enforcement rights” … . Luckow v RBG Design-Build, Inc., 2017 NY Slip Op 09221, Third Dept 12-28-17

 

CONTRACT LAW (CONSTRUCTION, DESIGN-BUILD, TURNKEY, IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT))/THIRD PARTY BENEFICIARY (CONTRACT LAW, CONSTRUCTION, DESIGN-BUILD, TURNKEY, IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT))/CONSTRUCTION (CONTRACT LAW, DESIGN-BUILD, TURNKEY, IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT))/DESIGN-BUILD (CONTRACT LAW, CONSTRUCTION, DESIGN-BUILD, TURNKEY, IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT))/TURNKEY PROJECT (CONTRACT LAW, CONSTRUCTION, DESIGN-BUILD, TURNKEY, IN A DESIGN-BUILD TURNKEY PROJECT, A PROPERTY OWNER IS NOT A THIRD PARTY BENEFICIARY OF CONTRACTS ENTERED INTO BY THE TURNKEY BUILDER IN CHARGE OF THE PROJECT (THIRD DEPT))

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SUPREME COURT DOES NOT HAVE THE POWER TO CONSIDER THE MERITS OF AN ARBITRATION AWARD, AWARD CONFIRMED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the arbitrator had not exceeded her authority in interpreting the collective bargaining agreement (CBA) to require full medical coverage for retiring firefighters. The Fourth Department explained the limited review powers of a court with respect to arbitration awards:

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“It is well settled that judicial review of arbitration awards is extremely limited”… . The court must vacate an arbitration award where the arbitrator exceeds a limitation on his or her power as set forth in the CBA … . The court, however, lacks the authority to “examine the merits of an arbitration award and substitute its judgment for that of the arbitrator simply because it believes its interpretation would be the better one”… .

Here, the arbitrator merely interpreted and applied the provisions of the CBA, as she had the authority to do. The court is powerless to set aside that interpretation merely because the court disagrees with it, and we may not countenance such an action. In any event, we conclude that the plain language of the CBA supports the arbitrator’s reasoning. Matter of Lackawanna Professional Fire Fighters Assn., Local 3166, IAFF, AFL-CIO (City of Lackawanna), 2017 NY Slip Op 08994, Fourth Dept 12-22-17

 

ARBITRATION (SUPREME COURT DOES NOT HAVE THE POWER TO CONSIDER THE MERITS OF AN ARBITRATION AWARD, AWARD CONFIRMED (FOURTH DEPT))/EMPLOYMENT LAW (COLLECTIVE BARGAINING AGREEMENT, (SUPREME COURT DOES NOT HAVE THE POWER TO CONSIDER THE MERITS OF AN ARBITRATION AWARD, AWARD CONFIRMED (FOURTH DEPT))/MUNICIPAL LAW (COLLECTIVE BARGAINING AGREEMENT, (SUPREME COURT DOES NOT HAVE THE POWER TO CONSIDER THE MERITS OF AN ARBITRATION AWARD, AWARD CONFIRMED (FOURTH DEPT))/CONTRACT LAW (COLLECTIVE BARGAINING AGREEMENT, SUPREME COURT DOES NOT HAVE THE POWER TO CONSIDER THE MERITS OF AN ARBITRATION AWARD, AWARD CONFIRMED (FOURTH DEPT))

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DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants-sellers, in the context of a motion to dismiss the complaint, were not entitled to keep the down payment based upon plaintiffs’ failure to attend the closing pursuant to a time of the essence demand. Defendants did not demonstrate they were able to close because there were outstanding liens on the property. In addition, there was a question whether defendants had a duty to speak when plaintiffs requested an adjournment of the closing, an issue that cannot be resolved in a motion to dismiss:

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Here, the mortgage indebtedness on the subject property amounted to $11,265,000, nearly three times the portion of the purchase price due at the closing. The defendants only satisfied $8,850,000 of that indebtedness in October 2014, about six months after the law day. Further, in order to close, the defendants were required to clear other liens of up to $25,000, and deliver their corporation formation documents to the title company, which allegedly was not done.

On the question of specific performance, a purchaser seeking specific performance of a real estate contract must demonstrate that he or she was ready, willing, and able to perform on the contract, regardless of any anticipatory breach by the seller … . An anticipatory breach of the contract excuses the purchaser from tendering performance, but does not excuse the purchaser from the requirement that it be ready, willing, and able to perform … .

The defendants were not required to consent to the adjournment of a time-of-the-essence closing … . However, the question here is whether the defendants had any obligation to respond. A duty to speak arises where there is a duty of fair dealing between the parties pursuant to a contractual relationship, and failure to speak is inconsistent with “honest dealings” and misleads another… .. Such a duty may be created by a course of conduct … . Here, the plaintiff was a tenant of the defendants; therefore, there was a prior course of conduct not explored on this record, as well as opportunities to speak and actual communication between the parties with respect to this transaction one day prior to the law day. 533 Park Ave. Realty, LLC v Park Ave. Bldg. & Roofing Supplies, LLC, 2017 NY Slip Op 08802, Second Dept 12-20-17

 

REAL ESTATE (TIME OF THE ESSENCE, DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT))/CONTRACT LAW (REAL ESTATE, TIME OF THE ESSENCE, DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT))/TIME OF THE ESSENCE (REAL ESTATE, DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT))/DUTY TO SPEAK (REAL ESTATE, TIME OF THE ESSENCE, REQUEST FOR ADJOURNMENT, DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT))/SPECIFIC PERFORMANCE (REAL ESTATE, TIME OF THE ESSENCE, DEFENDANTS HAD NOT CLEARED UP LIENS ON THE PROPERTY ON LAW DAY, SO THEY WERE NOT READY TO CLOSE AND WERE NOT ENTITLED TO KEEP PLAINTIFFS’ DOWN PAYMENT, WHETHER DEFENDANTS HAD A DUTY TO SPEAK WHEN PLAINTIFFS ASKED FOR AN ADJOURNMENT OF THE CLOSING CANNOT BE DETERMINED ON A MOTION TO DISMISS (SECOND DEPT)

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ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT).

The Third Department, partially reversing Supreme Court, over a two-justice concurrence, determined plaintiff’s General Business Law (deceptive business practices) cause of action should not have been dismissed for failure to state a cause of action. The plaintiff alleged the defendant insurance company pressured physicians to find no causal connection between the injury and the accident (no-fault claims). The Third Department further found that the claims for consequential damages for emotional distress and punitive damages, stemming from breach of contract, were properly dismissed. The concurring justices argued that the emotional distress was a legitimate damages-claim for breach of contract:

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… [P]laintiff alleged that defendant engaged in a consumer-oriented pattern and practice aimed at the public at large of wrongfully denying claims for no-fault benefits by pressuring the physicians it hired to perform IMEs to provide medical reports that would support the denial of benefits and, further, that she suffered injury as a result of that practice. Such allegations are sufficient to plead a cause of action pursuant to General Business Law § 349 “‘at this early prediscovery stage'”… . …

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 It has long been the rule that “absent a duty upon which liability can be based, there is no right of recovery for mental distress resulting from the breach of a contract-related duty”… .. As Supreme Court noted, plaintiff failed to satisfy this standard because she did not allege the existence of any relationship or duty between the parties separate from the contractual obligation. …

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Plaintiff’s claim for punitive damages was likewise properly dismissed. Punitive damages may be recovered for breach of contract “only where a defendant’s conduct was (1) actionable as an independent tort, (2) egregious, (3) directed toward the plaintiff and (4) part of a pattern directed at the public” … . Plaintiff’s allegations that defendant engaged in unfair claim settlement practices do not allege a tort independent of the parties’ contract sufficient to state a claim for recovery of punitive damages … . Brown v Government Employees Ins. Co., 2017 NY Slip Op 08774, Third Dept 12-14-17

 

CONTRACT LAW (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/INSURANCE LAW ( ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/GENERAL BUSINESS LAW (ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/DECEPTIVE BUSINESS PRACTICES  (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/EMOTIONAL DISTRESS (BREACH OF CONTRACT, DAMAGES, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/PUNITIVE DAMAGES  (INSURANCE LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))/DAMAGES (CONTRACT LAW, ALLEGATION THAT DEFENDANT INSURER PRESSURED PHYSICIANS TO FIND NO CAUSAL CONNECTION BETWEEN THE ACCIDENT AND INJURY IN NO-FAULT CASES STATED A CAUSE OF ACTION UNDER THE GENERAL BUSINESS LAW, EMOTIONAL DISTRESS IS NOT AN ELEMENT OF DAMAGES FOR BREACH OF CONTRACT, THE ALLEGATIONS DID NOT SUPPORT A CLAIM FOR PUNITIVE DAMAGES (THIRD DEPT))

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UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Moskowitz, modifying Supreme Court, in actions stemming from the sale of allegedly defective residential mortgage-backed securities, determined that, according to the terms of the relevant contracts, plaintiff did not have standing to sue in one aspect of the action because a critical assignment had not been accomplished in accordance with the contract. The opinion is fact-specific and too complex to fairly summarize here. With respect to Supreme Court’s failure to interpret the two relevant agreements such that both are given effect, the court explained:

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In interpreting a contract a court should favor an interpretation that gives effect to all the terms of an agreement rather than ignoring terms or interpreting them unreasonably … . Indeed, “where two seemingly conflicting contract provisions reasonably can be reconciled, a court is required to do so and to give both effect” … . We have also found that “agreements executed at substantially the same time and related to the same subject matter are regarded as contemporaneous writings and must be read together as one” … . Thus, in failing to harmonize the … agreement[s], the motion court essentially read … terms out of existence. U.S. Bank N.A. v GreenPoint Mtge. Funding, Inc., 2017 NY Slip Op 08644, First Dept 12-12-17

 

SECURITIES (RESIDENTIAL MORTGAGE-BACKED SECURITIES, CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))/CONTRACT LAW (RESIDENTIAL MORTGAGE-BACKED SECURITIES, CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))/RESIDENTIAL MORTGAGE-BACKED SECURITIES (CONTRACT LAW, UNDER THE TERMS OF THE RELEVANT CONTRACTS, WHICH MUST BE INTERPRETED TOGETHER TO GIVE EFFECT TO THEIR TERMS, PLAINTIFF DID NOT HAVE STANDING TO SUE IN ONE ASPECT OF THIS ACTION STEMMING FROM THE SALE OF ALLEGEDLY DEFECTIVE RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT))

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THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Stein, over an extensive two-judge dissent, determined plaintiff trustee (HSBC) was limited to the cure and replurchase remedy described in the contracts for these residential mortgage-backed securities, and could not sue for general contract damages:

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In these appeals stemming from four residential mortgage-backed securities (RMBS) transactions, we are asked to decide whether claims for general contract damages based on alleged breaches of a “no untrue statement” provision can withstand a motion to dismiss based on a contract provision mandating cure or repurchase as the sole remedy for breaches of mortgage loan-specific representations and warranties. We hold that, inasmuch as the claims for general contract damages at issue here are grounded in alleged breaches of the mortgage loan-specific representations and warranties to which the limited remedy fashioned by the sophisticated parties applies, plaintiffs’ claims for general contract damages should be dismissed. * * *

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.. .[I]t is readily apparent from the face of the complaints that the alleged breaches of the No Untrue Statement Provision are, in fact, based upon alleged breaches of the Mortgage Representations. … [T]he sole remedy for breaches of the Mortgage Representations is cure or repurchase. HSBC cannot “subvert this ‘exclusive remedies’ limitation” of liability by simply re-characterizing its claims … . Rather, “[r]eading the [contracts] as a harmonious and integrated whole” …  and honoring “the exclusive remedy that the[se] [sophisticated] parties fashioned” … , we conclude that the Sole Remedy Provision applies, precluding HSBC from seeking general contract damages for the particular claims challenged on this appeal. Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 2017 NY Slip Op 08622, CtApp 12-12-17

 

SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/CONTRACT LAW (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/RESIDENTIAL MORTGAGE-BACKED SECURITIES (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))/SOLE REMEDY PROVISIONS (THE RESIDENTIAL MORTGAGE-BACKED SECURITIES CONTRACTS PROVIDED FOR THE SOLE REMEDY OF CURE AND REPURCHASE, PLAINTIFF TRUSTEE’S CAUSES OF ACTION FOR GENERAL CONTRACT DAMAGES DISMISSED (CT APP))

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TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT).

The Third Department determined plaintiff lessee’s lawsuit against the lessor’s insurance carrier for denial of a claim for water damage was properly dismissed. Under New York law plaintiff could not sue the landlord’s carrier directly unless plaintiff first procured a judgment against the landlord which was not satisfied:

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… [I]t was well-established under the common law that an injured party has no direct cause of action against the insurer of a tortfeasor … . That is, an injured party, as a stranger to the policy between the insured tortfeasor and its insurer, could not, at common law, bring a claim against the tortfeasor’s insurer due to the lack of privity between the injured party and the insurer, even where the injured party had obtained a judgment against the insured … . As a result of the hardships and inequities this rule created, the Legislature created a “limited statutory cause of action on behalf of injured parties directly against insurers,” which is applicable where the injured party has obtained a judgment against an insured and the judgment has gone unsatisfied for 30 days … . It is undisputed that plaintiff has not obtained a judgment against [the landlord], which is “a condition precedent to a direct action” against [the landlord’s] insurer and, thus, plaintiff cannot avail itself of this limited statutory cause of action … . Thus, even liberally construing the complaint, accepting the facts as alleged as true and affording plaintiff the benefit of every inference, plaintiff has not stated a statutory cause of action against [the insurer]. … . As plaintiff is not a named insured under the policy and did not obtain a judgment against [the landlord], Supreme Court properly granted Cincinnati’s motion dismissing the complaint due to plaintiff’s lack of standing and failure to state a cause of action … . GM Broadcasting, Inc. v Cornelius Enters., LLC, 2017 NY Slip Op 08593, Third Dept 12-7-17

 

INSURANCE LAW (LANDLORD-TENANT, CONTRACT LAW, TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))/LANDLORD-TENANT (INSURANCE LAW, CONTRACT LAW,  TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))/CONTRACT LAW (INSURANCE LAW, LANDLORD-TENANT, TENANT DID NOT HAVE STANDING TO SUE LANDLORD’S INSURER FOR DENIAL OF A PROPERTY DAMAGE CLAIM, TENANT HAD NOT PROCURED A JUDGMENT AGAINST THE LANDLORD, A PREREQUISITE FOR A DIRECT SUIT AGAINST THE INSURER (THIRD DEPT))

ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT).

The Third Department, in a comprehensive “offer and acceptance” decision too detailed to fairly summarize here, determined that the defendant’s motion for summary judgment in this breach of a real estate contract action was properly granted on statute of frauds grounds. Although a typed name on an email is the equivalent of a signature, the same is not true for an attachment to an email, which can easily be signed by the sender. Here plaintiff’s breach of contract theory depended upon an attachment to an email sent by the defendant to the plaintiff. Because the attachment was not signed, there was no contract:

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Under ESRA [Electronic Signatures and Records Act}, plaintiff would have a viable argument that defendant signed the emails she sent, as they are electronic records and she typed her name at the end of each. As confirmed at oral argument, however, plaintiff does not contend that the emails constituted signed documents forming the contract, but that defendant’s typed name at the end of the proposed side letter constituted her signature. That document was separately typed and attached to emails for transmission. Although emails are electronic records, not every attachment to an email qualifies as an electronic record under ESRA. One of the purposes of ESRA is “to promote the use of electronic technology in the everyday lives and transactions” of government entities, businesses and average citizens… . To fulfill this purpose, it was necessary for the Legislature to permit emails to be considered equivalent to signed writings when that was the sender’s intent … , because it was not possible to place a handwritten signature on an email or similar electronic record that was being transmitted electronically.

The same logic does not apply to ordinary typed documents that are scanned and attached to emails, because a party could easily affix a handwritten signature to those documents. Solartech Renewables, LLC v Vitti, 2017 NY Slip Op 08574, Third Dept 12-6-17

 

CONTRACT LAW (STATUTE OF FRAUDS, EMAILS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/STATUTE OF FRAUDS (EMAILS, ATTACHMENTS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/EMAILS (CONTRACT LAW, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/ATTACHMENTS (EMAILS, CONTRACT LAW, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))/ELECTRONIC SIGNATURES AND RECORDS ACT (CONTRACT LAW, EMAILS, STATUTE OF FRAUDS, ALTHOUGH A TYPED NAME ON AN EMAIL MAY SUFFICE AS A SIGNATURE FOR STATUTE OF FRAUD PURPOSES, THE SAME IS NOT TRUE FOR AN ATTACHMENT TO AN EMAIL, WHICH CAN EASILY BE SIGNED BY THE SENDER (THIRD DEPT))

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BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT).

The First Department determined this breach of contract action stemming from a mortgage-backed-securities trust, brought by a California plaintiff (trustee) ,and concerning California lenders must be timely under both California and New York law. The action, although timely in New York, was not timely under California law, which has a four-year statute of limitations. The New York choice-of-law provisions in the agreements did not expressing incorporate the NY statute of limitations:

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CPLR 202 requires that an action brought by a nonresident plaintiff, “based upon a cause of action accruing without the state,” be timely under the respective statutes of limitations of both New York and “the place without the state where the cause of action accrued.” In Global Fin. Corp. v Triarc Corp. (93 NY2d 525, 529-530 [1999]), the Court of Appeals set forth the general rule that, in cases where (as here) the alleged injury is purely economic, a cause of action is deemed, for purposes of CPLR 202, to have accrued in the jurisdiction of the plaintiff’s residence. …

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it is undisputed that the domiciles of the trust beneficiaries, which are in various jurisdictions, do not provide a workable basis for determining the place of accrual. As to the New York choice-of-law clauses of the relevant agreements, because these provisions do not expressly incorporate the New York statute of limitations, they “cannot be read to encompass that limitation period” … . By contrast, the subject trust in each action comprises a pool of mortgage loans, originated by California lenders and encumbering California properties, either exclusively … or predominantly ,,,, and … administered in California by plaintiff, a California-based trustee …. Further, it is undisputed that the relevant pooling and servicing agreement (PSA) for each trust contemplates the payment of state taxes, if any, in California … . To the extent the physical location of the notes memorializing the securitized mortgage loans has relevance to the analysis, each trust’s PSA contemplates that the notes may be maintained in California, but neither contemplates maintaining the notes in New York … . ​Deutsche Bank Natl. Trust Co. v Barclays Bank PLC, 2017 NY Slip Op 08459, First Dept 12-5-17

 

CIVIL PROCEDURE (BORROWING STATUTE, CONTRACT LAW, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/BORROWING STATUTE (CIVIL PROCEDURE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/CONTRACT LAW (CIVIL PROCEDURE, BORROWING STATUTE, STATUTE OF LIMITATIONS, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/SECURITIES (MORTGAGE-BACKED SECURITIES, CONTRACT LAW, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/TRUSTS AND ESTATES (MORTGAGE-BACKED SECURITIES TRUST, BREACH OF CONTRACT, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))

, ,

ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT).

The Third Department, over a two-justice dissent, determined that the trial court’s finding that an oral agreement concerning the repayment of a $170,000 loan was enforceable, because the loan could have been paid off within a year (re: the statute of frauds). Both plaintiff and defendant were bookmakers who had been convicted of promoting gambling. The fact that plaintiff refused to answer questions about whether he paid income tax on the proceeds, based upon the Fifth Amendment, did not affect the result because there was nothing illegal about the loan agreement itself. The two dissenters argued the parties were engaged in money laundering and the loan agreement should not be enforced as a matter of public policy:

​

We are mindful that plaintiff testified that the source of the loan proceeds was cash obtained through his illegal bookmaking activities. Indeed, both plaintiff and defendant were convicted of promoting gambling and required to pay fines in the amount of $100,000 and $50,000, respectively. Although plaintiff asserted his Fifth Amendment right against self-incrimination when asked whether he ever reported the cash as income, we are not persuaded by defendant’s contention that Supreme Court erred in failing to draw a negative inference because the source and/or taxable status of the funds was not probative of the issue presented. According due deference to Supreme Court’s credibility assessments, we find ample evidence to support the determination that plaintiff and defendant agreed to the loan that defendant breached by failing to make all of the payments due… . Contrary to defendant’s argument, because there was nothing prohibiting defendant from repaying the loan within one year, the statute of frauds did not bar enforcement of the oral agreement … .

We also find that defendant waived his right to challenge the loan on the basis of illegality because it was not raised as an affirmative defense … . Were we to consider the issue, we would find that, because neither the agreement nor the performance of the agreement was illegal, the judgment was enforceable … . Centi v McGillin, 2017 NY Slip Op 08430, Third Dept 11-30-17

 

DEBTOR-CREDITOR (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CONTRACT LAW (STATUTE OF FRAUDS, DEBTOR-CREDITOR, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CRIMINAL LAW (DEBTOR-CREDITOR, MONEY LAUNDERING, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/MONEY LAUNDERING (DEBTOR-CREDITOR, CONTRACT LAW, (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))

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