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A Counteroffer Extinguishes the Initial Offer Which Cannot Be Unilaterally Revived by Subsequent Acceptance

The First Department determined that no binding contract for the sale of real property had been reached after a series of offers and counteroffers.  In the course of the decision, the court noted some of the relevant black letter law:

The record demonstrates that the parties never came to terms and instead proposed a series of offers and counteroffers to which they never mutually agreed. …To enter into a contract, a party must clearly and unequivocally accept the offeror’s terms … . If instead the offeree responds by conditioning acceptance on new or modified terms, that response constitutes both a rejection and a counteroffer which extinguishes the initial offer … . The counteroffer extinguishes the original offer, and thereafter the offeree cannot … unilaterally revive the offer by accepting it … .

…[O]ral acceptance of a written offer can form a binding contract for the sale of real property * * *. Thor Props LLC v Willspring Holdings LLC, 2014 NY Slip Op 04237, 1st Dept 6-12-14

 

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No Exigent Circumstances to Justify Search of a Closed Container in Defendant’s Possession Upon His Arrest for Minor Non Violent Offenses to Which the Contents of the Bag Could Have Had No Connection

The First Department determined there were no exigent circumstances which justified the search of a plastic bag (closed container0 that was in defendant’s possession at the time of his arrest:

The police detained defendant in a subway station for violating Transit Authority regulations. Because a warrant check revealed that defendant had an active warrant, the police decided to arrest him rather than issue a summons. Defendant was holding a plastic bag in his hand, and put it on the ground next to him before being handcuffed. An officer picked up the bag, which felt heavy, and looked inside to check for weapons or contraband. Inside the bag was another plastic bag, which contained a canvas bag. The officer then noticed a strong odor of marijuana, opened the canvas bag, and found nearly a pound of marijuana.

The People failed to meet their burden of showing exigency. The officers did not testify that they feared for their safety, or that they were concerned that the bag contained evidence that defendant could destroy, and the circumstances did not suggest that any exigency required an immediate search. Defendant was being arrested for minor nonviolent offenses and was not suspected of any crimes, he was handcuffed and guarded by several officers, he was fully cooperative and voluntarily placed the bag on the ground, his demeanor and actions were not threatening, and there was no indication that he might try to grab or kick the bag, which was no longer in his possession. Furthermore, there was no indication that the bag might contain a weapon and, given the nature of the transit violations, there was no possibility that the bag could contain evidence to support those charges. People v Febres, 2014 NY Slip OP 04150, 1st Dept 6-10-14

 

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NYC Taxi & Limousine Commission Had the Authority to Mandate the Use of a Particular Vehicle as a NYC Taxi

The First Department, in a full-fledged opinion by Justice Saxe, over a dissent, determined that the New York City Taxi and Limousine Commission (TLC) did not exceed its grant of authority under the NYC Charter and did not violate the separation of powers doctrine when it mandated the use of a particular vehicle for taxis in NYC. The TLC essentially designed a vehicle, to be used as New York City medallion taxicabs, which met all of its criteria and then chose a manufacturer, Nissan, to build it. Under the “Taxi of Tomorrow Rules…”, after October 31, 2013, holders of unrestricted medallions who  were scheduled to replace their taxi vehicles were required to buy the Nissan (called the Nissan NV200).  An association of taxi fleet owners brought an action for a declaratory judgment asking the court to find the “Taxi of Tomorrow Rules…” invalid. Supreme Court did so, holding that the TLC had exceeded its powers under the NYC Charter and had essentially crossed the line between administration and legislation. The First Department disagreed and reversed:

Ultimately, the key to determining whether an agency has exceeded the scope of its authority is …in examining the enabling legislation. The scope of the mandate established by City Charter § 2300 is sufficiently expansive to permit the TLC to act as it did. * * *

…[H]ere …the Legislature had clearly articulated its policy regarding the TLC’s assigned task, namely, the goal of ensuring and optimizing the comfort of riders, while protecting the public, the environment, the drivers, and the rights of medallion owners. The TLC was not left to take action based on its own ideas of sound public policy. Even if, arguendo, the TLC’s adoption of the revised Taxi of Tomorrow rules may be characterized as involving policy-making, here, the parameters of that policy-making were set by the City Council in the City Charter.  Greater NY Taxi Assn v New York City Taxi & Limousine Commn, 2014 NY Slip Op 04156, 1st Dept 6-10-14

 

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Client’s Claim His Attorney Pressured Him Into Changing the Retainer Agreement, Thereby Costing the Client More, Did Not Sound In Malpractice and Was Not an Arbitrable Fee Dispute

The First Department noted that an action by a client alleging he was pressured by his attorney into changing the retainer agreement from an hourly retainer to a contingency retainer (thereby costing the client more) did not sound in malpractice and was not arbitrable under part 137 of the Rules of the Chief Administrator of the Courts:

Plaintiff does not assert that defendants’ conduct caused the result of his dispute with his disability insurer to be worse than it would have been. Rather, he argues that defendants, in bad faith and without full disclosure, pressured him into changing from an hourly retainer to a contingency retainer. The only loss he alleges is the additional fees owed to counsel as a result of changing the retainer. This is fatal to his claim for malpractice … . …

The retainer agreement provided for arbitration under part 137 of the Rules of the Chief Administrator of the Courts. However, the gravamen of the contract claim is that it is invalid because of defendants’ misconduct in inducing plaintiff to sign it, or because it created a windfall for defendants. By the express terms of the rules the parties chose to govern their arbitration, claims such as this are not arbitrable since 22 NYCRR 137.1(b)(3) provides that part 137 does not apply to “claims involving substantial legal questions, including professional malpractice or misconduct” … . Cohen v Hack, 2014 NY Slip Op 04068, 1st Dept 6-5-14

 

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Writing Which Omitted Certain Crucial Terms Was an “Agreement to Agree,” Not an Enforceable Real Estate Sales Contract

The First Department determined that a writing [the September 14 letter] which included some terms of the sale of church property for $15 million constituted an “agreement to agree” and not an enforceable real estate sales contract.  The writing identified the parties, the property, the amount of the downpayment and the price of the property.  At some point after the writing was signed, the defendant property owner told the plaintiff it was negotiating the sale of the property to another and, if the plaintiff wanted to buy, the price would be $17.5 million.  The plaintiff then sued for breach of contract and specific performance.  In finding the writing was not an enforceable real estate sales contract, the court noted that several crucial terms were missing, including the failure to mention the required court-approval of the sale of church property pursuant to the not-for-profit corporation law, and the failure to include details of the escrow agreement:

…[W]e agree with defendant that the September 14 letter did not contain all of the material terms which one would reasonably have expected to be included under the circumstances, rendering the September 14 letter unenforceable. For example, while the September 14 letter contemplated that the down payment would be held in escrow, it failed to identify who the escrow agent would be and left to future negotiations “a reasonably acceptable escrow agreement.” Since “[n];o contract for the sale of real property can be created when a material element of the contemplated bargain has been left for further negotiations,” …, and the details of an escrow arrangement are certainly material, this alone warranted the motion court’s conclusion that the letter was not a contract.

Further, the contemplated transaction was unique, insofar as it was contingent on approval by the court and the Attorney General. While we do not question that defendant was entitled to agree to a sale of the property prior to seeking such approval …, one would expect that an agreement would have contained such material terms as defendant’s duty to seek approval in a diligent manner, and the consequences of a failure to secure such approval. Indeed, it has been held that the contingency created by a condominium association’s right of first refusal is material to an agreement to sell an individual condominium apartment … .  Argent Acquisitions LLC v First Church of Religious Science, 2014 NY Slip Op 04048, 1st Dept 6-5-14

 

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Court Did Not Conduct an Adequate “Searching Inquiry” Before Allowed Defendant to Represent Himself—New Trial Ordered

The First Department, in a full-fledged opinion by Justice Acosta, determined the trial judge did not conduct the requisite “searching inquiry” before allowing the defendant to represent himself.  The opinion includes all of the relevant exchanges between the judge and the defendant and compared those exchanges to the inquiry made in People v Wingate, 17 NY3d 469, where the Court of Appeals determined the inquiry by the trial court to be adequate:

Here, we find that the trial court’s inquiry failed to satisfy [the] “searching inquiry” standard. The court gave nothing more than generalized warnings, and completely failed to advise defendant of the benefits of being represented by counsel. The court’s statements to defendant that it was in his “interest” to continue with counsel; that “[g];enerally, [self-representation]; is a very bad idea”; and that there were “all kinds of dangers in doing this,” its sole example being that defendant would have to give the opening statement himself, failed to insure that the dangers and disadvantages of giving up the fundamental right to counsel [had]; been impressed on . . . defendant” … . The court also failed to advise defendant about the “importance of the lawyer in the adversarial system of adjudication” … . Because we find that the court did not make the requisite searching inquiry, we reverse the judgment convicting defendant and remand for a new trial.  People v Cole, 2014 NY Slip Op 04076, 1st Dept 6-5-14

 

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Ambiguous Termination Notice Will Not Trigger Four-Month Article 78 Statute of Limitations

The First Department explained that when a notice of termination of an at-will employee is ambiguous with respect to finality, the ambiguity is construed against the employer and the four-month statute of limitations for an Article 78 proceeding is not triggered:

Ordinarily, where the employment of an at-will employee, like petitioner, is terminated, the four-month statute of limitations applicable in article 78 proceedings (CPLR 217) begins to run from the date of the termination, notwithstanding the availability of optional administrative review proceedings … . However, where an administrative agency “create[s]; []; ambiguity and [the]; impression of nonfinality,” that ambiguity regarding finality is to be resolved against the agency … .

* * * We find that, notwithstanding the fact that the letter otherwise conveyed the concrete impact ordinarily associated with finality for statute of limitations purposes …, respondent created sufficient ambiguity as to finality such that the language must be construed against it and the petition must be deemed timely. Matter of Burch v New York City Health & Hosp Corp, 2014 NY Slip Op 04060, 1st Dept 6-5-14

 

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Record Did Not Support Striking the Answer for the Spoliation of Evidence

The First Department, over a partial and a full dissent, determined the extreme sanction of striking defendant’s answer and instructing the jury the lost evidence would have supported plaintiff’s position was not appropriate under the facts. Electronically stored information (ESI) had been lost.  The court rejected the argument that the failure to issue a written “litigation hold” to preserve the evidence constituted per se gross negligence.  Instead the court found that the record supported at most simple negligence.  The court explained the operative criteria and its appellate powers in this context:

“A party seeking sanctions based on the spoliation of evidence must demonstrate: (1) that the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and finally, (3) that the destroyed evidence was relevant to the [moving]; party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense” … .

Further, “[w];hile discovery determinations rest within the sound discretion of the trial court, the Appellate Division is vested with a corresponding power to substitute its own discretion for that of the trial court, even in the absence of abuse” … . * * *

Because the record supports, at most, a finding of simple negligence against the MP defendants, plaintiffs must prove that the lost ESI would have supported their claims … . This they have failed to do … . Pegasus Aviation I Inc, v Varig Logistica SA, 2014 NY Slip Op 04047, 1st Dept 6-5-14

 

Court Must Make a Youthful Offender Determination Even When Defendant Waives It

The First Department noted that the sentencing court must consider youthful offender treatment for every eligible youth even where the defendant waives the youthful offender determination as part of a negotiated plea:

…[T]he Court of Appeals in People v Rudolph (21 NY3d 497 [2013]) that CPL 720.20(1) requires “that there be a youthful offender determination in every case where the defendant is eligible, even where the defendant fails to request it, or agrees to forgo it as part of a plea bargain” requires a new sentencing proceeding. Although defendant pleaded guilty to an armed felony, he was potentially eligible under CPL 720.10(3), and he was thus entitled to a determination … . This issue survives defendant’s waiver of his right to appeal … . People v Malcolm, 2014 NY Slip Op 04050, 1st Dept 6-5-14

 

Question of Fact Whether Defendant’s Negligence Precluded Her Reliance on the Doctrine of Mutual Mistake to Rescind a Valid Oral Contract

The First Department determined there a question of fact about defendant’s negligence and the related applicability of the doctrine of mutual mistake. The parties orally agreed to share funeral expenses and commence a lost will proceeding based upon the understanding that the original will could not be found.  However, the original will was subsequently found.  The defendant moved to rescind the contract on the basis of mutual mistake and Supreme Court granted the motion.  In reversing, the First Department noted the doctrine of mutual mistake would not be available if defendant were negligent in initially failing to find the will, and a question of fact had been raised about defendant’s negligence in that regard:

Plaintiff met her obligations under the agreement to pay one half of the decedent’s funeral expenses and attorneys fees for the proceeding. Defendant did, as required, commence a lost will proceeding. Both parties thus fulfilled the terms of the oral agreement. It was only less than one month before the hearing on the lost will proceeding was to commence that defendant’s husband found the original will in the same box which defendant had searched prior to entering into the agreement. It was at that point that defendant attempted to abrogate the contract. It is noteworthy that defendant, in her motion for summary judgment dismissing the complaint argued that the contract should be rescinded due to a mutual mistake as to the existence of the original will. The question of mutual mistake, therefore, is central to the disposition of this case.

Defendant’s alleged negligence in searching for the original 1991 will, the absence of which formed the basis of the oral agreement to commence a lost will proceeding, is an important factor in determining whether the doctrine of mutual mistake may be invoked to rescind this otherwise valid oral agreement. ” Mistake, to be available in equity, must not have arisen from negligence, where the means of knowledge were easily accessible.'” … . The doctrine of mutual mistake “may not be invoked by a party to avoid the consequences of its own negligence” … . Gitelson v Quinn, 2014 NY Slip Op 03942, 1st Dept 5-3-14

 

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