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Law Re: Liquidated Damages Explained

The Fourth Department concluded that defendant’s papers were not sufficient to warrant summary judgment invalidating a liquidated damages provision of an agreement, but noted that plaintiff may not be able to prove the validity of the provision at trial. Liquidated damages are valid only if they bear a reasonable relationship to the loss; otherwise they constitute an unenforceable penalty. Here plaintiff sold defendant a car with the condition that the car not be re-sold for one year. Defendant sold the car two weeks after purchase and plaintiff sued to enforce the $20,000 liquidated damages provision of the “agreement not to export.”  The court explained the relevant law:

Liquidated damages are enforceable only to the extent that they comprise ” an estimate, made by the parties at the time they enter into their agreement, of the extent of the injury that would be sustained as a result of breach of the agreement’ ” … . As a general rule, a liquidated damages clause is enforceable only if the stipulated amount of damages “bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation” … . If, however, the clause provides for damages that are ” plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced’ ” … .

Here, defendant failed to meet his initial burden of establishing as a matter of law that the amount of liquidated damages does not bear a reasonable relation to plaintiff’s actual damages. In support of his motion, defendant relied on affidavits from himself and his attorney, both of whom asserted, upon information and belief only, that plaintiff sustained no actual damages, and that the liquidated damages clause is therefore unenforceable. Defendant offered no evidence in support of those conclusory assertions, and therefore failed to meet his initial burden of proof … . Thus, the court properly denied defendant’s motion, “regardless of the sufficiency of the opposing papers” … . Although defendant may be correct in contending that plaintiff cannot establish at trial that it sustained any actual damages as a result of defendant’s breach of the Agreement, it is well settled that a party moving for summary judgment must affirmatively establish the merits of its cause of action or defense “and does not meet its burden by noting gaps in its opponent’s proof” … . Great Lakes Motor Corp. v Johnson, 2015 NY Slip Op 07394, 4th Dept 10-9-15

 

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Gun Found Wedged Under a Rock After an Illegal Police Pursuit Was Not “Abandoned,” Suppression of Gun Was Proper

The Fourth Department determined that all the fruits of an illegal pursuit and arrest of the defendant were properly suppressed. Defendant crossed a street, causing a car to stop abruptly to avoid hitting him. The police pursued defendant, intending to arrest him for disorderly conduct. The police noticed defendant was carrying a bulky object held in his shirt. After capturing the defendant, the police found a gun wedged under a rock. The People conceded that the pursuit of defendant was unlawful because his crossing the street did not constitute disorderly conduct. The only question on appeal was whether the gun was abandoned, and therefore not subject to suppression. The court explained the relevant test for abandoned property in this context:

It is well established that property seized as a result of an unlawful pursuit must be suppressed, unless that property was abandoned … . “Property which has in fact been abandoned is outside the protection of the constitutional provisions . . . There is a presumption against the waiver of constitutional rights . . . [and, thus,] [t]he proof supporting abandonment should reasonably beget the exclusive inference of . . . throwing away’ ” … . “The test to be applied is whether defendant’s action . . . was spontaneous and precipitated by the illegality or whether it was a calculated act not provoked by the unlawful police activity and was thus attenuated from it” … . Here, the court properly concluded that defendant’s action was spontaneous and precipitated by the unlawful pursuit by the police … . The court thus properly determined that the People failed to establish that defendant had abandoned the gun and, consequently, properly suppressed the gun. People v Mueses, 2015 NY Slip Op 07088, 4th Dept 10-2-15

 

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Absence of Information About the Source of Double Hearsay in the Search Warrant Application Required Suppression

The Fourth Department determined a search warrant application which was based upon double hearsay did not provide probable cause to search because the initial source of the information was inadequately described.  There was no way to determine the reliability of the source or the basis of the source’s information (Aguilar-Spinelli test). An amended warrant which sought seizure of items in plain sight during the search was rendered invalid by the defective initial warrant:

It is well settled that a search warrant may be issued only upon a showing of probable cause to believe that a crime has occurred, is occurring, or is about to occur …, and there is sufficient evidence from which to form a reasonable belief that evidence of the crime may be found inside the location sought to be searched … . It is equally well settled that, under New York law, “[p]robable cause may be supplied, in whole or part, through hearsay information . . . New York’s present law applies the Aguilar-Spinelli rule for evaluating secondhand information and holds that if probable cause is based on hearsay statements, the police must establish that the informant had some basis for the knowledge he [or she] transmitted to them and that he [or she] was reliable” … . “Notably, where the information is based upon double hearsay, the foregoing requirements must be met with respect to each individual providing information” … .People v Bartholomew, 2015 NY Slip Op 07112, 4th Dept 10-2-15

 

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Pat-down Search Pursuant to a Stop for a Traffic Infraction Unlawful—Injury to Officer During Unlawful Search Will Not Support Assault Conviction (Which Requires the Officer Be Injured Performing a Lawful Duty)

The Fourth Department determined the pat-down search of defendant after he was stopped for walking in the street was unlawful. Therefore the assault charge stemming from injury to the police officer during the unlawful search was not supported by legally sufficient evidence. The officer was not performing a “lawful duty” at the time of the injury (a required element of the assault charge):

A person is guilty of assault in the second degree under Penal Law § 120.05 (3) when, “[w]ith intent to prevent . . . a police officer . . . from performing a lawful duty . . . , he or she causes physical injury to such . . . police officer” (id.). Here, a police officer stopped defendant for walking in the middle of a roadway in violation of Vehicle and Traffic Law § 1156 (a), and the suppression court found that the search of defendant’s person by another officer was not lawful … . We have previously held that even the more limited pat-down search of a traffic offender “is not authorized unless, when the [person or] vehicle is stopped, there are reasonable grounds for suspecting that the officer is in danger or there is probable cause for believing that the offender is guilty of a crime rather than merely a simple traffic infraction’ ” (People v Everett, 82 AD3d 1666, 1666, …). Here, as in Everett, the search of defendant was unauthorized, and the officer was injured only after he attempted to perform the unlawful search (see id.). Viewing the evidence in the light most favorable to the People …, we thus conclude that the evidence is legally insufficient to establish that the officer was injured while undertaking a lawful duty … . People v Richardson, 2015 NY Slip Op 07069, 4th Dept 10-2-15

 

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Where Arrest Was Not Authorized, Conviction for Resisting Arrest Was Against the Weight of the Evidence

The People conceded defendant’s actions (apparently simply standing with a group) did not constitute disorderly conduct. Therefore, the Fourth Department determined, defendant’s arrest for disorderly conduct was unauthorized and his conviction of resisting arrest was against the weight of the evidence:

As the People correctly concede, the evidence fails to establish beyond a reasonable doubt that the arrest of defendant for disorderly conduct was authorized. The Court of Appeals has “made clear that evidence of actual or threatened public harm (inconvenience, annoyance or alarm’) is a necessary element of a valid disorderly conduct charge” …, and there is no evidence of such actual or threatened harm here. Inasmuch as it “is not disorderly conduct . . . for a small group of people, even people of bad reputation, to stand peaceably on a street corner” …, the arrest of defendant for engaging in that conduct was not authorized. “There being no probable cause that authorized defendant’s arrest, [he] cannot be guilty of resisting arrest” … . Thus, we conclude that the jury “failed to give the evidence the weight it should be accorded” … . People v Howard, 2015 NY Slip Op 07100, 4th Dept 10-2-15

 

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Absence of Corroboration of Confession to Attempted Robbery Required Dismissal of Attempted Robbery Count—However Dismissal of the First Degree Murder and Felony Murder Counts, Both of Which Were Based Upon the Attempted Robbery, Was Not Required—The Death Itself Provided the Requisite Corroboration

The Fourth Department, in a detailed decision addressing several substantive issues not summarized here, found there was no proof of the attempted robbery count except defendant’s confession. The absence of corroboration required reversal of the attempted robbery count. However, with respect to the first degree murder and felony murder counts (for which attempted robbery was the underlying felony) the death itself provided sufficient corroboration:

“A person may not be convicted of any offense solely upon evidence of a confession or admission made by him [or her] without additional proof that the offense charged has been committed” (CPL 60.50…). With respect to the counts of murder in the first degree and felony murder, it is well settled that “CPL 60.50 does not require corroboration of defendant’s confession to the underlying predicate felony” to sustain a conviction of murder in the first degree or felony murder, when the charge is based on a murder committed in the course of and in furtherance of one of many enumerated felonies … . “The effect of the confession corroboration statute is to require proof of the corpus delicti” … . With felony murder and murder in the first degree, the corpus delicti is a death resulting from someone’s criminality, i.e., a death that did not occur by suicide, disease or accident … . The fact that the victim was found dead as the result of a gunshot wound is sufficient corroboration … .

The same analysis does not apply to the underlying felony itself. Where, as here, there is no corroboration of a defendant’s confession with respect to the underlying felony, that count of the indictment charging the defendant with the underlying felony must be dismissed … . People v Harper, 2015 NY Slip Op 07064, 4th Dept 10-2-15

 

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Courts’ Limited Review Powers Re: Administrative Rulings Clearly Illustrated

The Fourth Department, in a dispute about whether fiber optic cables were taxable by the city and the school district under the Real Property Tax Law, determined Supreme Court was powerless to rule on the matter on grounds not used by the administrative agencies which initially heard it. The Fourth Department succinctly explained the relevant review powers:

We agree with petitioners that the court erred in dismissing the petition on grounds different from those on which respondents relied in denying the applications. It is well settled that “[a] reviewing court, in dealing with a determination . . . which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis” … . Thus, the court was without power to uphold the administrative determinations on a different basis, no matter how sound that basis may be.

Contrary to petitioners’ further contention, however, we may not grant the ultimate affirmative relief requested in the petition, i.e., removal of the subject properties from the tax rolls and a refund of the taxes paid. The Court of Appeals has noted that courts “regularly defer to the governmental agency charged with the responsibility for administration of [a] statute’ in those cases where interpretation or application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom,’ and the agency’s interpretation is not irrational or unreasonable’ ” … . We conclude that “this case involves a question concerning the specific application of a broad statutory term, . . . and therefore is one in which the agency which administers the statute must determine it initially” … , because in such a situation, ” the reviewing court’s function is limited’ ” … . Matter of Level 3 Communications, LLC v Erie County, 2015 NY Slip Op 07104, 4th Dept 10-2-15

 

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Conclusory Allegations Will Not Survive a Motion to Dismiss for Failure to State a Cause of Action—Punitive Damages Must Be Connected to a Substantive Cause of Action—Late Disclaimer in Property Damage Action Is Valid Absent Prejudice

The Fourth Department determined plaintiff’s cause of action alleging bad faith on the part of the insurer should have been dismissed for failure to state a cause of action. The court explained that conclusory, as opposed to fact-based, allegations will not survive a motion to dismiss. The court noted that a claim for punitive damages must be tied to a specific cause of action and cannot be based upon conclusory allegations.  The court further held that even an unreasonable delay in disclaiming a property damage claim is valid absent prejudice:

Our role is thus to “determine only whether the facts as alleged fit within any cognizable legal theory . . . and the criterion is whether the proponent of the pleading has a cause of action, not whether he [or she] has stated one’ ” … . Nevertheless, ” [w]hile it is axiomatic that a court must assume the truth of the complaint’s allegations, such an assumption must fail where there are conclusory allegations lacking factual support’ ” … . Indeed, ” a cause of action cannot be predicated solely on mere conclusory statements . . . unsupported by factual allegations’ ” … . …

… [W]e note that, “in order to establish a prima facie case of bad faith, the plaintiff must establish that the insurer’s conduct constituted a gross disregard’ of the insured’s interests” … . We conclude … the fourth and sixth causes of action “should have been dismissed because they do not allege [any] conduct by [Allstate] constituting the requisite gross disregard of the insured’s interests’ necessary to support such causes of action” … . Moreover, the “[a]llegations that [Allstate] had no good faith basis for denying coverage are redundant to [plaintiffs’] cause[s] of action for breach of contract based on the denial of coverage, and do not give rise to an independent tort cause of action, regardless of the insertion of tort language into the pleading” … .

… “A demand or request for punitive damages is parasitic and possesses no viability absent its attachment to a substantive cause of action” … . Here, the complaint fails to set forth “the pleading elements required to state a claim for punitive damages” … ; plaintiffs’ “conclusory allegation[s] as to [Allstate’s] motive for [its] refusal [to pay the claim are] an insufficient premise for a demand for punitive damages” … . …

Where, as here, the underlying claim does not arise out of an accident involving bodily injury or death, the notice of disclaimer provisions set forth in Insurance Law § 3420 (d) are inapplicable and, [u]nder the common-law rule, delay in giving notice of disclaimer of coverage, even if unreasonable, will not estop the insurer to disclaim unless the insured has suffered prejudice from the delay’ ” … . Contrary to plaintiffs’ contention, their conclusory allegation that they were “damaged and prejudiced” by the untimely disclaimer is insufficient to withstand this CPLR 3211 (a) (7) motion to dismiss … . Miller v Allstate Indem. Co., 2015 NY Slip Op 07134, 4th Dept 10-2-15

 

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State Claims Re: Alleged Release of Toxins During Love Canal Clean-Up Not Precluded (Preempted) by Federal CERCLA Remedy

The Fourth Department determined state claims for negligence, abnormally dangerous activity, private nuisance and trespass were not precluded by a federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) remedy re: the Love Canal toxic contamination:

As the federal District Court explained, “it is uniformly recognized that, in enacting CERCLA, Congress expressly disclaimed an intent to preempt state tort liability for damages caused by the release of hazardous substances” … . District Court therefore granted plaintiffs’ motion seeking to remand the matter to Supreme Court, determining that “plaintiffs seek relief only under common law theories of negligence, . . . private nuisance, and trespass” … , “[and t]he claims . . . do not expressly challenge the effectiveness of the [CERCLA] remedy . . . Rather, plaintiffs seek only to be made whole for any harm proximately caused by defendants’ conduct, whether in performance of operation, maintenance, and monitoring obligations with respect to the remedy, or during the [sewer project]” … .

* * * The doctrine of judicial estoppel prohibits a party who has assumed a position in one legal proceeding, and prevailed on that position, from assuming a contrary position in another proceeding because the party’s interests have changed … . Here, however, we conclude that plaintiffs’ position was consistent in both the federal and state court matters inasmuch as they maintained that they did not challenge the CERCLA remedy, as the moving defendants alleged, but instead challenged defendants’ performance of their respective obligations in executing the CERCLA remedY. Abbo-Bradley v City of Niagara Falls, 2015 NY Slip Op 07145, 4th Dept 10-2-15

 

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Pleading Requirements for “Goods Sold and Delivered” Cause of Action Succinctly Explained

In affirming Supreme Court’s grant of summary judgment to plaintiff on its “goods sold and delivered” cause of action, the Fourth Department explained the pleading requirements:

… [P]laintiff’s complaint, with its attached invoices, satisfied the pleading requirements of CPLR 3016 (f) … . The invoices provided the requisite degree of specificity inasmuch as they permitted defendant ” to respond in a meaningful way on an item-by-item basis’ ” … . Each invoice set forth the date of the order, the specific items ordered and delivered, the quantity ordered and delivered, as well as the price per unit and the total price for the quantity ordered … . Defendant was thus required to indicate specifically in its verified answer “those items [it] dispute[d] and whether in respect of delivery or performance, reasonable value or agreed price” (CPLR 3016 [f]). Defendant failed to do so and, therefore, Supreme Court properly granted that part of plaintiff’s motion on the cause of action for goods sold and delivered … . Erie Materials, Inc. v Central City Roofing Co., Inc., 2015 NY Slip Op 07137, 4th Dept 10-2-15

 

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