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Limitation of Liability Clause in House-Design Contract Valid

he defendant designed plaintiffs’ residence and the first floor was built two feet below what the regulations required resulting in increased flood insurance premiums.  In the contract between the parties, it was agreed to limit defendant’s liability to the amount of the fees paid by plaintiffs.  After noting that contractual liability-limit clauses are valid and enforced except in cases of “gross negligence,” the Third Department determined “gross negligence” had not been demonstrated:  In describing “gross negligence,” the Third Department wrote:

In this context, it is settled  that  “gross negligence differs in kind, not only in degree, from claims of ordinary negligence.  It is conduct  that evinces a reckless disregard for the rights of others or smacks of intentional wrongdoing” … .  Soja v Keystone Tozze, LLC, 515422, 3rd Dept 5-2-13

 

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The Term “Release” (Re Hazardous Substances) Did Not Apply to Migration of Hazardous Substance to Neighbor’s Property Underground​

The Third Department determined there were two equally plausible interpretations of the term “sellers” as used in the contract, rendering the contract ambiguous.  Therefore, the motion to dismiss the complaint prior to discovery was properly denied. In addition, the Third Department determined that the term “release” (re: hazardous substances) did not extend to the migration of hazardous substances to neighboring properties under ground:

…[The provision] requires  indemnification  for environmental  claims  related  to, among other things, a “Release” of hazardous substances “at locations other than [500 Beech].” “Release”  is defined  to include  “any  spilling, leaking, pumping,  pouring,  emitting, emptying, discharging, injecting, dumping  or disposing of any Hazardous  Material  into  the  environment.” In its Canadian action, the neighbor alleged that contaminants – which would be classified as “Hazardous Materials” under the agreement – in the ground  at 500 Beech migrated into the soil and  groundwater at 606 Beech. There is no allegation that hazardous substances were spilled, leaked or otherwise disposed of directly onto the property at 606 Beech. Rather, the allegation is that the flow of underground water carried those substances from 500 Beech, where they had been spilled or leaked, to the neighboring property. Although the hazardous substances eventually wound up at 606 Beech, there is no support for an allegation that the “Release” of those substances occurred at a location other than 500 Beech. Vectron International, Inc, v Corning Oak Holding, Inc, 515408, 3rd Dept, 5-2-13

 

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Prevailing Wage Law Not Preempted by Federal Telecommunications Act or Labor Relations Act

In upholding the finding that petitioner had failed to pay the prevailing wage for work done for a school district, the Third Department determined the prevailing wage law was not preempted by the federal Telecommunications Act and the Labor Management Relations Act:

Generally, a federal law may supersede a state law where Congress explicitly declares preemption as its intent …, or where the federal law is “‘so pervasive as to make reasonable the inference that Congress left no room for the [s]tates to supplement it'” …. The Court of Appeals has observed, however, that “[t]he presumption against preemption is especially strong with regard to laws that affect the states’ historic police powers over occupational health  and safety issues” …. While the Telecommunications Act is intended to exclusively govern the field of telecommunications service (see 47 USC § 253 [a]), the prevailing wage law is a minimum labor standard … .As such, it falls within the Telecommunications Act’s safe harbor provision, which provides that  “[n]othing  in this section  shall affect the  ability of  a [s]tate to impose, on a competitively neutral basis . . . requirements necessary to . . . protect the public safety and welfare” (47 USC  §  253  [b]). … Nor is the prevailing wage law preempted by the federal Labor Management Relations Act. That statute provides that federal law governs suits to enforce collective bargaining agreements (see 29 USC § 185 [a]). While it is true that the Department  of Labor refers to collective bargaining agreements  to determine  prevailing wages,  those  agreements  are  not  necessarily determinative, and the rights conferred by the prevailing wage law  are independent of those conferred by  such  agreements … . Matter of Pascazi v Gardner, 513528, 3rd Dept, 5-2-13

 

Appraisal of Value of Gas-Line Easements Insufficient 

The Third Department reviewed an eminent domain proceeding for gas-line easements and determined that the appraisal relied upon by the trial court did not include a sufficient explanation of the valuation methods employed to allow substantive cross-examination.  Because the other appraisal offered at trial was rejected by the trial court, the case was remanded.  Matter of Acquisition of Easements … v Porto Bagel, Inc, 514583, 3rd Dept, 5-2-13

 

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Downtown Improvement/Sanitary District Charges; Downtown Special Assessment District Charges Not “Taxes” for Purposes of Empire-Zone Tax Credit

The question before the Third Department was whether petitioner’s limited liability company, which was a Qualified Empire Zone Enterprise (QEZE) and therefore was entitled to claim credit for “eligible real property taxes,” could also claim credit for a “downtown improvement tax.”  The issue was whether the “downtown improvement tax” was an “eligible real property tax.”  After extensive analysis of the meaning of “tax” in this context, the Third Department, in a full-fledged opinion by Justice McCarthy, determined it was not: “By long-standing precedent, statutory relief from real property ‘taxation’ . . . was held not to apply to taxes imposed for special benefits, typically in the form of special ad  valorem levies or special assessments” … .   Matter of Piccolo v NYS Tax Appeals Tribunal, 513539, 3rd Dept, 5-2-13

In a case which raised the same “tax versus ad valorem levy” issue in the QEZE context, the Third Department determined Sanitary District charges were not “taxes” entitled to credit.  Matter of Stevenson v NYS Tax Appeals Tribunal, 513540, 3rd Dept, 5-2-13

In another case with the same QEZE “tax versus ad valorem levy” issue, the Third Department determined that “Downtown Special Assessment District Charges” were not “taxes” entitled to credit.  Matter of Herrick v NYS Tax Appeals Tribunal, 513541, 3rd Dept, 5-2-13

 

Sole Custody to Mother Appropriate Because Voluntary Joint Custody No Longer Working

In affirming the grant of sole custody to the mother (in the face of a voluntary agreement of joint custody) because the parties’ relationship had deteriorated, the Third Department wrote:

Initially, “[w]here a voluntary agreement of joint custody is entered into, it will not  be  set aside unless there is a sufficient change in circumstances since the time of the stipulation and unless the modification of the custody agreement is in the best interests of the [child]…, and “an order entered on consent, without a plenary hearing, is entitled to less weight” ….”[A] sufficient change [in] circumstances can be established where  . . . the relationship between  joint custodial parents deteriorates ‘to the point where they simply cannot work together in a cooperative fashion for the good of their children'” … .  Matter of Youngs v Olsen, 514669, 3rd Dept, 5-2-13

 

 

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Summary Judgment in Neglect Proceeding Based Upon Proceeding Concerning Other Children in Another County Upheld​

In upholding the grant of summary judgment in a neglect proceeding based upon a prior “derivative neglect” determination (based upon drug abuse) with respect to other children in another county, the Third Department wrote:

“Although it is a drastic procedural device, Family Court is authorized to grant summary judgment in a neglect proceeding where no triable issue of fact exists” ….  We note that “evidence of abuse of one child will not, in and of itself, establish a prima facie case of derivative neglect or abuse of another” … . Rather, a prima facie case of “‘[d]erivative neglect is established where the evidence demonstrates an impairment of parental judgment to the point that it creates a substantial risk of harm for any child left in that parent’s care, and the prior neglect determination is sufficiently proximate in time to reasonably conclude that the problematic conditions continue to exist'” … . * * * Here, the prior neglect determination was proximate in time– the order reflecting respondent’s consent to a finding of neglect based upon excessive drug use was entered in January 2012, and petitioner moved for summary judgment in this proceeding less than one month later.  Matter of Alyssa WW … v Cortland County DSS, 514585, 3rd Dept, 5-2-13

 

 

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Issue Whether Son of Sam Law Supersedes Retirement and Social Security Law Protection of Pension Benefits Not Preserved for Review​

This case was remitted to the Third Department after the Court of Appeals determined the issue whether the Son of Sam Law (allowing the victims of crimes to seek compensation from the perpetrator) superseded Retirement and Social Security Law 110, which protects pension payments from creditors, had not been preserved for review.  The Third Department made it clear that it believes the Son of Sam Law does supersede the Retirement and Social Security Law, but the court was prohibited from addressing the subject due to the procedural posture of the case.  Matter of NYS Office of Victim Services v Raucci, 513039, 3rd Dept, 5-2-13

 

Department of Corrections Immune from Wrongful Confinement Suit

The Third Department affirmed the dismissal of a complaint by an inmate suing the Department of Corrections for wrongful confinement (after the annulment of a disciplinary determination) on immunity grounds: “[A]ctions of correctional facility employees with respect to inmate discipline matters are quasi-judicial in nature and, unless the employees exceed the scope of their authority or violate the governing statutes and regulations, [defendant] has absolute immunity for those actions”… .Loret v State of New York, 514609, 3rd Dept, 5-2-13

 

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Contract-Based Duty Owed to Non-Party Explained

In this case a stove that was not secured to the wall with a bracket tipped over as children either stood or jumped on the oven door. One of the children was killed.  One of the many issues in the case was whether the contractor who installed the stove without the bracket was liable to the surviving child.  In upholding the denial of the contractor’s motion for summary judgment, the Third Department explained when a contractual relationship can give rise to tort liability to a third party:

Defendant contends that, since he performed work as a contractor for the rental agent, he owed no duty to the surviving child and, thus, his motion for summary judgment in this regard should have been granted. “[A] contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party” …. The  three limited exceptions to this general rule include: “(1) where  the contracting party, in failing to exercise reasonable care in the performance  of his [or her] duties, launches a force or instrument of harm;  (2) where  the plaintiff detrimentally relies on  the continued performance  of the contracting party’s duties[;] and  (3) where  the contracting party has entirely displaced the other party’s duty to maintain the premises safely” …. Care must be taken in the application of the exceptions so that they do not “swallow up the general rule” …, and determining whether a duty exists is “a question of law for the courts” ….  Kelley…v Schneck…, 515645, 3rd Dept, 5-2-13

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