Contracts

Grouping of contacts

Matter of Matter of Unitrin Direct/Warner Ins. Co. v Brand, 2014 NY Slip Op 05887 [2nd Dept. 2014]

At the time of the accident, Collins maintained automobile liability insurance in Florida with Allstate Insurance Company with liability limits for bodily injury in the amount of $100,000 per person/$300,000 per occurrence and supplementary uninsured/underinsured motorist (hereinafter SUM) coverage for bodily injury in the amount of $100,000 per person/$300,000 per occurrence. Allstate tendered the bodily injury policy limit in the amount of $100,000 in settlement of Brand's claim.

At the time of the accident, Brand maintained automobile insurance coverage with the petitioner Unitrin Direct/Warner Insurance Company (hereinafter Unitrin) with policy limits for bodily injury also of $100,000 per person/$300,000 per occurrence and SUM coverage for bodily injury also of $100,000 per person/$300,000 per occurrence. Brand claimed that his injuries exceeded the limits of Collins' policy, and demanded from the American Arbitration Association in New York arbitration of a claim for SUM benefits under his Unitrin policy. In response to Brand's demand for arbitration, Unitrin moved for a permanent stay of arbitration on the ground that the SUM coverage was not triggered under New York law because the offending vehicle was not underinsured since Collins' bodily injury liability coverage under the Allstate policy equaled Brand's bodily injury liability coverage under the Unitrin policy. Unitrin argues that the "center of gravity"/"grouping of contacts" analysis demonstrates that New York is the forum that has the most significant contact to the dispute such that New York law should govern this matter. Brand contends, however, that under the "center of gravity"/"grouping of contacts" analysis, Florida law should control.

It is undisputed that this conflict of law question, although arising in the context of a motor vehicle accident, must be resolved by the conflict of law rules relevant to contracts, not torts (see Matter of Eagle Ins. Co. v Singletary, 279 AD2d 56). Generally, "the courts apply the more flexible center of gravity' or grouping of contacts' inquiry, which permits consideration of the spectrum of significant contacts' in order to determine which State has the most significant contacts to the particular contract dispute" (id. at 58-59, quoting Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 NY2d 219, 226). "In general, significant contacts in a case involving contracts, in addition to the place of contracting, are the place of negotiation and performance, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties" (id. at 59). As to insurance contracts specifically, significance has been attached to the " local law of the state which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 [of the Restatement] to the transaction and the parties'" (Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309, 318, quoting Restatement [Second] of Conflict of Laws § 193). In the case of a noncommercial vehicle, which is by its nature mobile, the principal location of the insured risk is the place where the vehicle is to be principally garaged (Matter of Eagle Ins. Co. v Singletary, 279 AD2d at 59).

Here, as the Supreme Court correctly noted, the insurance contract at issue was written to conform to the laws, rules and regulations of New York State, and was obtained in New York by Brand, a New York resident, from an insurance company doing business in New York. Furthermore, Brand served the demand for SUM arbitration upon the American Arbitration Association in New York. Applying the grouping of contacts inquiry to these facts, New York has the most significant contacts with the parties and the contract. Indeed, such a conclusion would be in conformity with the reasonable expectations of the contracting parties.

Brand's reliance on Florida as the situs of the accident confuses the contacts that might be significant in a tort case with those that are material in a contract dispute (see Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 NY2d 219). New York law applies herein.

Under New York law, SUM coverage is only triggered where the bodily injury liability insurance limits of the policy covering the tortfeasor's vehicle are less than the liability limits of the policy under which a party is seeking SUM benefits (see Insurance Law § 3420[f][2][A]; Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 607-608; Matter of AIU Ins. Co. v Hibbert, 85 AD3d 779). Here, Collins' Allstate policy limits for bodily injury were identical to Brand's Unitrin policy limits for bodily injury. Hence, Collins does not qualify as an underinsured driver.

Accordingly, the Supreme Court properly granted the petitioner's application to permanently stay arbitration of a claim for SUM benefits.

Brand's contention that Unitrin's payment of first party benefits constituted an agreement that Florida law controls is without merit, as Unitrin's payment of first party benefits in the first instance was required pursuant to 11 NYCRR 65-3.12(a)(3) and (b). To the extent there was a dispute between Unitrin and Allstate as to the priority of first party benefits, that is a matter to be resolved between the insurers (see Insurance Law § 5105; 11 NYCRR 65-3.12[b]; 65-4.11).

agreement to agree is not to agree at all

Michael H. Spector, AIA, P.C. v Billy Smith's Sport Ctr., Inc., 2012 NY Slip Op 03610 (2nd Dept., 2012)

Contrary to the plaintiff's contention, there is no valid line of reasoning or permissible inferences that could lead a rational person to the conclusion reached by the jury with respect to the causes of action to recover damages for beach of contract or to recover on an account stated. With respect to the cause of action alleging breach of contract, the evidence adduced at trial demonstrated that the parties had a mere agreement to agree, which is insufficient to bind either party (see Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105, 109-110; Maffea v Ippolito, 247 AD2d 366, 367). With respect to the cause of action to recover on an account stated, the parties did not agree on a price that the individual defendants would pay for the plaintiff's services, and the plaintiff thus failed to establish a requisite element for recovery on a theory of account stated (see Heelan Realty & Dev. Corp.v Ocskasy, 27 AD3d 620). Accordingly, the Supreme Court properly granted those branches of the individual defendants' motion which were pursuant to CPLR 4404(a) to set aside the verdict and for judgment as a matter of law dismissing the causes of action alleging breach of contract and to recover on an account stated insofar as asserted against them.

JMF Consulting Group II, Inc. v Beverage Mktg. USA, Inc., 2012 NY Slip Op 05392 (2nd Dept. 2012)

JMF and Ferolito established, prima facie, that the alleged oral agreement was too indefinite to be enforceable and was merely an agreement to agree (see Joseph Martin, Jr., Delicatessen v Schumacher, 52 NY2d 105; Mellen & Jayne, Inc. v AIM Promotions, Inc., 33 AD3d 676, 677-678; Flanel v Flanel, 152 AD2d 536, 536-537). Moreover, since the terms of each loan were set out in writing in each of the separate promissory notes executed by BMU, BMU was precluded from establishing the existence of an enforceable oral agreement by relying on parole evidence that contradicted the express terms of those notes (see Marine Midland Bank-S. v Thurlow, 53 NY2d 381, 387; Dong Won Kim v Frank H. Truck Corp., 81 AD3d 586, 587; Friends of Avalon Preparatory School v Ehrenfeld, 6 AD3d 658, 658-659). Since BMU failed to raise a triable issue of fact in response to the prima facie showing of JMF and Ferolito, those branches of the motion of JMF and Ferolito which were for summary judgment dismissing the first counterclaim and the first cause of action in the third-party complaint should have been granted.

Contracts

Eitan Ventures, LLC v Peeled, Inc., 2012 NY Slip Op 03085 (1st Dept., 2012)

When construing a contract, the most important consideration is to give effect to the parties' intentions (Federal Ins. Co v Americas Ins. Co., 258 AD2d 39, 44 [1999]). To ascertain those intentions, a court should examine the contract as a whole and interpret its parts with reference to the whole (see Kass v Kass, 91 NY2d 554, 566-567 [1998]).

Kaplan v Madison Park Group Owners, LLC, 2012 NY Slip Op 03086 (1st Dept., 2012)

By definition an anticipatory breach cannot be committed by a party already in material breach of an executory contract. It is well settled that an anticipatory breach of a contract is one that occurs before performance by the breaching party is due. For example, in Norcon Power Partners v Niagara Mohawk Power Corp. (92 NY2d 458 [1998]) the Court of Appeals defined an anticipatory repudiation as one that occurs "prior to the time designated for performance" (id. at 462-463). Consistently, in American List Corp. v U.S. News & World Report (75 NY2d 38 [1989]) the Court defined an anticipatory breach in terms of "a wrongful repudiation of the contract by one party before the time for performance" (id. at 44). Applying New York law, the United States Court of Appeals for the Second Circuit held that "[a]nticipatory repudiation occurs when, before the time for performance has arisen, a party to a contract declares his intention not to fulfill a contractual duty" (Lucente v International Bus. Machs. Corp., 310 F3d 243, 258 [2d Cir 2002] [citations omitted]). The rationale behind the doctrine of anticipatory breach is that it gives the non-repudiating party an opportunity to treat a repudiation as an anticipatory breach without having to futilely tender performance or wait for the other party's time for performance to arrive (see Cooper v Bosse, 85 AD2d 616, 618 [1981]). As noted above, plaintiffs were in default as of July 27, 2009, two days before the letter was sent. Once plaintiffs defaulted on July 27, Lipman did not have to tender performance or wait for a law date because [*3]he could have resorted to the contractual remedies for plaintiffs' breach set forth under paragraph 13. Accordingly, the July 29, 2009 letter did not give rise to an anticipatory repudiation because it was not issued "prior to the time designated for performance" within the meaning of Norcon and the other cases cited above.

Princes Point, LLC v AKRF Eng'g, P.C., 2012 NY Slip Op 02954 (1st Dept., 2012)

Plaintiff's motion to amend the complaint to add additional causes of action was properly denied. Plaintiff's claims for promissory estoppel and fraud relating to the June 2004 contract fail since, pursuant to the contract, the property was being purchased "AS IS . . . AND WITH ALL FAULTS," and plaintiff was relying solely on its own inspections of the property. Thus, plaintiff accepted all defects in the premises and was not relying on any assurances made by defendants as to the condition of the property (see Barnes v Gould, 83 AD2d 900 [1981], affd 55 NY2d 943 [1982). In addition, the proposed promissory estoppel claim is deficient because the contract included a clause stating that it represented the entire understanding between the parties (see Fariello v Checkmate Holdings, LLC, 82 AD3d 437, 438 [2001]).

Furthermore, the new damages sought, consequential and punitive, are unavailable to plaintiff on the claims asserted. Damages for fraud are to compensate plaintiffs for what they [*2]lost, " not to compensate them for what they might have gained'" (Starr Found. v American Intl. Group, Inc., 76 AD3d 25, 27 [2010], quoting Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996]), and punitive damages are not warranted since plaintiff has not alleged wrongdoing evincing a high degree of moral turpitude that demonstrates such wanton dishonesty as to imply a criminal indifference to civil obligations (Ross v Louise Wise Servs., Inc., 8 NY3d 478 [2007]).

Plaintiff failed to plead facts that are sufficient to support a cause of action for prima facie tort because the allegations do not establish that defendants' purportedly tortious conduct was motivated by an otherwise lawful act performed with the intent to injure or with a "disinterested malevolence" (see Curiano v Suozzi, 63 NY2d 113, 117 [1984]; Kleinerman v 245 E. 87 Tenants Corp., 74 AD3d 448 [2010]). Plaintiff's allegation of malevolence is contrary to its allegation concerning defendants' alleged profit motives (see Meridian Capital Partners, Inc. v Fifth Ave. 58/59 Acquisition Co. L.P., 60 AD3d 434 [2009]).

Josephson LLC v Column Fin., Inc., 2012 NY Slip Op 02588 (1st Dept., 2012)

Defendants contend that the breach of contract cause of action should be dismissed because the subject contract expressly prohibits oral modifications and the alleged oral agreement is barred by the Statute of Frauds (see General Obligations Law § 15-301). Plaintiffs failed to raise an issue of fact whether there was a partial performance of the contract that would permit enforcement of the oral modification (see F. Garofalo Elec. Co. v New York Univ., 270 AD2d 76, 80-81 [2000], lv dismissed 95 NY2d 825 [2000]). The act they identify as partial performance, i.e., the delivery of the purchase price to the title company, is not "unequivocally referable" to the oral modification; it can also reasonably be regarded as preparatory to performing the contract (see e.g. Merrill Lynch Interfunding, Inc. v Argenti, 155 F3d 113, 122-123 [1998]). Further, the record demonstrates that the parties did not agree on all the material terms of the alleged oral agreement. The deposition testimony upon which plaintiffs rely reflects a mere agreement to agree (see e.g. Meyers Assoc., L.P. v Conolog Corp., 61 AD3d 547 [2009]). [*2]

Plaintiffs abandoned their remaining claims by failing to oppose the parts of defendants' motion that sought summary judgment dismissing those claims.

Garber v Stevens, 2012 NY Slip Op 02437 (1st Dept., 2012)

Defendants' affirmative defenses of fraud and/or unconscionability, which were not asserted in their answer or raised on a prior motion, were properly rejected (see BMX Worldwide v Coppola N.Y.C., 287 AD2d 383, 384 [2001]).

Defendants' reliance on plaintiffs' silence and inaction to establish the defenses of waiver and/or equitable estoppel is misplaced (Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt., L.P., 7 NY3d 96, 105-107 [2006]; EchoStar Satellite L.L.C. v ESPN, Inc., 79 AD3d 614, 617 [2010]. Plaintiffs did not discover many of the acts about which they now complain until long after they entered into the agreement, in part, because of defendants' subterfuge and violation of that agreement. Moreover, defendants' last alleged violation occurred in 2005, the same year the complaint was filed.

Finally, laches is unavailable as a defense to the claims of breach of contract, breach of fiduciary duty and for the return of management fees, which, although brought together as a derivative action, are not equitable in nature (see e.g. Cadlerock, L.L.C. v Renner, 72 AD3d 454, 454 [2010]; see also Pfeiffer v Berke, 4 Misc 2d 918 [Sup Ct, Kings County 1953]).