Justia Contracts Opinion SummariesArticles Posted in New York Court of Appeals
IKB Int’l S.A. v Wells Fargo Bank, N.A.
The Court of Appeals modified the decision of the appellate division in this case challenging the devaluation of certain securities, holding that the relevant language in the governing agreements did not impose an affirmative duty on the part of the trustee to enforce repurchase obligations.Plaintiffs were commercial banks incorporated in Germany that invested in residential mortgage-backed securities issued by securitization trusts. Defendants served as trustees for the trusts. When the securities lost significant value in 2008, Plaintiffs sued, alleging that Defendants breached multiple statutory, contractual, and fiduciary duties. Supreme Court rejected Defendants' argument that the action was barred because Plaintiffs did not comply with the requirements of the no-action clause. The appellate division affirmed. The Court of Appeals affirmed as modified, holding (1) failure to comply with the no-action clause did not bar this suit; and (2) this Court declines to recognize an implied contractual duty on Trustees' part to enforce the repurchase protocol obligations of other parties. View "IKB Int'l S.A. v Wells Fargo Bank, N.A." on Justia Law
Singh v. City of New York
The Court of Appeals affirmed the judgment of the Appellate Division dismissing Plaintiffs' claims that Taxi and Limousine Commission and New York City breached the implied covenant of good faith and fair dealing and engaged in deceptive business practices under N.Y. Gen. Bus. Law 349, holding that Plaintiffs failed to state a claim.Plaintiffs, entities that purchased government licenses to operate taxis at an auction, brought this action alleging that Defendants (1) breached the implied covenant of good faith and fair dealing by failing to enforce certain licensing requirements against smartphone applicate-based competitors such as Uber Technologies, Inc. and Lyft, Inc.; and (2) engaged in deceptive business practices in their promotion of the auction. Supreme Court granted in part Defendants' motion to dismiss. The Appellate Division reversed in part and concluded that both claims should be dismissed. The Court of Appeals affirmed, holding (1) Plaintiffs did not adequately plead a claim for breach of the implied covenant of good faith and fair dealing; and (2) Plaintiffs failed to plead the type of conduct covered by N.Y. Gen. Bus. Law 349. View "Singh v. City of New York" on Justia Law
Cordero v. Transamerica Annuity Service Corp.
The Court of Appeals reformulated a question certified to it by the United States Court of Appeals for the Eleventh Circuit and concluded that Plaintiff's allegations did not state a cognizable cause of action for breach of the implied contract of good faith and fair dealing.At issue was whether Plaintiff sufficiently pled a cause of action for breach of the implied contract under New York law by alleging that, during a Structured Settlement Protection Act proceeding, the structured settlement obligor and the issuer of an annuity funding the settlement failed to enforce the anti-assignment provisions contained in structured settlement and qualified assignment agreements. The Court of Appeals answered the question, as reformulated, in the negative, holding that Plaintiff failed to meet its burden of proving an implied promise in this case. View "Cordero v. Transamerica Annuity Service Corp." on Justia Law
TCR Sports Broadcasting Holding, LLP v. WN Partner, LLC
In this dispute between two Major League Baseball (MLB) teams and their co-owned regional sports network the Court of Appeals affirmed as modified the judgment of the court of appeals affirming the confirmation of a second arbitration award and directed that a money judgment be vacated, holding that the highly sophisticated parties were bound to the terms of their agreement.In this dispute regarding the fair market value of certain telecast rights Plaintiffs sought to vacate an arbitration award granted by the MLB's Revenue Sharing Definitions Committee (RSDC). Supreme Court vacated the arbitration award based on the RSDC's evident partiality, and the appellate division affirmed. After a second hearing, the RSDC entered a second award. Supreme Court affirmed, and the appellate division affirmed. The Court of Appeals affirmed as modified, holding (1) the courts below correctly confirmed the second arbitration award; and (2) the order must be modified because Supreme Court erred by awarding prejudgment interest and rendering a money judgment. View "TCR Sports Broadcasting Holding, LLP v. WN Partner, LLC" on Justia Law
State v. Vayu, Inc.
The Court of Appeals reversed the judgment of the appellate division affirming the judgment of Supreme Court granting Defendant's motion to dismiss this breach of contract action for lack of personal jurisdiction, holding that jurisdiction was proper under New York's long-arm statute, N.Y. C.P.L.R. 302(a)(1).Defendant, a Delaware corporation headquartered in Michigan, designed and manufactured unmanned aerial vehicles (UAV). Defendant sold two UAVs to the State University of New York at Stony Brook for delivery in Madagascar. The State commenced this action on behalf of the university following a dispute regarding the operability of the UAVs, alleging breach of contract and other claims. Supreme Court granted the motion, and the appellate division affirmed. The Court of Appeals reversed, holding that there was personal jurisdiction over Defendant pursuant to the "transacts any business" clause of New York's long-arm statute. View "State v. Vayu, Inc." on Justia Law
34-06 73, LLC v. Seneca Insurance Co.
The Court of Appeals held that Plaintiffs' original complaint alleging that Defendant breached the parties' written insurance policy and that Plaintiffs had fully complied with the requirements contained in the policy failed to give Defendant the requisite notice of the "transactions, occurrences, or series of transactions or occurrences, to be proved" in support of Plaintiff's reformation claim, as required under N.Y. C.P.L.R. 203(f).Defendant, an insurance company, issued Plaintiffs, two limited liability companies, a multi-million dollar, written insurance policy covering many of Plaintiffs' vacant commercial properties. Plaintiffs later brought this action for breach of contract seeking damages based on Defendant's failure to cover damages incurred after a fire on the premises. A jury returned a verdict in favor of Plaintiffs on the reformation claim, and the appellate division affirmed. The Court of Appeals reversed, holding that Plaintiffs' complaint failed to give notice to Defendant of the transactions or occurrences on which Plaintiffs based their reformation claim. View "34-06 73, LLC v. Seneca Insurance Co." on Justia Law
Sage Systems, Inc. v. Liss
The Court of Appeals reversed the order of the appellate division in this case, holding that an indemnification provision in the partnership agreement between Plaintiff and Defendant lacked express language or indicia of the parties' "unmistakably clear" intent to indemnify each other for attorney's fees in an action between them concerning the contract.After Defendant unsuccessfully brought a partnership dissolution action Plaintiff commenced this action seeking attorney's fees and costs incurred defending the dissolution action, claiming that Defendant waived the benefit of the American Rule, under which a prevailing party in litigation generally may not recover attorney's fees from the losing party, by agreeing to the indemnification provision in the parties' partnership agreement. Supreme Court granted summary judgment for Defendant, and appellate division affirmed. The Court of Appeals affirmed, holding that nothing in the agreement made "unmistakably clear" that the partners intended to permit recovery for attorney's fees in an action between them on the contract. View "Sage Systems, Inc. v. Liss" on Justia Law
Donohue v. Cuomo
In response to questions certified to it by the United States Court of Appeals for the Second Circuit, the Court of Appeals held that inferences of vesting of retiree health insurance rights when construing a collective bargaining agreement (CBA) are inconsistent with New York's established contract interpretation principles.In Kolbe v. Tibbetts, the Court of Appeals left open the question of whether a New York court should infer vesting of retiree health insurance rights when construing a collective bargaining agreement (CBA). The Supreme Court rejected such inferences as incompatible with ordinary contract principles under federal law, thus repudiating International Union, United Automobile, Aerospace, & Agriculture Implement Workers of America v. Yard-Man, Inc., 716 F2d 1476 (6th Cir 1983). In answering the questions certified to it in this case, the Court of Appeals (1) held that it maintains its traditional contract interpretation principles, including those set forth in Kolbe; but (2) clarified that New York's contract law does not recognize Yard-Man-type inferences. View "Donohue v. Cuomo" on Justia Law
Freedom Mortgage Corp. v. Engel
In these four appeals turning on the timeliness of a mortgage foreclosure claim and involving the intersection of contracts affecting real property ownership and the application of the statute of limitations, the Court of Appeals held that the Appellate Division order in each case must be reversed.In two cases, the issue was when the maturity of the debt was accelerated, commencing the six-year statute of limitations period. The remaining issues in the other cases turned on whether the noteholder's voluntary discontinuance of a prior foreclosure action revoked acceleration of the debt, thus reinstating the borrower's right under contract to repay the loan in installments. The Court of Appeals held (1) in the first case, the default letter in question did not accelerate the debt; (2) in the second case, two complaints in prior discontinued foreclosure actions that failed to reference the pertinent loan were not sufficient to constitute a valid acceleration; and (3) as to the remaining issues, where the maturity of the debt has been validly accelerated by commencement of a foreclosure action, the noteholder's voluntary withdrawal of that action revokes the election to accelerate. View "Freedom Mortgage Corp. v. Engel" on Justia Law
In re Part 60 Put-Back Litigation
In this residential mortgage-backed securities (RMBS) action the Court of Appeals reversed the order of the Appellate Division and reinstated the order of Supreme Court, holding that, in a breach of contract action, the public policy rule prohibiting parties from insulating themselves from damages caused by grossly negligent conduct applies only to exculpatory clauses or provisions that limit liability to a nominal sum.At issue was a contract that contained a sole remedy provision that purported to limit, but not eliminate, the remedies available to Plaintiff in the event of a breach. Plaintiff sought to avoid the provision by alleging that Defendants breached the contract with gross negligence. Supreme Court held that the sole remedy provision was enforceable. The Appellate Division reversed, concluding that Plaintiff's allegations of gross negligence were sufficient to render the sole remedy provision unenforceable. The Court of Appeals reversed, holding (1) in a breach of contract case, grossly negligent conduct will render unenforceable only exculpatory or nominal damages clauses; and (2) because the sole remedy provision at issue was not an exculpatory or nominal damages clause and was not subject to the gross negligence public policy exception, the allegations of gross negligence did not render the sole remedy provision unenforceable. View "In re Part 60 Put-Back Litigation" on Justia Law