Justia Contracts Opinion SummariesArticles Posted in New York Court of Appeals
Congel v. Malfitano
The agreement establishing a partnership in this case dictated that Defendant, a partner, wrongfully dissolved the partnership, but it was error to include the legal fees incurred by the remaining partners in the damages owed to them by Defendant. In 1985, Defendant and seven others entered into a written agreement to form a general partnership. In the mid-2000s, Defendant withdrew from the partnership. Plaintiffs, as the partnership’s executive committee and on behalf of the partnership, brought this breach of contract action seeking a declaratory ruling that Defendant had wrongfully dissolved the partnership, as well as damages. Supreme Court granted summary judgment to Plaintiffs, determining that the partnership was not an “at-will” partnership and therefore could not be dissolved without violation of the partnership agreement. The Appellate Division upheld Supreme Court’s ruling, concluding that Defendant wrongfully dissolved the partnership. On remand for the second time, Supreme Court awarded attorneys’ fees and experts’ fees. The Court of Appeals held (1) the lower courts erred in applying N.Y. P'ship Law 62(1)(b) to decide that Defendant violated the agreement, but they correctly concluded that Defendant’s dissolution was wrongful; but (2) Supreme Court erred in awarding fees to Plaintiffs as part of the statutory damages. View "Congel v. Malfitano" on Justia Law
Paramount Pictures Corp. v. Allianz Risk Transfer AG
The claim brought by Paramount Pictures Corporation, the plaintiff in this suit, was barred by res judicata because it should have been asserted as a counterclaim in an action involving the same parties brought in federal court nearly ten years. Paramount was the defendant in a federal action brought in 2008 by investors following an unsuccessful investment venture. The district court entered judgment in favor of Paramount, and the judgment was affirmed on appeal. While the investors’ appeal was pending, Paramount commenced this action in Supreme Court, alleging breach of contract. The investors moved to dismiss on the basis of res judicata. Supreme Court denied the motion, but the Appellate Division reversed. The Court of Appeals affirmed, holding (1) pursuant to federal principles of claim preclusion - the applicable rules of decision in this case - Paramount’s breach of contract claim was transactionally related to the investor’s claims in the federal case, amount to the same claim for purposes of res judicata; and (2) because Paramount’s claim was not asserted in the parties’ prior federal action, it was now barred. View "Paramount Pictures Corp. v. Allianz Risk Transfer AG" on Justia Law
Dormitory Authority of State of N.Y. v. Samson Construction Co.
In this breach of contract and negligence action, the Court of Appeals held that the City of New York was an intended third-party beneficiary of an architectural services contract between Dormitory Authority of the State of New York (DASNY) and Perkins Eastman Architects, P.C. (Perkins) and that DASNY’s negligence claim against Perkins was duplicative of its breach of contract claim. The Appellate Division denied Perkins’ motion for summary judgment on the City’s breach of contract claim, holding that the City had raised an issue of fact whether it was an intended third-party beneficiary of the parties’ contract and denied Perkins’ motion for summary judgment to dismiss DASNY’s negligence claim as duplicative of its breach of contract claim, holding that there was an issue of fact whether Perkins assumed a duty of care to reform in accordance with professional standards that was independent of its contractual obligations. The Court of Appeals reversed, holding (1) the City failed to raise an issue of fact concerning its status as a third-party beneficiary, and Perkins’ motion for summary judgment on this issue should have been granted; and (2) under the circumstances, the negligence claim was duplicative of the breach of contract cause of action. View "Dormitory Authority of State of N.Y. v. Samson Construction Co." on Justia Law
Global Reinsurance Corp. of America v. Century Indemnity Co.
The Court of Appeals answered a question certified to it by the United States Court of Appeals in the negative, answering that under New York law generally, and particularly in light of the New York Court of Appeals’ decision in Excess Insurance Co. Ltd. v. Factor Mutual Insurance Co., 3 NY3d 577 (N.Y. 2004), there is neither a rule of construction nor a presumption that a per occurrence liability limitation in a reinsurance contract caps all obligations of the reinsurer, such as payments made to reimburse the reinsured’s defense costs. The court held definitively that Excess did not supersede the “standard rules of contract interpretation” otherwise applicable to facultative reinsurance contracts. Therefore, New York law does not impose either a rule or a presumption that a limitation on liability clause necessarily caps all obligations owed by a reinsurer, such as defense costs, without regard for the specific language employed therein. View "Global Reinsurance Corp. of America v. Century Indemnity Co." on Justia Law
Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc.
In these appeals stemming from four residential mortgage-backed securities transactions, the Court of Appeals held that claims for general contract damages based on alleged breaches of a “no untrue statement” provision in mortgage loan purchase agreements cannot withstand a motion to dismiss based on a contract provision mandating cure of the breaches or repurchase of the loans as the sole remedy for breaches of mortgage loan-specific representations and warranties. Specifically, the court held that, inasmuch as the claims for general contract damages at issue were grounded in alleged breaches of the mortgage loan-specific representations and warranties to which the limited remedy fashioned by the sophisticated parties applies, Plaintiffs’ claims for general contract damages should be dismissed. View "Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc." on Justia Law
Princes Point LLC v. Muss Development LLC
Under the circumstances of this case, the mere commencement of an action seeking “rescission and/or reformation” of a contract does not constitute an anticipatory breach of such agreement. Plaintiff agreed to purchase certain property from Defendants. The contract was subsequently amended. Plaintiff later commenced this action seeking specific performance absent the amendments on the ground that the amendments were executed based on Defendants’ alleged misrepresentations. Defendants asserted various counterclaims. Plaintiffs’ causes of action were eventually dismissed. Supreme Court granted summary judgment for Defendants on their counterclaims, concluding that the contract had “expired by its terms” and that Plaintiff” materially breached the contract.” The Appellate Division affirmed, concluding that a rescission action unequivocally evinces a plaintiff’s intent to disavow its contractual obligations, and therefore, the commencement of such an action before the date of performance constitutes an anticipatory breach. The Court of Appeals reversed, holding that the commencement of this action did not reflect a repudiation of the contract. View "Princes Point LLC v. Muss Development LLC" on Justia Law
In re Hennel
The Court of Appeals reversed the order of the Appellate Division affirming Surrogate’s Court’s grant of summary judgment to Petitioners, holding that Petitioners’ claim against the decedent’s estate seeking to enforce an oral promise was barred by the statute of frauds. Surrogate’s Court concluded that promissory estoppel should be applied to Petitioners’ claim to remedy a potential injustice. The Appellate Division affirmed, concluding that the elements of promissory estoppel were met and that application of the statute of frauds would be unconscionable under the circumstances. The Court of Appeals reversed, holding that Petitioners could not invoke the doctrine of promissory estoppel because application of the statute of frauds would not inflict an unconscionable injury upon Petitioners. View "In re Hennel" on Justia Law
Connaughton v Chipotle Mexican Grill, Inc.
Plaintiff appealed from an order of the Appellate Division affirming Supreme Court’s dismissal of Plaintiff’s complaint for failure to state a cause of action for fraudulent inducement against Chipotle Mexican Grill and its chief executive officer. As grounds for its decision, the Appellate Division concluded that Plaintiff’s damages were speculative and the facts alleged did not support an inference of calculable damages. The dissent concluded that the case should proceed to discovery to allow Plaintiff to accumulate evidence of a pecuniary loss because the pleading must be construed liberally and damages need not be proven during the pleading stage. The Court of Appeals affirmed, holding that Plaintiff failed to plead a cause of action for fraudulent inducement because he did not allege any out-of-pocket loss and otherwise plead a recoverable harm. View "Connaughton v Chipotle Mexican Grill, Inc." on Justia Law
Marin v. Constitution Realty, LLC
Jose and Ada Marin obtained an $8 million settlement for injuries Jose suffered when he fell forty feet while working on a building in Manhattan. At issue in this appeal was a fee dispute between Plaintiffs’ attorney-of-record in that action, Sheryl Menkes, and two attorneys she engaged to assist her, Jeffrey Manheimer and David Golomb. Supreme Court held that the fee-sharing agreements unambiguously entitled Manheimer to twenty percent of net attorneys’ fees and Golomb to forty percent of net attorneys’ fees. The Appellate Division affirmed. Menkes appealed. The Court of Appeals modified the order of the Appellate Division, holding that, based on the plain language of the parties’ respective fee-sharing agreements, Manheimer was entitled to twenty percent of net attorneys’ fees and Golomb was entitled to twelve percent of net attorneys’ fees. View "Marin v. Constitution Realty, LLC" on Justia Law
Stonehill Capital Mgt., LLC v. Bank of the West
Plaintiffs were affiliated commercial entities that sought to enforce the auction sale of a syndicated loan against Bank. When Bank accepted Plaintiffs’ bid and then refused to transfer the loan, Plaintiffs brought this action alleging breach of contract and breach of the implied covenant of good faith and fair dealing. In response, Defendant argued that it had no obligation to transfer the loan because the parties never executed a written sales agreement and Plaintiffs failed to submit a timely cash deposit. Supreme Court granted Plaintiffs’ motion for summary judgment on the breach of contract cause of action. The Appellate Division reversed. The Court of Appeals reversed, holding that Plaintiffs established their entitlement to summary judgment because the prerequisites of executing a written sales agreement and submitting a timely cash deposit were not conditions precedent to formation of the parties’ contract and did not render their agreement unenforceable. View "Stonehill Capital Mgt., LLC v. Bank of the West" on Justia Law