Articles Posted in Contracts

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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

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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

Posted in: Contracts

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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

Posted in: Contracts

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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

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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

Posted in: Business Law, Contracts

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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

Posted in: Contracts

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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

Posted in: Banking, Contracts

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The underlying federal action involved a dispute between General Motors LLC (GM), a franchisor and Chevrolet car manufacturer, and Beck Chevrolet Co., Inc., an automobile dealership with a Chevrolet franchise. Beck sued GM alleging violations of the Dealer Act. The district court ruled against Beck on its claims. On appeal, the United States Court of Appeals for the Second Circuit determined that resolution depended on unsettled New York law and certified two questions requiring the Court of Appeals’ interpretation of two provisions of New York’s Franchised Motor Vehicle Dealer Act. The Court of Appeals answered as follows: (1) the use of a franchisor sales performance standard that relies on statewide data and some local variances but fails to account for local brand popularity to determine compliance with a franchise agreement is unlawful under the Dealer Act; and (2) a franchisor’s unilateral change of a dealer’s geographic sales area does not constitute a prohibited modification to the franchise. View "Beck Chevrolet Co., Inc. v. General Motors LLC" on Justia Law

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Plaintiffs (collectively, “Pegasus”) sued one defendant (“VarigLog”) for breach of contract and conversion and sought to hold other defendants (“MP defendants”) liable for VarigLog’s conduct on an alter ego theory. Pegasus served a notice to produce documents seeking electronically stores information (ESI) concerning Pegasus’s claims and VarigLog’s relationship with the MP defendants. VarigLog’s production was unsatisfactory to Pegasus. Supreme Court appointed a discovery referee to assist Pegasus and VarigLog in resolving the dispute. During the conferences it was established that computer crashes resulted in the loss of much of the ESI, and that data recovery efforts had proven unsuccessful. Pegasus moved for the imposition of spoliation sanctions against VarigLog and the MP defendants. Supreme Court granted the motion, concluding that the evidence was negligently destroyed. The Appellate Division reversed. The Court of Appeals reversed, holding that the Appellate Division erred in determining that Pegasus had not attempted to make a showing that the destroyed documents were relevant to its claim. Remanded to the trial court for a determination as to whether the evidence was relevant to the claims asserted against Defendants and for the imposition of an appropriate sanction should the trial court decide that a sanction is warranted. View "Pegasus Aviation I, Inc. v Varig Logistica S.A." on Justia Law

Posted in: Contracts, Injury Law

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In IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A., the Court of Appeals held that, where parties include a New York choice-of-law clause in a contract, such a provision demonstrates the parties’ intent that courts not conduct a conflict-of-laws analysis. In the instant case, Plaintiff was a New York not-for-profit corporation that administered a retirement plan and a death benefit plan. Decedent was enrolled in both plans. Decedent named Appellants as beneficiaries. Both plans stated that they shall be governed by and construed in accordance with New York law. After Decedent died, a Colorado court admitted his will to probate. Plaintiff was unsure to whom the plan benefits should be paid after Decedent’s death and commenced a federal interpleader action against Decedent’s Estate, the personal representative (PR) of the Estate, and Appellants. A federal district court directed Plaintiff to pay the disputed funds to the PR, concluding that Colorado’s revocation law terminated any claims to the plans by Appellants. On appeal, the Second Circuit Court of Appeals certified questions to the Court of Appeals. The Court of Appeals answered by extending the holding in IRB to contracts that do not fall under Gen. Oblig. Law 5-1401 and clarifying that this rule obviates the application and both common-law and conflict-of-laws principles and statutory choice-of-law directives, unless the parties expressly indicate otherwise. View "Ministers & Missionaries Benefit Bd. v. Snow" on Justia Law