An HMY Major Win of Over $680,000

AN UNAMBIGUOUS LEASE, LIKE ANY CONTRACT, MUST BE INTERPRETED AS A MATTER OF LAW

Recently, Lane T. Maxson, Esq., Managing Partner of HMY, successfully moved for summary judgment on behalf of the Bellmore-Merrick Central High School District (the “District”) against the Board of Cooperative Educational Services of Nassau County (“BOCES”), in a contract interpretation case that resulted in a money judgment in favor of the District of over $680,000.00.

The case involved the interpretation of a 10-year lease between the parties, and a subsequent purchase agreement between the parties, executed about one year prior to the end of the lease term.  BOCES had agreed to purchase the leased property for $12 million.

The closing for the sale of the property occurred five months after the expiration of the lease term.  At the closing, BOCES refused to pay five months’ rent that the District claimed accrued pending closing of title, arguing that the lease had expired five months earlier and BOCES was, therefore, not obligated to pay rent.

The District disagreed, commenced an action for rent, and upon the District’s motion for summary judgment, the Hon. Vito M. DeStefano of the Commercial Division, Nassau County Supreme Court, agreed with the District.

In opposition to the motion, BOCES argued there was an ambiguity in the purchase agreement which expressly provided that the underlying lease could not be extended without a mutual agreement. In answer to this argument, Justice DeStefano reasoned that whether a writing is ambiguous is a question of law to be determined by the court and the determination of the intent of the parties to a contract should be made as a matter of law “whereas here, the intent is discernible from the four corners of an unambiguously-worded agreement.”

Justice DeStefano, “in viewing the Purchase Agreement in its entirely,” concluded that BOCES was obligated to pay the rent for the five month period because that agreement expressly stated the lease “‘shall be terminated at Closing’ (paragraph 4); the closing shall be July 1, 2018 or 30 days after obtaining approval of the lot subdivision, whichever is later (paragraph 5); ‘between the date hereof and the Closing Date… [t]he current lease to remain in effect’ (paragraph 21); and that ‘rent’ is ‘to be apportioned at the closing date’ (paragraph 8).”

In rejecting BOCES’ arguments (1) that the parties “must have contemplated” a closing prior to July 1, 2018, because the purchase agreement “intentionally and expressly did not extend the lease,” and (2) that the contractual apportionment of rent at closing was “intended to address the scenario where the parties closed” before the expiration of the lease term, Justice DeStefano reasoned: “While BOCES argues that the allocation provision only applied in the event the closing occurred prior to the end of the Lease term, ‘courts may not by construction add terms…under the guise of interpreting the writing.’ Moreover, the court declines to interpret the Purchase Agreement, as a matter of law, to include something that the parties have neglected to specifically include.”

Justice DeStefano also granted the District’s motion for summary judgment dismissing BOCES’ two counterclaims sounding in breach of contract and unjust enrichment.

With respect to the breach of contract counterclaim, BOCES claimed damages as a result of an alleged intentional delay on the part of the District to close title, but justice DeStefano concluded that “[h]aving closed on the purchase of the premises, with full knowledge of the District’s purported delay, BOCES’ claim to recover damages for the District’s delay in closing beyond the date contemplated by the Purchase Agreement is without mere merit. In any event, ‘delay, even “substantial delay,” in the closing of a real estate transaction does not constitute a breach of the contract of sale.’”

With respect to the unjust enrichment counterclaim, Justice DeStefano concluded that such recovery is “inappropriate if there exists a valid and enforceable contract between the parties. It is impermissible…to seek damages in an action sounding in quasi contract where the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties.”

This newsletter is provided by Hamburger, Maxson & Yaffe, LLP to keep its clients, prospective clients, and other interested parties informed of current legal developments that may affect or otherwise be of interest to them, and to learn more about our firm, our services and the experiences of our attorneys. The information is not intended as legal advice or legal opinion and should not be construed as such

Complimentary Luncheon Seminar

 

Hamburger, Maxson, Yaffe & McNally, LLP
Cordially invites you to a
Complimentary Luncheon Seminar:
ESTATE AND LONG-TERM CARE PLANNING
Protecting your Health and your Wealth

Estate and Long Term Care Planning Seminar

Rose M. Elefante, experienced elder
law and estate planning attorney,
will discuss key issues in this complex
area, including options for funding
long-term care, healthcare decision-making, and asset protection.
Please join us on Wednesday, April 11, 2018 at 11:30 a.m.
Location: Fairfield Conference Center • 175 Broadhollow Road • Melville
Feel free to invite friends, colleagues or extended family members to this informative seminar.
Please register as space is limited!
Kindly RSVP by April 4, 2018 to Caroline Pumilia at 631.694.2400 ext. 206 or at cpumilia@hmylaw.com

HMYM Wins Groundbreaking Ruling at State’s Highest Court Governing Awards of Municipal Contracts

In 2013, a major school bus transportation company, Acme Bus Corp., retained HMYM to challenge the award of student transportation contracts to its competitors in response to a request for proposals (RFP) issued by the Orange County Department of General Services.  The County had awarded the contracts to the lowest cost proposer in each category, contending that to do so served the “best interests” of the County, and it neglected to follow the criteria in the RFP which, if followed, would have established Acme as the “highest scoring proposer” overall.

HMYM initiated a lawsuit against the County in the Orange County Supreme Court, which rejected its arguments that the award of the contracts was arbitrary and capricious because the County had failed to follow the requirements of the RFP.  The battle was fought through three levels of judicial review which ended with victory for Acme Bus at the State’s highest court in Albany.  As the Court of Appeals instructed, in agreement with HMYM’s arguments, “an award of a contract pursuant to [an RFP] is arbitrary and capricious if the municipality evaluates a proposal using a standard that deviates from a standard expressly set forth in the RFP . . . .  When different standards are applied, the process is subverted.  Changing the expressly defined rules mid-way gives rise to speculation of fraud or corruption.”  Acme Bus Corp. v. Orange County, 28 N.Y.3d 417, 425-26 (2016).

Todd A. Knauer Retires

Todd Knauer, a named partner in the firm, retired on June 30, 2014, after more than 40 years as a distinguished member of the bar, and a valued member of the firm. “I had the pleasure of working closely with Todd, and admired his superb ability to represent the banking and business communities on commercial transactions, . . . read full announcement.

HMYKM Wins Battle on Behalf of 41 School Districts at State’s Highest Court

In 2011, 41 school districts retained HMYKM to challenge a Nassau County local law making them responsible for the payment of real property tax refunds emanating from the County’s erroneous property valuations. As a result of the local law, it was estimated that the school districts in the County would be responsible for upwards of $53 million in annual refunds.

HMYKM initiated a lawsuit against the County, maintaining that the local law violated several provisions of the State Constitution and the Municipal Home Rule Law limiting the authority of local governments to enact laws affecting local taxation. The battle was fought through three levels of judicial review, including the State’s highest court in Albany. In a unanimous 29-page ruling issued on February 18, 2014, the Court of Appeals agreed with our arguments and struck down the local law upon the ground that it was “unconstitutional, invalid, unenforceable and void.” Baldwin Union Free School District v. County of Nassau, ___ N.Y.2d ___, 2014 WL 590617 (Feb. 18, 2014). The Court’s ruling received prominent treatment in Newsday and the New York Law Journal.