- State’s Highest Court Finds E-Mails Did Not Refute Employee’s Claim Those E-Mails Formed A Binding Contract
- Occupants of Residence Fail to Show Adverse Possession
- Lease Relied on In Nonpayment Proceeding Could Not Have Been Signed by A Dead Tenant
State’s Highest Court Finds E-Mails Did Not Refute Employee’s Claim Those E-Mails Formed A Binding Contract
In Kolchins v. Evolution Markets, Inc., a former employee brought an action against his employer, alleging that the employer breached his employment agreement when it terminated him and failed to pay him a production bonus or non-compete payment. After an unsuccessful motion to dismiss, the employer appealed to New York’s highest Court, the Court of Appeals.
The issue on appeal was “whether the documentary evidence proffered by defendant Evolution Markets, Inc. on its motion to dismiss pursuant to CPLR 3211(a)(1) conclusively refuted plaintiff Andrew Kolchins’ breach of contract claims.”
The plaintiff and the defendant had entered into a written three-year employment agreement with an “ending date” of August 31, 2012. Under this agreement. The plaintiff was an “at will” employee; however, if defendant terminated him without “Cause” or he ceased employment for “Good Reason,” and he complied with certain restrictive covenants, he would be paid his base salary through the ending date, as well as a “special non–compete payment” thereafter. His compensation package included a $200,000 annual base salary and a “sign on bonus” of $750,000. Separately, the agreement set forth terms under which plaintiff was eligible to receive a “production bonus” that was “based on [his] performance” each trimester, and which would be “paid within two months of the close of a given trimester.” It also provided for minimum “guaranteed compensation” of $750,000 each contract year. The guaranteed compensation consisted of plaintiff’s “base salary and any bonus paid or payable” to him for such period, but did not include the amount paid as his sign on bonus, and it expressly stated that “[f]or the avoidance of doubt,” the bonus to be paid in respect of the second trimester of 2009 was not included in the calculation of the guaranteed compensation, but that any special non-compete payment made during the last year of the agreement would “count towards” his guaranteed compensation. Importantly it also provided that “in order to be eligible to receive any production bonus, bonus from the discretionary management bonus pool, or guaranteed compensation,” he had to be “actively employed” at the time of the defendant’s “firm-wide bonus payment dates.”
As the ending date of the employment agreement approached, the defendant’s chief executive officer sent the plaintiff an email with the subject line “In writing,” which stated that, “[t]he terms of our offer are the same [as the] terms of your existing contract (other than a clarification around the issue of departed members of the team), and include: [a] 3 year term[,] $200,000 base salary[,] $750,000 sign on bonus … [,] $750,000 per year minimum cash compensation[, and the same] production bonus.” He added, “[a]ny further questions, let me know but u [sic] do have your existing contract.” One month later, on July 16, plaintiff responded by email with “I accept, pls [sic] send contract,” to which Ertel replied, “Mazel. Looking forward to another great run.” Following this exchange, plaintiff and defendant’s general counsel communicated by email and in person over the ensuing weeks “in an unsuccessful attempt to reduce the parties’ mutual understanding to a more formal written instrument. Despite these efforts, defendant no tified plaintiff, by letter dated September 1, 2012, that his employment had ceased up on the expiration of the 2009 agreement.”
The plaintiff then commenced the breach of contract action against the defendant, alleging, that the e-mail exchanges constituted a written confirmation of the new agreement.
On the appeal to the Court of Appeals, the Court reasoned that in considering whether a binding contract exists, the first step is to determine whether there is a sufficiently definite offer by which its unequivocal acceptance will create an enforceable contract, and it was necessary to look to the “objective manifestations of the intent of the parties as gathered by their expressed words and deeds,” and that “disproportionate emphasis is not to be put on anysingle act, phrase or other expression, but, instead, on the totality of all of these, given the attendant circumstances, the situation of the parties, and the objectives they were striving to attain.” It also recognized that if an agreement is not “reasonably certain in its material terms,” there can be no legally enforceable cont ract because courts will not impose contractual obligations when the parties did not intend to have a binding agreement But it also recognized that while a “mere agreement to agree, in which a material term is left for future negotiations, is unenforceable” the terms of a contract do not need to be “fixed with absolute certainty” to create a binding agreement. The Court noted that if the parties had expressly stated that there would be no binding agreement until it is reduced to writing and signed by both of them, there would be no agreement until it had been written out and signed – but that was not expressed here. Here, the initial email to the plaintiff that “[t]he terms of our offer are the same [as the] terms of your existing contract”—apart from “a clarification” concerning an issue that plaintiff characterizes as minor—and outlined the core terms that were included in the 2009 agreement,” and that if plaintiff had “[a]ny further questions” he should consult his “existing contract,” the Court noted, “explained that ‘the terms of the offer’ were to be nearly identical to the terms of plaintiff’s existing contract,” and that “a reasonable factfinder could interpret it as evincing an objective manifestation of defendant’s intent to enter into a bargain, such that plaintiff was justified ‘in understanding that his assent to that bargain [was] invited and [would] conclude it.’” The Court stated that it could “reasonably be inferred” that this email “constituted a valid offer by defendant. In response to that email, plaintiff wrote “I accept. pls [sic] send contract,” to which there was a reply, “Mazel. Looking forward to another great run.”
The Court concluded that “this exchange—in essence, we ‘offer’ and ‘I accept,’ followed by an arguably congratulatory exclamation, coupled with a forward-looking statement about the next stage of the parties’ continuing relationship—sufficiently evinces an objective manifestation of an intent to be bound for purposes of surviving a motion to dismiss.” And although the initial email referenced one outstanding “clarification,” the Court found that the “parties’ further communications indicate that such clarification was incorporated into the first draft of the new agreement” to which the plaintiff had not objected.
Simply. If you don’t intend your communications to create a contract, you should expressly reserve the right not be bound except in a formal written document signed by the parties.
Occupants of Residence Fail to Show Adverse Possession
In Jaffer v. Hirji, the occupants of a residential house brought action against their brother and his wife, for, among other things, adverse possession. Adverse possession is a process by which real property can change ownership. In New York, it is governed by statute, as interpreted by the courts. By adverse possession, title to another’s real property can be acquired without compensation, by holding the property in a manner that conflicts with the record owner’s rights for a specified period. Here, the occupants appealed from order of the United States District Court for the Southern District of New York, which granted defendants judgment on the pleadings on the adverse possession claim. The Second Circuit affirmed that part of the lower Court’s judgment holding that the occupants failed to show that their possession of the residence was “open and notorious,” as a necessary element of adverse possession.
According to the decision of the Court, this case involved an intra-family dispute over who owns a residential house in Hartsdale, New York. In 1982, the now-deceased Mohamed Hirji purchased the house, and put the title in the names of two of his sons: plaintiff Ahmed Hirji and non-party Mustafa Hirji. According to the attorney who represented Mohamed at the purchase, Mohamed intended the house to be “a place that the family could reside in.” In 1989, plaintiff Ahmed and Mustafa transferred the title to their father Mohamed and their brother, defendant Naushad Hirji, as “joint tenants with the right of survivorship.” Mohamed and defendant Naushad paid no consideration. Mohamed died in 1998, and his interest in the house devolved by operation of New York law to defendant Naushad. In 2001, defendant Naushad deeded the house to himself and his wife, defendant Sabira Hirji. The defendants currently possess title to the house, but live in Tanzania. The defendant Naushad testified that he never spoke to the attorney who prepared the deeds in 1989 and 2001. During this whole period, defendant Naushad visited the house only once and never hired anyone to inspect it.
Meanwhile, plaintiffs Ahmed, Shehzad Hirji (son of Ahmed), Latifa Jaffer (daughter of Mohamed, sister of Ahmed), and Hussein Jaffer (husband of Latifa) now reside at the house, where they all (except Shehzad) have lived since 1984. Between 1984 and 2013, plaintiffs maintained and made capital improvements to the house, paid all subject property taxes, and never remitted rent payments to defendants.
In January 2014, defendants issued a Notice of Termination to the plaintiffs requiring them to vacate the house on or before February 28, 2014. Three days before they were required to vacate, the plaintiffs commenced this action.
As for the adverse possession claim, the Court reasoned that to establish such a claim under New York law, “one must show that the occupation of a property is ‘(1) hostile and under claim of right; (2) actual; (3) open and notorious; (4) exclusive; and (5) continuous for the required period’ of 10 years. While New York courts typically presume hostility where the other elements are satisfied, this presumption does not apply where ‘there is a close and cooperative relationship between the record owner and the person claiming title through adverse possession ….’ In such circumstances, the ‘party asserting the adverse possession claim must come forward with affirmative facts to establish that the use of the property was under a claim of right and adverse to the interests of the true owners.’” Here, because Ahmed conveyed title to his brother, defendant Naushad, in 1989, “permission can be implied from the beginning,” and adverse possession will not arise until there is a “distinct assertion of a right hostile to the owner.” Because the amended complaint did not contain any affirmative facts that the plaintiffs did anything that constituted “a distinct assertion of a right hostile to” defendants, the Court concluded that the District Court appropriately granted Defendants’ motion to dismiss the adverse possession claim.
Lease Relied on In Nonpayment Proceeding Could Not Have Been Signed by A Dead Tenant
In 470 Realty NY LLC v. Estate of Orange a residential landlord sought to collect arrears in a nonpayment summary proceeding. The respondent moved to dismiss the proceeding, providing the Court with decedent tenant’s death certificate showing she died June 27, 2015, and arguing that the petition sought arrears at a time no lease existed between the parties, and failed to state a cause of action for nonpayment of rent. In response, the landlord provided a renewal lease allegedly signed by the decedent tenant, almost a year after she died, for a two-year term to commence May 1, 2016.
The Court noted it was undisputed the arrears accrued during the period of this purported lease, but ruled that while an executor may remain in possession until a lease expired—it became the estate’s personal property—it may not be renewed.
It found petitioner failed to state a cause of action as any lease signed in April 2016, and relied on by petitioner as a basis for this suit, could not have been signed by the decedent tenant, noting arrears were sought well after expiration of the last lease the decedent tenant could have signed. “Upon the death of the tenant -of-record, the lease does not terminate but becomes the personal property of the deceased tenant’s estate. The executor, administrator, or other legal representative of the estate of the deceased tenant, may remain in possession until the expiration of the current lease, but may not renew the lease.” RPAPL §711(2) sets forth that a nonpayment proceeding must be predicated on a default in payment of rent owed pursuant to the agreement under which the premises are held.
Because there could not have been a renewal lease, the non-payment proceeding was dismissed.
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