There, plaintiff submitted a proposal for architectural and engineering services to defendants relating to a proposed resort project. Four days later, plaintiff informed defendants that it was still “working on formal agreement” but nonetheless asked defendants to give them authorization to proceed. Although defendants authorized plaintiff to start working, defendants expressly noted that plaintiff’s “proposal and associated pricing” were “still under review and . . . subject to formal agreement.” Also, although plaintiff started working on the project, the parties continued to exchange contract drafts and comments for several months and never came to an express agreement on price and other terms.

The Court found that it was evident based upon circumstances of this case that the parties never came to an express agreement on price and other terms. Accordingly, the Court found that defendants were entitled to summary judgment dismissing the claims for breach of an express contract.

As for the implied contract claims, the Court likewise found that defendants were entitled to summary judgment on these claims also. The Court emphasized that the parties never came to an express agreement on price. Also, the Court ruled that defendants’ statement that they would only be bound by a formal agreement and their repeated rejection of plaintiff’s proposed lump sum pricing overrode their act of paying for one invoice in August 2008 (that billed for work in June 2008).

On the account stated claim, the Court ruled that defendants’ consistent objection to plaintiff’s invoices required dismissal of this claim.

But on the quantum meruit claim, the Court ruled that the lower court properly declined to dismiss this claim as there were issues of fact as to whether plaintiff could have reasonably expected to be compensated for its services and the reasonable value of those services. The Court found that although the parties never reached an agreement on price, the record indicated that the defendants agreed to pay plaintiff at least some amount for its services. The Court rejected defendants’ claim that plaintiff cannot establish that defendants benefitted from the plaintiff’s services as the Court relied upon case-law establishing that it is immaterial whether any defendants in any economic senses benefitted from the performance. The Court likewise rejected defendants’ claim that plaintiff cannot establish its value of services as it did not maintain itemized billing records. The Court noted that there are other means of establishing the reasonable value of services rendered.

By Katherine Zalantis

There, plaintiff and defendant-general contractor Wheaton entered into a subcontract under which plaintiff agreed to install a concrete superstructure for a condominium complex located in Brooklyn. After Wheaton terminated the subcontract based upon plaintiff’s alleged poor performance, plaintiff commenced an action against the general contractor and the defendant project manager HE2 alleging that HE2 tortiously induced Wheaton to breach its subcontract with the plaintiff and that Wheaton and HE2 maliciously conspired together to interfere with and terminate the plaintiff's contract rights for their own benefit.

The Court established that to state a cause of action alleging tortious interference with contract, “the plaintiff must allege: the existence of a valid contract between it and a third party, the defendant's knowledge of that contract, the defendant's intentional procurement of the third party's breach of that contract without justification, and damages.” The plaintiff must specifically "allege that the contract would not have been breached but for the defendant's conduct"

While acknowledging the motion to dismiss standard requiring that a complaint be construed liberally, the Court ruled that “a plaintiff must support his claim with more than mere speculations.” The Court found that plaintiff “merely asserted, in a conclusory manner and without the support of relevant factual allegations, that HE2's actions caused Wheaton to breach the subcontract.” Also the Court ruled that plaintiff failed to “allege that, but for HE2's actions, Wheaton would have continued the subcontract.” Thus, the Court upheld the dismissal of the tortuous interference claim.

With the fall of the tortuous interference claim also fell the civil conspiracy claim. The Court ruled that “New York does not recognize civil conspiracy to commit a tort as an independent cause of action,” but rather, “the claim stands or falls with the underlying tort.” The Court ruled as the civil conspiracy claim was derivative of the underlying tort of tortious interference, that claim was also properly dismissed.

By Katherine Zalantis

The Appellate Division, First Department in Gotham Partners, L.P. v. High River Ltd. Ptnership, ruled that the language of the indemnification provision in that case “falls short of satisfying the exacting standard” established by Hooper Assoc. mandating that “for an indemnification clause to cover claims between the contracting parties rather than third-party claims, its language must unequivocally reflect that intent.” The Court ruled that the indemnification clause, like the one considered by Hooper Assoc., is framed in language relevant to a third-party claim. The Court noted that the parties were well aware of how to frame an enforceable attorneys’ fees provision, but that there was not a similar provision relating to claims between the parties to the contract.

In rejecting plaintiffs’ argument that it could rely upon the general indemnification provision, the First Department ruled that “[t]he problem with plaintiffs’ position is not that their interpretation is irrational; it is that the strict standard imposed by Hooper requires more than that. For an indemnification clause to serve as an attorney’s fee provision with respect to disputes between the parties to the contract, the provision must unequivocally be meant to cover claims between the contracting parties rather than third party claims.” The Court explained that the Hooper standard “requires more than merely an arguable inference of what the parties must have meant; the intention to authorize an award of fees to the prevailing party in such circumstances must be virtually inescapable.”

Similarly, the Appellate Division, Second Department in Adesso Café Bar & Grill, Inc. v. Burton, very recently ruled that the indemnification language in the contract was “not so ‘unmistakably clear’ as to read into the contract the obligation that defendants were to indemnify plaintiffs for the attorney’s fees incurred by the plaintiffs.” There, plaintiffs and defendants entered into a contract whereby the plaintiffs purchased the leasehold and assets of defendants’ business and “[a]mong the contract’s many provisions was an indemnification” provision. After the closing, plaintiffs commenced an action for breach of contract, fraud and material misrepresentation arising from defendants’ alleged numerous material representations and sought an award of its attorneys’ fees.

In affirming the lower court’s denial of the request for attorneys’ fees, the Second Department extensively cited from the holding in Hooper Assoc. The Second Department ruled that its determination that the contract’s indemnification language was “not so ‘unmistakably clear’ as to read into the obligation” that defendants were to indemnify the plaintiffs for their attorneys’ fees in prosecuting the action against defendants, was “bolstered by the fact that the provisions within the second part of the contract’s indemnification clause, entitled “Procedure” are inconsistent with a lawsuit between the parties themselves.” Thus, the Second Department ruled that “[w]here ‘the language of the parties is not clear enough to enforce an obligation to indemnify, [the courts] are unwilling to rewrite the contract and supply a specific obligation the parties themselves did not spell out.”

Thus, based upon these two recent appellate cases, it is clear that an indemnification provision must be “unmistakably clear” to also relate to claims between the parties and not simply the typical third-party claims.

By Katherine Zalantis

In March 2001, Regal’s project manager, Ronal LeClair, stepped onto a floor joist (to indicate a wall that needed to be demolished) and according to LeClair, the joint had been recently painted and the paint caused LeClair to slip and injure his back. LeClair alleged that an unnamed person from URS told him that URS employees had painted the joist.

In 2003, LeClair commenced a personal injury action against the City and URS. While LeClair did not name his employer, Regal, as a defendant, URS forwarded a copy of the complaint to Regal and to its insurer, INSCORP, demanding defense and indemnification based upon the additional insured clause of the CGL policy. Ultimately, Regal and INSCORP commenced a declaratory judgment action against URS and its insurer seeking a declaration that URS Was not entitled to coverage as an additional insured under the INSCORP policy.

The Court of Appeals ruled that an insurer’s duty to defend its insured is “exceedingly broad” and that an insurer must provide a defense “whether the allegations of the complaint suggest . . a reasonable possibility of coverage.” In other words, if the complaint contains any facts or allegations which bring the claim “even potentially within the protection purchased, the insurer is obligated to defend.”

The Court of Appeals found that the additional insured endorsement provided that URS was an additional insured “only with respect to liability arising out of [Regal’s] operations].” Although Regal and INSCORP claimed that LeClair’s injury did not arise for Regal’s demolition and renovations operation but from URS’ employees’ painting of the joist, the Court of Appeals ruled that “the focus of the inquiry ‘is not on the precise cause of accident but the general nature of the operation in the course of which the injury was sustained.’” As the Court of Appeals found that the injury “arose out of” Regal’s operation notwithstanding URS’s negligence, the injury fell within the scope of the additional insured clause of the insurance policy.

The Court of Appeals said its decision was factually distinguishable from its prior decision in Worth Const. Co., Inc. v. Admiral Ins. Co., 10 N.Y.3d 411, because in this case, there was “a connection between the accident and Regal’s work, as the injury was sustained by Regal’s own employee while he supervised and gave instructions to a subcontractor regarding work to be performed.” Consequently, the Court ruled that the fact that the underlying complaint alleged negligence on URS’s party and not Regal was of “no consequence” as URS’s potential liability for LeClair’s injury “arose out of” Regal’s operation and therefore, URS was entitled to a defense and indemnification.

By Katherine Zalantis

Plaintiff started its lawsuit alleging that it was entitled to be paid a placement fee. Plaintiff claimed that there was an “implied-in-fact” agreement between the parties.

The Court did not agree – the Court explained that for there to be an implied contract to pay for personal services, plaintiff must prove that services were performed and accepted with the “understanding on both sides that there was a fee obligation.” The Court focused on the facts that the New York partner did not know that the candidate was being interviewed by the Washington office and the Washington D.C. partner did not know before interviewing the candidate that his resume had been sent to the New York partner. Thus, there was not the required “assent” sufficient to establish an implied contract.

The Court also established that an implied contact could not be inferred based upon the parties’ prior conduct as the law firm never hired any of the 10 candidates referred to it over the course of 10 years. Further, the Court found that the “mere fact that defendant interviewed three of those candidates does not permit an inference that defendant had agreed to pay plaintiff a placement fee even in instances where plaintiff’s efforts played no role in defendant’s decision to interview and hire the candidate.”

By Katherine Zalantis