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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: July 15, 2014

Consequential Damages Not Available When Not Contemplated at the Time of Contracting

On July 2, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in Rampart Brokerage Corp. v. Ribs NY LLC, 2014 NY Slip Op. 31772(U), dismissing the plaintiff’s damages claim to the extent it sought consequential damages.

In Rampart Brokerage Corp., the defendants allegedly mislead the plaintiff and its clients “as to which insurance policies it had been issued, the nature of the policies, the premiums charged, and other terms.” The defendants moved to dismiss. The court denied their motion with respect to the plaintiff’s claims for gross negligence and consequential damages. Certain defendants moved for reargument, which the court granted with respect to consequential damages and, on reargument, dismissed the plaintiff’s damages claims to the extent they sought consequential damages, explaining:

In order to be entitled to consequential damages, plaintiff was required to plead that those damages were the natural and probable consequences of the breach, and that they were contemplated at the time the contract was executed. [The plaintiff’s] complaint merely sought all damages, which may be construed to include consequential damages. However, [the plaintiff] failed to plead either of the requisite elements of a consequential damages claim . . . .

(Internal quotations and citations omitted) (emphasis added).

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