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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: May 1, 2015

Rescission Not Available Where Status Quo Ante Cannot Be Restored

On April 22, 2015, the Second Department issued a decision in Habberstad Volkswagen, Inc. v. GC Volkswagen, Inc., 2015 NY Slip Op. 03321, affirming the dismissal of a claim for rescission.

In Habberstad Volkswagen, the plaintiff brought an action for breach of contract and for rescission. The trial court granted the defendants’ motion to dismiss the claim for rescission. The Second Department affirmed, explaining:

The equitable remedy of rescission is only to be invoked where the plaintiff has no adequate remedy at law and where the parties can be substantially restored to their status quo ante positions. In this action based on an alleged breach of interdependent contracts for the sale of a Volkswagen automobile franchise/dealership and its assets, the . . . defendants demonstrated their prima facie entitlement to judgment as a matter of law dismissing the plaintiff’s cause of action for rescission by demonstrating that they had surrendered their dealership rights in accordance with the terms of the contracts, and therefore they could not be substantially restored to their pre-contract position in the event that rescission was granted.

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

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