Commercial Division Blog
Performance or Occurrence of a Condition Precedent in a Contract Need not be Pleaded
On September 8, 2020, Justice Masley of the New York County Commercial Division issued a decision in CSC Holdings, LLC v. Samsung Elecs. Am., Inc., 2020 NY Slip Op. 32956(U), holding that the performance or occurrence of a condition precedent in a contract need not be pleaded, explaining:
Samsung further argues that this claim should be denied because CSC has not properly pled the claim in other respects, but this argument is unavailing. As a preliminary matter, Samsung argues that exception clauses to indemnification are conditions precedent. It is true that they are conditions. A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due. Performance, as relevant here, means Samsung will indemnify CSC. But Samsung need not indemnify CSC if the infringement would not have occurred but for (1) a modification to the Equipment or associated software by CSC without Samsung's written consent or (2) a combination of Samsung's equipment or associated software and other products that Samsung does not approve in writing. In this respect, prongs (1) and (2) are events not certain to occur especially concerning Samsung's consent and approval in writing or the lack thereof. They are, in effect, conditions to Samsung's performance.
Despite arguing that prongs 1 and 2 are conditions precedent, Samsung maintains that a breach of contract claim is not stated because the complaint lacks any allegation that Samsung provided written consent or approval in writing. In fact, Samsung asserts that the dispositive issue on this motion is whether CSC sufficiently alleged that Samsung provided written consent to CSC's modification or contribution of the set-top boxes. However, this issue is neither dispositive nor an accurate framing of New York's pleading requirements. The performance or occurrence of a condition precedent in a contract need not be pleaded. In enacting CPLR 3015 (subd. (a)), the Legislature eliminated any requirement that performance or occurrence of conditions precedent be pleaded. For instance, where a defendant moved to dismiss a complaint on the grounds that the plaintiff failed to allege compliance with conditions contained in an instrument, and the lower court granted the motion, the First Department reversed because the Supreme Court placed an improper pleading burden on plaintiff.
An improper pleading burden is exactly what Samsung argues for when it contends that the complaint should be dismissed because CSC does not allege that Samsung provided written consent or approval. Moreover, Samsung's reliance on Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co. (86 NY2d 685 ) to show that express conditions must be literally performed and alleged is misplaced because that decision did not concern a motion to dismiss pursuant to CPLR 3211 where the scope of a court's inquiry is narrowly circumscribed. The Oppenheimer Court makes no mention of the allegations needed to withstand a 3211 motion for breach of contract. Rather, Oppenheimer concerned a motion for judgment notwithstanding the verdict after a jury trial, and therefore, the procedural posture and scope of the court's inquiry were different to say the least.
The parties further dispute whether the written consent and approval is shown in the record. But whether the plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss.
(Internal quotations and citations omitted).
The pleading rules in New York state courts are, particularly with respect to contract claims, fairly simple. Still, as this decision shows, there are rules relating to some of what you must allege. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client need help regarding bringing a breach of contract claim.