Commercial Division Blog

Posted: August 8, 2022 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Christopher R. Dyess, Joshua Wurtzel, Hillary S. Zilz / Categories Commercial, Breach of Contract

Court Puts Substance Over Form to Deny Pre-Answer Motion to Dismiss Breach of Contract Claim

On April 8, 2022, in AFL Constr. Co., Inc. v. Roosevelt Is. Operating Corp., Index No. 656072/2021, Justice Ostrager of the New York County Commercial Division denied defendant’s pre-answer motion to dismiss plaintiff’s breach of contract claim rejecting defendant’s argument that dismissal was proper where plaintiff did not provide its “notice of claims” in accordance with the literal language of the contract.  The Court held that it was premature to dismiss the breach of contract claim at the pre-answer motion to dismiss stage because a dispute exists as to whether plaintiff’s notices were sufficient to comply with the meaning, purpose, and intent of the contract.  The Court explained:

Defendant does not dispute that defendant received from plaintiff multiple correspondence during the period between May 2018 and June 2020. Defendant asserts that these communications did not comply with the literal language of sections 27(b) and 36 of the Contract because the correspondence did not constitute "notices of claims" under the Contract. But it exalts form over substance to dismiss the breach of contract claim. The facts may show that defendant was surely on notice that plaintiff, by reporting on the work it was undertaking, was asserting a claim for payment and that plaintiff substantially complied with the notice provisions in the Contract.

Plaintiff cites to Huff Enters. v. Triborough Bridge & Tunnel Auth., 191 A.D.2d 314, 595 N.Y.S.2d 178 (1st Dept. 1993) for the proposition that, in certain circumstances, failure to give notice compliant in every technical respect of a contract has been excused in cases where there is an extensive record of timely written correspondence. Id. at 317. On the transcript of proceedings of April 6, 2022, defendant argued that Huff Enters. does not reflect the current state of the law. In any event, there are subsequent cases that recognize an exception to the rule of strict compliance with notice provisions in public works contracts in "situations where there is an extensive record of timely written correspondence and contact between the contractor and agency...." Travelers Cas. & Sur. Co. v. Dormitory Auth., 735 F. Supp. 2d 42, 76 (S.D.N.Y. Aug. 26, 2010), citing G. De Vincentis & Son Constr., Inc. v. City of Oneonta, 304 A.D.2d 1006, 1008, 759 N.Y.S.2d 216 (3d Dept. 2003). In addition, these cases all addressed the issue at the summary judgment stage, not at the pre-answer motion to dismiss stage of a case.

The attorneys at Schlam Stone & Dolan frequently litigate breach of contract claims. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such claims.