New York Law Review

Tag: General Obligations Law

  • Ovitz v. Bloomberg L.P., 18 N.Y.3d 753 (2012): Injury Required for Claims Under General Obligations Law and General Business Law

    18 N.Y.3d 753 (2012)

    A plaintiff must demonstrate actual injury to sustain a claim under General Obligations Law §§ 5-901 and 5-903, and General Business Law § 349.

    Summary

    Bruce Ovitz, an Illinois resident, sued Bloomberg L.P. alleging violations of New York General Obligations Law and General Business Law, breach of contract, and other claims, stemming from an automatically renewing subscription agreement for Bloomberg’s financial information services. Ovitz claimed Bloomberg failed to provide advance notice of the automatic renewal, as required by statute. The New York Court of Appeals affirmed the dismissal of Ovitz’s complaint, holding that he failed to demonstrate any actual injury as a result of Bloomberg’s actions, a necessary element for maintaining claims under the relevant statutes. Bloomberg waived its claims for termination fees and arrears. The court emphasized that without a cognizable injury, Ovitz’s claims, including those for declaratory and injunctive relief, could not stand.

    Facts

    In 2000, Ovitz entered a two-year subscription agreement with Bloomberg for financial information services, containing an automatic renewal clause for successive two-year periods unless either party provided 60 days’ written notice of termination. After the initial term expired in 2002, Ovitz continued using Bloomberg’s services. In September 2008, Ovitz notified Bloomberg of his intent to terminate the agreement at the end of the month. Bloomberg informed him the agreement had automatically renewed until June 2010 and he was liable for payments through that date or an early termination fee. Bloomberg allegedly admitted it was their standard policy not to provide advance notice of automatic renewals. Ovitz sent written notice of termination in October 2008. Bloomberg continued to bill him. Bloomberg eventually waived the early termination fee and collection of fees.

    Procedural History

    Ovitz filed a class action lawsuit in December 2008. Supreme Court initially dismissed some claims but allowed claims under General Obligations Law and General Business Law to proceed. The Appellate Division reversed, dismissing the entire complaint. The Appellate Division reasoned that while Bloomberg’s failure to comply with the notice requirements of the General Obligations Law made the automatic renewal provision unenforceable, Ovitz hadn’t alleged he paid for services he didn’t receive. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s decision.

    Issue(s)

    Whether a plaintiff can sustain claims for violations of General Obligations Law §§ 5-901 and 5-903, General Business Law § 349, and for declaratory and injunctive relief, absent a showing of actual injury.

    Holding

    No, because a plaintiff must demonstrate actual injury to maintain a claim under General Obligations Law §§ 5-901 and 5-903, General Business Law § 349, and to obtain declaratory or injunctive relief.

    Court’s Reasoning

    The Court of Appeals held that even assuming a private right of action exists under General Obligations Law §§ 5-901 and 5-903, Ovitz’s claim failed because he did not suffer any harm. He did not pay service termination fees, nor did he pay for services he did not receive. His argument that he prepaid for services through the end of September 2008 was contradicted by his statement he wanted to terminate at the end of the month. Further, Bloomberg’s waiver of claims extinguished any threat of injury based on alleged credit rating impairment.

    Regarding the General Business Law § 349 claim, the court cited Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 (1995), emphasizing that a plaintiff must demonstrate that the defendant’s deceptive act or practice caused injury to the plaintiff. Since Ovitz demonstrated no injury, this claim also failed. As the court explained, a prima facie showing requires allegations that a “defendant is engaging in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof“

    Finally, the court concluded that absent actual injury and given Bloomberg’s waiver of its claims, there was no justiciable controversy to support declaratory relief, nor was there irreparable harm to warrant injunctive relief. As a result, the court affirmed the dismissal of the entire complaint.

  • Petito v. Piffath, 85 N.Y.2d 1 (1994): Settlement Agreement Does Not Revive Time-Barred Debt

    Petito v. Piffath, 85 N.Y.2d 1 (1994)

    A settlement agreement to pay a specific sum in exchange for discontinuing a foreclosure action and assigning the mortgage does not constitute a written acknowledgment of the underlying mortgage debt or a partial payment sufficient to revive a time-barred claim under New York General Obligations Law.

    Summary

    This case addresses whether a settlement stipulation in a foreclosure action can revive a time-barred mortgage debt under New York’s General Obligations Law. Piffath borrowed money from Roslyn Savings Bank, defaulted, and entered a settlement where he paid a sum to Roslyn in exchange for an assignment of the mortgage to his brother. Petito later acquired the mortgage. When Piffath sought a declaration that the mortgage was unenforceable due to the statute of limitations, Petito initiated a foreclosure action. The Court of Appeals held that the settlement agreement was not a sufficient acknowledgment or partial payment of the original debt to restart the statute of limitations, as the payment was made pursuant to the new settlement agreement, not an acknowledgment of the original mortgage debt.

    Facts

    Ralph Peter Piffath borrowed from Roslyn Savings Bank, executing a note and mortgage. He defaulted on the balloon payment due April 1, 1980. Roslyn initiated foreclosure proceedings. A settlement stipulation dated June 24, 1981, was reached where Piffath would pay $197,455.57 to Roslyn, and in return, Roslyn would assign the mortgage to Piffath’s brother. Piffath arranged for the mortgage assignment to prevent other creditors from levying against his property. The mortgage was later used as collateral for a loan. Petito eventually acquired the mortgage.

    Procedural History

    In 1986, Piffath commenced an RPAPL 1501(4) proceeding seeking a declaration that the mortgage was unenforceable due to the statute of limitations. Petito responded with a foreclosure action. The cases were consolidated. The Judicial Hearing Officer (JHO) initially found Piffath equitably estopped from asserting the statute of limitations. The Appellate Division modified, rejecting the equitable estoppel argument but finding the 1981 stipulation a promise to pay, thus restarting the statute of limitations. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a stipulation settling a foreclosure action, where the mortgagor agrees to pay a sum in exchange for assignment of the mortgage to a third party, constitutes (1) a written acknowledgment of the underlying mortgage debt, (2) a promise to pay the mortgage debt, or (3) a part payment of the debt, sufficient to revive an otherwise time-barred claim under General Obligations Law §§ 17-101, 17-105(1), or 17-107(2)(b)?

    Holding

    No, because the settlement agreement and subsequent payment constituted a new obligation rather than an acknowledgment of the original mortgage debt, and therefore did not revive the time-barred claim.

    Court’s Reasoning

    The Court of Appeals reversed the Appellate Division, holding that the 1981 settlement stipulation did not revive the statute of limitations. The court reasoned that the agreement to pay $197,455.57 was a new obligation undertaken by Piffath in exchange for Roslyn’s promise to terminate the foreclosure action and assign the mortgage. It was not an explicit acknowledgment of the original mortgage debt. Quoting from Morris Demolition Co. v Board of Educ., 40 NY2d 516, the court emphasized that the writing must “recognize an existing debt”. Because the settlement agreement did not explicitly acknowledge the mortgage debt, it could not serve to restart the statute of limitations. The court also reasoned that the payment was made pursuant to the settlement agreement, not as a partial payment of the underlying mortgage debt. Citing Crow v Gleason, 141 NY 489, 493, the court stated, “[i]n order to make a money payment a part payment within the statute, the burden is upon the creditor to show that it was * * * accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due”. The court found that the settlement, intended to resolve all outstanding obligations, did not meet this standard. Therefore, by 1986, the mortgage debt was time-barred.

  • Sherman v. Robinson, 80 N.Y.2d 483 (1992): Limits on Liability for Indirect Alcohol Sales to Minors

    Sherman v. Robinson, 80 N.Y.2d 483 (1992)

    A convenience store is not liable under New York’s Dram Shop Law or common-law negligence for injuries caused by an intoxicated minor when the store’s unlawful sale of alcohol was to a different minor who then shared the alcohol with the intoxicated minor.

    Summary

    This case addresses the scope of liability for businesses that sell alcohol to minors when the alcohol is then shared with other minors, one of whom causes injury due to intoxication. The New York Court of Appeals held that a convenience store was not liable for injuries caused by an intoxicated minor when the store’s unlawful alcohol sale was to a different minor who subsequently shared the alcohol. The court reasoned that the Dram Shop Act and related statutes create a narrow exception to the common-law rule of individual responsibility for alcohol consumption, and this exception does not extend to indirect sales where the alcohol is furnished to someone other than the intoxicated person.

    Facts

    A minor, Relf, used a found driver’s license to purchase beer and wine coolers from a convenience store operated by AOK. Relf used money pooled from a group of teenagers, including Robinson and Sherman, who waited outside in a car. The group consumed the alcohol, and later, Robinson, while intoxicated, drove a car in which Sherman was a passenger. The car was involved in an accident, severely injuring Sherman.

    Procedural History

    Sherman sued Robinson and AOK, the convenience store. The motion court dismissed the complaint against AOK on summary judgment. The Appellate Division affirmed this dismissal. Sherman appealed to the New York Court of Appeals.

    Issue(s)

    Whether a convenience store that unlawfully sells alcohol to a minor is liable, under General Obligations Law §§ 11-100 and 11-101 or common-law negligence, for injuries caused by a different intoxicated minor who consumed the alcohol after it was shared with them.

    Holding

    No, because the Dram Shop Act and related statutes create a narrow exception to the common-law rule of individual responsibility, and this exception does not extend to indirect sales where the alcohol is furnished to someone other than the intoxicated person.

    Court’s Reasoning

    The Court of Appeals affirmed the dismissal of the claim against AOK, reasoning that General Obligations Law §§ 11-100 and 11-101, which provide a cause of action for injuries caused by an intoxicated person against someone who unlawfully sells alcohol to them, must be narrowly construed. The court emphasized that the statutes explicitly limit liability to situations where the unlawful sale is made to the intoxicated person who causes the injury. The court distinguished cases seeking administrative sanctions under the Alcoholic Beverage Control Law § 65 for on-premises activity, noting that those cases involved open and observable conduct. The court stated that “the General Obligations Law – unlike the regulatory provision – is explicit in limiting liability for injuries caused by an intoxicated minor to the unlawful supply of alcoholic beverages to that person.”

    The court rejected the argument that the sale to Relf was effectively a sale to Robinson, stating that no duty was imposed on the defendant to investigate potential consumers in the parking lot. Referencing D’Amico v. Christie, 71 N.Y.2d 76 (1987), the court reiterated that ” ‘[t]n order for plaintiffs to prevail on [a] claim of common-law negligence, there must first be a legal duty owed by defendant to them. Foreseeability of harm is alone not enough.’ ” The court also relied on the principle that “ ‘the very existence of a Dram Shop Act constitutes a substantial argument against expansion of the legislatively-mandated liability.’ ” The court declined to expand the common law to impose liability for indirect sales, given the Legislature’s choice not to provide for it in the statute.

  • Carrico v. Penn Central Transp. Co., 41 N.Y.2d 328 (1977): Defining the Duty of Care Owed to Trespassers and Licensees on Railroad Property

    Carrico v. Penn Central Transp. Co., 41 N.Y.2d 328 (1977)

    Railroad companies owe a duty to refrain from willful or reckless injury to trespassers or licensees on their property, and are not liable for injuries resulting from open and obvious conditions when the injured party is aware of the risks.

    Summary

    Christine Carrico, while walking on an abandoned train platform owned by Penn Central, slipped on ice and was severely injured by a passing train. The New York Court of Appeals reversed the lower court’s judgment in favor of Carrico, holding that Penn Central did not breach any duty owed to her. The Court reasoned that Carrico was either a trespasser or a licensee, and in either case, Penn Central’s duty was limited to refraining from willful or reckless harm. The Court emphasized that the icy condition was open and obvious, and Carrico was aware of the risk. This case clarifies the limited duty of care owed by railroads to individuals on their property without invitation and highlights the importance of the obviousness of a dangerous condition.

    Facts

    The infant plaintiff, Christine Carrico, and a companion were walking on an abandoned passenger platform owned by Penn Central. The platform had not been used as a passenger station since 1959. The platform was approximately 20 feet wide and 200 feet long, and partly covered by a canopy. While not open to the public, there was testimony that members of the public used it as a shortcut. Carrico slipped on snow and ice near the edge of the platform and fell under the wheels of a passing train, resulting in the loss of both legs below the knee. The train was moving slowly, with its headlight on and bell ringing.

    Procedural History

    The trial court entered judgment in favor of the plaintiffs. The Appellate Division affirmed the judgment, with two justices dissenting. The defendant, Penn Central, appealed to the New York Court of Appeals. The plaintiffs cross-appealed on the grounds that the damages awarded were inadequate, but this cross-appeal was dismissed.

    Issue(s)

    Whether Penn Central breached a duty of care owed to Carrico that proximately caused her injuries, considering her status as either a trespasser or a licensee on the abandoned train platform.

    Holding

    No, because Penn Central did not breach any duty owed to Carrico, whether she was considered a trespasser or a licensee. The railroad was only obligated to refrain from willful, wanton, or intentional harm, and the evidence failed to establish any such breach.

    Court’s Reasoning

    The Court of Appeals reasoned that Section 83 of the Railroad Law prohibits unauthorized individuals from walking along railroad tracks, and Section 9-103 of the General Obligations Law limits the duty of care owed by landowners to those using their property for recreational activities. Reading these statutes together, the court concluded that Carrico’s presence on the platform was either a trespass or, at best, that of a licensee. As a trespasser, Penn Central only owed her the duty not to cause willful, wanton, or intentional harm. As a licensee, Penn Central owed her a duty of reasonable care. However, the court found no evidence that Penn Central breached this duty. The condition of the platform (snow and ice) was open and evident, and Carrico, familiar with the platform, voluntarily chose to walk near the edge with knowledge of the risks. The court emphasized that “Whoever walks upon, or along, the tracks of a railroad, except when necessary to cross the same upon some street, highway, or public place, violates the law and is like a trespasser, and the company’s servants are under no other obligation than to refrain from willfully, or recklessly, injuring him.” The court found no evidence that the engineer or any of Penn Central’s employees acted in a wanton or reckless manner. The platform itself was structurally sound, and the danger arose from the snow, not from any affirmative act of Penn Central. The accident was not within the foreseeable anticipation of the defendant. Judges Gabrielli and Wachtler dissented, voting to affirm the Appellate Division’s judgment.