Vornado Realty Trust et al v. Alexander's Kings Plaza Center, Inc. et al
Filing
334
DECISION AND ORDER: Defendants' renewed motions for summary judgment are granted in their entirety. All claims against Defendants are dismissed with prejudice. Ordered by Judge William F. Kuntz, II on 12/18/2013. (Fwd'd for judgment) (Brucella, Michelle)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------------------------------)(
VORNADO REALTY TRUST, ALE)(ANDER'S INC.,
ALE)(ANDER'S OF BROOKLYN, INC.,
ALE)(ANDER'S KINGS PLAZA CENTER, INC.,
COMMERCE AND INDUSTRY INSURANCE
COMPANY als/o ALE)(ANDER'S KINGS PLAZA,
LLC,
DECISION AND ORDER
08-CV-4823 (WFK) (10)
Plaintiffs,
-againstMARUBENI SUSTAINABLE ENERGY, INC. a/k!a
DG ENERGY SOLUTIONS LLC, DG INVESTORS,
LLC, DG KINGS PLAZA LLC, CASTLTON
ENVIRONMENTAL CONTRACTORS, LLC
ENVIRON PRODUCTS, INC., HESS CORPO~A.TION,
EMCOR GROUP, INC., d/b/a PENGUIN ELECTRIC,
HOP ENERGY, LLC, d/b/a MADISON OIL; IVI
ENVIRONMENTAL, INC.; ENVIRON
HOLDINGS; DOVER CORPORATION; OPW
FUELING COMPONENTS, INC.; VARIOUS
JOHN DOES; JANES DOES; and )(YZ COMPANIES,
Defendants.
------------------------------------------------------------------------)(
WILLIAM F. KUNTZ, II, United States District Judge
Vornado Realty Trust ("Vornado"), Alexander's Inc., Alexander's of Brooklyn, Inc.,
Alexander's Kings Plaza Center, Inc. ("AKPC"), and Commerce and Industry Company als/o
Alexander's Kings Plaza, LLC ("AKP") (collectively, "Plaintiffs"), initiated this action for
damages against the above-captioned defendants based on an oil leak discovered on July 6, 2006
at the Kings Plaza Shopping Center ("the Site") in Brooklyn, New York. Plaintiffs seek to
recover from the named defendants clean-up and remediation costs allegedly resulting from the
leak. On September 30, 2011, the Court denied motions for summary judgment brought by
Defendant IVI Environmental Inc. ("IV I") and Defendant Castlton Environmental Contractors,
LLC ("CEC") (collectively, "Defendants"). On November 16, 2011, the Court denied
Defendants' respective motions for reconsideration. Before the Court are Defendants' Renewed
Motions for Summary Judgment pursuant to Federal Rule of Civil Procedure 54(b). For the
reasons set forth below, the Court grants Defendants' Renewed Motions for Summary Judgment
and directs the Clerk of Court to enter judgment in favor of Defendants.
BACKGROUND
I.
The State Court Action and the Release
Pursuant to a "Master Agreement" dated June 4, 1998, with Vornado, as agent for AKPC
and AKP, IVI agreed to perform certain site investigation and remediation services at the Site,
including the replacement of existing underground soil storage tanks ("USTs") and the
installation of new USTs. IVI 56.1 St. at '11. On May 3, 2002, Vornado terminated the Master
Agreement and revoked all permission for IVI to access the Site. Id. at ~ 2.
On July 23, 2002, IVI commenced an action in the Supreme Court of the State of New
York, County of Kings ("the State Court Action"), seeking to recover damages from Vornado
and AKPC for breach of contract, unjust enrichment, and to foreclose its mechanic's lien against
the Kings Plaza Shopping Center. Id. at ~ 3. AKPC and AKP interposed counterclaims against
IVI based, in part, upon their allegation that lVI's groundwater treatment system was designed
and installed incorrectly. Id. at ~ 4; Decl. of Joseph P. McNulty ("McNulty Dec!.), Ex. H.t On
July 21,2003, the claims and counterclaims in the State Court Action were compromised and
settled. IVI 56.1 St. at 11 5. AKPC and AKP executed a "Settlement Agreement and Mutual
I IVI .submi~ted.two Declarations.o~ Joseph P. McNulty in support of its renewed motion for summary judgment,
each mcludIng Its own set of exhibIts. Unless otherwise specified, citations to "McNulty Decl." refer to the second
of the two declarations and its attendant exhibits. See Dkt. No. 296-15.
2
Releases" (the "Release"), and paid $90,000 to IVI. Id. at ~ 6. Mario De Stefanis signed the
release on behalf of lVI, and Joseph Macnow signed the Release on behalf of AKP and AKPC.
McNulty Decl., Ex. F. A Stipulation of Discontinuance With Prejudice was filed in the Kings
County Clerk's Office on September 30, 2003. Jd. at ~ 7.
The Release states, in pertinent part:
WHEREAS, on or about February 7, 2003, ALEXANDER'S KINGS PLAZA CENTER, INC.
and ALEXANDER'S KINGS PLAZA, LLC served an answer and counterclaims to the second
amended complaint by IVI ENVIRONMENTAL, INC., which counterclaims seek to recover
damages for breach of contract, negligence, malpractice and conversion from IVI
ENVIRONMENTAL, INC.; and
WHEREAS, IVI ENVIRONMENTAL, INC., ALEXANDER'S KINGS PLAZA CENTER,
INC., ALEXANDER'S KINGS PLAZA, LLC and FIDELITY AND DEPOSIT COMPANY OF
MAR YLAND desire to settle the Kings Plaza Action, including all counterclaims, and discharge
and cancel the Bond.
***
3.
ALEXANDER'S KINGS PLAZA CENTER, INC., ALEXANDER'S
KINGS PLAZA, LLC and FIDELITY AND DEPOSIT COMPANY OF
MAR YLAND, for themselves and for their predecessors and successors in
interest, affiliates, principals, directors, officers, shareholders, partners,
members, managing members, agents, employees and assigns ... hereby
releases and discharges IVI ENVIRONMENTAL, INC ... and [lVI's] ...
agents ... from all actions, causes of action, suits, debts, sums of money,
accounts, reckonings, bills, bonds, specialties, contracts, covenants,
controversies, agreements, promises, variances, trespasses, judgments,
damages, executions, claims and demands whatsoever, in law, admiralty
or equity, which against the RELEASEES, the RELEASOR,
RELEASOR'S heirs, executors, administrators, successors, and assigns
ever had, now have or hereafter can, shall or may, have for, upon, or by
reason of any matter, cause or thing arising from or relating to services
rendered by IVI ENVIRONMENTAL, INC. in connection with the Kings
Plaza Shopping Center.
4.
It is hereby mutually understood and agreed that this settlement is a
compromise of disputed claims and is not to be construed or interpreted in
any way as an admission ofliability on the part of ALEXANDER'S
KINGS PLAZA CENTER, INC., ALEXANDER'S KINGS PLAZA LLC
and FIDELITY AND DEPOSIT COMPANY OF MARYLAND or by IVI
3
ENVIRONMENTAL, INC. on the counterclaims, such liability and/or
responsibility being hereby expressly denied.
***
6.
This RELEASE is intended to, and does finally and fully terminate and
dispose of all claims and demands which have been or may be asserted at
law or equity arising from or relating to the services rendered by IVI
ENVIRONMENTAL, INC. in connection with the Kings Plaza Shopping
Center, including all attorneys' fees and expenses that the parties may
have incurred to date.
7.
The signatories of this RELEASE hereby specifically state that they have
executed this RELEASE voluntarily and are fully aware of the provisions
of this RELEASE and the ramifications thereof.
8.
This RELEASE may not be changed orally and contains the entire
agreement between the parties hereto. The terms of this RELEASE are
contractual and not a mere recital.
McNulty Decl., Ex. F.
II.
CEC's Involvement and the Bankruptcy Action
IVI subcontracted removal and replacement work to Castlton Excavating, Inc. d/b/a
Castlton Environmental Contractors, Inc. ("Old Castlton") at the Kings Plaza Shopping Center.
CEC 56.1 St. at '\ll. Old Castlton was owned and operated by a parent company, commonly
known as Invatech, Inc. C'Invatech"). Id at '\l6. On or about September 30, 2003, Invatech filed
for Chapter II bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court"), and the board of directors filed an application for Chapter
II bankruptcy protection for Old Castlton. Jd at '\l'\l7-S.
Environmental Acquisition Company, LLC ("EAC") submitted bids to the Bankruptcy
Court and, on April 16, 2004, the Bankruptcy Court issued an Order ("the Sale Order"),
approving the sale of certain assets bid on by EAC. Jd at '\l9. The Bankruptcy Court ordered
4
that the transfer of assets to EAC did not and would not subject it to any liability for claims
against Old Castlton. ld. These assets were later transferred to Defendant CEC. ld. at '\110.
III.
The Present Action and Denial of Summary Judgment
On July 6, 2006, Plaintiffs discovered an oil leak at the Site. Second Am. Com pI. at '\134.
An investigation determined that the oil leak was caused by a problem with the UST system,
which had been installed by Old Castlton as subcontractor for IV!. ld. at '\1'\136-39,87,90.
Plaintiffs brought this action against Defendants, as well as other parties, to recover the costs of
environmental investigation, removal, remediation, and clean up arising from the oil leak.
In this action, IVI and CEC previously moved for summary judgment to dismiss
Plaintiffs Complaint on the basis that in July 2003, the Plaintiffs released all claims against IVI
related to lVI's work at the Site. IVI 56.1 St. at '\110. On September 30,2011, the Court denied
Defendants' motions for summary judgment, finding that although "[a]t first glance the language
of the Release is clear and unambiguous," the several "Whereas" statements that reference the
claims at issue in the State Court Action "imply that, although the Release contains general
language releasing the parties from any further liability, the Release was intended to cover the
settlement of only those claims at issue in the state court action." Varnado Really Trusl v.
Cast/Ion Envil. Contraclors, LLC ("Varnado F'), No. 08-CV-4823, 2011 WL 4592800, at *4-5
(E.D.N.Y. Sept. 30, 2011) (Irizarry, J.). Accordingly, the Court relied upon extrinsic evidence
and ultimately found that "there are issues of material fact improper for determination on
summary judgment as to whether the parties intended the Release to apply only to injuries at
issue in the State Court Action, and whether the parties intended for the Release to govern
services related to both improper design and installation of the UST system." ld. at *6.
5
On October II, 2011, this matter was reassigned from Judge Dora Irizarry to Judge
William F. Kuntz, ll. Though Defendants filed motions for reconsideration after the case was
reassigned to Judge Kuntz, Judge Irizarry entertained the motions for the sake of judicial
economy because they concerned Judge Irizarry's earlier order denying summary judgment. On
October 19,2011, this Court stayed discovery. See Dkt. No. 209.
On November 16, 2011, the Court denied Defendants' respective motions for
reconsideration. Varnado Realty Trust v. Castlton Envtl. Contractors, LLC ("Varnado 11'), No.
08-CV-4823, 2011 WL 5825688, at *2 (E.D.N.Y. Nov. 16,2011) (Irizarry, J.). The Court found
that it did not err in its previous order denying summary judgment, stating that "[a]lthough the
court did not discuss all instances of ambiguity in the Release in its Opinion, it did consider them
in its decision." Id. Following this statement, the Court discussed instances of ambiguity in the
operative language of the Release. See id. Specifically, the Court determined it noteworthy that
Paragraph Four of the Release "implies that the parties intended the Release to apply only to the
claims that were disputed in the state court action." Id.
On September 20, 2012, the Court lifted the stay of discovery. See Dkt. No. 227.
IV.
Deposition of Joseph Macnow
Joseph Macnow was the signatory of the Release on behalf of AKPC and AKP. IVI56.1
St. at ~ J 7. When IVI filed its Answer to the First Amended Complaint on January 29, 2009, it
attached a copy of the Release, which bore Mr. Macnow's signature. See Ok!. No. 29.
In their initial discovery responses, dated March 31, 2009, Plaintiffs did not identify any
individuals with information regarding the scope or meaning of the Release. McNulty Decl., Ex.
A. Plaintiffs did not identify Mr. Macnow as an individual likely to have information regarding
the terms of the Release until it produced supplemental disclosures on March 5, 2013. McNulty
6
Decl., Ex. Bat 2-3 ("Mr. Macnow has knowledge of ... the scope of the Settlement Agreement
and Mutual Releases (,Release') dated September 11,2003, which resolved the prior state court
litigation between Plaintitls [AKPC] and [AKP] and IV!."). Indeed, the only corporate
representative or witness identified by Plaintiffs supplemental disclosures as having knowledge
or information regarding the Release was Mr. Macnow.
On April 30, 2013, IVI took the deposition ofMr. Macnow. IVI 56.1 St. at 'Ii 17. When
asked about the scope of the Release, Mr. Macnow testitied as follows:
Q:
You agree with me that IVI was giving a release to Alexander's Kings
Plaza Center for any and all claims that it had in connection with the
Master Agreement and the services that were rendered by IVI at the site,
correct?
MR. BARNES: Same objections.
A:
I think that's what the words say.
Q:
And it was receiving a $90,000 payment in return for giving that full
release, correct?
A:
Yes.
Q:
Okay.
And, in addition to that, Vornado was giving a release to lVI, was it not?
When I say "Vornado," Alexander's Kings Plaza was giving a release to
lVI, was it not?
MR. BARNES: Same objections.
A:
Yes, it was.
Q:
And Alexander's Kings Plaza was giving a release of any and all past,
present or future claims that it had arising from the agreement that it
entered into with lVI, is that right?
MR. BARNES: Same objections.
7
Also objection as to form regarding excerpting from the release.
A:
That's what it says.
***
Q:
Referring you to paragraph 7 which reads, "The signatories of this release
hereby specifically state that they have executed this release voluntarily
and are fully aware of the provisions of this release and the ramifications
thereof."
Do you see that?
MR. BARNES: Same objections.
A:
I do see it.
Q:
And that was the understanding of Alexander's when they called upon you
to execute this agreement on their behalf?
MR. BARNES: Same objections.
A:
It was.
McNulty Dec!., Ex. Mat 118:5-119:8, 121:14-122:3.
Mr. Macnow also testified as to the parties' intent with respect to any exceptions or
carve-outs in the Release so as to allow Plaintiffs to file another lawsuit against IVI for claims
arising from the Master Agreement:
Q:
Mr. Macnow, we talked a little bit about the allegations and the claims that
were asserted by both IVI and Alexander's in connection with the lawsuit
that was filed back in 2002.
Was it your understanding that based on the Settlement Agreement and
Mutual Releases exchanged between the parties, that IVI was agreeing to
compromise its claims of $177,000 for unpaid services as well as
$326,000 as alleged in the fourth cause of action of its Second Amended
Complaint for $90,000?
A:
Yes.
Q:
And was it also your understanding that by way of the Settlement
Agreement of Mutual Release, that Alexander's was agreeing to forego
8
and compromise its $3 million claim in return for the release it was getting
from IVI?
MR. BARNES: Same objections as before. Calls for speculation. Asked
and answered and lack of foundation.
A:
Yes.
Q:
Do you recall ever having any conversations with Mr. Zubcak regarding
the settlement and mutual release in which he told you that there were any
exceptions or carve-outs that Varnado understood to be part of the
settlement it was entering into with IV I?
MR. BARNES: Same objections as before. And also as to form.
A:
I don't recal!.
McNulty Dec!., Ex. D. at 125:2-126:3.
V.
Affidavit of Mario De Stefan is
Mario De Stefanis is the Vice President of IVI and executed the Release on behalf of IV!.
AfT. of Mario de Stefanis ("Stefanis AfT.") at ~~ 1, 13. According to Mr. De Stefanis, "IV I
would never have agreed to the payment terms of the Release without first obtaining a full
release of all existing claims asserted against IVI and any future claims that could be asserted
against IVI in connection with the work performed under the Master Agreement." ld. at ~ 15.
Mr. De Stefanis' deposition testimony reflects his understanding that the Release would
prevent PlaintitTs from bringing any future claims arising out of the Master Agreement:
•
"The facts are that we were provided with a full release for Vornado for all the work
we've done in this and frankly I'm a little confused why I'm here on that."
•
"Not sure after our full release why we're even involved [in this case]."
•
'·[T]hey're dragging me into something that I've been released from."
•
"We've already been provided a release on this thing."
9
•
"We had a pay dispute and went back and forth, I liened the property and basically we
agreed to go our separate ways with the full release which cost me approximately
$90,000 in money."
McNulty Decl., Ex. H at 17: 19-22, 50: 17-18, 88: I 0-11, 88: 19-20, 150:24-151 :4. 2
LEGAL STANDARD
Federal Rule of Civil Procedure 54(b) provides that "any order or other decision ... that
adjudicates fewer than all the claims ... does not end the action as to any of the claims or parties
and may be revised at any time before the entry of a judgment adjudicating all the claims and all
the parties' rights and liabilities." Rule 54(b) gives district courts broad discretion to reconsider,
reverse, or modify interlocutory orders previously entered in a case. See, e.g., Parmar v. Jeetish
Imports, Inc., 180 F.3d 40 I, 402 (2d Cir. 1999) ("All interlocutory orders remain subject to
modification or adjustment prior to the entry of a final judgment adjudicating the claims to which
they pertain.") (citing Fed. R. Civ. P. 54(b)); Wright v. Cayan, 817 F.2d 999,1002 n.3 (2d Cir.
1987) ("[Ilt is clear that a second judge has the power to grant summary judgment despite
another judge's previous denial of summary judgment."); Corporacion de Mercadeo Agricola v.
Mellon Bank Int 'I, 608 F.2d 43, 48 (2d Cir. 1979) ("The first judge always has the power to
change a ruling; further reflection may allow a better informed ruling in accordance with the
conscience of the court. A fortiori, if the first judge can change his mind after denying summary
judgment and change his ruling, a second judge should have and does have the power to do so as
well."); Williams v County o/Nassau, 779 F. Supp. 2d 276, 280 (E.D.N.Y. 2011) (Mauskopf, 1.)
("A district court retains absolute authority to reconsider or otherwise affect its interlocutory
orders any time prior to appeal.").
2
This citation is to the first of the two McNulty Declarations.
10
However, "[ e ]ven if Rule 54(b) allows parties to request district courts to revisit earlier
rulings, the moving party must do so within the strictures of the law of the case doctrine." Virgin
Atl. Airways, Ltd. v. Nat 'I Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992). "The law of the
case doctrine is admittedly discretionary and does not limit a court's power to reconsider its own
decisions prior to final judgment." Id. (citations omitted). But "where litigants have once battled
for the court's decision, they should neither be required, nor without good reason permitted, to
battle for it again." Id. (citation and internal quotation marks omitted). "The major grounds
justifying reconsideration are 'an intervening change of controlling law, the availability of new
evidence, or the need to correct a clear error or prevent manifest injustice. '" Id. (quoting 18 C.
Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4478 at 790). "The objective of
the law of the case doctrine includes promoting efficiency and avoiding endless litigation by
allowing each stage of the litigation to build on the last and not afford an opportunity to reargue
every previous ruling." McGee v. Dunn, No. 09 Civ. 6098, 2013 WL 1628604, at *3 (S.D.N.Y.
Apr. 16,2013) (Stamp, J.) (internal editing and quotation marks omitted).
"[B]ecause the denial of a motion for summary judgment is an interlocutory order, the
trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in
the absence of new evidence or an intervening change in or clarification of the substantive law."
Nabisco v. Warner-Lambert Co., 32 F. Supp. 2d 690, 694-95 (S.D.N.Y. 1999) (Motley, J.)
(quoting Lavespere v. Niagara Machine & Tool Works, Inc, 910 F.2d 167,185 (5th Cir. 1990)),
aii'd 220 F.3d 43 (2d Cir. 2000); see also Jacques v. DiMarzio, 200 F. Supp. 2d 151, 163-64
(E.D.N.Y. 2002) (Block, J.) (quoting Nabisco, 32 F. Supp. 2d at 694); Jackson v. Roach, 364 F.
App'x 138, 139 (5th Cir. 2010) ("[T]he denial ofa motion for summary judgment is an
II
interlocutory order, which the trial court may reconsider and reverse for any reason it deems
sufficient. ").
DISCUSSION
I.
The Release Extends to Plaintiffs' Claims Against IVI in This Action
The Court concludes that it must reverse the September 30, 2011 and November 16,2011
decisions of this Court to prevent manifest injustice. Those earlier decisions rested on the
Court's finding that the Release was ambiguous as to whether it applied only to the specific
claims and counterclaims at issue in the State Court Action or whether the parties intended to
release any and all past, present, and future claims arising from IV!' s work at the Site. This
Court now finds that the broad language of the Release is unambiguous. The language of the
Release is clear, and it would be a manifest injustice to deprive IVI of the benefit of the bargain
it struck with Plaintiffs to settle the State Court Action. Therefore, to prevent manifest injustice,
the Court grants summary judgment to IV!.
"Where a contract is clear and unambiguous on its face, the intent of the parties must be
gleaned within the four corners of the instrument, and not from extrinsic evidence." RJE Corp.
v. Northville Indus. Corp., 329 F.3d 310, 314 (2d Cir. 2003) (citations and internal quotation
marks omitted); see also Appel v. Ford Motor Co., III A.D.2d 731, 732, 490 N.Y.S.2d 228
(N.Y. App. Div. 2d Dep't 1985) (where a valid release is "clear and unambiguous on its face"
and is "knowingly and voluntarily entered into," it "will be enforced as a private agreement
between [the] parties"). "Whether a contract is ambiguous is a question oflaw." RJE Corp., 329
F.3d at 314. The terms of a contract are not ambiguous if they "have a definite and precise
meaning and are not reasonably susceptible to differing interpretations." Id. (citations and
internal quotation marks omitted). If the court determines that an agreement is ambiguous, it
12
"may resort to extrinsic evidence to determine the parties' intent," "so long as the evidence is not
inconsistent with the express terms of the contract." Golden Pac. Bancorp v. F.D.IC, 273 F.3d
509,517 (2d Cir. 2001). However, "when the meaning ofa contract is plain and clear, it is
entitled to be enforced according to its terms and not to be subverted by straining to find an
ambiguity which otherwise might not be thought to exist." Uribe v. Merchants Bank ofN Y, 91
N.Y.2d 336, 341, 693 N.E.2d 740 (1998) (citation, internal quotation marks, and editing
omitted).
When a release is executed "in a commercial context by parties in roughly equivalent
bargaining positions and with ready access to counsel, the general rule is that if 'the language of
the release is clear ... the intent of the parties [is] indicated by the language employed. '"
Consorcio Prodipe, SA. de C V v. Vinci, SA., 544 F. Supp. 2d 178, 189 (S.D.N.Y. 2008)
(Castel, J.) (quoting Locafrance U.S Corp. v. Intermodal Sys. Leasing, Inc., 558 F.2d 11l3, 1115
(2d Cir. 1977»; see also Kay-R Elec. Corp. v. Stone & Webster Const. Co., Inc., 23 F.3d 55, 58
(2d Cir. 1994) ("The law of New York states that where the language with respect to the parties'
intent is clear and unambiguous, it will be given effect, regardless of one party's claim that he
intended something else. ") (citation, internal quotation marks, and editing omitted). And when
general language is used in the releasing document, "the release is to be construed most strongly
against the releaser." Middle E. Banking Co. v. State Street Bank. Int'!, 821 F.2d 897, 907 (2d
Cir. 1987). "[T]he burden is on the releaser to establish that the release should be limited." Id.
General releases are sometimes "avoided with respect to uncontemplated transactions
despite the generality of the language in the release form." Mangini v. McClurg, 24 N.Y.2d 556,
562 (1969). However, the New York Court of Appeals has cautioned against setting aside a
general release simply because it might preclude an action based on unrelated transactions:
13
This is not to say that a release may be treated lightly. It is a jural act of high
significance without which the settlement of disputes would be rendered all
but impossible. It should never be converted into a starting point for renewed
litigation except under circumstances and under rules which would render any
other result a grave injustice. It is for this reason that the traditional bases for
setting aside written agreements, namely, duress, illegality, fraud, or mutual
mistake, must be established or else the release stands.
ld. at 563. Indeed, the Mangini court emphasized that even in the case of a mutual mistake
between the settling parties as to the existence of an unknown injury, "there are many reasons,
including doubtful liability, the willingness to take a calculated risk, the desire to obtain an
earlier rather than a later settlement, and perhaps others, why releasers may wish to effect a
settlement and intend to give the release a discharge of liability for any unknown injuries-in
short to bargain for general peace. When general peace is the consideration there can be no
mutual mistake as to the extent of the injuries, known or unknown." ld at 566.
The Court concludes the Release is clear and unambiguous. Therefore, the Court must
glean the parties' intent from the four corners of the document. Paragraph Three of the Release
expressly released IVI from "all actions, causes of action, [or1suits ... whatsoever," which
Plaintiffs "now have or hereafter can, shall or may, have for, upon, or by reason of any matter,
cause or thing arising from or relating to services rendered by IVI ... in connection with the
Kings Plaza Shopping Center." McNulty Decl., Ex. F. Paragraph Six of the Release states the
Release is "intended to, and does finally and fully terminate and dispose of all claims which have
been or may be asserted at law or equity arising from or relating to the services rendered by IVI
... in connection with the Kings Plaza Shopping Center." ld. (emphasis added). The Release
contains no language excepting claims based on faulty installation of the USTs from the scope of
the agreement. See, e.g., Northgate Electric v. Barr & Barr, 61 A.D.3d 467, 468,877 N.Y.S.2d
36 (N.Y. App. Div. 1st Dep't 2009) ("If a plaintiff had wished to except its delay claim from the
14
release, it should have included plain language to that effect in the release. "). Regardless of
whether or not Plaintiffs were aware of problems with the installation of the USTs at the time
they executed the Release, and keeping in mind that a general release "is to be construed most
strongly against the releaser," Middle E. Banking Co., 821 F.2d at 907, the unambiguous
language of the Release shows the parties intended to bargain for general peace 3 Accordingly,
the Court grants summary judgment in favor of IVI.
Contrary to the findings of the previous interlocutory orders, this Court concludes the
Release is not rendered ambiguous by the introductory "Whereas" statements or by Paragraph
Four. While it is true that general words of release are sometimes "limited by the recital of a
particular claim," Green v. Lake Placid 1980 Olympic Games, 147 A.D.2d 860, 862, 538
N.Y.S.2d 82, 84 (N.Y. App. Div. 3d Dep't 1989), the mere recitation of the specific claims
underlying a settlement will not undermine the broad prophylactic effect of general release
language. Thus, in Green, the court found a general release was limited to a payment dispute
under a contract and did not extend to a dispute under a different contract because, contrary to
the facts in this case, the release referenced the specific claim at issue, the releasing party's
attorney had not reviewed the release prior to execution, and the defendants' attorney had told a
representative of the plaintiffs that the settlement would not affect the second action. Id. at 862.
The other cases cited by Plaintiffs are similarly distinguishable as involving releases arising from
disputes unrelated to later litigation. See Gellner v. Getty Oil Co., 226 A.D.2d 502, 641
N. Y.S.2d 73 (N. Y. App. Div. 2d Dcp't 1996) (general release arising from payment dispute did
not extend to later action based on alleged environmental damage); Perritano v. Town of
3 While the Court does not rely on extrinsic evidence in its reading of the unambiguously worded contract, the Court
notes that the deposition testimony of Mr. Macnow and Mr. De Stefanis, the signatories who executed the Release
on behalf of the parties, is consistent with the Court's conclusion that the Release covers any and all claims arising
from lVI's work at the Kings Plaza Shopping Center.
15
Mamaroneck, 126 A.D.2d 623, 511 N.Y.S.2d 60 (N.Y. App. Div. 2d Dep't 1987) (general
release arising from defamation suit did not necessarily extend to unrelated contract claims).
Unlike in Green, the State Court Action and the present dispute both arose from lVI's
work under a single contract. Unlike in Geitner, the State Court Action did not involve a mere
payment dispute. Plaintiffs lodged counterclaims against IVI for breach of contract, negligence,
malpractice and conversion arising from lVI's work at the Kings Plaza Shopping Center. As
such, the "Whereas" statements and Paragraph Four of the Release did not limit the Release to
the specific claims and counterclaims in the State Court Action. Instead, because Plaintiffs'
counterclaims in the State Court Action arose from lVI's work at the Kings Plaza Shopping
Center, the general language of the Release is more properly understood as striking a global
peace between the parties with the intent that all parties could move forward knowing there
would be no further disputes arising from lVI's services at the Site.
II.
CEC Is Also Entitled to Summary Judgment as an Agent of IVI
Because the Release expressly applies to lVI's agents, and because Old Castlton was an
agent ofIVI, CEC is also entitled to summary judgment 4 Plaintiffs argue Old Castlton was not
lVI's agent by pointing to an unsigned agreement between IVI as general contractor and Old
Castlton as sub-contractor, which disclaims the existence of an agency relationship between the
two. PIs.' Br. at
25~26;
Barnes Decl., Ex. F. However, for the reasons set forth below, the Court
rejects Plaintiffs' argument and concludes Old Castlton was lVI's agent, entitling it to the
protections of the Release.
The Court's September 30, 20 II interlocutory decision concluded there were genuine issues of material fact as to
whether CEC is a successor in interest to Old Castlton. For the sake of this motion, the Court assumes CEC is a
successor in interest to Old Castlton, exposing it to liabilities attached to assets purchased in the bankruptcy sale of
4
Old Castlton's assets.
16
A. The Unsigned Agreement Is Not Binding
To detennine whether an unsigned agreement constitutes a binding contract between two
parties, courts in the Second Circuit consider the following factors: "(I) whether there is an
expressed reservation of the right not to be bound in the absence of a writing; (2) whether there
has been partial perfonnance of the contract; (3) whether all of the terms of the alleged contract
have been agreed upon; and (4) whether the agreement at issue is the type of contract that is
usually committed to writing." Brown v. Cara, 420 F.3d 148, 154 (2d Cir. 2005).
The first factor is "frequently the most important." Id. The cover page of the unsigned
agreement between IVI and Old Castlton directs a representative of Old Castlton to "sign the
enclosed Contract Agreement form and mail the original copy back to our office." Barnes Decl.,
Ex. F. The signature page similarly requests Old Castlton to "acknowledge acceptance of the
terms and conditions of this Contract Agreement by signing and returning to us an original
copy." Id. Despite this repeated language, the agreement does not contain any signatures
acknowledging acceptance of the tenns and formation of a contract. Furthennore, the signature
page states the agreement "represents the entire agreement between IVI and the
CONTRACTOR, supersedes all prior agreements and understandings, and may be changed only
by written amendment executed by both parties." Id. Paragraph Nine of the unsigned agreement
contains a similar clause, stating "[t]he terms, instructions and conditions on the face and in the
body of this Contract Agreement ... constitute the entire agreement between the parties hereto
and any modification of this Contract Agreement to be valid must be in writing and signed by the
Construction Manager's authorized representative." Id. "The presence of such a merger clause
is persuasive evidence that the parties did not intend to be bound prior to the execution of the
written agreement." Nat '[ Gear & Pis/on, Inc. v. Cummins Power Sys., 861 F. Supp. 2d 344, 357
17
(S.D.N.Y. 2012) (Karas, J.) (quoting Ciaramella v. Reader's Digest Ass'n, Inc., 131 F.3d 320,
324 (2d Cir. 1997)); see also R. G. Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69, 76 (2d Cir.
1984) (clause stating that "any modification in the agreement would also have to be in writing
and signed" indicated the parties did not intend to be bound prior to execution of the contract).
Taken together, these provisions demonstrate a clear intent to be bound only once the agreement
was signed by both parties. See Cummins Power, 861 F. Supp. 2d at 357.
The record is sparse as to the three remaining factors. However, as noted earlier, the first
factor is frequently the most important. Indeed, "the second factor of partial performance is not
dispositive, and in some cases it is given little weight." Id.; see also United States v. U. S.
Currency in the Sum 0/$660,200, 423 F. Supp. 2d 14, 28 (E.D.N.Y. 2006) (Azrack, M.J.)
(noting "it is the second factor that appears to have had the least sway with courts"). As to the
third factor, though there is no indication that there were any terms yet to be agreed upon, that
fact "does not foreclose a holding that a proposed agreement is unenforceable because the parties
did not intend to be bound until it was in writing and signed." Cummins, 861 F. Supp. 2d at 358.
Likewise, even assuming the unexecuted agreement between IVI and Old Castlton is the sort of
contract that is usually committed to writing and signed as a matter of industry custom, that
would not outweigh the "first and most important factor," which "looks to the language of the
preliminary agreement for indication whether the parties considered it binding or whether they
intended not to be bound until the conclusion of final formalities." Teachers Ins. & Annuity
Ass 'n of Am. v. Tribune Co., 670 F. Supp. 491,499 (S.D.N.Y. 1987) (Leval, J.). Because the
unsigned agreement between IVI and Old Castlton contains no indication of Defendants' intent
for the agreement to become operative absent formal execution, the Court concludes the
agreement does not support Plaintiffs argument that Old Castleton disclaimed an agency
18
relationship with IVI. See Cummins, 861 F. Supp. 2d at 358 ("[T]he language of the Agreement
makes clear that Defendants did not intend to be bound until the Agreement was executed, and
Plaintiff has not otlered plausible allegations to the contrary.").
B. Old Castlton Was the Agent of IVI
As the record does not reflect a binding written agreement defining the nature of the
relationship between IVI and Old Castlton, the Court must determine whether an agency
relationship existed through the parties' conduct. In New York, an agency relationship requires
the following elements: "(1) manifestation by the principal that the agent shall act for him; (2)
the agent accepted the undertaking; and (3) an understanding between the parties that the
principal is to be in control of the undertaking." Spagnola v. Chubb Corp., 264 F.R.D. 76, 89
(S.D.N.Y. 2010) (Baer, J.). "The consent necessary for actual authority may be 'either express
or implied from the parties' words and conduct as construed in light of the surrounding
circumstances. '" ld. (citation omitted).
Based on the record, no reasonable jury could fail to conclude that Old Castlton was the
agent of IVI. According to the Master Agreement between Plaintiffs and lVI, IVI had authority
to remove and replace USTs at the Site. McNulty Dec!., Ex. A at 8. 5 Pursuant to the Master
Agreement, IVI was to provide all labor and materials to design and install the new USTs. Id.
IVI had "sole discretion to assign portions of [the Master Agreement] to subcontractors," and the
parties agreed to indemnify each other for injuries caused by the negligence or willful
misconduct of their respective agents, employees, or subcontractors. Id. at II. lVI, which had
primary responsibility for the installation of the USTs as the general contractor, subcontracted at
least some of that work to Old Castlton. See Second Am. Comp!. at ~~ 28-29 ("Defendants IVI
and Castlton designed and installed a new UST system"), 87-88 ("IVI hired Castlton to install
5
This citation is to the first of the two McNulty Declarations.
19
four new 15,000 gallon fuel oil underground storage tanks and associated piping at the Site."), 90
("The negligent acts and omissions by lVI, its agents, employees and subcontractors, including
Defendant Castlton, were the cause of Plaintiffs' damages."); CEC 56.1 St. at ~ 1. Hence, there
are no genuine issues of material fact as to whether an agency relationship existed between IVI
and Old Castlton. IVI manifested intent to grant authority to Old Castlton to help design and
install the USTs, Old Castlton accepted such authority, and IVI retained control over key aspects
of the undertaking. See Spagnola, 264 F.R.D. at 89. Because Old Castlton was an agent of lVI,
Old Castlton fell within the protections of the Release, and CEC, as successor-in-interest, cannot
be held liable in this action.
CONCLUSION
For the reasons stated above, Defendants' renewed motions for summary judgment are
granted in their entirety. All claims against Defendants are dismissed with prejudice. The Clerk
is directed to enter judgment for Defendants in accordance with this Decision and Order and to
close the case.
SO ORDERED
Dated: Brooklyn, New York
December 18, 2013
s/WFK
United States Dis ict Judge
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