WILJEFF, LLC v. United Realty Management Corp.

Memorandum: Plaintiff commenced this action seeking, inter alia, damages arising out of defendant’s breach of the management agreement (Agreement) between the parties, pursuant to which defendant was to manage a mixed-use complex (complex) owned by plaintiff. Plaintiff terminated the Agreement after defendant allegedly failed to perform its obligations thereunder, and defendant subsequently withdrew a certain sum from a bank account owned by plaintiff as a termination fee, alleging that it was entitled to such a fee because plaintiff had terminated the Agreement without cause. Supreme Court denied defendant’s motion to strike the complaint, granted plaintiffs cross motion for partial summary judgment on the second cause of action, determining that plaintiffs termination of the Agreement was for cause, and entered judgment against defendant in the amount of the termination fee that it improperly withdrew, plus interest and costs. We affirm.

Contrary to defendant’s further contention, we conclude that plaintiff met its initial burden of establishing, pursuant to the terms of the Agreement, that there was a material breach of that contract and thus that it was entitled to partial summary judgment determining that its termination thereof was for cause. “As a general rule, rescission of a contract is permitted for such a breach as substantially defeats its purpose. It is not permitted for a slight, casual[ ] or technical breach, but . . . only for such as are material and willful, or, if not willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in making the contract” (Lenel Sys. Intl., Inc. v Smith, 34 AD3d 1284 , 1285 [2006] [internal quotation marks omitted]; see Callanan v Keeseville, Ausable Chasm & Lake Champlain R.R. Co., 199 NY 268 , 284 [1910]). Generally, the question whether a breach is material is for the finder of fact but, “ ‘where the evidence concerning the materiality is clear and substantially uncontradicted ...[,] the question is a matter of law for the court to decide’ ” (Syracuse Orthopedic Specialists, P.C. v Hootnick, 42 AD3d 890 , 892 [2007]), and that

In opposition to the cross motion, defendant did not contradict those affidavits and instead attempted to establish that plaintiff was not entitled to summary judgment because it had not stated in sufficient detail the nature of the alleged breach. We conclude that defendant failed to raise a triable issue of fact sufficient to defeat the motion (see generally Zuckerman v City of New York, 49 NY2d 557 , 562 [1980]). Pursuant to the termination provisions of the Agreement, a party terminating the Agreement must give notice to the other party “specifying in detail a material breach [thereof].” The Agreement does not define “in detail” and, inasmuch as there is no extrinsic evidence establishing the meaning of that phrase, we may determine the question whether the notice letter provided sufficient detail as a matter of law (see Village of Hamburg v American Ref-Fuel Co. of Niagara, 284 AD2d 85 , 88 [2001], lv denied 97 NY2d 603 [2001]). Here, the letter by which plaintiff notified defendant of the breach of the Agreement alleged, inter alia, that defendant kept inaccurate tenant and financial records, that defendant failed to provide timely, complete and accurate financial and accounting information with respect to the complex’s rent roll, accounts receivable and cash reconciliation information and that defendant failed to provide timely notice of delinquency to tenants and plaintiff. Defendant thereafter offered a detailed response to those allegations. Thus, the error of which defendant was provided notice was defendant’s general ineptitude, rather than the specific consequences of its approach to the management of the complex. Such notice was sufficient pursuant to the terms of the Agreement. Indeed, the Agreement required that plaintiff, as the party seeking to terminate the Agreement, specify in detail a material breach, i.e., defendant’s pervasive incompetence, rather than imposing upon plaintiff the heavier obligation of particularizing each and every effect of the breach.

Contrary to defendant’s contention, the decision of the Court of Appeals in Chinatown Apts. v Chu Cho Lam ( 51 NY2d 786 [1980]) does not compel a different determination. That case does not articulate a general rule that effective notice of termination of any contract must always contain a recitation of each and every specific provision of the contract that allegedly

We further conclude that the court did not abuse its discretion in denying defendant’s motion to strike the complaint. “It is well settled that 6 [t]rial courts have broad discretion in supervising disclosure and, absent a clear abuse of that discretion, a trial court’s exercise of such authority should not be disturbed’ ” (Carpenter v Browning-Ferris Indus., 307 AD2d 713 , 715 [2003]). We have “repeatedly held that the striking of a pleading is appropriate only where there is a clear showing that the failure to comply with discovery demands is willful, contumacious [ ] or in bad faith” (Perry v Town of Geneva, 64 AD3d 1225 , 1226 [2009] [internal quotation marks omitted]). Once a moving party establishes that the failure to comply with a disclosure order was willful, contumacious or in bad faith, the burden shifts to the nonmoving party to offer a reasonable excuse (see Hill v Oberoi, 13 AD3d 1095 [2004]). Here, there is no merit to defendant’s contention that plaintiff failed to disclose certain e-mails, and plaintiff had a reasonable excuse for failing to produce certain witnesses for deposition, given the location at which defendant requested to depose those witnesses (see CPLR 3110 [1]). Present — Centra, J.P, Fahey, Lindley, Green and Martoche, JJ.