A. Stein Meat Prods., Inc. v New York City Health & Hosps. Corp.

[*1] A. Stein Meat Prods., Inc. v New York City Health & Hosps. Corp. 2009 NY Slip Op 50529(U) [23 Misc 3d 1101(A)] Decided on March 24, 2009 Supreme Court, Kings County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 24, 2009
Supreme Court, Kings County

A. Stein Meat Products, Inc., Plaintiff,

against

New York City Health and Hospitals Corporation, et ano., Defendants.



15040/07



Attorney for Plaintiff:

Mark A. Panzavecchia, Esq.

Panzavecchia & Associates, PLLC

1050 Franklin Avenue - Suite 300

Garden City, NY 11530

Attorney for Defendant:

Cesar Pereira, Esq.

New York City Law Department

Office of the Corporation Counsel

100 Church Street

New York, NY 10007-2601

Carolyn E. Demarest, J.

Upon the foregoing papers, defendants New York City Health and Hospital Corporation (HHC) and the City of New York (the City) (collectively, the Municipal Defendants) move, pursuant to CPLR 3212, for an order dismissing the above-captioned action on the ground that plaintiff failed to commence same within the time required by the applicable contracts.

The gravamen of the instant lawsuit involves goods sold and delivered pursuant to a number of contracts executed by and between the City and plaintiff, A. Stein Meat Products, Inc. (A. Stein), a wholesaler of meat and poultry products which is based in Brooklyn, New York. As set forth in its Verified Complaint, filed on May 1, 2007, plaintiff claims that despite its demand, it has received no payment on any account stated. [*2]Specifically, plaintiff alleges that (1) between August 11, 1997 and May 16, 2005, plaintiff sold and delivered to Coler-Goldwater Specialty Hospital and Nursing Facility goods, wares and merchandise for the agreed-upon price of $88,248.35, on terms of net 30 days; (2) between September 28, 2001 and February 4, 2005, plaintiff sold and delivered to Kings County Hospital goods, wares and merchandise for the agreed-upon price of $39,194.70 on terms of net 30 days; (3) between January 7, 2002 and January 18, 2005, plaintiff sold and delivered to Woodhull Hospital goods, wares and merchandise for the agreed-upon price of $30,928.77 on terms of net 30 days; and (4) between July 31, 2002 and August 26, 2004, plaintiff sold and delivered to Coney Island Hospital goods, wares and merchandise for the agreed-upon price of $842.61 on terms of net 30 days.[FN1] Plaintiff thus claims that it is entitled to recover damages in the total amount of $159,214.43, plus interest computed from July 31, 2002.

In their Answer and Amended Answer, served on June 29, 2007 and July 18, 2007 respectively, the Municipal Defendants assert, as their Fifth Affirmative Defense, that plaintiff's claims are untimely, in that they are barred by the applicable statutory or contractual statute of limitations. The instant motion is based upon said allegation.

As further alleged by the Municipal Defendants therein, thirty-six contracts, all annexed as exhibits to defendants' papers and identified by their bid numbers, were executed by the parties between June 30, 1997 and July 1, 2005. As pointed out, each of said thirty-six contracts contains a provision, enumerated Section 5 and entitled "New York City Purchase Contract", stating that "[b]idder acknowledges receipt of and agrees to be bound by the terms and conditions of the New York City Purchase Contract referenced in the Table of Contents." Incorporated by reference into each of the contracts was the following language, relied upon by the Municipal Defendants in the instant motion, that is found in Part III, Section 12 of the New York City Purchase Contract Terms and Conditions, entitled "Period of Limitation". Said provision states in pertinent part:

"[n]o action shall be maintained against the City upon any claim

arising out of this Contract unless such action be commenced

within (1) year from acceptance of final payment, termination

of the contract or accrual of cause of action, whichever is earlier."[FN2] [*3]

Thus, pointing out that the latest applicable contracts "ended" on July 1, 2005 and that plaintiff filed its complaint on May 1, 2007, the Municipal Defendants contend that plaintiff was required, but failed to, assert its claims against them with a year of the termination of even the latest applicable contract.

In opposition to the motion, plaintiff contends that denial is mandated because (1) the subject contracts were never terminated, thus raising an issue of fact as to the dates on which the City's obligation to make payment commenced, and (2) the term "terminated" is ambiguous. It further avers that an issue of fact exists concerning the circumstances surrounding the City's failure to "complete its obligations to pay [A.] Stein under the contracts," and whether plaintiff reasonably relied to its detriment on the City's course of past conduct in conducting business with plaintiff, in that it routinely carried balances owed to plaintiff for extended periods of time. Finally, plaintiff seeks denial of the instant motion in order to permit it to conduct discovery.

In reply, the Municipal Defendants assert that plaintiff has failed to meet its burden of demonstrating that there is an issue of fact as to the parties' rights and obligations pursuant to the language of the contracts. They further argue that the term "terminate", as used in the contracts, is clear and unambiguous, and that once again, no issue of fact has been raised. Finally, they reject plaintiff's contention that the City's past actions estop it from raising the contractual limitations period as a defense to plaintiff's maintaining a lawsuit against it.

DISCUSSION

The burden on a motion for summary judgment rests initially upon the moving party to come forward with sufficient proof in admissible form to enable a court to determine that it is entitled to judgment as a matter of law. If this burden cannot be met, the court must deny the relief sought (CPLR 3212; Zuckerman v City of New York, 49 NY2d 557 [1980]). However, once a moving party has made a prima facie showing of its entitlement to summary judgment, "the burden shifts to the opposing party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Garnham & Han Real Estate Brokers v Oppenheimer, 148 AD2d 493 [1989]; see also Zuckerman, 49 NY2d at 562). Mere conclusory statements, expressions of hope, or unsubstantiated allegations are insufficient to defeat the motion (Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966 [1988]).

The Municipal Defendants have demonstrated entitlement to judgment as a matter of law. In New York, parties may agree to shorten the applicable period for commencing an action as long as the agreement is in writing and the period of time is not unreasonably short (CPLR 201; see John J. Kassner & Co., Inc. v City of New York, 46 NY2d 544, 551 [1979]); Delidakis Constr. Co., Inc. v City of New York, 29 AD3d 403 [2006]). A one-year period of limitations, freely negotiated by the parties, may be upheld as reasonable (Rudin v Disanza, 202 AD2d 202 [1994]). Furthermore, with respect to claims arising out of contracts for the sale of goods and thus subject to the provisions of [*4]the Uniform Commercial Code, NYUCC 2-725(1) provides that the parties may agree to reduce the period of limitations for commencing an action to a minimum of one year (see Gruet v Care Free Housing Div. of Kenn-Schl Enterprises, Inc., 305 AD2d 1060, 1061 [2003]). Thus, the shortened limitations period provided for in the subject contracts is enforceable.

Termination

At the outset, the court finds that plaintiff's contention that the term "termination" is ambiguous, is devoid of merit. (see Klein v Empire Blue Cross and Blue Shield, 173 AD2d 1006, 1010 [1991] ["(i)t is for the court to determine, in the first instance, whether language in a contract is ambiguous and susceptible of two or more reasonable interpretations. If it is found to be ambiguous, then extrinsic evidence is admissible to resolve the ambiguity"]). Here, apart from its conclusory contention, plaintiff fails to show, as it must, that such language is, in fact, ambiguous (see Carollo v Tishman Const. and Research Co., Inc., 109 Misc 2d 506, 511 [1981]). As noted above, the New York City Purchase Contract is incorporated by reference into each of the contracts which are the subjects of the instant lawsuit. Part III, Paragraph 3.5 ("General Conditions Termination or Suspension of Contract") thereof unambiguously provides that "[w]here the Agency Chief Contracting Officer deems it to be in the interest of the City, the Agency Chief Contracting Officer may terminate or suspend the performance of this Contract in whole or in part." Such a provision is in complete accordance with the law in New York, where it is well-established "that when a contract affords a party the unqualified right to limit its life by notice of termination that right is absolute and will be upheld in accordance with its clear and unambiguous terms" (Red Apple Child Development Center v Community School Districts Two, 303 AD2d 156, 157 [2003]). In addition, the UCC defines "termination" as occurring "when either party pursuant to a power created by an agreement or law puts an end to the contract otherwise than for its breach" (NYUCC 2-106[3]). Here, the subject contracts each "terminated" or expired by their terms on a given date.

Similarly, plaintiff's charge, raised for the first time in opposition to the Municipal Defendants' motion, that the City never terminated any of the contracts at issue, must be rejected for two reasons. In the first place, plaintiff's claims rest exclusively on defendants' alleged failure to pay for goods sold and delivered, and nowhere does it plead that the contracts were never terminated or were wrongfully terminated. Secondly, plaintiff is bound by the language in the New York City Purchase Contract which requires commencement upon any claim arising therefrom within one year of "final payment, termination, or accrual of any cause of action, whichever is earlier" (emphasis provided). Here, plaintiff's cause of action accrued when it possessed "the legal right to be paid and to enforce its right to payment in court" (City of New York v State of New York, 40 NY2d 659, 668 [1976]; Reuter v Town of Babylon, 40 AD2d 710 [1972]). Part III, Paragraph 7(b) of the New York City Purchase Agreement ("Payment") provides that "[p]]roper invoices, when submitted, will be payable within thirty (30) days after either receipt of invoices or acceptance of the Goods, whichever date is later." Accordingly, "[u]pon the expiration of that period without approval or payment, plaintiff's claims were constructively rejected and its cause of action accrued" (Memphis Const. Inc. v Village of Moravia, 59 AD2d 646, 647 [1977]). Thus, under the facts alleged, and irrespective of any language employed by the Municipal Defendants in the present motion, the contractual one-year period of limitations was triggered, in each instance, by acceptance of the goods upon delivery and by the Municipal Defendants' constructive rejection of plaintiff's claims as they came due under each [*5]contract, and plaintiff fails to raise an issue of fact as to the untimeliness of its commencement of the present lawsuit.



Estoppel

Generally, the doctrine of estoppel is not applicable to municipalities acting in a governmental capacity (see Matter of Hamptons Hosp. & Med. Ctr. v Moore, 52 NY2d 88, 93, n 1[1981]). However, a municipality may be estopped from asserting that a claim was untimely filed when its improper conduct induced reliance by a party who changed his or her position to his or her detriment or prejudice (see Bender v New York City Health & Hosps. Corp., 38 NY2d 662, 668 [1976]).

Although plaintiff, through Mora's affidavit, alleges that the City regularly made late payments, and, in fact, did so as recently as 2½ months before plaintiff instituted the instant lawsuit, its contention that such a practice should estop the Municipal Defendants from asserting the expiration of the period of limitations is unavailing. In order for plaintiff to prevail on its equitable estoppel argument, it must demonstrate more than a past course of conduct in its business dealings with defendants. Rather, a showing of affirmative, misleading conduct on the part of defendants which led plaintiffs to forego commencing a timely action is required (see Montelione v Greenburgh Edgemont Union Free School Dist. at Scarsdale, 175 AD2d 113 [1991]; Rains v Metropolitan Transp. Authority, 120 AD2d 509 [1986]; see also Power Cooling, Inc. v Board of Educ. of City of New York, 48 AD3d 536, 537-538 [2007]; Consolidated Const. Group, LLC v Bethpage Union Free School Dist., 39 AD3d 792 [2007]). Some courts have required a showing of scienter on the part of the municipality (see Dowdell v Greene County, 14 AD3d 750 [2005], citing Rains , 120 AD2d at 509]).

Here, plaintiff's allegations fail to show that defendants engaged in that type of egregious conduct which meets the requisite legal standard (see Mitchell v New York City Dept. of Consumer Affairs, 160 AD2d 487, 489 [1990] [doctrine invoked where agency's misleading and recalcitrant behavior frustrated a petitioner's attempt to timely pursue his administrative remedies]), nor does the record suggest any action or representation made which would likely have lulled plaintiff into inaction or justifiable reliance (see Phillips v Dweck, 300 AD2d 969, 970 [2002]). Plaintiff's reliance on the holding in Conquest Cleaning Corp. v New York City Sch. Constr. Auth. (279 AD2d 546 [2001]) is misplaced. In that case, the Appellate Division affirmed the hearing court's order estopping defendant from asserting that the plaintiff failed to timely file a notice of claim. The court noted that during the three-month claim period, defendant's project manager provided plaintiff's president "with payment forms, advised Martinez on how to complete the forms, advised Martinez that the defendant had approved the submitted payment forms, made various requests for copies of additional documentation, and assured Martinez that the payment request had been sent to the defendant. The defendant did not inform Martinez that the payment request had been or would be rejected. Rather, . . . the defendant's manager of industrial hygiene set up a payment meeting with Martinez, directed Martinez to bring additional copies of the payment request documentation, and told Martinez that his payment request would be considered fairly." Under such circumstances, the court found that the conduct of the defendant lulled the plaintiff into sleeping on its rights to its detriment.

By contrast here, plaintiff fails to show that the Municipal Defendants's conduct involving past business practices with plaintiff, is tantamount to having engaged in "positive acts, or [*6]omissions where there was a duty to act" which would trigger the protection of the doctrine (see Henry Boeckmann, Jr. & Associates, Inc. v Board of Educ., Hempstead, 207 AD2d 773 [1994] [evidence that the School District failed to inform the plaintiff of the Board's vote to reject its invoice, coupled with the plaintiff's assertion that the School District's business manager requested additional documentation of the claim even after the Board's vote, sufficient to raise issue of fact]). Having thus failed to raise an issue of fact with regard to the applicability of the doctrine, the court finds no merit to plaintiff's contention.



Discovery

Finally, plaintiff, offering nothing more than conclusory averments, fails to establish that the defendants' motion should be denied pending discovery. "Although determination of a summary judgment motion may be delayed to allow for further discovery where evidence necessary to oppose the motion is unavailable to the opponent (see CPLR 3212 [f]), [a] determination of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence' "(Lambert v Bracco, 18 AD3d 619, 620 [2005], quoting Ruttura & Sons Constr. Co. v Petrocelli Constr., 257 AD2d 614, 615 [1999]). A party's mere hope that further discovery will reveal the existence of triable issues of fact is insufficient to delay determination on the issue of summary judgment (Id.).

In view of the foregoing, the defendants' motion for summary judgment is granted, and the complaint is dismissed.

The foregoing constitutes the decision, order and judgment of the court.

E N T E R,

J. S. C. Footnotes

Footnote 1:All of the named facilities are operated by defendant HHC.

Footnote 2:Depending upon its date of execution, one of four versions of the New York City Purchase Contract terms and conditions was incorporated into each of the thirty-six contracts. Said versions are enumerated 8825L/APRIL/1993, 310L/MAY/1999; 310L/SEPTEMBER/1999, or 310L/NOVEMBER/2000. However, all four versions contain the identical language providing for a one year period of limitations, as set forth.