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Extrinsic Evidence Considering the Parties Inten

Extrinsic Evidence Considering the Parties Inten

In Konami v. Galleria Condominium Association, the Supreme Court of New York Countydenied a motion to dismiss a lawsuit brought against the Galleria Condominium Association by Ms. Konami, a condominium apartment owner. One of the major issues in the case was whether or not damages to plaintiff Konami’s apartment fell within a contract – the condominium bylaws.

Background

On June 6, 2010, windows and part of a wall from apartments above Ms. Konami’s apartment fell and struck her apartment’s terrace, causing an alleged $100,000 worth of damage to her personal property (including costs of repair). The plaintiff then sued the Galleria Condominium Association (“Galleria”) as well as the manufacturer and installer of the windows.

Motion to Dismiss

The defendants asked the court to dismiss Ms. Konami’s complaint under various theories (a motion to dismiss is generally the first step of any trial, and if the court denies it the case proceeds forward). The defendants’ arguments boil down to the fact that Ms. Konami and her apartment were subject to the condominium bylaws which are a contract between the tenant and Galleria. One of the provisions of the bylaws stated that Galleria would not be liable for damage to personal property caused by “fire or other casualty.” Since the bylaws were part of a valid, enforceable, and non-breached contract, the defendants argued they precluded any recovery.

Plaintiff’s Counter Arguments

The Plaintiff makes some very interesting arguments in opposition. Her first argument is that her claim against defendant Galleria is based on negligence, rather than breach of contract. She states that Galleria, their window company, and other contractors negligently installed and maintained the windows and the wall that damaged her terrace. Negligence is simply the breach of the duty of ordinary care that all parties generally possess. Negligence does not require ‘bad intent’, but is generally viewed by commentators as being ‘worse’ than an ordinary breach of contract. As previously discussed in this blog, remedies for breach of contract are limited to making the plaintiff whole, but tort-law damages may include special or punitive damages. However in New York it is generally nigh-impossible to get punitive damages for ordinary negligence.

The Plaintiff’s second argument is that contract clauses that exempt owners and contractors from negligence liability are void and unenforceable under New York law (See General Obligations Law, Section 5-322.1). The state has determined that public policy disfavors the ability of owners and contractors to exempt themselves from negligence liability. Public policy is an important consideration when forming a contract because it serves as a limitation on the near-absolute freedom of contract and serves as an important protection to the public.

Judicial Analysis of Intent and Extrinsic Evidence

A court always construes a contract in accordance with the parties’ intent. The judicial standard in New York is that extrinsic (or “outside the contract”) evidence is only considered if the agreement is ambiguous.

Here the court examines the entire contract and the relationship of the plaintiff and the defendant and states that the contract cannot be read (even setting aside the issue of Section 5-322.1) to exempt Galleria from negligence liability. The plain language of the contract states that Galleria is not liable for fire or casualty, and that the defendant’s obligation to make repairs excludes “personal property.” However the court determines that, based on its assessment of the parties’ intent at contract signing, that none of the language clearly exempts negligence. Thus, the case must move forward to a trial on the merits.

It is crucial to have an experienced attorney familiar with the intricate details of contract law on your side when involved with matters that may involve breach of contract or unenforceable exculpatory language. Please do not hesitate to contact our office for a consultation.

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