Contract Clauses that Eliminate All Judicial and Nonjudicial Review Are Void as Against Public Policy

1. Introduction

Hochhauser v Urban Off. Architecture, PLLC (2026 NY Slip Op 04491 [2d Dept 2026]) arises from a residential renovation project in Dobbs Ferry, New York. Plaintiff Brian Hochhauser retained Urban Office Architecture, PLLC (“UOA”), owned by architect Carlo Frugiuele, under a design services agreement. The agreement contained a striking “mutual waiver” clause: “THE OWNER AND ARCHITECT AGREE TO MUTUALLY WAIVE EACH OTHER [sic] RIGHT TO SUE OR PLACE CLAIMS AGAINST EACH OTHER.”

The plaintiff alleged that—without his knowledge—UOA retained Urban Office Builds Corp. (“UOB”) as general contractor, a company owned by Frugiuele’s wife, Wamaris Rosario. After the plaintiff terminated the agreement before completion, he sued for, among other claims, breach of contract, negligence, professional malpractice, fraud, unjust enrichment, veil piercing, and a declaratory judgment that the waiver clause was void.

The core legal issue on appeal was whether New York’s strong policy favoring freedom of contract permits enforcement of a clause that purports to eliminate all avenues—judicial and nonjudicial—for resolving disputes arising from the contract.

2. Summary of the Opinion

The Second Department modified the Supreme Court’s order. It held that the waiver provision was void and unenforceable as against public policy because it “precludes access to the courts and leaves no judicial or nonjudicial avenues” for the plaintiff to adjudicate rights under the agreement. The Appellate Division granted the plaintiff summary judgment declaring the clause void and remitted for entry of a declaratory judgment.

The court also:

  • Reinstated certain claims (including breach of contract and negligence as against UOA/Frugiuele, and professional malpractice/veil-piercing claims) because defendants did not establish entitlement to dismissal on the merits once the waiver fell away.
  • Affirmed dismissal of breach of contract and negligence claims against UOB/Rosario for lack of privity and application of the economic loss principle in negligent construction where no contract exists.
  • Affirmed dismissal of the fiduciary duty claim against UOA/Frugiuele (no “special circumstances” converting an arm’s-length business relationship into a fiduciary one).
  • Affirmed dismissal of unjust enrichment (a written contract governing the subject matter bars quasi-contract, including against nonsignatories).
  • Affirmed dismissal of fraud (duplicative of contractual duties; no collateral/extraneous misrepresentation).

3. Analysis

3.1 Precedents Cited

Freedom of contract and its limits

  • New York Commercial Realty Group, LLC v Beau Pere Real Estate, LLC (216 AD3d 793): cited for the baseline rule that “Freedom of contract prevails” in arm’s-length transactions between sophisticated parties. The court used this principle as the starting point—then immediately emphasized it is not absolute.
  • Smith v Smith (129 AD3d 934): invoked to underscore that freedom of contract “has never been without limitation.” This framed the inquiry as a public-policy boundary case, not a mere disagreement with the parties’ bargain.
  • Matter of New Brunswick Theol. Seminary v Van Dyke (184 AD3d 176): supplied the doctrinal path: even where formation defenses are absent, a contract term may be avoided if it is “void against public policy.”
  • 159 MP Corp. v Redbridge Bedford, LLC (33 NY3d 353), quoting New England Mut. Life Ins. Co. v Caruso (73 NY2d 74): provided the controlling public-policy balancing test—courts may void a term only after weighing the public interests favoring invalidation against enforcement, and only “a limited group” of public policies are fundamental enough to override contractual freedom.

Why 159 MP controlled—and why this waiver failed under it

The Second Department treated 159 MP Corp. v Redbridge Bedford, LLC as the key comparator. In 159 MP, the Court of Appeals enforced a waiver of declaratory judgment actions because other avenues remained: the clause “does not preclude access to the courts,” and it did not impair the plaintiffs’ ability to seek damages for breach of contract or tort.

Here, the Second Department found the opposite: the waiver was “not limited” and purported to “completely foreclose” any form of review—judicial or nonjudicial. That total foreclosure was the dispositive fact that pushed the clause over the public-policy line.

Summary judgment and appellate review posture

  • Parochial Bus Sys. v Board of Educ. of City of N.Y. (60 NY2d 539): cited on the principle that an appellate court may affirm on an alternative ground urged by the respondent. The Second Department acknowledged the doctrine but held the defendants did not satisfy it “on the merits.”
  • Zuckerman v City of New York (49 NY2d 557): supplied the prima facie burden rule on summary judgment. Once the waiver clause was declared void, defendants still had to prove entitlement to dismissal of several claims on the merits—and failed to do so for key causes of action.

Privity and economic loss (claims against UOB/Rosario)

  • Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp. (64 AD3d 85): cited for the rule that breach of contract liability requires contractual relationship/privity; used to affirm dismissal of contract claims against UOB/Rosario.
  • Sacks v Knolls at Pinewood, LLC (157 AD3d 917): cited for the proposition that a plaintiff cannot recover purely economic losses for negligent construction absent a contractual relationship; used to affirm dismissal of negligence claims against UOB/Rosario.

Fiduciary duty in arm’s-length commercial dealings

  • Board of Mgrs. of Country Pointe at Smithtown N. Condominium v Country Pointe at Smithtown Homeowners Assn., Inc. (240 AD3d 650) and AHA Sales, Inc. v Creative Bath Prods., Inc. (58 AD3d 6): cited for the rule that a conventional business relationship does not create fiduciary duties absent “special circumstances,” such as one party controlling the other for the other’s benefit.
  • Board of Mgrs. of Highpoint Condominium v East/West Venture, Haseko [40th] (278 AD2d 55): additional authority supporting dismissal where the relationship remains commercial rather than fiduciary in character.

Unjust enrichment barred by a governing written contract—even as to nonsignatories

  • Clark-Fitzpatrick, Inc. v Long Is. R.R. Co. (70 NY2d 382) and Avery v WJM Dev. Corp. (216 AD3d 887): cited for the rule that a valid written contract covering the subject matter bars quasi-contract claims.
  • Randall's Is. Aquatic Leisure, LLC v City of New York (92 AD3d 463) and Bellino Schwartz Padob Adv. v Solaris Mktg. Group (222 AD2d 313): applied to extend that bar to unjust enrichment claims against third-party nonsignatories where the dispute is governed by the contract.

Fraud vs. breach of contract

  • Summit Dev. Corp. v Interstate Masonry Corp. (140 AD3d 1152): recited for the elements of fraud.
  • McKerin v Fanny Farmer Candy Shops (176 AD2d 233) and Oceanview Assoc., LLC v HLS Bldrs. Corp. (184 AD3d 843): applied for the rule that fraud does not lie where it merely repackages alleged breaches of contractual duties and lacks collateral/extraneous misrepresentations.

Declaratory judgment procedure on remittal

  • Lanza v Wagner (11 NY2d 317): cited for the requirement that where a declaratory judgment claim is involved, the court should remit for entry of an appropriate declaratory judgment.

3.2 Legal Reasoning

The court’s reasoning follows a structured path:

  1. Start with freedom of contract (especially where parties are sophisticated and negotiated at arm’s length).
  2. Shift to public policy: even absent formation defects, a term may be void if it violates fundamental public policy.
  3. Apply the 159 MP public-policy framework: enforce waivers that limit a particular remedy (e.g., declaratory judgment) so long as meaningful alternative avenues remain (e.g., damages actions).
  4. Draw the crucial distinction: this waiver was “not limited” and eliminated all avenues of adjudication—judicial and nonjudicial. That degree of foreclosure, in the court’s view, implicates interests beyond the contracting parties’ preferences.
  5. Result: the clause is void as against public policy; claims cannot be dismissed merely because the plaintiff “waived” all claims and suits.

Notably, the court did not hold that parties can never waive litigation rights. It held that a waiver that eradicates every forum for resolving disputes goes too far—especially when compared to 159 MP, where alternate judicial paths remained available.

3.3 Impact

  • Contract drafting in design/construction agreements: Clauses styled as “mutual waivers” of the right to sue (or “place claims”) must be drafted with care. This decision signals that a clause will likely be void if it functions as a total “no-remedy/no-forum” provision rather than a targeted limitation.
  • Waiver vs. channeling disputes: The opinion implicitly distinguishes between (a) impermissibly eliminating all dispute resolution and (b) permissibly channeling disputes into an alternate mechanism (e.g., arbitration, or limiting only a specific type of action) so long as meaningful adjudicatory avenues remain.
  • Litigation strategy: Defendants cannot rely on a broad “no claims/no lawsuits” clause as a universal summary judgment lever. They must still prove entitlement to dismissal on the merits under Zuckerman v City of New York.
  • Architect-owner disputes: Professional relationships often involve complex performance questions; the decision suggests New York courts will be reluctant to enforce provisions that would immunize one side from accountability by removing all mechanisms of review.

4. Complex Concepts Simplified

  • “Void as against public policy”: Even if a contract was properly formed, courts may refuse to enforce a term if enforcing it would seriously harm fundamental societal interests. This is rare and requires balancing, but it applies when a clause goes beyond private ordering into undermining the justice system’s role.
  • “Access to the courts” vs. “waiving a particular remedy”: Waiving one procedural tool (like a declaratory judgment) may be enforceable if other lawsuits remain available. Eliminating all routes—courts, arbitration, or other adjudication—crosses a different line.
  • “Privity”: Contract claims generally require a contract between the parties. If you did not contract with UOB/Rosario, you typically cannot sue them for breach of the UOA contract.
  • “Economic loss rule” (as applied here): Where the loss is purely financial (cost overruns, repair costs, diminished value) and there is no contract with the defendant, negligence claims for construction-related economic losses are often barred.
  • “Unjust enrichment” barred by contract: When a written contract covers the dispute, courts usually will not allow a quasi-contract claim as an end-run around the contract, even against certain nonsignatories if the contract governs the subject matter.
  • Fraud vs. breach of contract: Fraud requires a lie that is collateral to the contract (a separate deception), not merely a failure to perform contractual promises.

5. Conclusion

Hochhauser v Urban Off. Architecture, PLLC establishes a clear boundary on contractual waivers in New York: while sophisticated parties may waive specific rights and remedies, a provision that completely forecloses any judicial or nonjudicial avenue to adjudicate disputes is void and unenforceable as against public policy. By distinguishing 159 MP Corp. v Redbridge Bedford, LLC—where alternative judicial remedies remained—the Second Department anchored the rule in existing Court of Appeals doctrine while clarifying that “total-forum foreclosure” waivers are impermissible.

The decision also reinforces orthodox pleading boundaries in construction/design litigation: privity limits contract and negligence claims against non-contracting parties; fiduciary duty requires special circumstances beyond an arm’s-length relationship; unjust enrichment yields to a governing contract; and fraud must be truly collateral to contractual obligations.