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Smart Summary

Factual and Procedural Background

The plaintiff, Schenectady Steel Co., Inc., and defendant Meyer Contracting Corp. entered into a contract on December 12, 2001, whereby the plaintiff agreed to provide steel and steel erection services for a school construction project. The contract contained a provision allowing Meyer to complete the work itself if the plaintiff defaulted and failed to cure such default within a specified three-day written notice period. The plaintiff brought an action to recover damages for breach of contract, seeking summary judgment on the complaint for damages representing the costs of completing the project incurred by Meyer after June 21, 2002. The defendants opposed the motion and sought leave to renew their opposition based on evidence related to the three-day notice requirement and completion costs. The Supreme Court denied the defendants’ motion for leave to renew and granted summary judgment in favor of the plaintiff. The defendants appealed both the denial of their motion to renew and the order and judgment awarding damages to the plaintiff.

Legal Issues Presented

  1. Whether the defendants were entitled to leave to renew their opposition to the plaintiff's motion for summary judgment based on new evidence concerning the three-day written notice to cure requirement under the contract.
  2. Whether summary judgment was properly granted to the plaintiff on the issue of damages representing completion costs incurred by Meyer after June 21, 2002.
  3. Whether the defendants raised a triable issue of fact sufficient to preclude summary judgment on the damages claimed by the plaintiff.

Arguments of the Parties

Defendants' Arguments

  • The defendants argued that they had a reasonable justification for failing to submit evidence of the three-day written notice to cure with their original opposition papers because the plaintiff first raised the notice issue in its reply papers.
  • They contended that submitting the notice with their motion for leave to renew raised a triable issue of fact regarding whether Meyer provided the required notice and whether the defendants could deduct $33,616 in completion costs from the amount owed to the plaintiff.

Plaintiff's Arguments

  • The plaintiff contended that the defendants failed to provide the requisite three-day written notice of default as required by the contract before Meyer completed the work.
  • The plaintiff sought summary judgment on the complaint for damages without addressing the notice issue until its reply papers.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Matter of Aho, 39 NY2d 241, 248 Right of appeal terminates with entry of judgment. The court dismissed the appeal from the March 3, 2009 order as the right of appeal terminated with the judgment, but considered the issues on appeal from the order and judgment.
Burnett v Smith, 64 AD3d 669 Requirements for a motion for leave to renew: new facts not offered previously and reasonable justification for failure to present them earlier. The court applied this standard to evaluate the defendants’ motion for leave to renew and found a reasonable justification for the failure to submit the three-day notice on the initial motion.
Chernysheva v Pinchuck, 57 AD3d 936 Same as above regarding leave to renew motions. Supported the court’s criteria for granting leave to renew based on new facts and justification.
Dinten-Quiros v Brown, 49 AD3d 588 Same as above regarding leave to renew motions. Reinforced the flexible application of the standard for leave to renew.
Madison v Tahir, 45 AD3d 744 Same as above regarding leave to renew motions. Supported the court’s discretionary authority to grant leave to renew motions.
Lawman v Gap, Inc., 38 AD3d 852 Flexibility in granting renewal motions based on facts known at the time of initial motion if reasonable excuse is offered. The court cited this precedent to justify granting leave to renew despite the evidence being available at the time of the initial motion.
Lafferty v Eklecco, LLC, 34 AD3d 754 Same as above regarding discretion to grant renewal motions. Supported the court’s discretionary approach to renewal motions.

Court's Reasoning and Analysis

The court reasoned that a motion for leave to renew must be supported by new or additional facts not previously offered and must contain a reasonable justification for the failure to present those facts earlier. Although the defendants had access to the notice and letters at the time of the initial motion, the plaintiff did not raise the issue of the three-day notice requirement until its reply papers, which constituted new grounds. The Supreme Court’s initial denial of summary judgment was without prejudice to renewal upon proof of the requisite notice, indicating that the issue was open for reconsideration.

Given this context, the defendants’ explanation for failing to submit the notice earlier was reasonable. Upon renewal, the defendants submitted the three-day notice to cure, thereby raising a triable issue of fact about whether Meyer provided proper notice and whether the defendants could deduct $33,616 in completion costs from the amount owed. Because this factual dispute existed, summary judgment in favor of the plaintiff was inappropriate. The Supreme Court therefore abused its discretion in denying the defendants’ motion for leave to renew and in granting summary judgment on this issue.

Holding and Implications

The appeal from the March 3, 2009 order is dismissed. The court reversed the order and judgment dated April 14, 2009, granting the defendants leave to renew their opposition to the plaintiff's summary judgment motion. Upon renewal, the prior grant of summary judgment to the plaintiff is vacated, and that branch of the plaintiff’s motion is denied.

The direct effect of this decision is to reinstate the defendants’ right to contest the plaintiff’s claim for damages representing completion costs, thereby precluding summary judgment for the plaintiff on that issue. The court made no new precedent but clarified the application of CPLR 2221(e) regarding motions to renew and the flexible standard for reasonable justification when new issues arise during litigation.

SCHENECTADY STEEL CO., INC., Respondent, v. MEYER CONTRACTING CORP. et al., Appellants.

Ordered that the appeal from the order dated March 3, 2009, is dismissed; and it is further,

Ordered that the order and judgment is reversed, on the law, on the facts, and in the exercise of discretion, with costs, that branch of the defendants' motion which was for leave to renew their opposition to that branch of the plaintiffs motion which was for summary judgment on so much of the complaint as sought to recover damages in an amount that the defendants allege represents the costs of completion of the subject construction project incurred by the defendant Meyer Contracting Corp. after June 21, 2002, is granted, upon renewal, the determination in the order dated October 30, 2008, granting that branch of the plaintiffs motion is vacated and that branch of the plaintiffs motion is denied, and the orders dated October 30, 2008, and March 3, 2009, are modified accordingly.

The appeal from the intermediate order dated March 3, 2009, must be dismissed because the right of appeal therefrom terminated with the entry of judgment in the action ( see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from that order are brought up for review and have been considered on the appeal from the order and judgment ( see CPLR 5501 [a] [1]).

A motion for leave to renew must be supported by new or additional facts "not offered on the prior motion that would change the prior determination," and "shall contain reasonable justification for the failure to present such facts on the prior motion" (CPLR 2221 [e] [2], [3]; see Burnett v Smith, 64 AD3d 669; Chernysheva v Pinchuck, 57 AD3d 936; Dinten-Quiros v Brown, 49 AD3d 588; Madison v Tahir, 45 AD3d 744).

In the instant dispute, the plaintiff and the defendant Meyer Contracting Corp. (hereinafter Meyer) entered into a contract on December 12, 2001, pursuant to which the plaintiff, as subcontractor, agreed to provide Meyer, as contractor, with steel and steel erection services in connection with a school construction project. The contract recited that, if the plaintiff failed "in the performance of any of the covenants" it was obligated to perform under the contract, Meyer could, at its option, "at any time after serving written notice of such default with direction to cure in a specific period, such period not to be less than three (3) working days," compete the work itself upon the plaintiffs failure to cure its default. Contrary to the plaintiffs contentions, the defendants proffered a reasonable justification for failing to submit evidence that it provide the required three-day written notice to cure with their original papers.

While the notice and follow-up letters were available to the defendants at the time that the plaintiffs summary judgment motion was made, the issue of Meyer's failure to provide the plaintiff with three days written notice of default was not raised by the plaintiff until it submitted its reply papers. Moreover, the Supreme Court denied the motion for summary judgment, "without prejudice to renewal upon proof of the requisite notice." The rule requiring a reasonable justification for the failure to submit relevant evidence on an initial motion is a flexible one, and whether that evidence was available to a party is only one factor which may be considered. The motion court may, in its discretion, grant renewal upon facts known to the movant at the time of the initial motion or petition if the movant offers a reasonable excuse for the failure to present those facts on the initial motion or petition ( see Lawman v Gap, Inc., 38 AD3d 852; Lafferty v Eklecco, LLC, 34 AD3d 754). Here, the Supreme Court initially granted the plaintiffs motion for summary judgment on the complaint without prejudice to the defendants' right to seek to renew their opposition, and the defendants, on their motion for leave to renew, offered a reasonable excuse for not including the three-day notice to cure with their original opposition papers, namely, that the issue was first raised by the plaintiff in its reply papers submitted on the initial motion for summary judgment.

By submitting the three-day notice to cure in connection with their motion for leave to renew, the defendants raised a triable issue of fact as to whether they were entitled to deduct, from the amount owed to the plaintiff under the contract, the sum of $33,616, which the defendants allege represents the costs incurred by Meyer after June 21, 2002, for the completion of the construction project. Since there is a triable issue of fact as to whether this sum may be deducted, an award of summary judgment in favor of the plaintiff is precluded and, thus, the new facts submitted on the defendants' motion for leave to renew "would change the prior determination" (CPLR 2221 [e] [2]).

Thus, the Supreme Court improvidently exercised its discretion in failing to grant that branch of the defendants' motion which was for leave to renew and, upon renewal, in denying summary judgment to the defendants in connection with the alleged completion costs.

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SCHENECTADY STEEL CO. v. MEYER CONT. CORP
(May 18, 2010)