NIAGARA FOODS, INC. v. FERGUSON ELECTRIC SERVICE COMPANY ( 2011 )


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  •          SUPREME COURT OF THE STATE OF NEW YORK
    Appellate Division, Fourth Judicial Department
    803
    CA 11-00333
    PRESENT: SCUDDER, P.J., SMITH, CARNI, SCONIERS, AND GREEN, JJ.
    NIAGARA FOODS, INC., BENLEY REALTY CO. AND
    THE CHARTER OAK FIRE INSURANCE COMPANY,
    PLAINTIFFS-APPELLANTS-RESPONDENTS,
    V                              MEMORANDUM AND ORDER
    FERGUSON ELECTRIC SERVICE COMPANY, INC. AND TEGG
    CORPORATION, DEFENDANTS-RESPONDENTS-APPELLANTS.
    LAW OFFICES OF ROBERT A. STUTMAN, P.C., NEW YORK CITY (KEVIN P. SMITH
    OF COUNSEL), AND BRANDT, ROBERSON & BRANDT, P.C., LOCKPORT, FOR
    PLAINTIFFS-APPELLANTS-RESPONDENTS.
    RUPP, BAASE, PFALZGRAF, CUNNINGHAM & COPPOLA LLC, BUFFALO (R. ANTHONY
    RUPP, III, OF COUNSEL), FOR DEFENDANT-RESPONDENT-APPELLANT FERGUSON
    ELECTRIC SERVICE COMPANY, INC.
    WALSH, ROBERTS & GRACE, BUFFALO (MARK P. DELLA POSTA OF COUNSEL), FOR
    DEFENDANT-RESPONDENT-APPELLANT TEGG CORPORATION.
    Appeal and cross appeals from an amended order of the Supreme
    Court, Niagara County (Ralph A. Boniello, III, J.), entered July 27,
    2010. The amended order, among other things, granted in part
    defendants’ motions to dismiss.
    It is hereby ORDERED that the amended order so appealed from is
    unanimously modified on the law by granting that part of the motion of
    defendant Ferguson Electric Service Company, Inc. to dismiss the
    breach of contract cause of action asserted against it by plaintiff
    Benley Realty Co. and as modified the amended order is affirmed
    without costs.
    Memorandum: In this action to recover damages sustained as the
    result of a fire, plaintiffs appeal and defendants each cross-appeal
    from an amended order that, inter alia, granted in part defendants’
    respective motions to dismiss the first amended complaint. Addressing
    first plaintiffs’ appeal, we conclude that Supreme Court properly
    granted those parts of the motions to dismiss the causes of action for
    fraud and negligent misrepresentation.
    With respect to that part of the fraud cause of action against
    defendant Tegg Corporation (Tegg), plaintiffs relied upon an e-mail
    from Tegg that merely constituted a promise for future action, which
    is insufficient to support that cause of action against Tegg (see
    -2-                           803
    CA 11-00333
    Transit Mgt., LLC v Watson Indus., Inc., 23 AD3d 1152, 1155; Cerabono
    v Price, 7 AD3d 479, 480, lv dismissed 3 NY3d 737, lv denied 4 NY3d
    704). With respect to that part of the fraud cause of action against
    defendant Ferguson Electric Service Company, Inc. (Ferguson), we note
    that it is well settled that “[a] cause of action premised upon fraud
    cannot lie where it is based on the same allegations as [a] breach of
    contract [cause of action]” (Heffez v L & G Gen. Constr., Inc., 56
    AD3d 526, 527). Nevertheless, where the alleged fraudulent
    representation is collateral to the contract, i.e., it is a fraudulent
    representation regarding present fact as opposed to one reflecting an
    intent to perform, the fraud and breach of contract causes of action
    simultaneously may be maintained (see Deerfield Communications Corp. v
    Chesebrough-Ponds, Inc., 68 NY2d 954, 956; McKernin v Fanny Farmer
    Candy Shops, 176 AD2d 233, 234). Here, the fraud and breach of
    contract causes of action with respect to Ferguson are based upon the
    same allegations inasmuch as both rely upon the May 3, 2004 agreement
    between Ferguson and plaintiff Niagara Foods, Inc. (Niagara Foods).
    Moreover, the documents attached to the first amended complaint
    establish that Ferguson made no false representation of present fact.
    With respect to the negligent misrepresentation cause of action, no
    special relationship other than an ordinary business relationship is
    asserted in the first amended complaint with respect to either Tegg or
    Ferguson. Thus, the court properly granted those parts of defendants’
    motions dismissing that cause of action against them (see Fleet Bank v
    Pine Knoll Corp., 290 AD2d 792, 795-796; H & R Project Assoc. v City
    of Syracuse, 289 AD2d 967, 969; Cecos Intl. v Advanced Polymer
    Sciences, 245 AD2d 1017).
    With respect to defendants’ cross appeals, we reject their
    contention that the court erred in denying those parts of their
    motions to dismiss the strict products liability cause of action.
    Plaintiffs properly pleaded a cause of action for strict products
    liability (see Van Iderstine v Lane Pipe Corp., 89 AD2d 459, 460-461,
    lv dismissed 58 NY2d 610, 1113), and the court was correct that, at
    this stage of the litigation, there is an issue of fact whether
    defendants provided a service, a product, or a combination thereof.
    We agree with Ferguson, however, that the court erred in denying that
    part of its motion to dismiss the breach of contract cause of action
    asserted by plaintiff Benley Realty Co. (Benley) against it inasmuch
    as Benley did not enter into a contract with Ferguson (see Mandarin
    Trading Ltd. v Wildenstein, 16 NY3d 173, 181-182). Nor has Benley
    established that it was a third-party beneficiary of the contract
    between Ferguson and Niagara Foods or that any benefit it received
    from that contract was sufficiently immediate to establish the
    assumption of a duty by Ferguson to compensate Benley in the event
    that the benefit was lost (see id. at 182). We therefore modify the
    amended order accordingly.
    Entered:   July 1, 2011                        Patricia L. Morgan
    Clerk of the Court
    

Document Info

Docket Number: CA 11-00333

Filed Date: 7/1/2011

Precedential Status: Precedential

Modified Date: 10/8/2016