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Electrical Waste Recycling Group, Ltd. v. Andela Tool & Machine, Inc.

Supreme Court of New York, Fourth Department

June 28, 2013

ELECTRICAL WASTE RECYCLING GROUP, LIMITED, PLAINTIFF-RESPONDENT,
v.
ANDELA TOOL & MACHINE, INC., FORMERLY KNOWN AS ANDELA PRODUCTS, LTD., DEFENDANT-APPELLANT.

Appeal from an order of the Supreme Court, Herkimer County (Norman I. Siegel, A.J.), entered September 4, 2012. The order, among other things, denied the motion of defendant for summary judgment.

STEWART BERNSTIEL & REBAR, LLC, NEW YORK CITY (CATHLEEN K. REBAR OF COUNSEL), FOR DEFENDANT-APPELLANT.

DINOVO PRICE ELLWANGER & HARDY LLP, AUSTIN, TEXAS (JAY D. ELLWANGER, OF THE TEXAS AND CALIFORNIA BARS, ADMITTED PRO HAC VICE, OF COUNSEL), AND FELT EVANS, LLP, CLINTON, FOR PLAINTIFF-RESPONDENT.

PRESENT: SCUDDER, P.J., PERADOTTO, LINDLEY, SCONIERS, AND WHALEN, JJ.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting defendant's motion in part and dismissing the seventh cause of action and as modified the order is affirmed without costs.

Memorandum: City Electrical Factors/Matrix-Direct-Recycle (MDR), which was plaintiff's predecessor in interest, entered into two separate contracts with defendant. Pursuant to the first contract, defendant was to supply MDR with an "Electronic-CRT Recycling System." Pursuant to the second contract, defendant was to supply MDR with a "Fluorescent Tube Recycling System." Each contract contained identical limitation of liability provisions, which provided in pertinent part that defendant would "not be responsible for any indirect, special, incidental or consequential loss or damage whatsoever (including lost profits and opportunity costs) arising out of any purchase order or responding document issued as a result of this proposal."

After both systems allegedly failed, plaintiff commenced this action, asserting causes of action for, inter alia, breach of contract, strict products liability, negligence and a violation of General Business Law § 349. Defendant moved for summary judgment dismissing the first amended complaint, and Supreme Court denied the motion in its entirety. We conclude that, with the exception of the section 349 cause of action, the court properly denied the motion.

As a preliminary matter, we reject plaintiff's contention that defendant failed to meet its initial burden on the motion because it submitted an affidavit from an attorney lacking personal knowledge. Although defendant's attorney "did not assert any personal knowledge of the facts, his affirmation, to which were annexed [numerous] exhibits, satisfied the statutory requirements because it served as a vehicle for the submission of documentary evidence" (State of New York v Grecco, 43 A.D.3d 397, 399-400; see Branch Servs., Inc. v Cooper, 102 A.D.3d 645, 648; see generally Alvarez v Prospect Hosp., 68 N.Y.2d 320, 325).

We likewise reject defendant's contention that it was entitled to summary judgment dismissing those causes of action predicated on recovery of indirect, special, incidental or consequential loss or damages on the ground that the limited liability clauses preclude such recovery. Although defendant established as a matter of law that the clauses are neither unconscionable nor wholly void or unenforceable (see Biotronik A.G. v Conor Medsystems Ireland, Ltd., 95 A.D.3d 724, 725-726 ; Noble Thread Corp. v Vormittag Assoc., 305 A.D.2d 386, 387), we conclude that defendant, as the movant, failed to meet its burden of establishing "by competent evidence that there is no factual issue barring the grant of summary judgment in its favor" based on the limited liability clauses (Banc of Am. Sec. LLC v Solow Bldg. II, L.L.C., 47 A.D.3d 239, 245; see Corinno Civetta Constr. Corp. v New York, 67 N.Y.2d 297, 318-319; see generally Sommer v Federal Signal Corp., 79 N.Y.2d 540, 553-554). Thus, the burden never shifted to plaintiff to raise a triable issue of fact (see generally Alvarez, 68 N.Y.2d at 324).

Contrary to defendant's further contention, the economic loss doctrine does not preclude plaintiff from recovering in tort as a matter of law. "Pursuant to that doctrine, a plaintiff may not recover in tort against a manufacturer for economic loss that is contractually based, whether due to injury to the product itself or consequential losses flowing therefrom' " (Hodgson, Russ, Andrews, Woods & Goodyear v Isolatek Intl. Corp., 300 A.D.2d 1051, 1052, quoting Bocre Leasing Corp. v General Motors Corp. [Allison Gas Turbine Div.], 84 N.Y.2d 685, 693). Where, however, there is harm to persons or property other than the property that is the subject of the contract, a plaintiff is entitled to recover in tort (see Adirondack Combustion Tech., Inc. v Unicontrol, Inc., 17 A.D.3d 825, 826-827; Hodgson, Russ, Andrews, Woods & Goodyear, 300 A.D.2d at 1052-1053; Village of Groton v Tokheim Corp., 202 A.D.2d 728, 728-729, lv denied 84 N.Y.2d 801; Syracuse Cablesystems v Niagara Mohawk Power Corp., 173 A.D.2d 138, 140-143). The factors to consider are "the nature of the defect, the injury, the manner in which the injury occurred, and the damages sought" (Hodgson, Russ, Andrews, Woods & Goodyear, 300 A.D.2d at 1052; see Syracuse Cablesystems, 173 A.D.2d at 142-143). We conclude that defendant failed to meet its initial burden on the motion with respect to the causes of action sounding in tort because the evidence submitted by defendant establishes that the mercury contamination of plaintiff's facility, which was allegedly caused by defendant's products, caused damage to persons and property other than the property that was the subject of the contracts.

Finally, we agree with defendant that the court erred in denying the motion insofar as it sought summary judgment dismissing the seventh cause of action, alleging a violation of General Business Law § 349. We therefore modify the order accordingly. "A plaintiff under section 349 must prove three elements: first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act" (Stutman v Chemical Bank, 95 N.Y.2d 24, 29; see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 N.Y.2d 20, 25-26). Defendant, as the movant, met its initial burden by establishing, as a matter of law, that its conduct was not consumer-oriented. The statute does not apply herein, inasmuch as the issues raised "essentially [concern]... private' contract dispute[s]... unique to these parties, not conduct which affects the consuming public at large" (New York Univ. v Continental Ins. Co., 87 N.Y.2d 308, 321; see Oswego Laborers' Local 214 Pension Fund, 85 N.Y.2d at 25; Cooper v New York Cent. Mut. Fire Ins. Co., 72 A.D.3d 1556, 1557-1558).


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