Protection Industries Corp., Plaintiff-Appellant, v. DDB Needham Worldwide, Inc., Defendant-Respondent. 1511, 1511A

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT
306 A.D.2d 175; 763 N.Y.S.2d 546; 2003 N.Y. App. Div. LEXIS 7287






June 24, 2003, DecidedJune 24, 2003, Entered
NOTICE:  [***1]  THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGEPENDING THE RELEASE OF THE FINAL PUBLISHED VERSION.

CASE SUMMARY
PROCEDURAL POSTURE: Plaintiff corporation sought review of a judgment and anorder of the Supreme Court, New York County (New York), which granteddefendant corporation's motion for partial summary judgment dismissing thefirst, second, fourth, and fifth causes of action in a contract dispute anddenied plaintiff's cross motion for partial summary judgment on the first,third, fourth, and fifth causes of action and its motion to dismissdefendant's counterclaim.

OVERVIEW: The contract covered certain alarms and included an automaticrenewal clause, which was the basis for part of plaintiff's actions. Thecourt affirmed the motion court's actions in the case in all aspects exceptits denial of plaintiff's cross motion to dismiss defendant's counterclaim.The court ruled that: (1) summary judgment as to the first, fourth, andfifth causes of action was proper, because N.Y. Gen. Oblig. Law §§ 5-901,5-903 rendered the automatic renewal clause unenforceable, so thatdefendant's lease payments made after the termination date of the contractdid not act to renew the contract; (2) plaintiff failed to establish anyproof of an independent agreement regarding alarms not covered under theoriginal contract, making summary judgment dismissal of plaintiff's secondcause of action proper; (3) the third cause of action seeking recovery ofthe value of plaintiff's equipment failed, because, due to the non-renewalof the contract, the clause allowing such election did not apply; and (4)defendant's counterclaim should have been dismissed.

OUTCOME: The court modified the judgment on the law to grant plaintiff'scross motion to dismiss defendant's counterclaim. The judgment was otherwiseaffirmed.
COUNSEL: For Plaintiff-Appellant: Frank N. Napoli.
For Defendant-Respondent: Patricia Hatry.
JUDGES: Buckley, P.J., Tom, Sullivan, Marlow, JJ.
OPINION:  [*175]   [**546]  Judgment, Supreme Court, New York County(Charles Ramos, J.), entered September 5, 2002, and order, same court andJustice, entered August 7, 2002, which granted defendant's motion forpartial summary judgment dismissing the first, second, fourth, and fifthcauses of action and denied plaintiff's cross motion for partial summaryjudgment on the first, third, fourth, and fifth causes of action anddismissing defendant's counterclaim, unanimously modified, on the law, togrant plaintiff's cross motion insofar as to dismiss [**547]  defendant'scounterclaim, and otherwise affirmed, without costs.
The motion court properly found that General Obligations Law § 5-901 and §5-903 render the automatic renewal clause in the parties' contractunenforceable. Thus, even though defendant made payments after the June 7,1999 termination date, the June 7, 1991 contract was not renewed for anothereight years (see e.g. Concourse Nursing Home v Axiom Funding  [*176]  Group,Inc., 279 A.D.2d 271, 719 N.Y.S.2d 19; [***2]  and see Peerless Towel SupplyCo. v Triton Press, 3 A.D.2d 249, 250-251, 160 N.Y.S.2d 163), and the courtproperly granted defendant's motion for summary judgment as to the first,fourth, and fifth causes of action.
The second cause of action differs from the first, fourth, and fifth causesof action in that it does not depend on renewal of the June 7, 1991contract. On the contrary, plaintiff alleges that, on or about February 14,2000, the parties reached an independent agreement whereby defendant wouldpay an additional $ 950 per quarter for certain alarms that had not beencovered by the original contract. However, defendant denied theseallegations, and since the record is devoid of any proof of the existence ofthe alleged agreement summary judgment dismissing the second cause of actionwas proper.
The motion court properly denied plaintiff's cross motion for partialsummary judgment as to the third cause of action. Since the June 7, 1991contract was not renewed, paragraph 11(A) of the contract does not apply. Tobe sure, plaintiff is entitled to remove its equipment upon termination ofthe contract, but paragraph 10, unlike paragraph 11(A), does not permit[***3]  plaintiff to elect to recover the value of its equipment. (Becausedefendant does not automatically owe plaintiff the value of the equipment,plaintiff's argument that it is entitled to late fees and attorneys' feeseven if the June 7, 1991 contract was not renewed is unavailing.) Of course,defendant had no right to damage or destroy plaintiff's equipment, but theoriginal complaint does not refer to this, nor does it assert a claim forconversion.
The IAS court should have dismissed defendant's counterclaim (see ConcourseNursing Home, supra).
ENTERED: JUNE 24, 2003