Nassau Cnty. v. New York State Urban Dev. Corp Index No. 002750-04/2015, 3/30/15 (Destefano, J.)

Contract; breach; motion to dismiss; affirmative defense; consideration.

By Judith Balasubramaniam | Staff Writer

Plaintiff is Nassau County. Defendant is a public benefit corporation of New York. The New York legislature appropriated funds to defendant towards the construction of an aquatic center in plaintiff’s county. When the funds initially allocated towards the project were deemed insufficient, plaintiff offered to pay for all costs of the project’s completion in excess of the initial funds. Plaintiff entered into a written agreement with defendant, who in turn entered into an agreement with co-defendant, another public benefit corporation of New York, who was tasked with planning, managing and constructing the project. The aquatic center opened, and subsequently, its system failed, metal fixtures corroded, and ceiling materials were damaged through excessive condensation.

Plaintiff brought suit against defendant and co-defendant for breach of contract, alleging poor, defective design and construction of the aquatic center. Plaintiff claimed defendant failed to perform all the obligations under defendant’s agreement with plaintiff, and co-defendant in turn breached co-defendant’s contractual obligations to plaintiff as a third-party beneficiary of the agreement between defendant and co-defendant.

Defendant moved for summary judgment dismissing plaintiff’s action against defendant, asserting that its agreement with plaintiff was void and unenforceable for lack of consideration.

Defendant contended the project was the result of legislative appropriation, rather than the result of a bargained-for contract between plaintiff and defendant. The agreement outlined the purposes of the project and plaintiff’s obligation to pay the funding shortfall to defendant. Consequently, defendant argued that it did not receive a benefit from the agreement.

Plaintiff maintained New York State received an economic benefit from the project, as the aquatic center was available for use by the surrounding community and the State. Defendant’s mission statement was to advance the economic development of New York. As such, plaintiff argued, this benefitted New York as a whole and was sufficient consideration to support the agreement between plaintiff and defendant. Plaintiff further contended it donated land for the project, promised payment of excess funds needed, and relinquished code-permitting authority over the project to co-defendant. Plaintiff argued these constituted past consideration for the agreement.

The court rejected plaintiff’s first argument, as a benefit conferred to the State was not the equivalent of a benefit conferred to defendant. As a public benefit corporation, defendant acted independently, autonomously, and under statute, was never compensated for its work on the project, nor did it receive anything quid pro quo for plaintiff’s contributions. When defendant met its obligations under the agreement, defendant did nothing more than fulfill its statutory mandate.

The court rejected plaintiff’s second argument, reasoning the land was not donated as a bargain for exchange in the agreement with defendant. Rather, plaintiff donated the land for the project to comply with statutes to construct the aquatic center. A promise supported by past consideration is unenforceable as the detriment concerned was not induced by the promise, except when the past consideration is expressed unequivocally in writing. Here, the written agreement did not contain an unequivocal expression of plaintiff’s claimed past consideration of the land donation. The court concluded there was no evidence showing plaintiff intended the land donation to be consideration for the agreement with defendant.

The court granted defendant’s motion for summary judgment to dismiss plaintiff’s breach of contract claim.

Nassau Cnty. v. New York State Urban Dev. Corp Index No. 002750-04/2015, 3/30/15 (Destefano, J.)

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