N.Y. Mun. Power Agency v. Town of Massena

188 A.D.3d 1517

137 N.Y.S.3d 520

NEW YORK MUNICIPAL POWER AGENCY, Respondent,

v.TOWN OF MASSENA et al., Appellants, et al., Defendants.

529888

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: October 22, 2020

Decided and Entered: November 25, 2020

Hancock Estabrook, LLP, Syracuse (Janet D. Callahan of counsel), for appellants.

Costello, Cooney & Fearon, PLLC, Syracuse (Matthew W. O'Neil of counsel), for respondent.

Before: Garry, P.J., Clark, Devine, Aarons and Reynolds Fitzgerald, JJ.

MEMORANDUM AND ORDER

Garry, P.J. Appeal from an order of the Supreme Court (Farley, J.), entered August 1, 2019 in St. Lawrence County, which, among other things, denied defendants' motion to dismiss the amended complaint.

Plaintiff is a joint action agency of 36 municipal utility members and primarily functions to supply power to these members. Plaintiff was formed in 1996 under an agreement (hereinafter the agreement) made pursuant to General Municipal Law § 119–o, and is governed by its constitution and bylaws, which were adopted in 1997. Defendant Town of Massena (hereinafter the Town) is a municipal corporation located in St. Lawrence County and was a signatory to the agreement in 1996. Defendant Massena Electric Department (hereinafter the Department) is a not-for-profit electric utility owned and operated by the Town and is governed by defendant Massena Electric Utility Board (hereinafter the Board). Defendant Andrew J. McMahon is employed by the Town as the superintendent of the Department and served as president of plaintiff's board of directors from January 2018 to November 2018. In November 2018, the Board adopted a resolution to withdraw from plaintiff effective December 23, 2018, and the Board's vice-president wrote to plaintiff, advising of the Department's withdrawal pursuant to the agreement. Plaintiff responded that the Department's withdrawal was ineffective, and that the effective withdrawal date was December 31, 2020, pursuant to the bylaws.

Plaintiff commenced this action against the Town, the Board and the Department, as well as individual members of the Board, and sought a preliminary injunction to prevent the Department from withdrawing from membership before December 2020. The injunctive relief was denied, and plaintiff then served an amended complaint, which added McMahon as a defendant. The Town, the Board, the Department and McMahon (hereinafter collectively referred to as defendants), as well as the other named Board members, moved to dismiss the amended complaint pursuant to CPLR 3211(a)(1) and (7). Plaintiff then cross-moved for leave to serve a second amended complaint, including more details relative to a monetary damages claim.¹ Supreme Court granted leave to serve the second amended complaint and denied the motion to dismiss. Defendants appeal.

Defendants first argue that they submitted documentary evidence establishing that the agreement has primacy over the bylaws and that Supreme Court should have granted the motion to dismiss on this ground. A "motion to dismiss on the ground that the action is barred by documentary evidence ... may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002] ; see Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ; see also CPLR 3211[a][1). "To qualify as documentary evidence, the evidence must be unambiguous and of undisputed authenticity" ( Koziatek v. SJB Dev. Inc., 172 A.D.3d 1486, 1486, 99 N.Y.S.3d 480 [2019] [internal quotation marks and citations omitted]) and must "resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff['s] claim" ( Thomas A. Sbarra Real Estate, Inc. v. Lavelle–Tomko, 84 A.D.3d 1570, 1571, 921 N.Y.S.2d 919 [2011] [internal quotation marks, brackets and citation omitted]).

The crux of this dispute is that the terms of the underlying documents are in conflict; the agreement states that members who vote against the annual operating budget must withdraw from plaintiff within 60 days following the adoption of that budget, while the bylaws state that a member shall provide two years notice of its withdrawal. As documentary evidence, defendants submitted the agreement, the bylaws and a memorandum, prepared in 2004 by plaintiff's bylaws committee, which recommended amending the agreement to allow the bylaws to govern.² Upon review, we agree with Supreme Court that these documents do not clearly establish the understanding of the parties. Their authenticity is not disputed, but as these documents provide sharply conflicting withdrawal procedures, and the parties disagree as to which document governs the proposed withdrawal, the documents do not resolve all factual issues as a matter of law, and do not conclusively dispose of plaintiff's claims. Accordingly, the court properly denied the motion to dismiss on this ground (see Carr v. Wegmans Food Mkts., Inc., 182 A.D.3d 667, 668, 122 N.Y.S.3d 391 [2020] ; Fontanetta v. John Doe, 73 A.D.3d 78, 83–84, 898 N.Y.S.2d 569 [2010] ).

Turning to the denial of defendants' motion to dismiss pursuant to CPLR 3211(a)(7), a court, when reviewing such a motion, "must give the complaint a liberal construction, accept the allegations as true and provide [the] plaintiff[ ] with the benefit of every favorable inference" ( Nomura Home Equity Loan, Inc., Series 2006–FM2 v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 582, 69 N.Y.S.3d 520, 92 N.E.3d 743 [2017] [internal quotation marks and citation omitted]). "A breach of contract claim requires allegations of an agreement, performance by one party, failure to perform by the other party and resulting damages" ( Vestal v. Pontillo, 158 A.D.3d 1036, 1041, 72 N.Y.S.3d 610 [2018] [internal quotation marks and citations omitted]; see Hyman v. Schwartz, 127 A.D.3d 1281, 1283, 6 N.Y.S.3d 732 [2015] ).

Here, defendants argue that neither the amended...