| Monticello Raceway Mgt., Inc. v Concord Assoc. L.P. |
| 2013 NY Slip Op 02133 [104 AD3d 1114] |
| March 28, 2013 |
| Appellate Division, Third Department |
| Monticello Raceway Management, Inc.,Appellant-Respondent, v Concord Associates L.P.,Respondent-Appellant. |
—[*1] DelBello, Donnellan & Weingarten, White Plains (Michael J. Schwarz of counsel),for respondent-appellant.
Lahtinen, J. Cross appeals from an order of the Supreme Court (Melkonian, J.),entered November 29, 2011 in Sullivan County, which, among other things, deniedplaintiff's cross motion for summary judgment.
Plaintiff and defendant disagree regarding the interpretation of a reimbursementprovision of a contract. Plaintiff owns and operates Monticello Raceway, which isreferred to as a "racino" because gambling activities at the site include harness horseracing and video gambling machines (hereinafter VGMs). Defendant owns the nearbyConcord Resort and, as part of a redevelopment program, intended to establish a racinoon its property. Monticello Harness Horsemen's Association (hereinafter Association) isthe bargaining agent of the owners, trainers and drivers of the harness horses.
In contemplation of opening a racino at defendant's resort within about two years,plaintiff, defendant and the Association entered into a detailed contract on July 1, 2008.As relevant to the issues on appeal, the agreement provided a minimum annual amount tobe paid by plaintiff to the Association and, until the racino started operating atdefendant's resort or for the [*2]first two years of theagreement,[FN1] that amount would be the greater of (1) 8.75% of the net win from VGMs at theMonticello Raceway or (2) $5 million. The contract also provided that, in the event therewas a VGM shortfall (that is, the 8.75% was less than $5 million), defendant wouldreimburse plaintiff the amount of the shortfall. There was a shortfall for each of the twoyears, as the 8.75% of VGM wins was allegedly under $5 million by about $122,500 inthe first year and $185,000 in the second year. When plaintiff sought reimbursement,defendant took the position that its reimbursement obligation applied only if the 8.75%of VGM wins fell under $5 million for the cumulative period of the entire two years.Since the total VGM wins percentage for the two years combined was nearly $9,700,000(far exceeding $5 million), defendant contended that it did not owe any money toplaintiff under the contract.
Plaintiff commenced this action for, among other things, breach of contract. In lieuof an answer, defendant moved to dismiss pursuant to CPLR 3211 (a) (1) and (7)contending that the complaint failed to state a cause of action and that the terms of thecontract constituted a defense founded upon documentary evidence. Plaintiffcross-moved under CPLR 3211 (c) and 3212, requesting Supreme Court to treat themotion as one for summary judgment and rule in its favor. Supreme Court grantedplaintiff's request to treat its cross motion as one for summary judgment. However, on themerits of the motions, Supreme Court denied both parties' motions finding that thedisputed contractual language was ambiguous and that factual issues existed regardingthe extrinsic proof.[FN2] Both parties appeal.
"[W]hen parties set down their agreement in a clear, complete document, theirwriting should . . . be enforced according to its terms" (Vermont Teddy Bear Co. v 538Madison Realty Co., 1 NY3d 470, 475 [2004] [internal quotation marks andcitation omitted]). The contract "should be read as a whole to ensure that undue emphasisis not placed upon particular words and phrases" (Bailey v Fish & Neave, 8 NY3d 523, 528 [2007]), and"courts may not by construction add or excise terms, nor distort the meaning of thoseused and thereby make a new contract for the parties under the guise of interpreting thewriting" (id. [internal quotation marks and citations omitted]). "Whether acontract is ambiguous is a question of law and extrinsic evidence may not be consideredunless the document itself is ambiguous" (Consedine v Portville Cent. School Dist., 12 NY3d 286,293 [2009] [internal quotation marks and citations omitted]).
Defendant's pertinent obligation to plaintiff is set forth in paragraph 31 (a) of theagreement as follows: "Notwithstanding anything to the contrary contained in thisAgreement, so long as the Term of this Agreement has not expired, for the periodcommencing on the date of execution of this Agreement through and including theGuaranty Date, [defendant] hereby agrees to reimburse [plaintiff] for, and [*3]guarantees to the Association, any and all amounts paid by[plaintiff] to the Association with respect to the Guaranteed VGM PurseContribution pursuant to Paragraph 2 (b) of Exhibit B to this Agreement in excess of8.75% of the net win from [VGM] activities at the Monticello Raceway" (emphasisadded). Exhibit B to the contract sets forth in paragraph 1 that plaintiff's "Annual PursePayment for each year" includes "[t]he Horsemen Alternative Gaming Revenue Share,"which is defined in paragraph 2 (b) as 8.75% of net win from VGM activities. Paragraph2 (b) continues, providing: "Notwithstanding the foregoing, that, so long as thisAgreement has not been terminated pursuant to Section 25 hereof and the Term of thisAgreement has not expired, (I) for the period from the execution of this Agreementthrough and including the Start Date,[FN3] the [Association] shall receive the greater of a) the 'Horsemen's Alternative GamingRevenue Share' as defined above [as 8.75% of the net win from VGMs] OR b) [$5million] (the 'Guaranteed VGM Purse Contribution')."
Reading the various relevant provisions reveals that defendant was obligated toreimburse plaintiff for the VGM shortfall incurred during each of the two years of thecontract. Paragraph 1 of Exhibit B to the contract establishes the requirement of anannual purse payment by plaintiff to the Association. As per paragraph 2 (b) of ExhibitB, that payment for the years in question was required to be at least $5 million. This wasreferenced as the "Guaranteed VGM Purse Contribution" and was paid by plaintiff ineach year in question because of an alleged shortfall in the net wins from VGMs. By itsplain terms, paragraph 31 (a) required defendant to reimburse plaintiff for theseGuaranteed VGM Purse Contributions paid by plaintiff to the Association. The fact thatdefendant's obligation is not separately and specifically spelled out as an annualobligation is unavailing to its position. The contract required defendant to reimburseplaintiff for this payment to the Association, and plaintiff's obligation to the Associationwas an annual one.
Although plaintiff is entitled to summary judgment on the issue of liability, the issueof damages cannot be resolved on this record. Defendant disputes the amountspurportedly paid as well as the underlying VGM net wins during the relevant years. Atthis early procedural point in the litigation, and in light of the fact that the pertinentinformation appears to be within the exclusive possession of plaintiff, defendant isentitled to discovery on the issue of damages.
The remaining issues, to the extent not rendered academic by our decision, areunavailing.[*4]
Peters, P.J., Stein and Spain, JJ., concur. Orderedthat the order is modified, on the law, without costs, by reversing so much thereof asdenied plaintiff's cross motion for summary judgment; cross motion granted to the extentof awarding partial summary judgment to plaintiff on the issue of liability on the breachof contract cause of action; and, as so modified, affirmed.
Footnote 1: The relevant part of theagreement actually ran for up to 25 months, from July 1, 2008 to July 31, 2010, unlessdefendant earlier constructed its racino and received licensing. The proposed project,however, was not completed.
Footnote 2: Plaintiff's second causeof action for unjust enrichment was dismissed and plaintiff has not challenged thatdismissal.
Footnote 3: "Start Date" was setforth as when a certificate of occupancy and necessary licenses were obtained fordefendant's site, which were never obtained in this case. If defendant had started tooperate a racino, yearly specific amounts of compensation to the Association wereprovided for up to 20 years.