| Board of Educ. of Northport-E. Northport Union Free Sch. Dist.v Long Is. Power Auth. |
| 2015 NY Slip Op 06304 [130 AD3d 953] |
| July 29, 2015 |
| Appellate Division, Second Department |
[*1]
| Board of Education of Northport-East Northport UnionFree School District et al., Respondents, v Long Island Power Authority et al.,Appellants, et al., Defendants. |
Rivkin Radler, LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, MichaelP. Versichelli, and Henry Mascia of counsel), for appellants.
Ingerman Smith, LLP, Hauppauge, N.Y. (John H. Gross, Carrie Anne Tondo, andDavid F. Kwee of counsel), for respondents.
In an action, inter alia, to recover damages for breach of contract, the defendantsLong Island Power Authority and Long Island Lighting Company appeal from so muchof an order of the Supreme Court, Suffolk County (Emerson, J.), dated May 21, 2013, asdenied those branches of their motion which were pursuant to CPLR 3211 (a) to dismissthe first through fourth, ninth, and tenth causes of action insofar as asserted againstthem.
Ordered that the order is affirmed insofar as appealed from, with costs.
In June 1997, the defendant Long Island Lighting Company (hereinafter LILCO)entered into a "Power Supply Agreement" (hereinafter the PSA) with the defendant LongIsland Power Authority (hereinafter LIPA), whereby LILCO agreed to sell and deliver toLIPA the energy produced from its power generating facilities in Nassau and SuffolkCounties, including certain facilities located within the geographical boundaries of theplaintiff Board of Education of the Northport-East Northport Union Free School District(hereinafter the School District) and subject to school taxes to the School District.Pursuant to section 21.16 of the PSA, LILCO was only entitled to challenge property taxassessments on its "Generating Facilities . . . if the assessment on any suchchallenged facilities is increased not in an appropriate proportion to the increase in valuerelated to taxable capital additions affixed to the tax parcel between the last two taxstatus dates." In a letter dated May 2, 1997, LIPA advised the Nassau-Suffolk SchoolBoards Association, of which the School District was part, that upon the issuance of thePSA, "LIPA will immediately drop all tax certiorari cases against all municipalities andschool districts," and that "neither LIPA nor LILCO will initiate any further tax certioraricases on any of their respective properties at any time in the future unless a municipalityabusively increases its assessment rate," as "spelled out in the [PSA]." In October 2010,during the term of the PSA, LIPA commenced a tax certiorari proceeding to challengetax assessments levied against "the Northport facilities" located within the boundaries ofthe School District, for the 2010-2011 school year.
In May 2011, the School District, among others, commenced this action, inter alia, torecover damages for breach of contract against, among others, LIPA and LILCO(hereinafter together the defendants). In the first through fourth, ninth, and tenth causesof action, the plaintiffs [*2]alleged that the SchoolDistrict was an intended third-party beneficiary of section 21.16 of the PSA, and LIPAwas precluded from commencing the tax certiorari proceeding because the conditionstated in that section of the PSA was not applicable. The defendants moved pursuant toCPLR 3211 (a) to dismiss the complaint insofar as asserted against them, arguing that theSchool District was not an intended third-party beneficiary entitled to enforce section21.16 of the PSA, as any benefit to it from that provision was merely incidental. In theorder appealed from, the Supreme Court, among other things, denied those branches ofthe defendants' motion which were pursuant to CPLR 3211 (a) to dismiss the firstthrough fourth, ninth, and tenth causes of action insofar as asserted against them. Thedefendants appeal from those portions of the order, and we affirm the order insofar asappealed from.
" 'A non-party [to a contract] may sue for breach of contract only if it is anintended, and not a mere incidental, beneficiary' " (East Coast Athletic Club, Inc. vChicago Tit. Ins. Co., 39 AD3d 461, 463 [2007], quoting LaSalle Natl. Bankv Ernst & Young, 285 AD2d 101, 108 [2001]). However, " 'the identityof a third-party beneficiary need not be set forth in the contract or, for that matter, evenbe known as of the time of its execution' " (Encore Lake Grove Homeowners Assn., Inc. v Cashin Assoc.,P.C., 111 AD3d 881, 883 [2013], quoting MK W. St. Co. v MeridienHotels, 184 AD2d 312, 313 [1992]). "A party asserting rights as a third-partybeneficiary must establish (1) the existence of a valid and binding contract between otherparties, (2) that the contract was intended for [its] benefit and (3) that the benefit to [it] issufficiently immediate, rather than incidental, to indicate the assumption by thecontracting parties of a duty to compensate [it] if the benefit is lost" (Nanomedicon, LLC v ResearchFound. of State Univ. of N.Y., 112 AD3d 594, 596 [2013] [internal quotationmarks omitted]; see Burns Jackson Miller Summit & Spitzer v Lindner, 59NY2d 314, 336 [1983]). " 'In determining third-party beneficiary status it ispermissible for the court to look at the surrounding circumstances as well as theagreement,' " and " 'the obligation to perform to the third partybeneficiary need not be expressly stated in the contract' " (Encore Lake GroveHomeowners Assn., Inc. v Cashin Assoc., P.C., 111 AD3d at 882, quotingAievoli v Farley, 223 AD2d 613, 614 [1996]).
Contrary to the defendants' contention, the Supreme Court properly determined thatit "cannot conclude as a matter of law that the School District is merely an incidentalbeneficiary and not an intended third-party beneficiary of the [PSA]." "A motionpursuant to CPLR 3211 (a) (1) to dismiss based on documentary evidence may beappropriately granted 'only where the documentary evidence utterly refutes plaintiff'sfactual allegations, conclusively establishing a defense as a matter of law' " (Jahan v U.S. Bank N.A., 127AD3d 926, 927 [2015], quoting Goshen v Mutual Life Ins. Co. of N.Y., 98NY2d 314, 326 [2002]). In opposition to a motion pursuant to CPLR 3211 (a), a plaintiffmay submit affidavits "to preserve inartfully pleaded, but potentially meritorious, claims"(Rovello v Orofino Realty Co., 40 NY2d 633, 635 [1976]).
Here, in support of their motion, the defendants submitted the PSA, which theycontended established as a matter of law that the School District was not an intendedthird-party beneficiary (see Encore Lake Grove Homeowners Assn., Inc. v CashinAssoc., P.C., 111 AD3d at 882-883; Aievoli v Farley, 223 AD2d at 614). Inopposition, the plaintiffs submitted, inter alia, an affidavit from Steven V. Waldenburg,Jr., the president of the School District, who averred that, during his tenure as a boardmember of the School District, he reviewed correspondence signed by Richard Kessel,the Chairman of LIPA, wherein Kessel assured the Nassau-Suffolk School BoardsAssociation, of which the School District was part, among others, that neither LIPA norLILCO would initiate any further tax certiorari cases on any of their respective propertiesat any time in the future. The School District also submitted the letter dated May 2, 1997,wherein LIPA advised the Nassau-Suffolk School Boards Association that, upon theissuance of the PSA, "LIPA will immediately drop all tax certiorari cases against all. . . school districts," and that LIPA would not "initiate any further taxcertiorari cases on any of their respective properties at any time in the future," unless aspecific condition was applicable which is not alleged by the defendants (emphasisadded). Waldenburg also stated in his affidavit that he attended a press conference inMay 1997, wherein then-Governor George Pataki assured residents of the School Districtthat no future tax certiorari proceedings involving the Northport Facilities would becommenced, and that any pending tax certiorari proceedings would be discontinued.
In the absence of any language in the PSA expressly negating enforcement by thirdparties (see Facilities Dev. Corp. v Miletta, 180 AD2d 97, 101 [1992]; cf. IMS Engrs.-Architects, P.C. v[*3]State of New York, 51 AD3d 1355,1357-1358 [2008]; Nepco Forged Prods. v Consolidated Edison Co. of N.Y., 99AD2d 508 [1984]), it cannot be said that the documentary evidence submitted by thedefendants "utterly refutes" the School District's allegation, as augmented by the affidavitof Waldenburg (see Rovello v Orofino Realty Co., 40 NY2d at 635), that it wasan intended third-party beneficiary of section 21.16 of the PSA (Goshen v MutualLife Ins. Co. of N.Y., 98 NY2d at 326).
The defendants' remaining contentions are without merit.
Accordingly, the Supreme Court properly denied those branches of the defendants'motion which were pursuant to CPLR 3211 (a) to dismiss the first through fourth, ninth,and tenth causes of action insofar as asserted against them. Mastro, J.P., Chambers,Roman and LaSalle, JJ., concur. [Prior Case History: 39 Misc 3d 1232.]