| Town of Huntington v Long Is. Power Auth. |
| 2015 NY Slip Op 06332 [130 AD3d 1013] |
| July 29, 2015 |
| Appellate Division, Second Department |
[*1]
| Town of Huntington, Respondent, v LongIsland 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.
Besen and Trop, LLP, Garden City, N.Y. (Stuart P. Besen of counsel), forrespondent.
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 third causes of action insofar as asserted against them.
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 in the plaintiff, Town of Huntington.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 August 6, 1997, LIPA advised Frank P. Petrone,Supervisor of the Town, that upon the issuance of the PSA, "all pending certiorariproceedings against the Town . . . will be withdrawn," with no challenge toany tax assessments "[i]n the future . . . unless [the] Town singles out LIPA[or] LILCO . . . for reassessment, thus increasing the assessment separateand apart from other properties located within the [T]own." In October 2010, during theterm of the PSA, LIPA commenced a tax certiorari proceeding to challenge taxassessments levied against "the Northport facilities" which were located within theTown.
In May 2011, the Town commenced this action, inter alia, to recover damages forbreach of contract against, among others, LIPA and LILCO (hereinafter together thedefendants). In the first through third causes of action, the Town alleged that it was anintended third-party beneficiary of section 21.16 of the PSA, and LIPA was precludedfrom bringing the tax certiorari [*2]proceeding becausethe specific condition stated in that section of the PSA was not applicable. Thedefendants moved pursuant to CPLR 3211 (a) to dismiss the complaint insofar asasserted against them, arguing that the Town was not an intended third-party beneficiaryentitled to enforce section 21.16 of the PSA, as any benefit to it from that provision wasmerely incidental. In the order appealed from, the Supreme Court, among other things,denied those branches of the defendants' motion which were pursuant to CPLR 3211 (a)to dismiss the first through third 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] [internal quotation marksomitted]).
Contrary to the defendants' contention, the Supreme Court properly determined thatit "cannot conclude as a matter of law that the Town is merely an incidental beneficiaryand not an intended third-party beneficiary of the [PSA]." "A motion pursuant to CPLR3211 (a) (1) to dismiss based on documentary evidence may be appropriately granted'only where the documentary evidence utterly refutes plaintiff's factual 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 Town was not an intended third-partybeneficiary. In opposition, the Town submitted, inter alia, an affidavit from Petrone, whoaverred that he had discussions with Richard Kessell, the Chairman of LIPA, prior to theissuance of the PSA, regarding his concerns "about the potential of LIPA filing taxcertioraris," that Kessell "promised to work with the Town . . . to make sure[it] w[as] protected in the PSA," and that section 21.16 of the PSA was included "for thedirect benefit of the Town" based on those discussions. This affidavit incorporated by areference the letter dated August 6, 1997, in which Kessell advised Petrone that upon theissuance of the PSA, "all pending certiorari proceedings against the Town. . . will be withdrawn," with no challenge to any tax assessments "[i]n thefuture," except under certain circumstances not alleged to have occurred here. Moreover,that letter referred to "the various concerns" raised by Petrone regarding the transactionwhich was the subject of the PSA.
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. vState of New York, 51 AD3d 1355, 1357-1358 [2008]; Nepco Forged Prods.v Consolidated Edison Co. of N.Y., 99 AD2d 508 [1984]), it cannot be said that thedocumentary evidence submitted by the defendants "utterly refutes" the Town'sallegation, as augmented by the affidavit of Petrone (see Rovello v Orofino RealtyCo., 40 NY2d at 635), that it was an intended third-party beneficiary of section 21.16of the PSA (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at326).
[*3] The defendants' remainingcontentions 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 third causesof action insofar as asserted against them. Mastro, J.P., Chambers, Roman and LaSalle,JJ., concur. [Prior Case History: 39 Misc 3d 1232.]