14‐4435‐cv Ebert v. Holiday Inn
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 8th day of October, two thousand fifteen.
PRESENT: DENNY CHIN, CHRISTOPHER F. DRONEY, Circuit Judges, KATHERINE B. FORREST, District Judge.*
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VICTOR EBERT, PETER CALCHERA, PATRICIA STEINMETZ, JOHN FENNELL, Plaintiffs‐Appellees,
v. 14‐4435‐cv
HOLIDAY INN, FISHKILL, NEW YORK, NOWAB HOTELS GROUP, INC., BUSHRA JAVAID, BNG HOSPITALITIES, INC., ASIF JAVAID, Defendants‐Appellants.
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* The Honorable Katherine B. Forrest, of the United States District Court for the Southern District of New York, sitting by designation.
FOR PLAINTIFFS‐APPELLEES: MICHAEL R. DICHIARA, Krakower DiChiara LLC, Park Ridge, New Jersey.
FOR DEFENDANTS‐APPELLANTS: MICHAEL H. SUSSMAN, Sussman & Watkins, Goshen, New York.
Appeal from the United States District Court for the Southern District of
New York (Ramos, J., and Broderick, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the orders of the district court are AFFIRMED.
Defendants‐appellants appeal from an order entered by the district court
(Broderick, J.) on November 18, 2014 awarding $205,000 in favor of plaintiffs‐appellees
against defendants‐appellants. By opinion and order filed on January 31, 2014, the
district court (Ramos, J.) granted summary judgment to plaintiffs on their breach of
contract claim and to plaintiff Victor Ebert on his Fair Labor Standards Act (ʺFLSAʺ)
claim. We assume the partiesʹ familiarity with the underlying facts, the procedural
history of this case, and the issues on appeal.
Plaintiffsʹ claims arise from the early termination of their employment
with defendant BNG Hospitalities, Inc. (ʺBNGʺ), a hotel management company owned
by defendant Asif Javaid. Plaintiffs were hired in July and August of 2010 to provide
services for three years at the Holiday Inn, Econo Lodge, and/or Knights Inn. These
hotels were owned by Javaid or his wife through corporate entities. Prior to and during
plaintiffsʹ employment, Holiday Inn was mortgaged and subject to a forbearance
‐ 2 ‐
agreement providing the lender with the right to foreclose upon default and secured by
a fully executed deed held in escrow. After the lender foreclosed on the Holiday Inn,
BNG terminated plaintiffsʹ employment in December of 2010.
At the district court, defendants failed to respond to plaintiffsʹ Local Rule
56.1 Statement, and thus the facts asserted therein were deemed admitted. After the
district court granted summary judgment to plaintiffs on the breach of contract and
FLSA claims, the parties stipulated to the amount of damages and plaintiffs withdrew
their additional claims against defendants. Defendants reserved the right to appeal
certain aspects of the summary judgment decision on liability. The district court
entered its final order awarding the stipulated amount of $205,000, and this appeal
followed.
We review orders granting summary judgment de novo, focusing on
whether the district court properly concluded that there was no genuine issue as to any
material fact and the moving party was entitled to judgment as a matter of law. See
Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). We resolve all
ambiguities and draw all reasonable inferences in favor of the nonmoving party.
Nationwide Life Ins. Co. v. Bankers Leasing Assʹn, 182 F.3d 157, 160 (2d Cir. 1999).
Summary judgment is appropriate ʺ[w]here the record taken as a whole could not lead
a rational trier of fact to find for the non‐moving party.ʺ Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
‐ 3 ‐
On appeal, defendants argue that they should be excused from
performance under the doctrines of impossibility and frustration of purpose. In
addition, they argue that if such defenses fail, liability may only be asserted against
BNG. We reject these arguments and affirm the district court for the reasons discussed
below.
1. Doctrine of Impossibility
We agree with the district court that defendants were not excused from
performance under the doctrine of impossibility. Under New York law, a defendant
may be excused from a contractual obligation where performance is impossible due to
ʺthe destruction of the means of performance by act of God, vis major, or by law.ʺ 407 E.
61st Garage, Inc. v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275, 281 (1968). Economic hardship,
even to the extent of bankruptcy or insolvency, does not excuse performance. See, e.g.,
id.; Health‐Chem. Corp. v. Baker, 737 F. Supp. 770, 776 (S.D.N.Y.), affʹd, 915 F.2d 805 (2d
Cir. 1990); see also Bierer v. Glaze, Inc., No. CV‐05‐2459 (CPS), 2006 WL 2882569, at *6‐7
(E.D.N.Y. Oct. 6, 2006) (loss of primary contract for products plaintiff was hired to
market did not constitute impossibility). Defendantsʹ loss of the Holiday Inn did not
render performance impossible, as plaintiffs were able to continue working at the Econo
Lodge or Knights Inn.
Moreover, even assuming performance was rendered impossible, the
foreclosure of the Holiday Inn was a foreseeable risk. To establish impossibility, the
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inability to perform ʺmust be produced by an unanticipated event that could not have
been foreseen or guarded against in the contract.ʺ Kel Kim Corp. v. Central Mkts., Inc., 70
N.Y.2d 900, 902 (1987). Defendants should have foreseen the risk of foreclosure in light
of the outstanding forbearance agreement and they could have provided for this risk in
the employment contracts.1
2. Liability of Multiple Defendants
Defendants also argue that the district court erred in entering judgment
against all defendants, because only BNG was the employer. Defendants did not raise
this argument in the district court; that is, they defended themselves as a group and
made no effort to argue that their liability should be individually assessed because of
their different roles.
Generally, we will not consider an issue raised for the first time on appeal.
Allianz Ins. Co. v. Lerner, 416 F.3d 109, 114 (2d Cir. 2005). As the ʺrule is prudential, not
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14‐4435‐cv Ebert v. Holiday Inn
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 8th day of October, two thousand fifteen.
PRESENT: DENNY CHIN, CHRISTOPHER F. DRONEY, Circuit Judges, KATHERINE B. FORREST, District Judge.*
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
VICTOR EBERT, PETER CALCHERA, PATRICIA STEINMETZ, JOHN FENNELL, Plaintiffs‐Appellees,
v. 14‐4435‐cv
HOLIDAY INN, FISHKILL, NEW YORK, NOWAB HOTELS GROUP, INC., BUSHRA JAVAID, BNG HOSPITALITIES, INC., ASIF JAVAID, Defendants‐Appellants.
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* The Honorable Katherine B. Forrest, of the United States District Court for the Southern District of New York, sitting by designation.
FOR PLAINTIFFS‐APPELLEES: MICHAEL R. DICHIARA, Krakower DiChiara LLC, Park Ridge, New Jersey.
FOR DEFENDANTS‐APPELLANTS: MICHAEL H. SUSSMAN, Sussman & Watkins, Goshen, New York.
Appeal from the United States District Court for the Southern District of
New York (Ramos, J., and Broderick, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the orders of the district court are AFFIRMED.
Defendants‐appellants appeal from an order entered by the district court
(Broderick, J.) on November 18, 2014 awarding $205,000 in favor of plaintiffs‐appellees
against defendants‐appellants. By opinion and order filed on January 31, 2014, the
district court (Ramos, J.) granted summary judgment to plaintiffs on their breach of
contract claim and to plaintiff Victor Ebert on his Fair Labor Standards Act (ʺFLSAʺ)
claim. We assume the partiesʹ familiarity with the underlying facts, the procedural
history of this case, and the issues on appeal.
Plaintiffsʹ claims arise from the early termination of their employment
with defendant BNG Hospitalities, Inc. (ʺBNGʺ), a hotel management company owned
by defendant Asif Javaid. Plaintiffs were hired in July and August of 2010 to provide
services for three years at the Holiday Inn, Econo Lodge, and/or Knights Inn. These
hotels were owned by Javaid or his wife through corporate entities. Prior to and during
plaintiffsʹ employment, Holiday Inn was mortgaged and subject to a forbearance
‐ 2 ‐
agreement providing the lender with the right to foreclose upon default and secured by
a fully executed deed held in escrow. After the lender foreclosed on the Holiday Inn,
BNG terminated plaintiffsʹ employment in December of 2010.
At the district court, defendants failed to respond to plaintiffsʹ Local Rule
56.1 Statement, and thus the facts asserted therein were deemed admitted. After the
district court granted summary judgment to plaintiffs on the breach of contract and
FLSA claims, the parties stipulated to the amount of damages and plaintiffs withdrew
their additional claims against defendants. Defendants reserved the right to appeal
certain aspects of the summary judgment decision on liability. The district court
entered its final order awarding the stipulated amount of $205,000, and this appeal
followed.
We review orders granting summary judgment de novo, focusing on
whether the district court properly concluded that there was no genuine issue as to any
material fact and the moving party was entitled to judgment as a matter of law. See
Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). We resolve all
ambiguities and draw all reasonable inferences in favor of the nonmoving party.
Nationwide Life Ins. Co. v. Bankers Leasing Assʹn, 182 F.3d 157, 160 (2d Cir. 1999).
Summary judgment is appropriate ʺ[w]here the record taken as a whole could not lead
a rational trier of fact to find for the non‐moving party.ʺ Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
‐ 3 ‐
On appeal, defendants argue that they should be excused from
performance under the doctrines of impossibility and frustration of purpose. In
addition, they argue that if such defenses fail, liability may only be asserted against
BNG. We reject these arguments and affirm the district court for the reasons discussed
below.
1. Doctrine of Impossibility
We agree with the district court that defendants were not excused from
performance under the doctrine of impossibility. Under New York law, a defendant
may be excused from a contractual obligation where performance is impossible due to
ʺthe destruction of the means of performance by act of God, vis major, or by law.ʺ 407 E.
61st Garage, Inc. v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275, 281 (1968). Economic hardship,
even to the extent of bankruptcy or insolvency, does not excuse performance. See, e.g.,
id.; Health‐Chem. Corp. v. Baker, 737 F. Supp. 770, 776 (S.D.N.Y.), affʹd, 915 F.2d 805 (2d
Cir. 1990); see also Bierer v. Glaze, Inc., No. CV‐05‐2459 (CPS), 2006 WL 2882569, at *6‐7
(E.D.N.Y. Oct. 6, 2006) (loss of primary contract for products plaintiff was hired to
market did not constitute impossibility). Defendantsʹ loss of the Holiday Inn did not
render performance impossible, as plaintiffs were able to continue working at the Econo
Lodge or Knights Inn.
Moreover, even assuming performance was rendered impossible, the
foreclosure of the Holiday Inn was a foreseeable risk. To establish impossibility, the
‐ 4 ‐
inability to perform ʺmust be produced by an unanticipated event that could not have
been foreseen or guarded against in the contract.ʺ Kel Kim Corp. v. Central Mkts., Inc., 70
N.Y.2d 900, 902 (1987). Defendants should have foreseen the risk of foreclosure in light
of the outstanding forbearance agreement and they could have provided for this risk in
the employment contracts.1
2. Liability of Multiple Defendants
Defendants also argue that the district court erred in entering judgment
against all defendants, because only BNG was the employer. Defendants did not raise
this argument in the district court; that is, they defended themselves as a group and
made no effort to argue that their liability should be individually assessed because of
their different roles.
Generally, we will not consider an issue raised for the first time on appeal.
Allianz Ins. Co. v. Lerner, 416 F.3d 109, 114 (2d Cir. 2005). As the ʺrule is prudential, not
jurisdictional, we have discretion to consider waived argumentsʺ and exercise such
discretion ʺwhere necessary to avoid a manifest injustice.ʺ Sniado v. Bank Austria AG,
378 F.3d 210, 213 (2d Cir. 2004) (per curiam).
1 The parties dispute whether defendants waived the defense of frustration. Even assuming, arguendo, that defendantsʹ preserved this argument for appeal, the doctrine of frustration would not justify non‐performance, because, like impossibility, it is unavailable where ʺthe event which prevented performance was foreseeable and provision could have been made for its occurrence.ʺ Rebell v. Trask, 632 N.Y.S.2d 624, 627 (2d Depʹt 1995).
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The circumstances here do not weigh in favor of considering the issue.
Defendants had ample opportunity to raise the question before the district court.
Indeed, the district court explicitly permitted defendants to file a motion for
reconsideration to dismiss Javaidʹs wife from the action, but defendants failed to file a
motion or respond to the district courtʹs October 24, 2014 order to show cause as to why
judgment should not be entered against all defendants.
Defendants proffer no reason for their failure to raise the arguments
below, nor do they suggest that manifest injustice will result from a refusal to consider
them. Moreover, the issue raises factual questions as to the respective roles of the
different defendants; these are factual questions that we are not in a position to resolve
in the first instance.
We have reviewed defendantsʹ remaining arguments and conclude they
are without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine OʹHagan Wolfe, Clerk
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