Alicea v. City of New York

145 A.D.2d 315, 534 N.Y.S.2d 983, 29 Wage & Hour Cas. (BNA) 502, 1988 N.Y. App. Div. LEXIS 12958
Appellate Division of the Supreme Court of the State of New York·Decided December 6, 1988·Published·Cited by 33 cases

Opinion

— Order of the Supreme Court, New York County (Francis N. Pécora, J.), entered on November 4, 1987, which denied defendants’ motion for summary judgment pursuant to CPLR 3212, is unanimously reversed on the law and the motion for summary judgment dismissing the complaint is granted, without costs or disbursements.

Plaintiffs-respondents are former employees of S & D Main[316] tenance Company who instituted this action for breach of a contract between S&D Maintenance and the City of New York pursuant to which S&D Maintenance agreed to maintain parking meters located within the City of New York. In that regard, the Comptroller of the City of New York ordered a hold on all payments under the contract following the receipt of allegations of fraud against S&D Maintenance. S & D Maintenance ceased its maintenance of parking meters on or about October 9, 1986, and the city began to utilize its own employees to oversee the meters. On or about December 31, 1986, the Commissioner of the New York City Department of Transportation notified S&D Maintenance that the city was terminating the contract. Thereafter, S&D Maintenance commenced various lawsuits against the city arising out of the latter’s refusal to make payment under the contracts of 1984 and 1986. The instant action represents a separate attempt by former employees of S & D Maintenance to recover under the 1986 contract on the ground that they "are third party beneficiaries of the aforesaid contract, in that the contract provided that most of the money required to be paid by the City to S&D would be paid as wages by S&D to the plaintiffs in accordance with wage schedules set forth in the contract, and that the contract would redound to the benefit of the plaintiffs.”

Defendants filed an answer to the complaint and then moved for summary judgment, disputing plaintiffs’ contention that they are third-party beneficiaries to the contract. In response, plaintiffs urged that they "are a group of members of Local No. 3, International Brotherhood of Electrical Workers, AFL-CIO — a group which for thirty-three years have [sic] performed the work of maintaining most of the parking meters in New York City — as employees of all of the contractors which successively obtained the parking meter contracts from the City. The City had no doubt, when the Department of Transportation gave the current * * * contract to S & D, that most of its payments made pursuant to said contract would immediately be forwarded by S & D to the plaintiffs.” Plaintiffs further asserted that 23 of them are currently engaged in maintaining the parking meters and that the city has agreed to hire additional persons from among plaintiffs for the work, "thus continuing the thirty-three year connection between the named plaintiff group and the parking meter work which most recently was performed by S & D.” It should be noted that in claiming third-party beneficiary status, plaintiffs did not cite any specific clause of the contract and [317] specifically disclaimed reliance upon article 19, which is the section most concerned with the wages and working conditions of employees of S & D Maintenance.

The Supreme Court denied the motion for summary judgment, concluding that "the contract in question herein is sufficiently ambiguous, by its terms, to raise triable issues of fact as to the intentions of the parties concerning the extent to which plaintiffs were intended to be third-party beneficiaries.” We disagree. An examination of the record of the matter before us fails to show "evidentiary proof in admissible form sufficient to require a trial of material questions of fact” (Iselin & Co. v Mann Judd Landau, 71 NY2d 420, 425).

The law is settled that an intended beneficiary of a contract may maintain an action as a third party but an incidental beneficiary may not (Port Chester Elec. Constr. Corp. v Atlas, 40 NY2d 652, 655; see also, Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314). As the Court of Appeals explained in Burns Jackson Miller Summit & Spitzer v Lindner (supra, at 336), "[a] third party may be the beneficiary of a public as well as a private contract * * *. He may recover, however, only by establishing (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for his benefit and (3) that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost”. Accordingly, "[e]yen when the contracting parties specifically intend to confer benefits on a third party, not all consequential damages which flow from a breach of the contract are recoverable by the third party. The contract must evince a discernible intent to allow recovery for the specific damages to the third party that result from a breach thereof before a cause of action is stated” (Strauss v Belle Realty Co., 98 AD2d 424, 427, affd 65 NY2d 399).

Moreover, a party claiming to be a third-party beneficiary has the burden of demonstrating an enforceable right (Strauss v Belle Realty Co., supra). In Lake Placid Club Attached Lodges v Elizabethtown Bldrs. (131 AD2d 159, 161), the court defined an intended beneficiary as one whose "right to performance is 'appropriate to effectuate the intention of the parties’ to the contract and either the performance will satisfy a money debt obligation of the promisee to the beneficiary or 'the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance’ (Re[318] statement [Second] of Contracts § 302 [1] [a], [b])”. Thus, where the performance is rendered directly to a third party, that party is generally considered an intended beneficiary of the contract (Nepco Forged Prods, v Consolidated Edison Co., 99 AD2d 508). The best evidence, however, of whether the contracting parties intended a benefit to accrue to a third party can be ascertained from the words of the contract itself (Nepco Forged Prods, v Consolidated Edison Co., supra). An intent to benefit a third party can also be found when "no one other than the third party can recover if the promisor breaches the contract * * * or * * * the language of the contract otherwise clearly evidences an intent to permit enforcement by the third party” (Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 45, supra).

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Alicea v. City of New York, 145 A.D.2d 315, 534 N.Y.S.2d 983, 29 Wage & Hour Cas. (BNA) 502, 1988 N.Y. App. Div. LEXIS 12958 (N.Y. Ct. App. 1988).

145 A.D.2d 315 (Alicea v. City of New York) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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