Ashokan Water Services, Inc. v. New Start, LLC

11 Misc. 3d 686
CourtCivil Court of the City of New York
DecidedJanuary 19, 2006
StatusPublished
Cited by7 cases

This text of 11 Misc. 3d 686 (Ashokan Water Services, Inc. v. New Start, LLC) is published on Counsel Stack Legal Research, covering Civil Court of the City of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ashokan Water Services, Inc. v. New Start, LLC, 11 Misc. 3d 686 (N.Y. Super. Ct. 2006).

Opinion

OPINION OF THE COURT

Jack M. Battaglia, J.

[687]*687In a utility bill auditing agreement, plaintiff Ashokan Water Services, Inc. agreed to “use its best efforts to bring about saving[s] in . . . past, current and future utility bills to” property located at 530 St. Paul’s Place in the Bronx. In return, defendant 3716 Third Avenue, LLC, the owner of the property, and defendant New Start, LLC, the manager of the property, agreed to pay plaintiff “an amount calculated as one third (1/3) of all credits and of all favorable adjustments to Ghent’s water/sewer utility accounts made on or after the date of [the] contract, such payment to be due immediately after receipt by Client of such credit(s) and/or adjustment(s).” Although the agreement shows only defendant New Start as client, defendants’ verified answer admits that both defendants are obligated under it. (See notice of appearance, verified answer, affirmative defenses and counterclaim 1i 4.)

There is no dispute that subsequent to the effectiveness of the agreement the Department of Environmental Protection (DEP) posted credits totaling $48,226.17 to six water/sewer utility accounts for the property; that with an invoice dated June 11, 2003 plaintiff billed defendants for $16,073.78, its “Contingency [f]ee of 1/3” the amount of the credits; and that defendants made two payments against the invoice, totaling $8,000, but then refused to pay any more.

In its verified complaint, plaintiff seeks the balance due on its invoice, $8,073.78, together with prejudgment interest and attorney fees, alleging causes of action for breach of contract, on an account stated, for money had and received, and for unjust enrichment. Defendants’ notice of appearance, verified answer, affirmative defenses and counterclaim denies any obligation for additional payment on the invoice, and seeks a return of the $8,000 paid, allegedly by mistake, also with prejudgment interest and attorney fees. The essential ground for defendants’ denial of any obligation for additional payment and for return of amounts already paid is that plaintiff allegedly failed to perform as required under the agreement.

Plaintiff now moves for summary judgment on its cause of action for breach of contract. On a motion for summary judgment, the movant has the initial burden of establishing prima facie, with evidence in admissible form, that it is entitled to judgment as a matter of law; the burden then shifts to the nonmoving party to demonstrate the existence of a triable issue of fact. (See LD Exch. v Orion Telecom. Corp., 302 AD2d 565, 565 [2d Dept 2003].) The court notes that neither plaintiff nor defendants [688]*688have made any objection to the admissibility of any of the documents attached to the affidavits submitted in support of, or in opposition to, plaintiffs motion.

In support of its motion, plaintiff has submitted the affidavit of Hershel Weiss, its president and a licensed master plumber. Mr. Weiss supports the factual bases for plaintiffs cause of action, as outlined above, and describes plaintiffs performance under the contract. Essentially, plaintiff inspected the property, its water pipes and meters; reviewed Department of Environmental Protection account records with respect to the property; analyzed the data, and discussed it with DEP representatives; and demonstrated to DEP that it had over-billed the property for water/sewer use. According to Mr. Weiss:

“DEP had overcharged and was continuing to overcharge the property for water/sewer use by charging the property for its actual water consumption measured by a meter on the main-line on one account while concurrently charging the property for some of the same water consumption measured by other meters located downstream of that meter; made-up consumption estimates for meters that did not exist and which could only have been downstream of the house-meter anyway; and for flat-rate charges which are inappropriate where the consumption registered by the house-meter is already charged.” (Affidavit in support of summary judgment 1i 9.)

With a DEP accounts receivable transaction history for each of the accounts at the property and a letter dated June 13, 2003 from the DEP to plaintiff, plaintiff shows that the credits were posted, and that the credits were a consequence of plaintiffs efforts on defendants’ behalf.

In opposition, defendants present the affidavit of Alfred Thompson, principal of defendant New Start, LLC and manager of defendant 3716 Third Avenue, LLC. Mr. Thompson does not dispute any of the factual bases upon which plaintiffs claim to its “contingency fee” rests. Mr. Thompson acknowledges the “one time reduction in past water and sewer bills,” but asserts that plaintiff failed “to use its best efforts to bring about savings in client’s past, current, and future utility bills.” Mr. Thompson contends that plaintiff breached the agreement in two ways: first, that plaintiff failed to inspect “the meter,” and, therefore, failed to determine that it was “defective,” with the result that plaintiff did not obtain a “full credit” from DEP; [689]*689and second, that the “consolidation” of the various accounts at the property has led to higher billings since, with the result that the credits that plaintiff did obtain were “removed” by the subsequent excessive billings. (See affidavit in opposition 1Í1Í 6-9.) “The answer to Defendant’s [sic] problem was not consolidating the different accounts; it was replacing the defective meter.” (Id. 11 8.)

In one of the leading cases applying an express “best efforts” provision, Judge Friendly commented that “the New York law is far from clear” (see Bloor v Falstaff Brewing Corp., 601 F2d 609, 613 [2d Cir 1979]); 20 years later another federal court found it “murky” (see McDonald’s Corp. v Hinksman, 1999 WL 441468, *12, 1999 US Dist LEXIS 9587, *36 [ED NY, May 28, 1999]). It is still unclear when and how an express “best efforts” provision is to be enforced in the absence of articulated objective criteria in the agreement, and, particularly, the relationship between “best efforts” and “good faith,” “fair dealing,” and “reasonable care.”

There is authority in the Second Department that “[w]here ... a clause in an agreement . . . provides that a party must use its ‘best efforts’, it is essential that the agreement also contain clear guidelines against which to measure such efforts in order for such clause to be enforced.” (See Strauss Paper Co. v RSA Exec. Search, 260 AD2d 570, 571 [2d Dept 1999]; see also Cross Props. v Brook Realty Co., 76 AD2d 445, 453-454 [2d Dept 1980]; Northeast Sort & Fulfillment Corp. v Reader’s Digest Assn., 2001 NY Slip Op 40354[U], *14-15 [Sup Ct, Westchester County 2001].) In particular, courts will refuse to enforce an express “best efforts” provision, or to imply one where it is not expressed, in those situations in which it amounts to a dreaded “agreement to agree.” (See Richbell Info. Servs. v Jupiter Partners, 309 AD2d 288, 303-304 [1st Dept 2003]; Bernstein v Felske, 143 AD2d 863, 865 [2d Dept 1988]; Mocca Lounge v Misak, 94 AD2d 761, 763 [2d Dept 1983]; Jillcy Film Enters., Inc. v Home Box Off., Inc., 593 F Supp 515, 520-521 [SD NY 1984]; Pinnacle Books, Inc. v Harlequin Enters. Ltd., 519 F Supp 118, 121-122 [SD NY 1981].)

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Bluebook (online)
11 Misc. 3d 686, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ashokan-water-services-inc-v-new-start-llc-nycivct-2006.