24-165-cv Up State Tower Co. v. Southline Little League, Inc.
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 COURT’S 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 “SUMMARY ORDER“). 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 10th day of February, two thousand twenty-five.
PRESENT: ROBERT D. SACK, GERARD E. LYNCH, RAYMOND J. LOHIER, JR., Circuit Judges. ------------------------------------------------------------------ UP STATE TOWER CO., LLC, BUFFALO LAKE ERIE WIRELESS SYSTEMS, CO. LLC,
Plaintiffs-Counter-Defendants-Appellants,
v. No. 24-165-cv
TOWN OF CHEEKTOWAGA, TOWN BOARD OF TOWN OF CHEEKTOWAGA,
Defendants,
v. SOUTHLINE LITTLE LEAGUE, INC. F/K/A SOUTHLINE ATHLETIC ASSOCIATION,
Third-Party Defendant-Appellee.
------------------------------------------------------------------
FOR APPELLANTS: JON P. DEVENDORF, Barclay Damon LLP, Syracuse, NY
FOR APPELLEE: JOHN A. MANCUSO (Lauren Baron, on the brief), Mancuso Brightman PLLC, Rochester, NY
Appeal from a judgment of the United States District Court for the
Western District of New York (Geoffrey W. Crawford, Judge).*
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.
Plaintiffs Up State Tower Co., LLC and Buffalo-Lake Erie Wireless Systems
Co., LLC (collectively “Up State”) appeal from a December 19, 2023 judgment of
the United States District Court for the Western District of New York (Crawford,
J.) denying Up State’s summary judgment motions and granting the summary
* Judge Geoffrey W. Crawford, of the United States District Court for the District of Vermont, by designation. 2 judgment motions of Southline Little League, Inc. (“Southline”) to dismiss Up
State’s crossclaims against Southline for breach of contract, fraud, and
indemnification. Up State also appeals the District Court’s award of attorney’s
fees to Southline. We assume the parties’ familiarity with the underlying facts
and the record of prior proceedings, to which we refer only as necessary to
explain our decision to affirm.
Southline, a Little League organization comprised of parents and others
interested in youth sports, owns a ball field and athletic facilities. The deed to
the property includes a restrictive covenant limiting the use of the property to
recreational activities. In 2016, Up State signed a lease with Southline to build a
cell tower on the property with the intent of serving the Town of Cheektowaga
and the surrounding area. Up State then applied to Cheektowaga for the
necessary permits. Cheektowaga denied Up State’s application, citing, among
other things, the restrictive covenant in Southline’s deed limiting use of the
property to “recreational purposes.” App’x 185. Up State then initiated this
action against Cheektowaga. After an intervenor brought claims against Up
State and Southline to enforce the restrictive covenant in the deed, Up State and
Southline filed crossclaims against each other. The District Court first dismissed
3 all claims involving other parties and then granted summary judgment for
Southline against Up State.
“We review the District Court’s grant of summary judgment de novo,
construing all evidence in the light most favorable to the non-moving party.”
Rentas v. Ruffin, 816 F.3d 214, 220 (2d Cir. 2016). We will affirm a grant of
summary judgment if “there is no genuine dispute as to a material fact and the
movant is entitled to judgment as a matter of law.” Id.; see Fed. R. Civ. P. 56(a).
I. Breach of Contract
A breach of contract claim under New York law has four elements: “(i) the
formation of a contract between the parties; (ii) performance by the plaintiff; (iii)
failure of defendant to perform; and (iv) damages.” Johnson v. Nextel Commc’ns,
Inc., 660 F.3d 131, 142 (2d Cir. 2011). As to breach, Up State points to the lease’s
quiet enjoyment provision, in which Southline promised that the property is free
of any encumbrances “other than any which don’t interfere with [Up State’s] use
of the Premises and the Easements.” App’x 64.27. As to damages, Up State
claims only the attorney’s fees it incurred in preparing its permitting application
and throughout the present litigation. The District Court determined that the
attorney’s fees Up State claims are consequential damages. And because the
4 lease contains an express waiver of consequential damages, the District Court
dismissed the breach of contract claim.
On appeal, Up State argues that its attorney’s fees are general damages,
not consequential damages, and therefore not barred by the waiver. We
disagree. New York law distinguishes “general damages which are the natural
and probable consequence of the breach” from “[s]pecial, or consequential
damages, which do not so directly flow from the breach.” Bi-Econ. Mkt., Inc. v.
Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 192 (2008) (quotation marks omitted).
Consequential damages compensate a plaintiff for additional losses, other than
the value of the promised performance, incurred as a result of the breach.
Schonfeld v. Hilliard, 218 F.3d 164, 176 (2d Cir. 2000). The breaching party may
be liable for consequential damages only if those damages are “reasonably
contemplated by the parties” at the time of contracting. Bi-Econ., 10 N.Y.3d at
193. Up State argues that it was reasonably foreseeable that, under the
circumstances of the lease, it would suffer damages by “vigorously pursu[ing]”
its telecommunications project, including through litigation, in reliance on
Southline’s representations that the property was free of encumbrances.
Appellants’ Br. 25. But this argument both ignores the fact that Up State
5 expressly waived its right to recover consequential damages in the lease and
supports the District Court’s conclusion that Up State sought only consequential
damages.
Because Up State waived its right to consequential damages, it could
recover only general damages. As the District Court explained, general
damages are limited to what “a reasonable person, not possessing special
information about the parties’ plans,” would have anticipated. Spec. App’x 11.
In this case, where Up State had the right to unilaterally withdraw from the lease
if it could not secure the necessary permits, we agree with the District Court that
no reasonable person would have anticipated Up State’s extensive litigation as a
“natural and probable consequence” of an alleged breach. Bi-Econ., 10 N.Y.3d at
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24-165-cv Up State Tower Co. v. Southline Little League, Inc.
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 COURT’S 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 “SUMMARY ORDER“). 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 10th day of February, two thousand twenty-five.
PRESENT: ROBERT D. SACK, GERARD E. LYNCH, RAYMOND J. LOHIER, JR., Circuit Judges. ------------------------------------------------------------------ UP STATE TOWER CO., LLC, BUFFALO LAKE ERIE WIRELESS SYSTEMS, CO. LLC,
Plaintiffs-Counter-Defendants-Appellants,
v. No. 24-165-cv
TOWN OF CHEEKTOWAGA, TOWN BOARD OF TOWN OF CHEEKTOWAGA,
Defendants,
v. SOUTHLINE LITTLE LEAGUE, INC. F/K/A SOUTHLINE ATHLETIC ASSOCIATION,
Third-Party Defendant-Appellee.
------------------------------------------------------------------
FOR APPELLANTS: JON P. DEVENDORF, Barclay Damon LLP, Syracuse, NY
FOR APPELLEE: JOHN A. MANCUSO (Lauren Baron, on the brief), Mancuso Brightman PLLC, Rochester, NY
Appeal from a judgment of the United States District Court for the
Western District of New York (Geoffrey W. Crawford, Judge).*
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.
Plaintiffs Up State Tower Co., LLC and Buffalo-Lake Erie Wireless Systems
Co., LLC (collectively “Up State”) appeal from a December 19, 2023 judgment of
the United States District Court for the Western District of New York (Crawford,
J.) denying Up State’s summary judgment motions and granting the summary
* Judge Geoffrey W. Crawford, of the United States District Court for the District of Vermont, by designation. 2 judgment motions of Southline Little League, Inc. (“Southline”) to dismiss Up
State’s crossclaims against Southline for breach of contract, fraud, and
indemnification. Up State also appeals the District Court’s award of attorney’s
fees to Southline. We assume the parties’ familiarity with the underlying facts
and the record of prior proceedings, to which we refer only as necessary to
explain our decision to affirm.
Southline, a Little League organization comprised of parents and others
interested in youth sports, owns a ball field and athletic facilities. The deed to
the property includes a restrictive covenant limiting the use of the property to
recreational activities. In 2016, Up State signed a lease with Southline to build a
cell tower on the property with the intent of serving the Town of Cheektowaga
and the surrounding area. Up State then applied to Cheektowaga for the
necessary permits. Cheektowaga denied Up State’s application, citing, among
other things, the restrictive covenant in Southline’s deed limiting use of the
property to “recreational purposes.” App’x 185. Up State then initiated this
action against Cheektowaga. After an intervenor brought claims against Up
State and Southline to enforce the restrictive covenant in the deed, Up State and
Southline filed crossclaims against each other. The District Court first dismissed
3 all claims involving other parties and then granted summary judgment for
Southline against Up State.
“We review the District Court’s grant of summary judgment de novo,
construing all evidence in the light most favorable to the non-moving party.”
Rentas v. Ruffin, 816 F.3d 214, 220 (2d Cir. 2016). We will affirm a grant of
summary judgment if “there is no genuine dispute as to a material fact and the
movant is entitled to judgment as a matter of law.” Id.; see Fed. R. Civ. P. 56(a).
I. Breach of Contract
A breach of contract claim under New York law has four elements: “(i) the
formation of a contract between the parties; (ii) performance by the plaintiff; (iii)
failure of defendant to perform; and (iv) damages.” Johnson v. Nextel Commc’ns,
Inc., 660 F.3d 131, 142 (2d Cir. 2011). As to breach, Up State points to the lease’s
quiet enjoyment provision, in which Southline promised that the property is free
of any encumbrances “other than any which don’t interfere with [Up State’s] use
of the Premises and the Easements.” App’x 64.27. As to damages, Up State
claims only the attorney’s fees it incurred in preparing its permitting application
and throughout the present litigation. The District Court determined that the
attorney’s fees Up State claims are consequential damages. And because the
4 lease contains an express waiver of consequential damages, the District Court
dismissed the breach of contract claim.
On appeal, Up State argues that its attorney’s fees are general damages,
not consequential damages, and therefore not barred by the waiver. We
disagree. New York law distinguishes “general damages which are the natural
and probable consequence of the breach” from “[s]pecial, or consequential
damages, which do not so directly flow from the breach.” Bi-Econ. Mkt., Inc. v.
Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 192 (2008) (quotation marks omitted).
Consequential damages compensate a plaintiff for additional losses, other than
the value of the promised performance, incurred as a result of the breach.
Schonfeld v. Hilliard, 218 F.3d 164, 176 (2d Cir. 2000). The breaching party may
be liable for consequential damages only if those damages are “reasonably
contemplated by the parties” at the time of contracting. Bi-Econ., 10 N.Y.3d at
193. Up State argues that it was reasonably foreseeable that, under the
circumstances of the lease, it would suffer damages by “vigorously pursu[ing]”
its telecommunications project, including through litigation, in reliance on
Southline’s representations that the property was free of encumbrances.
Appellants’ Br. 25. But this argument both ignores the fact that Up State
5 expressly waived its right to recover consequential damages in the lease and
supports the District Court’s conclusion that Up State sought only consequential
damages.
Because Up State waived its right to consequential damages, it could
recover only general damages. As the District Court explained, general
damages are limited to what “a reasonable person, not possessing special
information about the parties’ plans,” would have anticipated. Spec. App’x 11.
In this case, where Up State had the right to unilaterally withdraw from the lease
if it could not secure the necessary permits, we agree with the District Court that
no reasonable person would have anticipated Up State’s extensive litigation as a
“natural and probable consequence” of an alleged breach. Bi-Econ., 10 N.Y.3d at
192 (quotation marks omitted). Because Up State failed to establish damages,
the District Court correctly dismissed its breach of contract claim.
II. Fraud
Up State also challenges the District Court’s grant of summary judgment
in favor of Southline as to Up State’s fraud claim. To prevail on that claim, Up
State had to show that it reasonably relied on Southline’s materially false
representation. Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d
6 13, 19 (2d Cir. 1996). Up State argues that it was reasonable for it to rely on
Southline’s representations that its property was free of encumbrances that
would interfere with constructing a cell tower because Southline should have
been more familiar with the effect of the restrictive covenant on use of the
property. We are not persuaded. Don Carpenter, Up State’s agent, reviewed a
copy of the property deed, including the restrictive covenant. So “the facts
represented [we]re not peculiarly within [Southline’s] knowledge[,] and [Up
State] ha[d] the means available” — and indeed used those means — to know
“the truth or real quality of the subject of the representation.” Ponzini v. Gatz,
548 N.Y.S.2d 36, 37 (2d Dep’t 1989) (quotation marks omitted). The restrictive
covenant unambiguously conflicts with Up State’s proposed use of the property.
Accordingly, Up State had clear notice that the lease was inconsistent with the
restrictive covenant and thus could not have reasonably relied on Southline’s
contrary representation in the lease.
III. Indemnification
Paragraph 14 of the lease agreement provides that either party has the
right to indemnification for losses caused by either “acts or omissions in
operations or activities on the Property,” or “a breach by the indemnifying
7 party.” App’x 64.26. Up State contends that the first condition is ambiguous
and that this ambiguity should be resolved in its favor. We disagree. The
District Court correctly determined that the first condition does not apply
because “[t]here have been no operations or activities on the property.” Spec.
App’x 14. As for the second condition, Up State’s only claimed damages from
the contractual breach are the attorney’s fees it incurred. As discussed above,
however, those fees do not establish damages to which Up State is entitled under
the terms of the parties’ lease.
IV. Attorney’s Fees
We also reject Up State’s challenge to the District Court’s award of
attorney’s fees to Southline. Paragraph 23 of the lease provides that “[i]f a
dispute arises out of this Lease, then the prevailing party will be entitled to
actual attorney’s fees and costs.” App’x 64.28. Under New York law,
reasonable attorney’s fees may be awarded “when a contract provides that in the
event of litigation the losing party will pay the attorneys’ fees of the prevailing
party.” F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d 1250, 1263 (2d Cir.
1987). The District Court accordingly did not err in granting attorney’s fees to
Southline as the prevailing party in this litigation.
8 CONCLUSION
We have considered Up State’s remaining arguments and conclude that
they are without merit. For the foregoing reasons, the judgment of the District
Court is AFFIRMED.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court