State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: August 6, 2015 519509
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VAN ETTEN OIL CO., INC., et al.,
Respondents,
v MEMORANDUM AND ORDER
AERO STAR PETROLEUM, INC., et
al.,
Appellants.
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Calendar Date: June 5, 2015
Before: McCarthy, J.P., Egan Jr., Lynch and Devine, JJ.
__________
Rusk Wadlin Heppner & Martuscello, LLP, Kingston (Dennis B.
Schlenker, Albany, of counsel), for appellants.
Steven N. Mogel, Monticello, for respondents.
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Devine, J.
Appeal from an order and two amended orders of the Supreme
Court (Schick, J.), entered September 24, 2013, October 1, 2013
and November 1, 2013 in Sullivan County, which denied defendants'
motion for summary judgment dismissing the complaint.
Plaintiffs owned service stations and had wholesale
franchise rights to sell branded gasoline to several independent
stations. Defendant Aero Star Petroleum, Inc. agreed to purchase
several stations and the wholesale franchise from plaintiffs, and
subsequent negotiations led to the execution of an asset purchase
agreement in October 2012. Aero Star committed to paying
plaintiffs, in consideration for the wholesale franchise, four
cents for every gallon of gasoline it sold to the independent
stations over the course of the year following the execution of
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the agreement. The agreement went on to provide that, "[i]n the
event [plaintiffs are] unable to deliver valid, currently
existing supply contracts together with estoppel certificates for
the aforementioned [independent stations] or, in the event any
such supply contract . . . shall be terminated . . . then
. . . any reimbursement obligation of [Aero Star] to [plaintiffs]
shall simultaneously end upon the happening of the final delivery
of motor fuels under any such contract, written or casual
agreement." After post-execution discussions, that provision was
amended to state that the reimbursement obligation would cease
"upon the happening of the final delivery of motor fuels under
any such contract, written agreement" (emphasis added).
Plaintiffs did not turn over valid, written supply
contracts within the time allowed by the agreement and, as such,
Aero Star advised in February 2013 that it would not reimburse
them for any sales made to the independent stations. Plaintiffs
responded by commencing this action against Aero Star and its
president, defendant Tariq Gujar, asserting a claim for breach of
contract and sundry others. Defendants served an answer and
thereafter moved for summary judgment dismissing the complaint,
arguing solely that Aero Star had no legal obligation to make the
reimbursement payments given the language of the amended
agreement.1 Supreme Court found questions of fact as to that
issue and denied the motion, prompting this appeal.
We affirm. It is well settled that "[a] written agreement
that is clear and complete on its face must be enforced according
to the plain meaning of its terms" (Matter of Warner v Board of
Educ., Cobleskill-Richmondville Cent. Sch. Dist., 108 AD3d 835,
836 [2013], lv denied 22 NY3d 859 [2014]; see Samuel v Druckman &
Sinel, LLP, 12 NY3d 205, 210 [2009]). In order to determine
whether the terms of an agreement are ambiguous, a court must
"examine the entire contract and consider the relation of the
1
Defendants' motion for summary judgment was branded as a
cross motion, as plaintiffs had previously moved for a
preliminary injunction. Plaintiffs withdrew their motion,
however, and Supreme Court was only asked to resolve the motion
for summary judgment.
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parties and the circumstances under which it was executed"
(Matter of Warner v Board of Educ., Cobleskill-Richmondville
Cent. Sch. Dist., 108 AD3d at 836 [internal quotation marks and
citations omitted]). "When the language of a contract is
ambiguous, its construction presents a question of fact which may
not be resolved by the court on a motion for summary judgment"
(Leon v Lukash, 121 AD2d 693, 694 [1986] [citations omitted];
accord 1000 N. of N.Y. Co. v Great Neck Med. Assoc., 7 AD3d 592,
593 [2004]).
As to the circumstances surrounding the execution of the
agreement, the signatories were fully aware that the written
supply contracts for the independent stations had expired. The
language of the agreement reflects that reality, providing for a
remedy if plaintiffs failed to deliver valid supply contracts or
those contracts were otherwise terminated. Inasmuch as the
independent stations were continuing to purchase gasoline in the
absence of a written supply contract, however, the agreement only
relieved Aero Star of its obligation to reimburse plaintiffs for
the sales "upon the happening of the final delivery . . . under
any such contract, written or casual agreement." Aero Star, in
short, was required by this language to reimburse plaintiffs if
the informal purchases of fuel by the independent stations
continued. Aero Star thereafter obtained the consent of
plaintiffs to eliminate "or casual" from that provision. This
alteration left a murky sentence proclaiming that the
reimbursement obligation of Aero Star would end when a final
delivery was made "under any such contract, written agreement."
A conjunction of some sort is required to make sense of this
phrase and reveal when the reimbursement obligation of Aero Star
ceases, namely, when the last delivery is made under either a
contract that is also a written agreement, or when it is made
under any contract or written agreement. Accordingly, even
assuming that the necessary "and" or "or" could be supplied as a
matter of interpretation (see Matter of Wallace v 600 Partners
Co., 86 NY2d 543, 547-548 [1995]), the agreement as a whole is
unclear as to which was intended. Given the ambiguity in the
agreement as to whether the absence of written supply contracts
would permit Aero Star to cease reimbursement payments, questions
of fact preclude a grant of summary judgment to defendants
(see Shields v Carbone, 78 AD3d 1440, 1444 [2010]).
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Defendants' remaining arguments were not raised in their
motion papers, and "we will not address [them] for the first time
on appeal" (Dinneny v Allstate Ins. Co., 295 AD2d 797, 799
[2002]; see Voorheesville Rod & Gun Club v Tompkins Co., 82 NY2d
564, 570 n 1 [1993]; Jones v Castlerick, LLC, 128 AD3d 1153, 1154
[2015]; compare Welch v Di Cicco, 9 AD3d 725, 727 [2004]).
McCarthy, J.P., Egan Jr. and Lynch, JJ., concur.
ORDERED that the order and amended orders are affirmed,
with costs.
ENTER:
Robert D. Mayberger
Clerk of the Court