DIPIZIO CONSTRUCTION COMPANY, INC. v. ERIE CANAL HARBOR DEVELOPMENT CORPO

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department

1282
CA 15-00742
PRESENT: SCUDDER, P.J., CENTRA, LINDLEY, VALENTINO, AND WHALEN, JJ.

DIPIZIO CONSTRUCTION COMPANY, INC.,
PLAINTIFF-APPELLANT,

V MEMORANDUM AND ORDER

ERIE CANAL HARBOR DEVELOPMENT CORPORATION,
DEFENDANT-RESPONDENT.
(APPEAL NO. 3.)

BARCLAY DAMON, LLP, BUFFALO (MICHAEL E. FERDMAN OF COUNSEL), FOR
PLAINTIFF-APPELLANT.

THE REDDY LAW FIRM, LLC, BUFFALO (PRATHIMA REDDY OF COUNSEL), AND
PHILLIPS LYTLE LLP, FOR DEFENDANT-RESPONDENT.

Appeal from an order of the Supreme Court, Erie County (Timothy
J. Walker, A.J.), entered April 21, 2015. The order, among other
things, denied plaintiff’s motion for leave to renew its prior motion
for summary judgment.

It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting plaintiff’s motion for
leave to renew and, upon renewal, vacating the award of summary
judgment to defendant and reinstating the complaint, and as modified
the order is affirmed without costs in accordance with the following
memorandum: As we set forth in earlier appeals between the same
parties, plaintiff, DiPizio Construction Company, Inc. (DiPizio), and
defendant, Erie Canal Harbor Development Corporation (Erie), entered
into a construction agreement (Contract) pursuant to which DiPizio was
to provide construction services for a certain revitalization project
(DiPizio Constr. Co., Inc. v Erie Canal Harbor Dev. Corp., 120 AD3d
905; DiPizio Const. Co., Inc. v Erie Canal Harbor Dev. Corp., 120 AD3d
909; DiPizio Constr. Co., Inc. v Erie Canal Harbor Dev. Corp., 120
AD3d 911). Those earlier appeals arose out of a hybrid breach of
contract action and CPLR article 78 proceeding.

DiPizio commenced this related action seeking a judgment
declaring that Erie’s notice of intent to terminate the Contract
(Notice) and its ultimate termination of the Contract were nullities
and that the parties’ Contract remains in full force and effect.
DiPizio contended that Erie’s Board of Directors (Board) was required
to approve by a majority vote any official action to be taken by Erie
and, because the Board did not vote on the decision to issue the
Notice or to terminate the Contract, those actions taken by the
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CA 15-00742

Board’s President were nullities.

DiPizio moved for summary judgment on the complaint and, in the
order in appeal No. 1, Supreme Court denied DiPizio’s motion, searched
the record under CPLR 3212 (b) and awarded Erie summary judgment. In
the order in appeal No. 2, the court granted DiPizio’s motion for
reargument and, upon reargument, adhered to its prior decision. In
the order in appeal No. 3, the court denied DiPizio’s motion for leave
to renew the earlier motion for summary judgment and adhered to its
award of summary judgment to Erie. We note at the outset that the
appeal from the order in appeal No. 1 must be dismissed (see Loafin’
Tree Rest. v Pardi [appeal No. 1], 162 AD2d 985).

We agree with DiPizio with respect to appeal No. 3 that the court
abused its discretion in denying DiPizio’s motion for leave to renew.
“It is well established that a motion for leave to renew ‘shall be
based upon new facts not offered on the prior motion that would change
the prior determination,’ and ‘shall contain reasonable justification
for the failure to present such facts on the prior motion’ ” (DiPizio
Constr. Co., Inc., 120 AD3d at 910, quoting CPLR 2221 [e] [2], [3];
see Fuentes v Hoffman, 122 AD3d 1319, 1320). DiPizio, “as the movant,
‘bore the burden of proving that the new evidence [it] sought to
present could not have been discovered earlier with due diligence and
would have led to a different result’ ” (DiPizio Constr. Co., Inc.,
120 AD3d at 910). Here, DiPizio met its burden.

In support of the renewal motion, DiPizio submitted deposition
transcripts containing information relevant to the underlying motion
for summary judgment. Contrary to Erie’s contention, we conclude that
DiPizio provided a reasonable justification for its failure to submit
those depositions on the earlier motion, i.e., the court had denied
DiPizio’s requests to conduct such depositions (see Luna v Port Auth.
of N.Y. & N.J., 21 AD3d 324, 325-326; cf. Justino v Santiago, 116 AD3d
411, 411; Eskenazi v Mackoul, 92 AD3d 828, 829; see also State Farm
Fire & Cas. v Parking Sys. Valet Serv., 85 AD3d 761, 764).

We further conclude that the new facts offered in support of the
renewal motion would change the prior determination awarding Erie
summary judgment in this declaratory judgment action (see CPLR 2221
[e] [2]). In denying DiPizio’s initial motion and awarding Erie
summary judgment, the court concluded that, although Erie’s Board had
not taken any formal action to issue the Notice or to terminate the
Contract, the Board ratified the actions of its president. The
deposition testimony submitted by DiPizio in support of the renewal
motion establishes that there are triable issues of fact whether the
president’s action could have been ratified by Erie’s Board.
“ ‘Ratification is the express or implied adoption of the acts of
another by one for whom the other assumes to be acting, but without
authority[,] . . . [and it] relates back and supplies original
authority to execute [an agreement]’ . . . Ratification requires ‘full
knowledge of the material facts relating to the transaction, and the
assent must be clearly established and may not be inferred from
doubtful or equivocal acts or language’ ” (Rocky Point Props. v Sear-
Brown Group, 295 AD2d 911, 913; see Holm v C.M.P. Sheet Metal, 89 AD2d
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CA 15-00742

229, 232-233; see generally Matter of New York State Med. Transporters
Assn. v Perales, 77 NY2d 126, 131). In support of its renewal motion,
DiPizio submitted deposition testimony from a majority of the Board
members raising triable issues of fact whether a majority of the Board
had “ ‘full knowledge of the material facts relating’ ” to DiPizio’s
termination (Rocky Point Props., 295 AD2d at 913).

Erie contends, as an alternative ground for affirmance (see
Parochial Bus. Sys. v Board of Educ. of City of N.Y., 60 NY2d 539,
545-546), that no formal Board vote was required. Contrary to
DiPizio’s contention, Erie may properly raise this theory on appeal
inasmuch as this ground was raised by Erie in opposition to the
original motion (see Summers v City of Rochester, 60 AD3d 1271, 1273).
We nevertheless conclude, however, that there are triable issues of
fact whether a formal vote of the Board was required. Despite the
language of Erie’s bylaws and the presumption that the Board’s
president had the authority to enter into and terminate contracts “in
the ordinary course of the corporation’s business” (A & M Wallboard v
Marina Towers Assoc., 169 AD2d 751, 752, lv denied 78 NY2d 854; see
Odell v 704 Broadway Condominium, 284 AD2d 52, 56-57; see generally
Hardin v Morgan Lithograph Co., 247 NY 332, 338-339), there are
triable issues of fact whether the termination of the $20 million
Contract was “ ‘extraordinary’ or ‘unusual’ and outside of the
ordinary course of [Erie’s] business” (Arrow Communication Labs. v
Pico Prods., 206 AD2d 922, 923). Thus, there are triable issues of
fact whether the Board’s president could terminate the Contract in the
absence of the express authority of the Board (see Liebermann v
Princeway Realty Corp., 17 AD2d 258, 260, affd 13 NY2d 999; Arrow
Communication Labs., 206 AD2d at 923). Moreover, the evidence of the
Board’s past practices in taking formal action to enter into and to
amend contracts raises triable issues of fact whether the Board’s
president could terminate the Contract without formal action of the
Board (see Hellman v Hellman, 60 AD3d 1468, 1468-1469; see also 56 E.
87th Units Corp. v Kingsland Group, Inc., 30 AD3d 1134, 1134-1135;
Saleh v Saleh, 239 AD2d 165, 167). We thus conclude that the order in
appeal No. 3 must be modified by granting plaintiff’s motion for leave
to renew and, upon renewal, vacating the award of summary judgment to
Erie and reinstating the complaint. Based on our determination in
appeal No. 3, we conclude that the appeal from the order in appeal No.
2 must be dismissed as academic (see e.g. Fan-Dorf Props., Inc. v
Classic Brownstones Unlimited, LLC, 103 AD3d 589, 589-590; Del Bene v
Frank C. Perry, DDS, P.C., 83 AD3d 771, 771-772).

Entered: December 23, 2015 Frances E. Cafarell
Clerk of the Court