SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

803 

CA 11-00333 

PRESENT: SCUDDER, P.J., SMITH, CARNI, SCONIERS, AND GREEN, JJ. 

 

NIAGARA FOODS, INC., BENLEY REALTY CO. AND 

THE CHARTER OAK FIRE INSURANCE COMPANY,

PLAINTIFFS-APPELLANTS-RESPONDENTS, 

V MEMORANDUM AND ORDER

FERGUSON ELECTRIC SERVICE COMPANY, INC. AND TEGG 

CORPORATION, DEFENDANTS-RESPONDENTS-APPELLANTS. 

 

LAW OFFICES OF ROBERT A. STUTMAN, P.C., NEW YORK CITY (KEVIN P. SMITH

OF COUNSEL), AND BRANDT, ROBERSON & BRANDT, P.C., LOCKPORT, FOR

PLAINTIFFS-APPELLANTS-RESPONDENTS.

RUPP, BAASE, PFALZGRAF, CUNNINGHAM & COPPOLA LLC, BUFFALO (R. ANTHONY

RUPP, III, OF COUNSEL), FOR DEFENDANT-RESPONDENT-APPELLANT FERGUSON

ELECTRIC SERVICE COMPANY, INC.

WALSH, ROBERTS & GRACE, BUFFALO (MARK P. DELLA POSTA OF COUNSEL), FOR

DEFENDANT-RESPONDENT-APPELLANT TEGG CORPORATION. 

 

Appeal and cross appeals from an amended order of the Supreme

Court, Niagara County (Ralph A. Boniello, III, J.), entered July 27,

2010. The amended order, among other things, granted in part

defendants’ motions to dismiss. 

It is hereby ORDERED that the amended order so appealed from is

unanimously modified on the law by granting that part of the motion of

defendant Ferguson Electric Service Company, Inc. to dismiss the

breach of contract cause of action asserted against it by plaintiff

Benley Realty Co. and as modified the amended order is affirmed

without costs. 

Memorandum: In this action to recover damages sustained as the

result of a fire, plaintiffs appeal and defendants each cross-appeal

from an amended order that, inter alia, granted in part defendants’

respective motions to dismiss the first amended complaint. Addressing

first plaintiffs’ appeal, we conclude that Supreme Court properly

granted those parts of the motions to dismiss the causes of action for

fraud and negligent misrepresentation. 

With respect to that part of the fraud cause of action against

defendant Tegg Corporation (Tegg), plaintiffs relied upon an e-mail

from Tegg that merely constituted a promise for future action, which

is insufficient to support that cause of action against Tegg (see
-2- 803 

CA 11-00333 

Transit Mgt., LLC v Watson Indus., Inc., 23 AD3d 1152, 1155; Cerabono

v Price, 7 AD3d 479, 480, lv dismissed 3 NY3d 737, lv denied 4 NY3d

704). With respect to that part of the fraud cause of action against

defendant Ferguson Electric Service Company, Inc. (Ferguson), we note

that it is well settled that “[a] cause of action premised upon fraud

cannot lie where it is based on the same allegations as [a] breach of

contract [cause of action]” (Heffez v L & G Gen. Constr., Inc., 56

AD3d 526, 527). Nevertheless, where the alleged fraudulent

representation is collateral to the contract, i.e., it is a fraudulent

representation regarding present fact as opposed to one reflecting an

intent to perform, the fraud and breach of contract causes of action

simultaneously may be maintained (see Deerfield Communications Corp. v

Chesebrough-Ponds, Inc., 68 NY2d 954, 956; McKernin v Fanny Farmer

Candy Shops, 176 AD2d 233, 234). Here, the fraud and breach of

contract causes of action with respect to Ferguson are based upon the

same allegations inasmuch as both rely upon the May 3, 2004 agreement

between Ferguson and plaintiff Niagara Foods, Inc. (Niagara Foods). 

Moreover, the documents attached to the first amended complaint

establish that Ferguson made no false representation of present fact. 

With respect to the negligent misrepresentation cause of action, no

special relationship other than an ordinary business relationship is

asserted in the first amended complaint with respect to either Tegg or

Ferguson. Thus, the court properly granted those parts of defendants’

motions dismissing that cause of action against them (see Fleet Bank v

Pine Knoll Corp., 290 AD2d 792, 795-796; H & R Project Assoc. v City

of Syracuse, 289 AD2d 967, 969; Cecos Intl. v Advanced Polymer

Sciences, 245 AD2d 1017). 

With respect to defendants’ cross appeals, we reject their

contention that the court erred in denying those parts of their

motions to dismiss the strict products liability cause of action. 

Plaintiffs properly pleaded a cause of action for strict products

liability (see Van Iderstine v Lane Pipe Corp., 89 AD2d 459, 460-461,

lv dismissed 58 NY2d 610, 1113), and the court was correct that, at

this stage of the litigation, there is an issue of fact whether

defendants provided a service, a product, or a combination thereof. 

We agree with Ferguson, however, that the court erred in denying that

part of its motion to dismiss the breach of contract cause of action

asserted by plaintiff Benley Realty Co. (Benley) against it inasmuch

as Benley did not enter into a contract with Ferguson (see Mandarin

Trading Ltd. v Wildenstein, 16 NY3d 173, 181-182). Nor has Benley

established that it was a third-party beneficiary of the contract

between Ferguson and Niagara Foods or that any benefit it received

from that contract was sufficiently immediate to establish the

assumption of a duty by Ferguson to compensate Benley in the event

that the benefit was lost (see id. at 182). We therefore modify the

amended order accordingly. 

Entered: July 1, 2011 Patricia L. Morgan

Clerk of the Court