Court Opinion

ID: 2819713
Source: CourtListenerOpinion
Date Created: 2015-07-23 14:19:18.713595+00
Date Added: 2024-06-11T12:41:18.282805
License: Public Domain

State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: July 23, 2015                     519938
________________________________

GALUSHA & SONS, LLC, et al.,
                    Respondents,
      v                                     MEMORANDUM AND ORDER

CHAMPLAIN STONE, LTD, et al.,
                    Appellants.
________________________________

Calendar Date:   May 27, 2015

Before:   Peters, P.J., Lahtinen, Garry and Devine, JJ.

                             __________

      Bond, Schoeneck & King, PLLC, Albany (Stuart F. Klein of
counsel), for appellants.

      Bartlett, Pontiff, Stewart & Rhodes, PC, Glens Falls (Karla
Buettner of counsel), for respondents.

                             __________

Garry, J.

      Appeal from an order of the Supreme Court (Krogmann, J.),
entered January 27, 2014 in Washington County, upon a decision of
the court in favor of plaintiffs.

      Plaintiff Galusha & Sons, LLC (hereinafter plaintiff) was
engaged in the business of producing and selling aggregate stone.
Plaintiff's predecessor in interest was E. Galusha & Sons
(hereinafter E. Galusha), a family partnership. In October 1992,
E. Galusha entered into a 99-year lease agreement with defendant
Champlain Stone, Ltd. and Champlain's president, defendant
Michael Morey. This agreement granted E. Galusha the right to
operate a stone crushing business in a quarry owned by
defendants, in exchange for rental payments in a specified amount
per ton of the aggregate stone produced by the business, and,
                               -2-                519938

among other things, provided that defendants would be given a
first right of purchase in the event that E. Galusha elected to
sell the business.

      During 1993 and 1994, E. Galusha engaged in various
preparatory activities, but removed no aggregate stone from the
quarry and paid no rent to defendants. In March 1995, while some
blasting was occurring at the site, defendants sent a letter to
Daniel Galusha, a principal of E. Galusha and a shareholder in
plaintiff. This letter stated that defendants considered the
failure to commence the stone crushing business to be a violation
of the lease, and warned that defendants would declare the lease
to be null and void if operations were not commenced within 90
days. Shortly thereafter, E. Galusha assigned "all right, title
and interest" in the lease agreement to plaintiff.1 Thereafter,
the parties conducted discussions in an effort to resolve their
differences. In December 1995, plaintiff removed some rock
produced by the March 1995 blast from the quarry and paid rent to
defendants at the rate specified in the lease. In April 1996,
Morey advised Daniel Galusha (hereinafter Galusha) in writing
that defendants viewed the lease as null and void, as the demands
of the March 1995 letter had not been complied with. Morey
directed Galusha to remove his equipment from the property and
warned that defendants would initiate legal action if he did not
do so. In June 1996, defendants' counsel advised plaintiff's
counsel that the lease had been rescinded by the April 1996
letter, and that plaintiff had no right to enter the property.

      In August 1996, Galusha collaborated with a third party to
form plaintiff Jointa Galusha, LLC (hereinafter Jointa), and
assigned the lease agreement to Jointa. In January 1999, Galusha
informed defendants that he planned to remove previously blasted
stone from the quarry and to conduct additional mining there on a
regular basis thereafter. One week later, defendants responded
that the lease agreement was null and void and that Galusha had
no authorization to conduct activities in the quarry.

     1
        Defendants do not challenge the validity of this
assignment or contend that it violated the lease.
                              -3-                519938

      In April 1999, plaintiffs commenced the instant action for
breach of contract, seeking, among other things, money damages
and specific performance under the lease agreement. Defendants
answered and asserted counterclaims alleging that plaintiff
breached the lease agreement by selling the stone crushing
business to Jointa without offering defendants a first right of
purchase. Following a bifurcated bench trial on the issue of
liability, Supreme Court found, as pertinent here, that
defendants materially breached the agreement in April 1996 by
unilaterally declaring the lease agreement to be null and void,
and that plaintiffs were entitled to damages in an amount to be
determined in a subsequent inquest.2 Defendants appeal.

      Defendants contend that Supreme Court erred in determining
that they materially breached the agreement in April 1996 and
that, instead, plaintiff was the first to breach the agreement
when it transferred the stone crushing business to Jointa several
months later. To establish their claim for breach of contract,
plaintiffs were required to prove that a contract existed, that
plaintiffs performed their obligations under the contract, that
defendants breached the contract and that damages resulted (see
Clearmont Prop., LLC v Eisner, 58 AD3d 1052, 1055 [2009]). Here,
it is undisputed that the lease agreement was a valid and
enforceable contract. As for performance, Supreme Court found
that the activities that E. Galusha and plaintiff conducted after
executing the lease were sufficient to constitute performance
within a reasonable time (see Savasta v 470 Newport Assoc., 82
NY2d 763, 765 [1993]; Tedeschi v Northland Bldrs., LLC, 74 AD3d
1613, 1614 [2010]). Defendants raise no challenge to this
determination upon appeal, thus abandoning any related arguments
(see Battaglia v Town of Bethlehem, 46 AD3d 1151, 1154 [2007]).
Instead, they contend that the court erred in determining that

    2
         With considerable dismay, we note that Supreme Court's
decision was issued in January 2014, more than nine years after
the December 2005 trial. The first period of this prolonged
delay may apparently be attributed to the parties, who delivered
their final posttrial submissions in August 2009. Inexplicably,
this was followed by a period of almost 4½ years while the
decision remained pending before the court.
                              -4-                519938

defendants' April 1996 letter constituted a breach of the lease
agreement, arguing that plaintiffs were not actually denied
access to the quarry until defendants advised them in 1999 that
they were not authorized to conduct activities there. We reject
this argument, and agree with Supreme Court that the April 1996
letter constituted a breach of the lease agreement.

      "In the case of every contract there is an implied
undertaking on the part of each party that he [or she] will not
intentionally and purposely do anything to prevent the other
party from carrying out the agreement on his [or her] part"
(Syracuse Orthopedic Specialists, P.C. v Hootnick, 42 AD3d 890,
892 [2007] [internal quotation marks and citation omitted]; see
Wieder v Skala, 80 NY2d 628, 637 [1992]; Bass v Sevits, 78 AD2d
926, 927 [1980]; 10-53 Corbin on Contracts § 53.5 [2015]). In
the April 1996 letter, Morey advised Galusha that the lease was
null and void, threatened legal action if plaintiff did not
"promptly" remove its equipment from the quarry, and stated that
Morey did not consider himself bound by the lease because it was
void. Two months later, defendants' counsel advised plaintiff's
counsel that it was defendants' position that the lease had been
rescinded and that plaintiff "ha[d] no right to enter upon the
property." Contrary to defendants' claim, the January 1999
letter did not deny access to the quarry for the first time, but
merely repeated the previously-stated claims that the lease was
null and void and that plaintiffs were not authorized to enter
the quarry. "[R]efusing to permit the other party to perform is
a breach of contract" (22A NY Jur 2d, Contracts § 433). Here,
defendants' unilateral declaration that the lease was null and
void, and their threat of legal action if plaintiff did not
promptly remove its equipment, followed shortly thereafter by the
statement of defendants' counsel that plaintiff had no right to
enter the property, constituted a refusal to permit plaintiff to
perform. Exercising our broad factual review power to
independently assess the evidence while deferring to the trial
court's credibility assessments (see Northern Westchester
Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499
[1983]; Sterling v Sterling, 21 AD3d 663, 665 [2005]), and in
view of the court's determination that plaintiff performed its
obligations under the lease before the April 1996 letter, we find
that the record evidence supports the court's determination
                              -5-                  519938

(compare Greenspan v Amsterdam, 145 AD2d 535, 536 [1988]).

     Peters, P.J., Lahtinen and Devine, JJ., concur.

     ORDERED that the order is affirmed, with costs.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court