Court Opinion

ID: 5487327
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:17:49.441068+00
Date Added: 2024-06-11T08:33:42.371768
License: Public Domain

Cipahick, J. (dissenting).
In the City of New York, the number of people currently in need of shelter, that most basic of human necessities, is staggering: on a recent night in June, 42,007 individuals were in the city shelter system; 17,301 of them were *577children (see http://www.nyc.gov/html/dhs/downloads/pdf/ dailyreport.pdf [accessed June 14, 2012]). In 2007, the City, through its agencies and codefendants the Department of Homeless Services (DHS) and Human Resources Administration (HRA), created Advantage New York, a program designed to move homeless individuals and families out of shelters and into permanent housing by providing rental subsidies to enable them to lease apartments from private landlords. Because I believe that the City, as a matter of law, formed a contract with participating landlords to continue paying rental subsidies on behalf of current Advantage tenants like plaintiffs—an agreement that plaintiffs rightly seek to enforce as third-party beneficiaries—I respectfully dissent.
It is axiomatic that “[t]o create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms” (Matter of Express Indus. & Term. Corp. v New York State Dept. of Transp., 93 NY2d 584, 589 [1999]). “Generally, [we] look to the basic elements of the offer and the acceptance to determine whether there is an objective meeting of the minds sufficient to give rise to a binding and enforceable contract” (id.).
“In determining whether the parties entered into a contractual agreement and what were its terms, it is necessary to look ... to the objective manifestations of the intent of the parties as gathered by their expressed words and deeds” (Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397, 399 [1977]; see also Mencher v Weiss, 306 NY 1, 7 [1953] [“It is well-established contract law that in determining whether the parties possessed the necessary intention to contract, an objective test is generally to be applied”] [internal quotation marks, brackets and citation omitted]). One party’s subjective or actual intent not to be legally bound is of no moment (see Lord, Willis-ton on Contracts § 4:1 [“(I)t was long ago settled that secret, subjective intent is immaterial”]), unless “the other knows or has reason to know of that intention” (Restatement [Second] of Contracts § 21, Comment a, Illustration 2 [emphasis added]). Thus, as Judge Learned Hand stated, even “[i]f ... it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort” (Hotchkiss v National City Bank of N.Y., 200 F 287, 293 [SD NY 1911] [emphasis added]).
*578It follows that, here, while “disproportionate emphasis is not to be put on any single act, phrase or other expression” (Brown Bros., 41 NY2d at 399-400), we must ascertain the City’s manifested intent, in the first instance, “from the language [it] used” (Lally v Cronen, 247 NY 58, 63 [1928]) in the documents that implemented the Advantage program. “[T]he aim is a practical interpretation of the expressions of the parties to the end that there be a realization of their reasonable expectations” (Brown Bros., 41 NY2d at 400 [internal quotation marks and brackets omitted]). To that end, we apply the well-settled principle that “an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part. . . of no effect” (Restatement [Second] of Contracts § 203 [a]).
Relying on Brown Bros, and proceeding on the premise that the “issue is whether the course of conduct and communications between the parties have created a legally enforceable agreement” (majority op at 571 [internal quotation marks and brackets omitted]), the majority erroneously determines that Supreme Court’s affirmed finding (that the City did not manifest its assent to contract with Advantage landlords) is one of fact, such that our review is limited to whether record evidence supports that determination (see majority op at 573, 573-574). But “where a question of intention is determinable by written agreements, the question is one of law, appropriately decided by an appellate court” (Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285, 291 [1973] [emphasis added]). Here, there is no need to look to the parties’ course of conduct or any “continuum of events and permissible inferences” (Brown Bros., 41 NY2d at 401) because we can determine the question of the City’s intent—and, more importantly, what a reasonable person in the position of the landlords would reasonably have understood the City’s intent to be—from the language of the Advantage program documents alone.1 Thus, our inquiry is one of law, guided by the familiar principles discussed above.
*579Taken together, the Advantage program documents unambiguously memorialize a bargained-for exchange between the City and the Advantage landlords to which the parties mutually assented. In the Certification Letter, which was drafted on DHS and HRA letterhead,2 signed by a city representative and shown to the landlords to induce them into renting apartments to plaintiffs in lieu of other potential tenants, the City “guarantee[d] that the subsidy portion of the rent will be paid directly to [the] landlord for one year”3 (emphasis added). Having accepted the City’s offer in accordance with its terms,4 a landlord signed a Landlord Statement of Understanding, printed on DHS letterhead, that indicated his or her understanding that “the [City] will pay directly to me, the Landlord, monthly rent . . . for a period of one year” and that an Advantage tenant “is automatically entitled to a self-executing renewal of the Lease for a second year” (emphasis added). In exchange, the landlord made significant “commitments,” including to refrain from charging an Advantage tenant any amount beyond the agreed upon rent, to offer the apartment at the same level of rent for a second year, to supply heat and hot water and to allow the City to place another Advantage tenant in the apartment in the event the original tenant moved or was evicted.5 Lastly, an Advantage tenant and participating landlord signed a lease rider, providing that the tenant “agree[d] [to] authorize[ ]” the City to pay “rental assistance directly to the Landlord” and that the City *580“shall pay” those subsidies. None of the statements contained in those documents were conditioned on the City’s receipt of state or federal aid, or on the City’s ability to fund the subsidies.
Terms and phrases such as “guarantee,” “shall” and “will pay” are not merely “trappings of contract language” or “mere assurances,” as the Appellate Division majority declared (Zheng v City of New York, 93 AD3d 510, 511 [1st Dept 2012]). Rather, “the usual meaning which the law [and common usage] impose[ ] upon” these words (Hotchkiss, 200 F at 293) is one of binding obligation, not election (see Black’s Law Dictionary 772 [9th ed 2009] [defining “guarantee” as “(t)he assurance that a contract or legal act will be duly carried out”]; see also Matter of Syquia v Board of Educ. of Harpursville Cent. School Dist., 80 NY2d 531, 536 [1992]; Matter of Jewett v Luau-Nyack Corp., 31 NY2d 298, 304 [1972] [construing “shall” as mandatory, rather than permissive]). Thus, a reasonable person in the position of the Advantage landlords would justifiably understand that the City was, by virtue of that mandatory language, promising to pay rental subsidies on plaintiffs’ behalf for the term of plaintiffs’ leases. Indeed, it would have been patently unreasonable for landlords to read such language in the anomalous manner of the courts below, which, in essence, found that “guaranteed” meant “not guaranteed,” “shall” meant “may,” and “will pay” meant “may pay.” That strained interpretation renders the City’s own choice of words of no effect, an outcome the law instructs us to avoid (see Cobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475, 483 [1989] [“the conclusion that a party’s promise should be ignored as meaningless is at best a last resort”] [internal quotation marks omitted]; see also Restatement [Second] of Contracts § 203 [a]).
Both Supreme Court and the Appellate Division majority determined that, in using the mandatory language discussed above, the City meant to distinguish the Advantage program from its predecessor program, Housing Stability Plus (HSP), which tied the receipt of rental subsidies to the tenant’s public assistance (PA) status and, to the ire of landlords, resulted in frequent subsidy disruptions. The courts found that in “guaranteeing]” subsidy payments regardless of changes in a tenant’s PA status, the City intended not to bind itself contractually, but to allay landlords’ concerns that rent would go unpaid (see Zheng, 93 AD3d at 511). But accepting this manufactured definition of “guarantee” is problematic for two reasons. First, it mistakenly relies almost entirely on the City’s subjective *581understanding of the language it used, as opposed to what a reasonable person in the landlords’ position would understand the language to have meant. In neither decision below was that vital analysis undertaken with regard to any of the program documents.6 Secondly, even if one in that position would have understood the City’s mandatory language as conveying a distinction from HSP—due to the parenthetical appearing in the Certification Letter’s subject line, “(Guaranteed Rent Not Tied to [PA])”—it would only serve to enhance one’s belief that the City’s commitment to consistent subsidy payments was binding. After all, that changes in PA status would not disrupt payment of a rental subsidy would be a promise of scant value if, in actuality, the City was under no continuing obligation to pay the subsidy at all and could terminate it at will.
The majority’s statement that “no document whatsoever was executed by the City and any landlord respecting the Advantage program” (majority op at 575) effectively cuts the Landlord Statement of Understanding—drafted on city letterhead, signed by landlords and embodying the parties’ mutual promises regarding the Advantage program—right out of the record. That this and other Advantage program documents were not “specifically captioned” as a contract, like documents used pursuant to the Section 8 housing assistance program (see id.), is not determinative of whether they created a contract as a matter of law (see generally Winston v Mediafare Entertainment Corp., 777 F2d 78, 80 [2d Cir 1986]; see also 1 Williston on Contracts § 1:3 [“A binding agreement sufficient to establish a contract requires no precise formality”]).
Although I strongly maintain that the question before us is one of law, even if it were, as the majority holds, one of fact (see majority op at 573), the record evidence purportedly supporting the conclusion that the City did not manifest its assent to a contract with the landlords is inapposite. The City’s unwillingness, for example, to become a party to the underlying leases between the Advantage tenants and landlords has nothing to do *582with whether the City entered into a separate and distinct agreement with Advantage landlords to subsidize the rent obligations created by the leases. Quite simply, the City’s emphasis on its status as a nonparty to any Advantage lease is entirely misplaced; that one is not bound by contract A has no bearing on whether one assented to be bound by contract B.
Much has been made of the fact that “the Advantage rent subsidy program for the homeless was simply a social services program” (Zheng, 93 AD3d at 511), as though the term “social services program” were anathema to the law of contracts; it is not. Nor is it a shield that, when invoked, permits the City to renege on the very promises it used to induce private parties— here, the landlords, who received no program benefits—to enter into separate agreements, causing them to forgo profitable alternatives for the use of their property. The result of the majority’s decision is cause for concern. After today, even the clearest of contract terms on which public and private entities routinely rely to efficiently coordinate their transactions apparently will grant no assurance that the law will recognize an agreement and provide a remedy for its breach.
The human consequences of today’s decision are even more compelling. As Justice Moskowitz opined in her dissent:
“Now, because the City breached its contractual obligations, the landlords face the expense of eviction proceedings in court and nonreceipt of rent. Plaintiffs are now potentially liable for the balance of leases they cannot afford. They are also in an untenable situation whereby they face eviction and homelessness. Many Advantage participants are victims of domestic violence. They will not be eligible to return to the relative safety of the domestic violence shelter system unless they suffer new incidents of domestic violence”7 {id. at 519).
Accordingly, I would reverse the order of the Appellate Division and grant the relief sought, a declaration that the City entered into binding contracts with its Advantage landlords and that plaintiffs are entitled to specific performance of those contracts.
*583Judges Graffeo, Smith and Pigott concur with Judge Read; Judge Ciparick dissents and votes to reverse in a separate opinion in which Chief Judge Lippman and Judge Jones concur.
Order affirmed, without costs.

. In Brown, by contrast, there was no writing or set of writings embodying a complete agreement; rather, an invoice sent by Brown, a subcontractor, to the defendant owner and the owner’s response that it would “pay . . . the balance” evinced that the parties may have come to a prior, unmemorialized agreement (see 41 NY2d at 399). Only upon thoroughly examining the surrounding circumstances and the parties’ communications, however, was it apparent that the owner and subcontractor, out of mutual self-interest, had arrived at an agreement for the latter to complete the electrical work it was *579hired to perform by the general contractor, despite the general’s default (see id. at 400-401).

*578
(n. cont’d)

. Under New York law, official letterhead of a city agency such as DHS and HRA constitutes the signature of that agency, and, by extension, the City (see General Construction Law § 46). However, the absence of a signature would still not be fatal to an agreement possessing the requisite elements of a contract in light of the “common-law rule that written documents can be enforced even if they are not signed” (Flores v Lower E. Side Serv. Ctr., Inc., 4 NY3d 363, 369 [2005]).

. The Certification Letter also indicated the total rent allowable under the program, the amount of rent the City would subsidize, the amount of rent for which the tenant was responsible, the initial prerequisites for the program and when the certification would expire.

. The Certification Letter contained a section entitled “Information for Brokers and/or Landlords,” instructing landlords to contact DHS at a provided phone number and stipulating that “[a] 11 apartments must pass a Housing Quality Standard inspection before being leased.”

. The Participant Statement, also printed on DHS letterhead and signed by the tenant and a city representative, provided that “[u]nder the Advantage Program, [the City] will pay a portion of [the tenant’s] monthly rent . . . directly to [his or her] Landlord.”

. The majority incorrectly states that the analysis we find lacking in the decisions below concerned the landlords’ intent (majority op at 567 n 5). Rather, as we have explained, what is at issue is the City’s objectively manifested intent, which should be gleaned from looking to what a reasonable person in the position of the landlords, as promisees, would have understood from the City’s writings (see 1 Lord, Williston on Contracts § 1:2 [4th ed] [“(Wlhether a manifestation of intention by the promisor will have operative effect as a promise depends upon how the promisee understands the manifestation. That manifestation, however, is judged by an objective standard”]).

. We now know from the City’s post-argument submission that, in fact, 252 families within the class are victims of domestic violence (see letter of defendant, June 4, 2012 1Í 2).