Jeda Capital-56, LLC v. Village of Potsdam ( 2016 )

14-4098-cv
JEDA Capital-56, LLC v. Vill. of Potsdam
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 2nd day of September, two thousand sixteen.
PRESENT: JOHN M. WALKER, JR.,
JOSÉ A. CABRANES,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
JEDA CAPITAL-56, LLC,
Plaintiff-Appellant, 14-4098-cv
v.
VILLAGE OF POTSDAM, NEW YORK,
Defendant-Appellee.
FOR PLAINTIFF-APPELLANT: JUSTIN T. HUFFMAN, Camardo Law Firm,
Auburn, NY.
FOR DEFENDANT-APPELLEE: GREGG T. JOHNSON (April J. Laws, on the
brief), Lemire, Johnson & Higgins, LLC,
Malta, NY.
Appeal from a judgment of the United States District Court for the Northern District of
New York (Norman A. Mordue, Judge).
1
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the District Court be and hereby is
AFFIRMED.
Plaintiff-appellant JEDA Capital-56, LLC (“JEDA”) appeals from the September 30, 2014
judgment of the District Court granting the motion for summary judgment by defendant-appellee
the Village of Potsdam, New York (“the Village”).1 We assume the parties’ familiarity with the
underlying facts, the procedural history of the case, and the issues on appeal.
BACKGROUND
JEDA and the Village entered into a lease, under the terms of which JEDA, a developer,
would build a water storage facility that it would lease to the Village in exchange for monthly rent
payments. JEDA was to deliver the facility to the Village by December 1, 2008. Delivery still had not
occurred, however, as of August 18, 2009, when the parties executed a “Project Completion
Agreement” (“PCA”), which identified various items that needed to be completed before the Village
would accept delivery. The PCA also contained a release provision, which is the principal subject of
this appeal.2
1
The District Court declined to exercise supplemental jurisdiction over two of JEDA’s state-law
claims, which it dismissed without prejudice.
2
Section 6 of the PCA provides in full:
INDEMNIFICATION: JEDA does hereby covenant and agrees that JEDA will
never institute any suit or action at law or equity against Village or its Engineer, nor
institute, prosecute or in any way nor aid in the institution or prosecution of any
claim, demand, action or cause of action of any kind, whether developed or
undeveloped, known or unknown, or which JEDA may have for, or by reason of any
matter, whatsoever from the beginning of the world to the day of the date of this
agreement arising from or in any way related to the construction of the Water Tower
project and related water and sewer systems. Furthermore, JEDA does hereby
remise, release and forever discharge the Village or its Engineer from any and all
actions, causes of action, suits, debits, sums of money, damages, judgments,
controversies, agreements, promises, executions and/or claims of any kind, in law or
equity, which against the Village or its Engineer JEDA has ever had or shall have
upon or by reason of any matters, whatsoever from the beginning of the world as it
in any way relates to the construction of the Water Tower project and related water
and sewer systems.
App. 111.
2
JEDA never completed the facility to the Village’s satisfaction, and the Village never
accepted delivery or made any rent payments. In January 2010, Community Bank, which had
financed JEDA’s project, commenced a foreclosure action on the water storage facility property,
purchased it, and sold it to the Village pursuant to a preexisting agreement.
JEDA commenced this action on May 27, 2011, alleging pursuant to state contract law that
the Village breached its contract with JEDA and pursuant to 42 U.S.C. § 1983 that the Village
deprived JEDA of property without due process of law. JEDA also sought rescission of the PCA
based on claims that it was obtained by duress, that it was obtained without consideration, and that
it contained contradictory terms. The District Court dismissed JEDA’s rescission claims on their
merits. Having found that the PCA was enforceable, the District Court went on to hold that the
PCA barred JEDA’s claim for nonpayment of rent and its § 1983 claims for deprivation of property.
Finally, the District Court declined to exercise supplemental jurisdiction over JEDA’s state-law
claims for unjust enrichment and for breach of contract based on alleged alterations to the lease
agreement.
On appeal, JEDA argues that the District Court erred in granting summary judgment
because (1) the release in the PCA is unenforceable because it was obtained by economic duress, (2)
the release is unenforceable because JEDA received no consideration for signing it, and (3) the
release is unenforceable because it contains contradictory terms. In addition, JEDA argues that (4)
even if the release is enforceable, it does not cover all of JEDA’s claims. We consider each of these
arguments in turn.
DISCUSSION
JEDA first argues that the release was obtained by economic duress. We need not decide
whether duress was present, however, because JEDA ratified the release and therefore waived the
right to claim duress. Under New York law, “[a] party may ratify a contract or release entered into
under duress by intentionally accepting benefits under the contract, by remaining silent or
acquiescing in the contract for a period of time after [the party] has the opportunity to avoid it, or by
acting upon it, performing under it, or affirmatively acknowledging it.” VKK Corp. v. Nat’l Football
League, 244 F.3d 114, 123 (2d Cir. 2001) (internal quotation marks omitted). Here, JEDA signed the
PCA on August 18, 2009, but did not attempt to repudiate it until commencing this suit on May 27,
2011. To the contrary, JEDA affirmatively sought to perform under the PCA and to hold the Village
to its alleged obligations under that agreement. This delay of more than 21 months is “simply too
long” to permit JEDA to assert duress in this litigation. See id. at 124 (finding that a party ratified a
contract by acquiescing for one year); see also United States v. Twenty Miljam-350 IED Jammers, 669 F.3d
78, 91 (2d Cir. 2011) (finding ratification under New York law after a four-month period of
acquiescence).
3
Second, JEDA argues that “[t]he PCA is invalid for lack of consideration.” JEDA Br. 18.
Assuming without deciding that consideration is even necessary under these circumstances, see N.Y.
Gen. Oblig. Law § 15–303, we reject this argument as meritless. As the District Court rightly
observed, JEDA, in exchange for signing the PCA, gained the resolution of a number of disputed
items to which it was not clearly entitled at the time. These included, for example, the resolution of
concerns stemming from a possible discrepancy in elevation between two towers in the water
storage facility. Resolution of a disputed claim is sufficient consideration to support a contract. See,
e.g., Apfel v. Prudential-Bache Sec. Inc., 616 N.E.2d 1095, 1097 (N.Y. 1993); Wahl v. Barnum, 22 N.E.
280, 282 (N.Y. 1889) (holding that settlement of a disputed claim is legal consideration, even if the
claim lacked merit).
Third, JEDA argues that the District Court improperly granted the Village summary
judgment on JEDA’s fifth cause of action—which sought rescission of the PCA based on its
allegedly contradictory terms—because the Village did not specifically move for summary judgment
on that claim. Even if we assume arguendo that JEDA has correctly characterized the Village’s
motion, this argument is nonetheless meritless.3 Although we have discouraged district courts from
granting summary judgment sua sponte, it is permissible to do so as long as the party against whom
summary judgment is granted is not “procedurally prejudiced” as a result. Bridgeway Corp. v. Citibank,
201 F.3d 134, 139 (2d Cir. 2000). “A party is procedurally prejudiced if it is surprised by the district
court’s action and that surprise results in the party’s failure to present evidence in support of its
position.” Id. Here, JEDA has not pointed to any additional evidence it could have brought to
oppose summary judgment on its fifth cause of action. Indeed, JEDA presented to the District
Court precisely the same argument against summary judgment that it now rehearses in its principal
brief. We therefore have no reason to conclude that JEDA was procedurally prejudiced by the
District Court’s grant of summary judgment on that claim.
Furthermore, we agree with the District Court that JEDA’s fifth cause of action fails on its
merits. JEDA argues that the release contradicts another provision of the PCA, which states that the
terms of JEDA’s previous lease with the Village would remain “in full force and effect.” Because the
original lease permitted JEDA to bring suit for breach of contract, JEDA claims that this provision
effectively nullifies the release. It is well established, however, that “[i]n a situation of potential
contract ambiguity, an interpretation that gives a reasonable and effective meaning to all terms of a
contract is preferable to one that leaves a portion of the writing useless or inexplicable.” Sompo Japan
Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165, 179 (2d Cir. 2014) (internal quotation marks
omitted). Read in context, it is clear that the provision JEDA cites was intended to keep the other
provisions of the original lease in effect but not to abrogate the release.
3
The Village argues that it moved for summary judgment on all eight of JEDA’s claims.
4
Finally, we consider JEDA’s argument that the PCA’s release provision does not apply to
JEDA’s seventh and eighth causes of action, which raise deprivation-of-property claims pursuant to
42 U.S.C. § 1983.4 JEDA argues that the release covers only claims that accrued on or before August
18, 2009, when the PCA was executed, and that JEDA’s seventh and eighth causes of action accrued
after that date. This argument is contrary to the plain language of the PCA. In section 6 of the PCA,
JEDA released the Village from all “claims of any kind, which . . . JEDA has ever had or shall have”
relating to “the construction of the Water Tower project.” App. 111 (emphasis supplied). The
“broad language” of the release indicates the parties’ intent to release the Village from future claims
that might have accrued after the PCA was signed.5 See Centro Empresarial Cempresa S.A. v. Am. Movil,
S.A.B. de C.V., 952 N.E.2d 995, 1000 (N.Y. 2011) (“Notably, a release may encompass unknown
claims . . . .”).
CONCLUSION
We have reviewed all of the arguments raised by JEDA on appeal and find them to be
without merit. For the foregoing reasons, we AFFIRM the September 30, 2014 judgment of the
District Court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
4
JEDA’s reply brief also suggests that the release does not cover JEDA’s first cause of action
for nonpayment of rent. But JEDA makes no mention of that claim in its principal brief.
Accordingly, JEDA has abandoned its argument as to whether the PCA bars JEDA’s first cause of
action. See Norton v. Sam’s Club, 145 F.3d 114, 117–18 (2d Cir. 1998) (noting that we do not ordinarily
address issues raised for the first time in a reply brief).
5
JEDA also argues, for the first time in it reply brief, that its seventh and eighth causes of action
are beyond the scope of the PCA because they are “not related in any way the construction of the
water tower project.” JEDA Reply Br. 8. JEDA abandoned this argument by not raising it in its
opening brief. See ante note 4. In any event, the argument is contradicted by the text of the Amended
Complaint. See App. 43 (describing JEDA’s seventh cause of action as deriving in part from the
Village’s actions with respect to the PCA and from its refusal to accept delivery of the water storage
facility); App. 44 (describing JEDA’s eighth cause of action as deriving in part from the Village’s
interference with the construction process).
5