Amsterdam Savings Bank v. Marine Midland Bank , 504 N.Y.S.2d 563 ( 1986 )

Mahoney, P. J.,

dissents in part and concurs in part in a memorandum. Mahoney, P. J. (dissenting in part and concurring in part). Although I agree with the dismissal of plaintiffs third cause of action, I disagree with the majority’s holding that, in the absence of allegations that defendant had actual knowledge of defects in the construction work that it failed to report, plaintiffs complaint is legally insufficient. "A complaint survives a motion to dismiss for failure to state a cause of action if it gives the court and the parties notice of what is intended to be proved and the material elements of the cause of action” (Burlew v American Mut. Ins. Co.,. 99 AD2d 11, 15, affd 63 NY2d 412). Conversely, for the defendant to succeed on a motion to dismiss, he must show conclusively that the plaintiff has no cause of action (Rovello v Orofino Realty Co., 40 NY2d 633, 636; Kaufman v International Business Machs. Corp., 97 AD2d 925, 926-927, affd 61 NY2d 930). The issue is whether the plaintiff actually has a cause of action (Fields v Leeponis, 95 AD2d 822; see, Guggenheimer v Ginzburg, 43 NY2d 268, 275), not whether the cause of action can be proved, and the complaint is deemed to allege whatever cause of action can be implied from its allegations by fair and reasonable intendment (Lupinski v Village of Ilion, 59 AD2d 1050).

Taking the facts as alleged by plaintiff to be true, as we must (see, Credit Alliance Corp. v Andersen & Co., 65 NY2d 536, 541, n 1; Becker v Schwartz, 46 NY2d 401, 408), it is clear that the parties had a contract which required notice of defaults and that no such notice was given to plaintiff. Contrary to the majority’s holding, the agreement did not limit defendant’s duty to give notice of defaults of which it had knowledge and, accordingly, plaintiff was not required to allege actual knowledge. Although the agreement eventually may be interpreted so as to require actual knowledge of default to trigger defendant’s duty, such an interpretation must depend on the introduction of trial evidence. Here, since the motion to dismiss the complaint was made before issue was joined and Special Term did not give the parties notice that it was treating the motion as one for summary judgment (see, CPLR 3211 [c]; Gifts of the Orient v Linden Country Club, 89 AD2d 508), the motion court should not have indulged in a consideration of whether plaintiff could prove its claim, its sole duty being a determination of whether plaintiff had a claim. In my view, the complaint states a cause of action for breach of contract.

Finally, since I have concluded that plaintiff’s complaint states a viable cause of action for breach of contract, it necessarily follows that I must dissent from the majority’s view that plaintiff’s second cause of action for negligent misrepresentation, which sounds in tort, is not viable.

In my view, plaintiff’s complaint set forth the material elements of the tort of negligent misrepresentation. Plaintiff alleges a duty arising from a contract, a misrepresentation through nondisclosure of defaults and its justifiable reliance (see, White v Guarente, 43 NY2d 356, 363). While I concede that the factual issues are unresolved, the central inquiry on a motion to dismiss a complaint must be whether the plaintiff has sufficiently alleged the material elements of the cause of action so as to put the court and the defendant on notice. Here, plaintiff has done so in both its first and second causes of action.