AUTOCRAFTING FLEET SOLUTIONS, INC. v. BELL, JEFF ( 2017 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
146
CA 16-01197
PRESENT: CENTRA, J.P., PERADOTTO, CURRAN, TROUTMAN, AND SCUDDER, JJ.
AUTOCRAFTING FLEET SOLUTIONS, INC.,
PLAINTIFF-RESPONDENT,
V MEMORANDUM AND ORDER
ALLIANCE FLEET CO., ET AL., DEFENDANTS,
AND JEFF BELL, DEFENDANT-APPELLANT.
LECLAIR KORONA VAHEY COLE LLP, ROCHESTER (STACEY E. TRIEN OF COUNSEL),
FOR DEFENDANT-APPELLANT.
GALLO & IACOVANGELO, LLP, ROCHESTER (DAVID D. SPOTO OF COUNSEL), FOR
PLAINTIFF-RESPONDENT.
Appeal from an order of the Supreme Court, Monroe County (Ann
Marie Taddeo, J.), entered May 6, 2016. The order denied the motion
of defendant Jeff Bell to dismiss the complaint against him.
It is hereby ORDERED that the order so appealed from is
unanimously reversed on the law without costs, the motion is granted,
and the complaint against defendant Jeff Bell is dismissed.
Memorandum: Plaintiff commenced this breach of contract action
against Alliance Fleet Company (Alliance) and certain individuals,
including Jeff Bell (defendant), who executed personal guarantees on
the subject asset purchase agreement. In its complaint, plaintiff
alleged, inter alia, that Alliance breached its obligation to make
payment under section 2.1 of the agreement. Defendant made a pre-
answer motion to dismiss pursuant to CPLR 3211 (a) (1) and (7), and he
asserted that he could not be held liable for a breach of section 2.1
under any provision of the agreement. In opposition, plaintiff
asserted that section 9.2 of the agreement, which defendant personally
guaranteed, obligated him to indemnify plaintiff for any losses
incurred by Alliance’s failure to perform under the agreement.
Supreme Court denied defendant’s motion.
We agree with defendant that the court erred in denying his
motion to dismiss the complaint against him. When interpreting a
contract, “ ‘[a] written agreement that is complete, clear and
unambiguous on its face must be enforced according to the plain
meaning of its terms’ ” (Potter v Grage, 133 AD3d 1248, 1249, quoting
Greenfield v Philles Records, 98 NY2d 562, 569). Moreover, “[a]
guaranty is to be interpreted in the strictest manner” (White Rose
Food v Saleh, 99 NY2d 589, 591; see Continental Indus. Capital, LLC v
-2- 146
CA 16-01197
Lightwave Enters., Inc., 85 AD3d 1639, 1640). Here, the obligation
that plaintiff seeks to enforce under section 2.1 was not included in
the guarantee clause. By its express terms, that clause was fashioned
for the “sole purpose” of securing a guarantee on “Sections 2.2, 2.5,
7.5, 9.2 and 9.4,” and thus it must be limited to those enumerated
sections. If the parties had wished to hold the individual guarantors
personally liable for payment of the purchase price, they could have
done so (see Continental Indus. Capital, LLC, 85 AD3d at 1640).
We further agree with defendant that the indemnification clause
in section 9.2 does not apply to claims between the parties for a
breach of section 2.1. “ ‘[A] contract assuming th[e] obligation [to
indemnify] must be strictly construed to avoid reading into it a duty
which the parties did not intend to be assumed’ ” (Jeanetti v Casler
Masonry, Inc., 133 AD3d 1339, 1340, quoting Hooper Assoc. v AGS
Computers, 74 NY2d 487, 491; see Capretto v City of Buffalo, 124 AD3d
1304, 1310). In other words, we may not extend the language of an
indemnification clause “to include damages which are neither expressly
within its terms nor of such character that it is reasonable to infer
that they were intended to be covered under the contract” (Jeanetti,
133 AD3d at 1340 [internal quotation marks omitted]). Here, section
9.2 provides that defendant “shall . . . indemnify” plaintiff for “any
and all . . . losses” that plaintiff “may incur by reason” of
Alliance’s “failure to perform any of its . . . commitments.” It is
hornbook law that “a promise of indemnity against loss is a promise by
the indemnitor to reimburse the indemnitee after the indemnitee has
paid [a] third party” (Calamari and Perillo, Contracts § 17.8, at 680
[5th ed 2003]). In our view, it is not reasonable to infer that the
boilerplate indemnification language in section 9.2 contemplated
defendant’s personal liability on an intraparty claim of a breach of
section 2.1, particularly in light of the fact that section 2.1 was
excluded from the guarantee clause. We thus conclude that, accepting
the facts in the complaint as true and according plaintiff the benefit
of every favorable inference (see generally Whitebox Concentrated
Convertible Arbitrage Partners, L.P. v Superior Well Servs., Inc., 20
NY3d 59, 63), the court should have granted defendant’s motion to
dismiss the complaint against him.
Entered: March 24, 2017 Frances E. Cafarell
Clerk of the Court