# Vanderbilt Minerals, LLC v. Sub-Technical, Inc.

> District Court, N.D. New York · October 8, 2019

URL: https://www.frixlaw.com/law-library/cases/10312223

## Case

- **Court:** District Court, N.D. New York
- **Decided:** October 8, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10312223

## How later opinions describe it (automated extraction)

- finding that an agreement involving payments over several years based on a percentage of earnings should have been in writing given that the parties found the contract substantial enough to re-draft the language
- holding that not verifying in the record the assertions in the motion for summary judgment "would derogate the truth-finding functions of the judicial process by substituting convenience for facts"

## Opinion text

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
VANDERBILT MINERALS, LLC,
Plaintiff,
vs. 1:18-CV-105
(MAD/ML)
SUB-TECHNICAL, INC.,
Defendant.
____________________________________________
APPEARANCES: OF COUNSEL:
SUGARMAN LAW FIRM LLP – BRIAN SUTTER, ESQ.
BUFFALO OFFICE SAMUEL M. VULCANO, ESQ.
1600 Rand Building BRITTANY LEE HANNAH, ESQ.
14 Lafayette Square
Buffalo, New York 14203
Attorneys for Plaintiff
AHMUTY, DEMERS LAW FIRM – PATRICK J. PICKETT, ESQ.
ALBERTSON OFFICE
200 I.U. Willets Road
Albertson, New York 11507
Attorneys for Defendant
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
Plaintiff Vanderbilt Minerals, LLC ("Plaintiff") commenced this action against Sub-
Technical, Inc. ("Defendant") in state court on December 19, 2017, alleging breach of contract,
negligence, breach of warranty, and negligent misrepresentation. See Dkt. No. 2. Plaintiff seeks
monetary compensation for damages allegedly caused by or related to work Defendant performed.
See id. at ¶¶ 26-31. Defendant subsequently removed this action to this Court on the basis of
diversity jurisdiction, pursuant to 28 U.S.C. § 1332. See Dkt. No. 1. Currently before the Court
is Defendant's motion for summary judgment. See Dkt. No. 34.
II. BACKGROUND
In 2014, Plaintiff contacted Defendant to address a water inflow problem in Plaintiff's
mine, located in Diana, New York. See Dkt. No. 34-1 at ¶ 7. Defendant's principal, Eric Smith
("Smith"), made a site visit in December of 2014. See id. at ¶ 9. During the visit, Smith was
shown the affected area and Smith noted signs of water infiltration, i.e., clay and rock about knee

height above the floor. See id. at ¶ 11. During the site visit, Smith viewed all areas of the mine
that he believed to be necessary to determine the proper means of addressing Plaintiff's water
problem. See Dkt. No. 34-9 at 30-31. Following the inspection, Defendant provided Plaintiff
with an estimate of costs to stem the water inflow. See Dkt. No. 35-2. Subsequently, Plaintiff
issued a purchase order based on the estimate. See Dkt. No. 34-1 at ¶ 15; Dkt. No. 34-10 at 55;
Dkt. No. 35-3. Defendant was hired to provide drilling and grouting services in the mine to stem
the flow of water. See Dkt. No. 34-1 at ¶ 13. The work was completed in April 2015 without
issue and to Plaintiff's satisfaction. See Dkt. No. 34-1 at ¶ 12; Dkt. No. 34-10 at 54.
Prior to August 2016, Plaintiff contacted Defendant to perform additional work

concerning water inflow in Plaintiff's mine. See Dkt. No. 34-1 at ¶ 17; Dkt. No. 34-9 at 54-55.
Smith made another site visit and observed that the water intrusion level was higher than at the
time of the original visit. See Dkt. No. 34-1 at ¶ 17. During the site visit, Smith gathered
information from Plaintiff about seepage in the mine and inspected the areas affected by the water
inflow. See Dkt. No. 34-9 at 55-58. Following the site visit, Defendant issued an estimate. See
Dkt. No. 34-9 at 58; Dkt. No 35-7. Plaintiff then created a purchase order for the corresponding
amount. See Dkt. No. 34-1 at ¶ 19; Dkt. No. 35-9. Work began in August 2016. See Dkt. No.

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34-1 at ¶ 25. However, prior to completion, Plaintiff terminated the project. See id. at ¶ 34.
Plaintiff claims that the project was cancelled because after more than 40,000 pounds of
polyurethane was injected in an attempt to stem the water inflow, the inflow of water worsened
substantially. See Dkt. No. 35 at ¶ 33. Defendant was never paid for the work performed in
2016. See Dkt. No. 34-1 at ¶ 35.
On December 19, 2017, Plaintiff commenced this action in state court, alleging four
causes of action arising from the events described above: breach of contract, negligence, breach

of warranty, and negligent misrepresentation. See Dkt. No. 2 at 7-9. Specifically, Plaintiff argues
that it suffered damages as a result of Defendant's failure to properly determine necessary
processes, materials, and methods; failure to perform services in accordance with industry
standards; and by providing non-conforming, defective materials not fit for the particular purpose
identified. See id. at 7-9. Further, Plaintiff alleges that it reasonably relied upon false
representations made by Defendant as to the scope and quality of its skill and expertise, as well as
the advisability of the materials and methods used. See id. at 9-10.
In its motion for summary judgment, Defendant argues that Plaintiff's claim for negligent
misrepresentation must be dismissed as the parties did not have a relationship that would create a

duty and any of the statements allegedly relied upon by Plaintiff constitute inactionable "puffery."
See Dkt. No. 34-2 at 5-7. Further, Defendant urges the dismissal of Plaintiff's breach of contract
claim, arguing that there was no contract between the parties, or in the alternative, Plaintiff was in
breach of the contract and failed to establish that Defendant did not perform its obligations. See
id. at 7-10. Finally, Defendant argues that Plaintiff's breach of warranty claim must be dismissed
as there was no contract with which Defendant failed to conform and all materials used by
Defendant were merchantable. See id. at 10-12.

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III. DISCUSSION
A. Summary Judgment Standard

A court may grant a motion for summary judgment only if it determines that there is no
genuine issue of material fact to be tried and that the facts as to which there is no such issue
warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp., 43
F.3d 29, 36 (2d Cir. 1994) (citations omitted). When analyzing a summary judgment motion, the
court "cannot try issues of fact; it can only determine whether there are issues to be tried." Id. at
36-37 (quotation and other citation omitted). Moreover, it is well-settled that a party opposing a
motion for summary judgment may not simply rely on the assertions in its pleading. See Celotex
Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed. R. Civ. P. 56(c), (e)).

In assessing the record to determine whether any such issues of material fact exist, the
court is required to resolve all ambiguities and draw all reasonable inferences in favor of the
nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986)) (other citations omitted). Where the non-movant either does not respond to the
motion or fails to dispute the movant's statement of material facts, the court must be satisfied that
the citations to evidence in the record support the movant's assertions. See Giannullo v. City of
New York, 322 F.3d 139, 143 n.5 (2d Cir. 2003) (holding that not verifying in the record the
assertions in the motion for summary judgment "would derogate the truth-finding functions of the
judicial process by substituting convenience for facts").

B. Breach of Contract
Defendant claims that it is entitled to summary judgment as to Plaintiff's breach of
contract claim. See Dkt. No. 34-2 at 7. Specifically, Defendant contests the existence of a
contract and argues that, even if the Court finds that a contract existed, Defendant cannot be
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found liable because Plaintiff failed to perform and failed to establish that Defendant did not
perform its obligations under the contract. See id. at 9.
Under New York law, a party alleging a breach of contract claim must allege the
following elements: (i) the existence of a contract; (ii) adequate performance of the contract by
the plaintiff; (iii) breach by the other party; and (iv) damages suffered as a result of the breach.
See Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996) (citation omitted); see also Wolff v.
Rare Medium, Inc., 171 F. Supp. 2d 354, 357-58 (S.D.N.Y. 2001) (citation omitted). "In pleading

these elements, a plaintiff must identify what provisions of the contract were breached as a result
of the acts at issue." Wolff, 171 F. Supp. 2d at 358 (citation omitted).
1. Existence of a Contract
"In order to adequately allege the existence of an agreement, 'a plaintiff must "plead the
provisions of the contract upon which the claim is based."'" Howell v. American Airlines, Inc.,
No. 05-CV-3628, 2006 WL 3681144, *3 (E.D.N.Y. Dec. 11, 2006) (quoting Phoenix Four, Inc. v.
Strategic Res. Corp., No. 05 Civ. 4837(HB), 2006 WL 399396, at *10 (S.D.N.Y. Feb. 21, 2006)
(quoting Window Headquarters, Inc. v. MAI Basic Four, Inc., Nos. 91 Civ. 1816 (MBM), 92 Civ.
5283(MBM), 1993 WL 312899, at *3 (S.D.N.Y. Aug. 12, 1993) (quoting Griffin Bros., Inc. v.

Yatto, 68 A.D.2d 1009, 1009, 415 N.Y.S.2d 114, 114 (3d Dep't 1979)))). "A plaintiff need not
attach a copy of the contract to the complaint or quote the contractual provisions verbatim." Id.
(citing Window Headquarters, 1993 WL 312899, at *3 (citing Mayes v. Local 106, Int'l Union of
Operating Eng'rs, 739 F. Supp. 744, 748 (N.D.N.Y. 1990))). "However, the complaint must at
least 'set forth the terms of the agreement upon which liability is predicated . . . by express
reference.'" Id. (quoting Phoenix Four, 2006 WL 399396, at *10; Chrysler Capital Corp. v.
Hilltop Egg Farms, Inc., 129 A.D.2d 927, 928, 514 N.Y.S.2d 1002, 1003 (3d Dep't 1987)).

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Here, Plaintiff "set forth the substance of [the contract's] essential terms." Marquardt-
Glenn Cor. v. Lumelite Corp. 11 F.R.D. 175, 177 (S.D.N.Y. 1951). Specifically, Plaintiff alleged:
In 2016, Plaintiff and Defendant entered into an Agreement
whereby Defendant agreed to eliminate the groundwater intrusion at
the Mine by identifying, implementing and providing the materials
and services Defendant determined necessary to perform the
"Hydro Sealing" injection grouting process it determined were
necessary in particular areas of the Mine.
. . .
By the Agreement, Defendant agreed to determine what materials
were necessary to perform the "Hydro Sealing" injection grouting
processes it determined necessary in particular areas in the Mine for
the particular purpose of eliminating the groundwater intrusion.
By the Agreement, Defendant agreed to determine what services
and means and methods of installation of the recommended
materials were necessary to perform [the] "Hydro Sealing" injection
grouting processes at the mine for the particular purpose of
eliminating the groundwater intrusion.
By the Agreement, Defendant agreed to provide the materials it
determined necessary to perform [the] "Hydro Sealing" injection
grouting processes at the mine for the particular purpose of
eliminating the groundwater intrusion.
By the Agreement, Defendant agreed to provide the services and
means and methods of installation of the materials it determined
necessary to perform [the] "Hydro Sealing" injection grouting
processes at the mine sufficient for the particular purpose of
eliminating the groundwater intrusion.
Dkt. No. 2 at ¶¶ 19-24. Plaintiff then alleges, with sufficient specificity, which provisions of the
agreement were breached by Defendant. See id. at ¶¶ 26-29. Thus, Plaintiff's complaint
sufficiently alleges the existence of the contract upon which its claims are based.
Contrary to Defendant's claims, Plaintiff has not admitted that there was no contract,
rather Plaintiff admitted that there was no formal writing memorializing the agreement between
6
the parties. See Dkt. No. 34-8 at 70. The issue before the Court is whether the apparently oral
agreement between the parties, supplemented by related documentation such as estimates,
purchase orders, and invoices, and when viewed in light of the parties prior dealings and the
performance of work, indicate that the parties entered a binding and enforceable agreement. In
the alternative, Plaintiff argues that a unilateral contract was formed when Defendant, in receipt
of Plaintiff's purchase order detailing the required work, arrived on-site and began to perform the
requested repairs. See Dkt. No. 35-14 at 7-8.

"Under New York law, parties are free to enter into a binding contract without
memorializing their agreement in a fully executed document. This freedom to contract orally
remains even if the parties contemplate a writing to evidence their agreement." Winston v.
Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985). "The parties' expressed
intentions, the words and deeds which constitute objective signs in a given set of circumstances"
are to be considered. See R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 74 (2d Cir.
1984) (citations omitted). The Second Circuit has provided the following four factors to consider
in making a determination as to the existence of a contract:
(1) whether there has been an express reservation of the right not to
be bound in the absence of a writing; (2) whether there has been
partial performance of the contract; (3) whether all of the terms of
the alleged contract have been agreed upon; and (4) whether the
agreement at issue is the type of contract that is usually committed
to writing.

Winston, 77 F.2d at 80. "These circumstances may be shown by 'oral testimony or by
correspondence or other preliminary or partially complete writings.'" Id. Here, neither party
contends, nor does the record indicate, that there was an express reservation not to be bound
absent a formal written contract. Thus, the Court will consider the remaining factors.
a. Partial Performance
7
"Partial performance under New York law and general contract principles is a significant
factor in determining not only the existence of a binding oral agreement but in constructing
terms." DiMario v. Coppola, 10 F. Supp. 2d 213, 220 (E.D.N.Y. 1998) (citing Metro-Goldwyn-
Mayer, Inc. v. Scheider, 40 N.Y.2d 1069, 1070-71 (1976)). "'Where the parties have completed
their negotiations of what they regard as essential elements, and performance has begun on the
good faith understanding that agreement on the unsettled matters will follow, the court will find
and enforce a contract . . . ." Scheider, 40 N.Y.2d at 1070. "[P]artial performance is an

unmistakable signal that one party believes there is a contract . . . ." R.G. Group, Inc., 751 F.2d at
75-76.
Here, it is uncontested that, following reaching the alleged agreement, Defendant began
work in the mine in August of 2016. See Dkt. No. 34-1 at ¶ 25. Initially, the work was
progressing as expected, but some time prior to completion, Plaintiff decided to terminate the
grouting project. See Dkt. No. 34-9 at 60-61. Partial performance by Defendant supports the
conclusion that the parties reached a binding agreement.
b. Material Terms Left to be Negotiated
The Court must also consider whether there are any material terms that had yet to be

negotiated. See Winston, 777 F.2d at 82. "Only if essential terms are omitted or indefinitely
phrased, will the agreement be unenforceable." Dimario, 10 F. Supp. 2d at 221 (citing
Brookhaven Housing Coalition v. Solomon, 583 F.2d 584, 593 (2d Cir. 1978)) (other citation
omitted). "New York will look to industry standards to determine whether a reasonable critical
term may be supplied, 'based on proof of an established custom and practice in the industry.'"
DiMario, 10 F. Supp. 2d at 221 (quoting Scheider, 40 N.Y.2d at 1070). "If the contract can be

8
rendered certain and complete, by reference to something certain, the court will fill in the gaps."
Scheider, 40 N.Y.2d at 1071 (citations omitted).
Defendant argues that material terms of the contract had yet to be sufficiently detailed,
specifically citing a lack of price and duration terms. See Dkt. No. 34-2 at 9.1 "[A] price term
may be sufficiently definite if the amount can be . . . found within the agreement or ascertained by
reference to an extrinsic event, commercial practice or trade usage." Cobble Hill Nursing Home,
Inc. v. Henry & Warren Corp., 74 N.Y.2d 475, 483 (1989). "[W]here the parties have not clearly

expressed the duration of a contract, the courts will imply that they intended performance to
continue for a reasonable time." Haines v. New York, 41 N.Y.2d 769, 772 (1977).
Here, multiple witnesses for Defendant testified that it is impossible to know the length of
time and amount of materials required for a grouting job prior to the commencement of work
given the uncertain and volatile nature of polyurethane grouting. See Dkt. No. 34-7 at 15, 22-24,
44; Dkt. No. 34-9 at 37. In fact, one of Defendant's witnesses testified that often, in putting
together an estimate, there is a question as to the appropriate length of time and amount of
materials to bill because "[they] don't really know what [they] are going to [ ] run into . . . ." See

Dkt. No. 34-7 at 44. Additionally, Defendant provided Plaintiff with an itemized estimate,
detailing the expected price and quantity of materials and labor that Defendant anticipated would
be necessary. See Dkt. Nos. 35-7. Accordingly, the Court finds that the agreement between the

1 The Court finds Defendant's argument that the agreement was not sufficiently specific
because Plaintiff did not provide Defendant with a formal scope of work unpersuasive. The
record is clear that the parties understood the scope of work to be injection of polyurethane into
the mine to address a water inflow problem. See Dkt. No. 34-9 at 55-57; Dkt. Nos. 35-6, 35-7,
35-8, 35-9. Further, Defendant has provided the Court with no authority which requires a formal
scope of work for the creation of a contract.
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parties was sufficiently specific as to the material terms and that this factor indicates the existence
of a contract.
c. Type of Agreement
Finally, the Court looks to whether the alleged agreement is one that "concerns [ ]
complex and substantial business matters where [a written contract is] the norm rather than the
exception." R.G. Group, Inc., 751 F.2d at 76. In examining this factor, "[s]tandards and customs
of the industry are critical." DiMario, 10 F. Supp. 2d at 221 (citation omitted).

Here, the agreement is not of the same complexity as those that have typically been found
to necessitate a writing. See generally Reprosystem, B.V. v. SCM Corp., 727 F.2d 257 (2d Cir.
1984) (finding a proposed deal involving a four million dollar sale of six companies which were
incorporated under the laws of five different countries which had assets of over seventeen million
dollars, sales of forty million dollars, and profits of four million dollars must be in writing);
Winston, 777 F.2d at 83 (finding that an agreement involving payments over several years based
on a percentage of earnings should have been in writing given that the parties found the contract
substantial enough to re-draft the language). Here, the agreement was a relatively straight-
forward service agreement by which Defendant would perform a service – polyurethane grouting

of a mine – for Plaintiff in exchange for monetary compensation originally estimated to be
approximately $46,000. See Dkt. Nos. 35-7, 35-11. Thus, the Court finds that this factor weighs
in favor of finding an enforceable agreement. Accordingly, the Court finds that all of the factors
weigh in favor of a finding that a binding contract existed.
d. Definiteness

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In the alternative, Defendant argues that Plaintiff's breach of contract claim must be
dismissed because the agreement reached was not sufficiently definite to constitute a binding
agreement. See Dkt. No. 34-2 at 7-9.
The requirement of definiteness states that "[i]f an agreement is not reasonably certain in
its material terms, there can be no legally enforceable contract." Cobble Hill Nursing Home, Inc.,
74 N.Y.2d at 482. "Before rejecting an agreement as indefinite, a court must be satisfied that the
agreement cannot be rendered reasonably certain by reference to an extrinsic standard that makes

its meaning clear." Id. at 483.
Here, Defendant argues that the agreement was not sufficiently definite as to the price and
duration terms. See Dkt. No. 34-2 at 9. As the Court discussed above, the agreement between the
parties was sufficiently specific given the nebulous nature of polyurethane grouting.
In light of the testimony of the parties, documentation related to the work at issue, and for
the reasons explained above, the Court finds that there remain issues of material fact as to the
existence of a binding contract between the parties.
2. Plaintiff's Performance Under the Contract
It is not contested that Plaintiff did not pay Defendant for its work on the mine. See Dkt.

No. 34-1 at ¶ 35. Defendant argues that Plaintiff is precluded from bringing an action for breach
of contract because Plaintiff did not adequately perform under the contract, as is required for any
breach of contract claim. See Dkt. No. 34-2 at 9-10; Dkt. No. 35-14 at 15. However, in its
response in opposition to Defendant's motion for summary judgment, Plaintiff alleges the
existence of a condition precedent to its duty to perform. See Dkt. No. 35-14 at 16. Specifically,
Plaintiff claims that Defendant's successful completion of the project under the contract was a
condition precedent to Plaintiff's duty to pay. See id. at 16-17. Plaintiff argues this condition

11
precedent is necessarily implied because the final amount owed to Defendant could not be
calculated until the work concluded. See id. Thus, Plaintiff argues, because Defendant never
completed performance, its duty to perform never arose. See id.
"Under New York law, the burden is generally on the plaintiff to show [its] own
performance and not on the defendant to show nonperformance." Harte v. Ocwen Fin. Corp., No.
13-CV-5410, 2016 WL 11120941, *7 (E.D.N.Y. Mar. 11, 2016) (citing British American &
Eastern Co. v. Wirth Ltd., 592 F.2d 75, 78 (2d Cir. 1979)). "A condition precedent is 'an act or

event, other than a lapse of time, which, unless . . . excused, must occur before a duty to perform a
promise in the agreement arises.'" Patel v. Baluchi's Indian Rest., No. 08-CV-9985, 2009 WL
2358620, *7 (S.D.N.Y. July 30, 2009) (quoting Oppenheimer & Co. v. Oppenheim, Appel, Dixon
& Co., 86 N.Y.2d 685, 690 (1995)). "Conditions can be express or implied. Express conditions
are those agreed to and imposed by the parties themselves. Implied or constructive conditions are
those 'imposed by law to do justice.'" Oppenheimer & Co., 86 N.Y.2d at 690 (quotation omitted).
The Second Circuit has held that the determinative factor in the existence of a condition precedent
is the intent of the parties. See Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200, 214 (2d
Cir. 2002). "The question of intent [ ] is a question of fact." Recticel Foam Corp. v. Bay Indus,

128 Fed. Appx. 798, 799 (2d Cir. 2005) (citation omitted).
Although it is undisputed that Plaintiff did not perform under the contract, a question of
fact remains as to whether Plaintiff was exempted from performance due to the existence of a
condition precedent. In its reply papers, Defendant does not contest the existence of a condition
precedent. See Dkt. No. 36. Thus, a question remains as to whether there was an express
condition precedent agreed upon by the parties. Moreover, in prior dealings Defendant did not
receive payment until the water inflow was successfully remedied. See Dkt. No. 34-1 at ¶ 15.

12
Thus, there is a question as whether an implied condition precedent existed in the instant
agreement.
3. Defendant's Performance Under the Contract
Finally, Defendant argues that summary judgment is appropriate as to the breach of
contract claim because Plaintiff cannot establish that Defendant did not perform its obligations
under the contract. See Dkt. No. 34-2 at 10.
"Breach of contract occurs when a party fails to perform its contractual duty." Commerce

Funding Corp. v. Comprehensive Habilitation Servs., No. 01-CV-3796, 2005 WL 447377, *14
(S.D.N.Y. Feb. 24, 2005) (citing Restatement (Second) of Contracts § 235(2)). "Material breach
of a contract occurs when a party's non-performance goes to the root of the agreement and is so
substantial that it defeats the purpose of the contract." Id. (citing Frank Felix Assocs. v. Austin
Drugs, 111 F.3d 284 (2d Cir. 1997), corrected op. reported at, No. 96 Civ. 7604, 1997 U.S. App.
LEXIS 19798, *14 (2d Cir. Apr. 10, 1997). "Under New York law, a party's performance under a
contract is excused where the other party has substantially failed to perform its side of the bargain
or, synonymously, where that party has committed a material breach." Merrill Lynch & Co. Inc.
v. Allegheny Energy, Inc., 500 F.3d 171, 186 (2d Cir. 2007) (citing Hadden v. Consol. Edison Co.

of N.Y., 34 N.Y.2d 88, 96 (1974)). In other words, "[a] party's obligation to perform under a
contract is only excused where the other party's breach of the contract is so substantial that it
defeats the object of the parties in making the contract." Frank Felix Assocs., Ltd., 111 F.3d at
289 (citing Babylon Assocs. v. County of Suffolk, 101 A.D.2d 207, 215 (2d Dep't 1984)). "[I]n
most cases, the question of materiality of breach is a mixed question of fact and law [ ] and thus is
not properly disposed of by summary judgment." Bear, Stearns Funding, Inc. v. Interface Group-
Nevada, Inc., 361 F. Supp. 2d 283, 295-96 (S.D.N.Y. 2005) (citing Manhattan Life Ins. Co. v.

13
Prussian Life Ins. Co., 296 F. 39, 42 (2d Cir. 1924); F. Garofalo Elec. Co., Inc. v. New York
University, 300 A.D.2d 186, 189 (1st Dep't 2002)) (other citations omitted). "The issue of
whether a party has substantially performed is usually a question of fact and should be decided as
a matter of law only where the inferences are certain." Merrill Lynch, 500 F.3d at 186 (citing
Anderson Clayton & Co. v. Alanthus Corp., 91 A.D.2d 985 (2d Dep't 1983)).
Here, it is undisputed that Defendant was hired to provide drilling and grouting services to
stem the flow of water in Plaintiff's mine. See Dkt. No. 34-1 at ¶ 13. It is also clear that, at the

time that Plaintiff terminated the contract, the water inflow had not been remedied. See id. at ¶
34. However, Defendant claims that it was in the process of remedying the water inflow when
Plaintiff abruptly terminated the contract. See id. Contrastingly, Plaintiff claims that it was
justified in terminating the agreement as Defendant had not only failed to stem the water inflow,
but made the inflow worse, after weeks of work and that materials had been invested over the
estimate price. See Dkt. No. 35 at ¶ 33. At present, there remain questions of material fact as to
whether Defendant's failure to stem the water inflow constituted a breach at the time Plaintiff
terminated the contract. Accordingly, the Court denies Defendant's motion for summary
judgment on this ground.

C. Negligent Misrepresentation
In its motion for summary judgment, Defendant claims that it is entitled to summary
judgment as to Plaintiff's negligent misrepresentation claim, arguing that the relationship between
Plaintiff and Defendant was not sufficiently close to create a duty between the parties. See Dkt.
No. 34-2 at 6. Further, Defendant claims that the statements supposedly relied upon by Plaintiff
would, at worst, constitute puffery and, thus, are not actionable for negligent misrepresentation.
See id. at 6-7. In its response, Plaintiff alleges that, in addition to the representation included in

14
the complaint, the estimate provided by Defendant following a site visit constitutes another
misrepresentation giving rise to liability.2 See Dkt. No. 35-14 at 18. The alleged representations
at issue here are that Defendant (1) told Plaintiff that the personnel assigned the job were "the two
with the most experience in the world," (2) included an advertisement on its website making
representations about the amount of water they could stop, and (3) represented on its website that
Defendant had an in-house chemist, geologist, and civil engineer to assist in the development of
solutions for clients. See Dkt. No. 2 at ¶ 47.

"To prevail on a claim of negligent misrepresentation under New York law, a plaintiff
must show '(1) the existence of a special or privity-like relationship imposing a duty on the
defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and
(3) reasonable reliance on the information.'" Crawford v. Franklin Credit Management Corp.,
758 F.3d 473, 490 (2d Cir. 2014) (quoting J.A.O. Acquisition Corp. v. Stavitsky, 8 N.Y.3d 144,
148 (2007)). The New York Court of Appeals has ruled that "before a party may recover in tort
for pecuniary loss sustained as a result of another's negligent misrepresentations there must be a
showing that there was either actual privity of contract between the parties or a relationship so

close as to approach that of privity." Parrott v. Coopers & Lybrand, L.L.P., 95 N.Y.2d 479, 483
(2000). "In order to recover under a negligent misrepresentation theory, plaintiff must allege a

2 The Court notes that although the Second Circuit has not decided whether the heightened
pleading requirements for allegations of fraud pursuant to Rule 9(b) apply to negligent
representation claims, see Eternity Global Master Fund Ltd v. Morgan Guar. Trust Co. of N.Y.,
375 F.3d, 168, 188 (2d Cir. 2004), courts in this Circuit have applied the Rule 9(b) heightened
pleading standards to claims such as this. See Richards v. Johnson & Johnson, Inc., No. 5:17-
CV-178, 2018 WL 2976002, *7 n.9 (N.D.N.Y. June 12, 2018) (collecting cases). Thus, Plaintiff's
claims that it was not required to plead with particularity the alleged negligent misrepresentation
may not necessarily be accurate. See Dkt. No. 35-14 at 18. However, because the allegations in
Plaintiff's complaint survive summary judgment, the Court need not decide whether the
heightened pleading standard applies.
15
special relationship that 'suggest[s] a closer degree of trust and reliance than that of the ordinary
buyer and seller.'" Patell Indus. Mach. Co., Inc. v. Toyoda Machinery U.S.A., Inc., 880 F. Supp.
96, 99 (N.D.N.Y. 1995) (quotations and other citations omitted).
1. Special Relationship
"'[L]iability in the commercial context is "imposed only on those persons who possess
unique or specialized expertise, or who are in a special position of confidence and trust with the
injured party such that reliance on the negligent misrepresentation is justified."'" Crawford, 758

F.3d at 490 (quotations omitted). To determine whether a special relationship existed for
purposes of a negligent misrepresentation claim, a court must examine the following factors:
"[1] whether the person making the representation held or appeared
to hold unique or special expertise; [2] whether a special
relationship of trust or confidence existed between the parties; and
[3] whether the speaker was aware of the use to which the
information would be put and supplied it for that purpose."
Lenco Diagnostic Labs., Inc. v. McKinley Scientific, Inc., No. 15-CV-1435, 2018 WL 7932085,
*9-10 (E.D.N.Y. Aug., 15, 2018) (quoting Kimmell v. Schaefer, 89 N.Y.2d 257 (1996)).
Here, Defendant has acknowledged that individuals who work in the mining business are
often unfamiliar with the process of polyurethane grouting. See Dkt. No. 34-9 at 42-43, 69, 74-
75. Contrastingly, Defendant's principals had over seventy years of experience in polyurethane
grouting. See Dkt. No. 35-13. Thus, Defendant held, or at the very least appeared to hold, unique
or special expertise. Additionally, the parties previously contracted to remedy a water inflow
problem in Plaintiff's mine. See Dkt. No. 34-1 at ¶ 12. In that instance, Defendant followed the
same procedure – performed a site visit and inspection, issued an estimate, received a purchase
order from Plaintiff, commenced work – and succeeded in stemming the water inflow. See id. at
¶¶ 13-15. Thus, in light of the previous relationship between the parties, the Court finds that a
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special relationship of trust or confidence existed. Finally, there remain questions of material fact
as to the duty that existed between the parties. Defendant has not addressed Plaintiff's allegation
that it assured Plaintiff that the personnel assigned to the project were the "best in the world." If
such a representation was in fact made, then there would be a question of fact regarding whether
Defendant was aware of the use to which the information would be put and whether Defendant
supplied the information for that purpose.
Accordingly, the Court finds that there remain issues of material fact as to whether the

relationship between the parties gave rise to a duty on the part of Defendant.
2. Puffery
In the alternative, Defendant argues that the statements allegedly relied upon by Plaintiff
constitute inactionable puffery. See Dkt. No. 34-2 at 6-7. "It is well established that conclusory
representations or those that constitute 'puffery,' opinions as to value, or future expectations
cannot form the basis of a claim for negligent misrepresentation." Sotheby's Fin. Servs. v. Baran,
107 Fed. Appx. 235, 238 (2d Cir. 2004) (citations omitted).
As discussed, Plaintiff alleges that Defendant (1) told Plaintiff that the personnel assigned
the job were "the two with the most experience in the world," (2) included an advertisement

making representations about the amount of water they could stop, and (3) represented on its
website that Defendant had an in-house chemist, geologist, and civil engineer to assist in the
development of solutions for clients. See Dkt. No. 2 at ¶ 47. While some of the alleged
representations may meet the definition of puffery, others are factual representations. See Entity
Global Master Fund Ltd., 375 F.3d at 187-88. The representations, if they were made and are
proven to be false and material, could support a claim of negligent misrepresentation. At present,
Defendant has not eliminated all questions of fact as to the representations made to Plaintiff.

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Thus, a question of material fact remains. Accordingly, Defendant's motion for summary
judgment as to Plaintiff's negligent misrepresentation claim must be denied.
D. Breach of Warranty
In its complaint, Plaintiff alleges that the materials provided by Defendant (1) were
defective, (2) were not merchantable, (3) did not conform to the description of the goods in the
agreement, (4) were not fit for the particular purpose intended and identified, and (5) otherwise
failed to meet the implied and express warranties provided by Defendant. See Dkt. No. 35-14 at

21. In its motion for summary judgment, Defendant argues that the Court must dismiss Plaintiff's
breach of warranty claim as there was no contract specifying the grade of materials to be used and
all materials used exceeded the industry standard.3 See Dkt. No. 34-2 at 10.
1. Implied Warranty of Merchantability
"'The implied warranty of merchantability is a guarantee by the seller that its goods are fit
for the intended purpose for which they are used and that they will pass in the trade without
objection.'" In re Lyman Good Dietary Supplements Litig., No. 17-CV-8047, 2018 WL 3733949,
*23 (S.D.N.Y. Aug. 6, 2018) (quoting Caronia v. Philip Morris USA, Inc., 715 F.3d 417, 433 (2d
Cir. 2013)). Therefore, "'[t]o establish that a product is defective for the purposes of a breach of

implied warranty of merchantability claim, a plaintiff must show that the product was not
reasonably fit for its intended purpose.'" Humphrey v. Diamant Boart, Inc., 556 F. Supp. 2d 167,
182-83 (E.D.N.Y. 2008) (citing Wojcik v. Empire Forklift, Inc., 14 A.D.3d 63 (3d Dep't 2004)).
"In determining whether a product is unmerchantable in this respect, 'the . . . inquiry focuses on
the expectations for the performance of the product when used in the customary, usual, and

3 Defendant has not sought summary judgment as to Plaintiff's final allegation – failure to
meet implied and express warranties provided by Defendant – and, therefore, that claim survives
summary judgment.
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reasonably foreseeable manners.'" Brazier v. Hasbro, Inc., No. 99-CV-11258, 2004 WL 515536,
*13 (S.D.N.Y. Mar. 16, 2004) (quoting Denny v. Ford Motor Co., 87 N.Y.2d 248, 258-59
(1995)). "'A warranty of fitness for ordinary purposes does not mean that the product will fulfill
[a] buyer's every expectation,'" only "that the warranty 'provides for a minimal level of quality.'"
Sci. Components Corp. v. Sirenza Microdevices, Inc., 399 Fed. Appx. 637, 640 (2d Cir. 2010)
(quoting Denny v. Ford Motor Co., 87 N.Y.2d 248 (1995)).
Here, there remains a question of material fact as to whether the materials were defective.

In support of its argument that the materials used were not defective and were marketable,
Defendant relies upon an affidavit submitted by Defendant's President, Smith. See Dkt. No. 34-2
at 11-12. Plaintiff asserts that both the opinion and the reports underlying the opinion are
inadmissible for a variety of reasons and, thus, should be disregarded. See Dkt. No. 35-14 at 22.
First, Plaintiff argues that the opinion, provided in the form of an affidavit in support of summary
judgment by Smith, violates Rule 56(c) of the Federal Rules of Civil Procedure. See id. at 22;
Dkt. No. 34-11. Additionally, Plaintiff claims that the opinion provided by Defendant is
inadmissible under the Federal Rules of Evidence. See Dkt. No. 35-14 at 23-24. Specifically,
Plaintiff argues that the opinion is improper and the underlying information is inadmissible

hearsay. See id. at 23-25.
"Because the purpose of summary judgment is to weed out cases in which 'there is no
genuine issue as to any material fact . . . and the moving party is entitled to judgment as a matter
of law,' it is appropriate for district courts to decide questions regarding the admissibility of
evidence on summary judgment." Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) (internal
quotation omitted). "The principles governing admissibility of evidence do not change on a
motion for summary judgment." Id. Rule 56 of the Federal Rules of Civil Procedure requires that

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"affidavit[s] or declarations in support of or against summary judgment must be made on personal
knowledge. . . ."
Initially, the Court notes that Smith's affidavit is not based on personal knowledge, rather
it is based on information provided to the affiant by another organization. See Dkt. No. 34-11 at
¶¶ 9, 11-12. Thus, it does not comply with the Federal Rules of Civil Procedure regarding
affidavits in support of summary judgment. See Fed. R. Civ. Proc. 56(c). In the alternative,
Plaintiff further asserts Smith's opinion as to the merchantability of the materials is inadmissible

under the Federal Rules of Evidence. See Dkt. No. 35-14 at 23-24. Specifically, Plaintiff claims
that the opinion provided by Defendant is not admissible as a lay opinion because such an opinion
would require specialized knowledge regarding the chemical composition of polyurethane grout.
See Dkt. No. 35-14 at 23-24. Moreover, Plaintiff argues that the opinion is not admissible as an
expert opinion because Defendant has failed to properly qualify the affiant as an expert witness.
See id.
Rule 701 of the Federal Rules of Evidence defines a lay opinion as that which is
"rationally based on the witness's perception; helpful to clearly understanding the witness's
testimony or to determining a fact in issue; and not based on scientific, technical, or other

specialized knowledge within the scope of Rule 702." Fed. R. Evid. 701. Contrastingly, an
expert opinion is given by "[a] witness [ ] qualified as an expert by knowledge, skill, experience,
training, or education" and relates to a matter that requires specialized knowledge. See Fed. R.
Evid. 702; Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592 (1993).
Here, Smith opined that the materials at issue were merchantable and fit for the particular
purpose for which they were used. See Dkt. No. 34-11 at ¶¶ 11-12, 15-16. Undoubtedly, an
analysis as to the chemical composition of material such as polyurethane grout requires a degree

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of specialized knowledge. Further, as previously discussed, the information relied upon by Smith
was not information that was rationally based on the witness' perception. Thus, Smith's opinion
could not qualify as a lay opinion. Additionally, although it is unclear whether Defendant
proffers Smith as an expert, Smith's opinion could not qualify as an expert opinion. While Smith
testified that he has had almost three decades of experience in ground and water control with the
use of polyurethane, the record does not indicate that his experience includes analysis of the
chemical composition of polyurethane grout. See Dkt. No. 34-9 at 15-17. Thus, Smith could not

qualify as an expert in regards to the composition and defectiveness of polyurethane grout.
Because Smith is not an expert, the data underlying his opinion is inadmissible hearsay.
Defendant relies upon test results purportedly provided to Defendant by Huntsman, the
manufacturer of the polyurethane grout. See Dkt. No. 34-2 at 11-12. Huntsman provided
certificates of analysis for the materials at issue which provide that the materials tested conform
to Huntsman's specifications. See Dkt. No. 34-1 at ¶ 25; Dkt. No. 34-11 at 5-12.
"'Hearsay' is defined as an out-of-court statement 'offered in evidence to prove the truth of
the matter asserted in the statement.'" United States v. Preldakaj, 489 Fed. Appx. 507, 507-08 (2d
Cir. 2012). Hearsay is not admissible unless it falls under one of the recognized exemptions or

exceptions. See Fed. R. Evid. 802.
Here, Defendant attempts to proffer reports based on testing conducted by Huntsman in
order to show that the materials in question were, in fact, merchantable. See Dkt. No. 34-2 at 12-
13. Absent an applicable exception, the reports constitute inadmissible hearsay. As Plaintiff
correctly notes, the reports would not be admissible as a record of regularly conducted activity.
Such a record of a condition or opinion is admissible if:
(A) the record was made at or near the time by – or from
information transmitted by – someone with knowledge; (B) the
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record was kept in the course of a regularly conducted activity of a
business, organization, occupation, or calling, whether or not for
profit; (C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian
or another qualified witness, or by certification . . .; and (E) the
opponent does not show that the source of information or the
method of circumstances of preparation indicate a lack of
trustworthiness.
Fed. R. Evid. 803(6). Here, the record was obtained in anticipation of litigation and has not been
certified. See Dkt. No. 34-2 at 12; Dkt. No. 34-11. Thus, the records would not be admissible
under this exception. Because there are no other applicable exceptions, the records are
inadmissible and the Court will not consider them in deciding the instant motion.
The Court finds that Defendant has failed to eliminate all questions of material fact as to
the merchantability of the materials at issue. Accordingly, Defendant's motion must be denied on
this ground.
2. Implied Warrant of Fitness for a Particular Purpose
"Under New York law, '[w]here the seller at the time of contracting has reason to know
any particular purpose for which the goods are required and that the buyer is relying on the
seller's skill or judgment to select or furnish suitable goods,' there is an implied warranty that 'the
goods shall be fit for such purpose.'" In re Lyman Good Dietary Suppements, 2018 WL 3733949,
at *25 (quotation omitted). "[T]he implied warranty of fitness for a particular purpose does not
arise in every consumer sale, but only when a seller knows or has reason to know the particular
purpose for which a buyer requires goods, and also knows or should know that the buyer is
relying on his special knowledge." Abraham v. Volkswagen of America, Inc., 795 F.2d 238, 249
(2d Cir. 1986).
In its complaint, Plaintiff alleges that Defendant provided defective materials that were
not fit for the particular purpose of eliminating groundwater intrusions. See Dkt. No. 2 at ¶ 28. In
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its motion for summary judgment, Defendant summarily states that the record is void of evidence
that the materials used were not reasonably fit for its intended purpose. See Dkt. No. 34-2 at 12.
Defendant's argument, absent additional information, is insufficient to justify summary judgment.
As Plaintiff notes, there remains a question of material fact as to whether the polyurethane grout
was fit for the purpose of eliminating groundwater intrusions. Accordingly, the Court denies
Defendant's motion for summary judgment on this ground.
IV. CONCLUSION
After carefully reviewing the entire record in this matter, the parties' submissions and the
applicable law, and for the reasons set forth above, the Court hereby
ORDERS that Defendant's motion for summary judgment (Dkt. No. 34) is DENIED; and
the Court further
ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on the parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: October 8, 2019 VM Gf. LP Ly .
Albany, New York
Mae A. D’Agostino
U.S. District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10312223. Public record. Not legal advice.