City of New York v. 611 West 152nd Street, Inc.

• Citation: 710 N.Y.S.2d 36,273 A.D.2d 125
• Court: New York Supreme Court Appellate Division
• Decision Date: 20 June 2000
• Parties: CITY OF NEW YORK, Appellant,<BR>v.<BR>611 WEST 152ND STREET, INC., Respondent, et al., Defendant.

273 A.D.2d 125

710 N.Y.S.2d 36

CITY OF NEW YORK, Appellant,

v.611 WEST 152ND STREET, INC., Respondent, et al., Defendant.

Decided June 20, 2000.

Concur — Nardelli, J.P., Ellerin, Lerner, Buckley and Friedman, JJ.

We affirm the order of the IAS Court insofar as it denied the branches of plaintiff's motion seeking summary judgment of foreclosure and summary judgment dismissing the eighth affirmative defense of breach of contract, based on evidence that plaintiff breached the parties' building loan contract by disbursing loan funds to pay contractors in full for rehabilitation work on defendant's real property that was substantially incomplete or of substandard quality. Although the building loan contract committed to plaintiff's judgment the determination of the timing and amounts of advances of the loan proceeds, a contract provision committing a matter to the judgment of one party requires that party to exercise its judgment reasonably and in accordance with fairness and good faith, not in an arbitrary manner (see, Edgewater Constr. Co. v 81 & 3 of Watertown, 252 AD2d 951, 952, lv denied 92 NY2d 814). We note that plaintiff has not offered any evidence of the basis on which it determined to make payment for the work in question. Given the existence of an issue of fact as to whether plaintiff committed a breach of contract in bad faith by making such payments, and an issue of fact as to whether any bad faith payments by plaintiff prejudiced defendant's ability to pay back even properly made advances, the breach of contract affirmative defense was potentially viable and precluded granting plaintiff summary judgment of foreclosure (see, EBC Amro Asset Mgt. v Kaiser, 256 AD2d 161, 161-162). However, the assertion of a separate defense for breach of the implied covenant of good faith and fair dealing was improperly duplicative (see, Business Networks v Complete Network Solutions, 265 AD2d 194, 195).

We modify to grant plaintiff summary judgment dismissing the other affirmative defenses sustained by the IAS Court. The equitable estoppel defense is legally insufficient because it is duplicative of the breach of contract affirmative defense and, to the extent based on plaintiff's alleged promises concerning tax abatement or rent increase benefits, relates to plaintiff's actions in a governmental capacity (see, Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30, 33). The negligence and gross negligence defenses are meritless, since claims based on negligent...