Fortune Limousine Service, Inc. v. Nextel Communications

• Decision Date: 05 December 2006
• Docket Number: 2005-03034.
• Parties: FORTUNE LIMOUSINE SERVICE, INC., Respondent, v. NEXTEL COMMUNICATIONS et al., Defendants, and UNISTAR LEASING et al., Appellants.
• Court: New York Supreme Court — Appellate Division

35 A.D.3d 350

826 N.Y.S.2d 392

2006 NY Slip Op 09158

FORTUNE LIMOUSINE SERVICE, INC., Respondent, v. NEXTEL COMMUNICATIONS et al., Defendants, and UNISTAR LEASING et al., Appellants.

2005-03034.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided December 5, 2006.

In an action, inter alia, to recover damages for breach of contract, the defendants Unistar Leasing and Unistar Capital Corporation I through V appeal, as limited by their notice of appeal and brief, from so much of an order of the Supreme Court, Queens County (Kelly, J.), dated February 4, 2005, as denied those branches of their motion which were for summary judgment dismissing the first, second, and third causes of action.

Ordered that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the motion which were for summary judgment dismissing the first, second, and third causes of action are granted.

On November 7, 1995, the plaintiff Fortune Limousine, Inc. (hereinafter Fortune), and the defendants Nextel Communications and related companies (hereinafter Nextel), entered into a contract under which Nextel agreed to provide digital mobile communications services and equipment to Fortune. On November 8, 1995, Fortune and the defendants Unistar Leasing and related companies (hereinafter Unistar), entered into a separate contract. Under the separate contract, Fortune agreed to advance to Unistar the sum of $911.99 per month for an 11-month initial contract term in exchange for the possession and use of the Nextel communications equipment. After the expiration of the initial term, Fortune had the option to (1) exercise a one-dollar purchase opportunity by notifying Unistar in writing no later than 30 days prior to the expiration of the initial term; or (2) return the equipment to Unistar. If Fortune exercised neither option, Unistar was authorized to (a) remove the equipment and charge Unistar two monthly payments, or (b) continue the contract for successive one-year periods at the same monthly rental rate subject to the right of either party to terminate the contract upon 12-months written notice. The contract also provided that all required notices shall be sufficient if delivered personally or by certified or registered mail, postage prepaid.

From January 12 through November 12, 1996, Fortune advanced the requisite monthly payments to Unistar. The final payment for the initial contract term was due on November 12, 1996, and the contract was scheduled to expire. Unistar provided Fortune with 90 days advance notice that the contract was scheduled to expire, and that it should contact Unistar regarding renewal. According to Unistar, at no time prior to November 1996 did Fortune exercise either of its two options under the subject contract. According to Fortune, however, at some point prior to October 12, 1996, it notified Unistar of its intent to exercise the one-dollar purchase option.

After issue was joined, Fortune moved for class action certification that motion was denied. Thereafter, Fortune moved for permission to conduct pre-class certification discovery, and Nextel cross-moved for summary judgment dismissing the complaint insofar as asserted against it. The court granted Fortune's motion and Nextel's cross motion. Subsequently, Unistar moved for summary judgment dismissing the complaint as time-barred under the four-year limitations period under Article 2 and 2A of the Uniform Commercial Code governing the sale or lease of goods, and for failure to state a cause of action. Fortune cross-moved for leave to amend the complaint, or in the alternative, to permit amendment upon the conclusion of pre-certification discovery, compel Unistar's compliance with discovery and disclosure, and receive an extension to complete precertification and move for class certification. The Supreme Court denied those branches of Unistar's motion which were for summary judgment dismissing the first through third causes of action, but granted those branches of Unistar's motion which were for summary judgment dismissing the fourth and fifth causes of action predicated on violations of the General Business Law § 349. As to Fortune's cross motion, the Supreme Court denied leave to serve an amended complaint subject to renewal upon the completion of precertification discovery, granted the request to compel Unistar's compliance with discovery, and granted Fortune an extension of 20 days from the completion of pre-certification disclosure to move for class certification.

We disagree with the Supreme Court's finding that the first cause of action, sounding in breach of contract, should not be dismissed. The parties' contract required that at the conclusion of its 11-month term, Fortune either was to return the Nextel communications equipment to Unistar, or alternatively, purchase the equipment for one dollar upon at least 30 days written notice prior to the expiration of the contractual term. The affidavit of E. James Hanley, Unistar's president, submitted in support of summary judgment, asserted that at no time prior to the expiration of the contract term did Fortune return the equipment or exercise its option to purchase it. Hanley's averment is corroborated by a facsimile...