GTF Marketing, Inc. v. Colonial Aluminum Sales, Inc.

• Decision Date: 22 April 1985
• Citation: 108 A.D.2d 86,488 N.Y.S.2d 219
• Parties: GTF MARKETING, INC., Respondent, v. COLONIAL ALUMINUM SALES, INC., Appellant.
• Court: New York Supreme Court — Appellate Division

Page 219

488 N.Y.S.2d 219

108 A.D.2d 86

GTF MARKETING, INC., Respondent, v. COLONIAL ALUMINUM SALES, INC., Appellant.

Supreme Court, Appellate Division,

Second Department.

April 22, 1985.

Jessel Rothman, P.C., Mineola (Margaret D. Kranz, Mineola, on brief), for appellant.

Howard L. Blau, Massapequa, for respondent.

Before TITONE, J.P., and MANGANO, GIBBONS and BROWN, JJ.

TITONE, Justice Presiding.

In this action to recover damages for breach of contract, defendant appeals from an order of the Supreme Court, Suffolk County, which denied its motion for summary judgment. At issue is the reach of the issue preclusion branch of the doctrine of former adjudication. We conclude that an alternative finding made in two other consolidated actions brought by plaintiff that enforcement of its contract would be "shocking to the conscience of the Court", is binding upon plaintiff in this action. Further, the only opposition to the motion for summary judgment consisted of an attorney's hearsay affidavit, which is without probative weight. Therefore, the order appealed from should be reversed and the complaint dismissed.

Plaintiff commenced this action to recover damages of $124,630 arising out of an alleged breach of contract. It claims that it offered and supplied to defendant some 12,463 "leads" of prospective customers for aluminum siding, roofing and other aspects of the defendant's business at $10 per lead. The leads consisted of the names of persons who had indicated on a survey that they planned to buy aluminum siding, roofing, exterior precast stone, basement alterations or solar energy equipment within the next six months. Defendant states, without contradiction in evidentiary form, that the "leads" amounted to nothing more than a random selection of names and addresses which could be obtained from a telephone book; they were absolutely useless.

Separate actions against two other contractors had been previously initiated by plaintiff in Nassau County (see GTF Marketing v. Dodge Home Remodeling Corp., 110 A.D.2d 818, 488 N.Y.S.2d 620; GTF Marketing v. Marjo Systems, 110 A.D.2d 818, 488 N.Y.S.2d 620). Examination of the pleadings and the letter agreements in those cases shows them to be virtually identical, and defendant avers, again without contradiction, that the same survey was used as the basis for the claims in all three cases.

After a joint nonjury trial before Justice Robbins, the Nassau County actions were dismissed. Justice Robbins found that plaintiff failed to sustain its burden of proof and that the contract was unenforceable as it amounted to nothing less than "extortion and or robbery" because, with respect to the people surveyed, there was "no evidence in the record to support a finding that the alleged prospective home owners at any time expressed an interest of having any work done". Justice Robbins went on to say:

"My observation with regard to how this Court would characterize the decision of this Court if I were to grant a judgment in favor of the plaintiff in this case, it would be so repugnant to the conscience of this Court, that it would, in my judgment, constitute an extortion and or robbery, again, with the aid and complicity of the Court. This Court declines to be a party to such an act.

"I believe it is well established law that even if there were a contract, if the Court found that it so substantially, so overreaching as to shock the conscience of the Court, that the Court may, in the interest of justice, deny any recovery to the extent that the Court would not become a participant in such a scheme.

"Both of these cases, let me say again however, as emphatically as I can muster, emphatically as I can state, that never in all my years have I seen anything so shocking to the conscience of this Court.

"Argument has been made that the defendant made a bad business judgment, perhaps, but to ask this Court to enforce it is to suggest to the Court that the Court become a knave, blind, weak, whimpering, to wring his hands and say, 'What can I do? I can do nothing.' Well, on the contrary, on the law of this case I find that the plaintiff has not made out, in either of these cases they have not--strike that--I find that the plaintiff has not sustained the burden of proof on the evidence credited by the Court.

"And further, and with regard to the shocking of the conscience of the Court, it is the claim, the underlying claim under the circumstances of this case that I want to address that is shocking to the conscience of the Court, to make it clear that there is [sic ] two separate things, either one of which would be sufficient to dismiss the plaintiff's causes of action, this case both apply". ^*

Based upon this decision, defendant sought summary judgment on the ground of issue preclusion, setting forth the pertinent details in an affidavit of its president. Plaintiff opposed by an attorney's affidavit, urging that the motion should be denied as there were separate agreements and issues of fact.

Special Term denied the motion, stating that it "cannot fairly be said that upon a trial, plaintiff will not be able to prove some performance under the contract, and any unconsciounnability [sic ] that may have been justifiably found following trial in the Nassau cases is not evident from a reading of the contract itself". We reverse, grant summary judgment, and dismiss the complaint.

It is now axiomatic in New York that mutuality is " 'a dead letter' " (Koch v. Consolidated Edison Co. of N.Y., 62 N.Y.2d 548, 556, 479 N.Y.S.2d 163, 468 N.E.2d 1, quoting DeWitt, Inc. v. Hall, 19 N.Y.2d 141, 147, 278 N.Y.S.2d 596, 225 N.E.2d 195). When issue preclusion is asserted the core question is whether the party against whom issue preclusion is sought to be invoked has had "a full and fair opportunity to contest" the issue in prior litigation, irrespective of the identity of the adversary (Schwartz v. Public Administrator of County of Bronx, 24 N.Y.2d 65, 71, 298 N.Y.S.2d 955, 246 N.E.2d 725; see Koch v. Consolidated Edison Co. of N.Y., supra; Kartiganer Assoc. v. Wehran Eng., 92 A.D.2d 911, 912, 460 N.Y.S.2d 124, lv. denied 59 N.Y.2d 603, 463 N.Y.S.2d 1028, 450 N.E.2d 252).

Similarly, whatever may be the rule elsewhere, in this State an alternative finding made by the trier of fact after a full trial will be given preclusive effect when it is clear that, though an alternative finding, the determination was neither "casual [n]or of any lesser quality than had the outcome of the trial depended solely on this issue" (Malloy v. Trombley, 50 N.Y.2d 46, 52, 427 N.Y.S.2d 969, 405 N.E.2d 213; cf. O'Connor v. G & R Packing Co., 53 N.Y.2d 278, 282, 440 N.Y.S.2d 920, 423 N.E.2d 397). Inasmuch as it is clear that Justice Robbins gave careful consideration to the alternative findings and since plaintiff had a full and fair opportunity to litigate the issues and to appeal from Justice Robbins' ruling (Industralease Automated & Scientific Equip. Corp. v. R.M.E. Enterprises, 58 A.D.2d 482, 489, 396 N.Y.S.2d 427), we turn to the central question which divides us, i.e., whether "the issue as to which preclusion is sought [is] identical with the issue decided in the prior proceeding" (Capital Tel. Co. v. Pattersonville Tel. Co., 56 N.Y.2d 11, 17, 451 N.Y.S.2d 11, 436 N.E.2d 461; see Kartiganer Assoc. v. Wehran Eng., supra ). A majority of the court concludes that there is a sufficient identity of issue to preclude plaintiff from relitigating the legal enforceability of its contract.

To be sure, the determination of unconscionability is a multifaceted one, embracing procedural and substantive admixtures (see Lister Electric, Inc. v. Incorporated Vil. of Cedarhurst, 108 A.D.2d 731, 484 N.Y.S.2d 897; White and Summers, Uniform Commercial Code, ch 4 [2d ed]; Ellinghaus, In Defense of Unconscionability, 78 Yale LJ 757; Leff, Unconscionability and the Code--The Emperor's New Clause, 115 U of Pa L Rev 485). Our dissenting colleague has written that there are "extreme cases where a contractual term is so outrageous and oppressive as to warrant a finding of unconscionability irrespective of the contract formation process" though generally "there must be a showing of both a lack of meaningful choice and the presence of contractual terms which unreasonably favor one party" (State of New York v. Wolowitz, 96 A.D.2d 47, 68, 468 N.Y.S.2d 131).

We need not decide the category within which the present contractual agreement falls, a matter that could be of relevance in some cases, as, on the record before us, we are persuaded that the "commercial setting, purpose, and effect" of the unconscionability issue presented to Justice Robbins was identical to the issue sought to be litigated by plaintiff here (Wilson Trading Corp. v. David Ferguson, Ltd., 23 N.Y.2d 398, 403, 297 N.Y.S.2d 108, 244 N.E.2d 685; cf. Behren v. Papworth, 35 A.D.2d 798, 315 N.Y.S.2d 756, appeal dismissed 30 N.Y.2d 532, 330 N.Y.S.2d 381, 281 N.E.2d 178). Not merely are the contractual provisions the same, but the names and addresses supplied to defendant were from the same purported survey as that utilized in the Nassau County cases. Justice Robbins necessarily focused on the fraudulent nature of the survey in finding the agreement to amount to a "robbery" because he found "no evidence * * * to support a finding that the alleged prospect or prospective home owners at any time expressed an interest of having any work done". The peculiarities of the contractual formation played no part in this determination. The quality of performance in all the cases stems from the same survey, found to be fraudulently portrayed (cf. Frankel v. Manufacturers Hanover Trust Co., 106 A.D.2d 542, 483 N.Y.S.2d 67). Justice Robbins' findings should be given preclusive effect here because the unconscionability aspect of the transaction rests upon that common factor, not the particular contract itself (Zabriskie v. Zoloto, 22 A.D.2d 620, 257 N.Y.S.2d 965; cf. Chisholm-Ryder Co. v. Sommer...