Inter-Power of New York Inc. v. Niagara Mohawk Power Corp., INTER-POWER

• Decision Date: 20 October 1994
• Docket Number: INTER-POWER
• Citation: 617 N.Y.S.2d 562,208 A.D.2d 1073
• Parties: OF NEW YORK INC., Appellant-Respondent, v. NIAGARA MOHAWK POWER CORPORATION et al., Respondents-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 562

617 N.Y.S.2d 562

208 A.D.2d 1073

INTER-POWER OF NEW YORK INC., Appellant-Respondent, v. NIAGARA MOHAWK POWER CORPORATION et al., Respondents-Appellants.

Supreme Court, Appellate Division,

Third Department.

Oct. 20, 1994.

Chadbourne & Parke (Thomas J. Hall, of counsel), and Arkin, Schaffer & Supinop, New York City, for appellant-respondent.

Swidler & Berlin, Chartered (John R. Ferguson, of counsel), Washington, DC, and Kevin P. Glasheen, Niagara Mohawk Power Corp., Albany, for Niagara Mohawk Power Corp., respondents-appellants.

Before CREW, J.P., and CASEY, YESAWICH and PETERS, JJ.

CREW, Justice Presiding.

Cross appeals from an order of the Supreme Court (Hughes, J.), entered August 19, 1993 in Albany County, which, inter alia, partially granted defendants' motion for summary judgment.

This action arises out of a power sales contract entered into between plaintiff and defendant Niagara Mohawk Power Corporation on or about February 16, 1988, under the terms of which Niagara Mohawk agreed to purchase power generated by a plant to be constructed by plaintiff in the Town of Halfmoon, Saratoga County. Insofar as is relevant to this appeal, the contract required that the proposed facility be operational by December 31, 1993. In the event that plaintiff was unable to meet this in-service deadline, Niagara Mohawk had the option of terminating the contract with plaintiff.

As part of the construction process for the proposed facility, plaintiff applied for a certificate of environmental compatibility and public need from the New York State Board on Electric Generation Siting and the Environment (hereinafter the Siting Board). While plaintiff's application was pending, it became apparent that plaintiff was not going to be able to meet the December 31, 1993 in-service deadline set forth in its contract with Niagara Mohawk. Although the Siting Board ultimately granted plaintiff the requested certificate in September 1992, it was subject to a number of conditions, including plaintiff's ability to obtain a new power sales contract. ¹

Niagara Mohawk thereafter announced its intention to terminate the contract, and plaintiff then commenced this action in March 1993 setting forth causes of action for, inter alia, breach of contract. Niagara Mohawk answered and along with the remaining named defendants moved for summary judgment contending, inter alia, that plaintiff should be estopped from pursuing this action based upon certain representations it made before the Siting Board. ² Supreme Court rejected Niagara Mohawk's estoppel argument but dismissed plaintiff's ninth and eleventh causes of action seeking, respectively, a declaration that plaintiff was excused from complying with the in-service deadline due to impossibility and reformation of the contract based upon mutual mistake. These cross appeals ensued.

With respect to plaintiff's ninth cause of action, it is well settled that "[i]mpossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible" (Kel Kim Corp. v. Central Mkts., 70 N.Y.2d 900, 902, 524 N.Y.S.2d 384, 519 N.E.2d 295). Such impossibility, in turn, "must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract" (id., at 902, 524 N.Y.S.2d 384, 519 N.E.2d 295; see, Matter of A & S Transp. Co. v. County of Nassau, 154 A.D.2d 456, 458, 546 N.Y.S.2d 109). Although plaintiff contends that the regulatory delay which accompanied its application for a certificate under Public Service Law former article VIII was unforeseeable, this argument is belied by the record in this matter, which plainly reveals the complicated nature of plaintiff's application and the opposition thereto. Additionally, with respect to plaintiff's assertion that the parties had no reason to believe that the certification process would extend beyond the two-year deadline set forth in Public Service Law former § 143(4), we note that the statute expressly permits the Siting Board to waive the two-year deadline ...