SCOTT FAIRGRIEVE, J.
**1 Plaintiff, New York Merchants Protective Company moves pursuant
to CPLR 3211(a)(6) to dismiss defendant's counterclaim because the
contract between the parties prohibits same. The issue pending before
this Court is whether the counterclaim survives the contractual
waiver, because the allegations support a fraud claim or whether the
allegations only support a contract claim, and thus can be waived.
Plaintiff alleges that the parties executed a contract, dated April
4, 2002, "whereby plaintiff agreed to lease, service, and monitor an
alarm system for defendant for a period of five years" (paragraph 4
of the complaint).
Plaintiff alleges that defendant breached the contract by failing to
pay amounts owed. Thus, plaintiff seeks recovery of the amounts owed,
plus attorney fees.
Defendant has asserted the following counterclaim in its answer:
12. On or about April 4, 2002, plaintiff, through its agents,
servants and/or employees visited the home of defendant. During that
visit, they made numerous representations concerning the quality and
promptness of the security services provided by plaintiff's
organization. Those representations included the ability to promptly
and timely maintain and repair plaintiff's security system, and keep
it in full functioning condition at all times.
13. As a result of the affirmative representations made by plaintiff
and its agents and/or employees on April 4, 2002, defendant agreed to
enlist the services of plaintiff to monitor and maintain her security
system at the residence. As part of that agreement, she tendered to
the plaintiff and its agents and/or employees, her check in the
amount of $56.50 representing the first quarterly charge, covering
the period April, May and June of 2002.
14. During the period between April and June 2002, several calls were
placed to plaintiff to obtain service on the alarm system and to keep
it in functioning form. Those requests for service were met with
delay and otherwise nonresponsive conduct. As a direct result
thereof, in June, 2002, plaintiff telephoned the defendant, advising
that it was canceling the contract. The plaintiff's employees said
they would take care of the paperwork. When further bills were
received, defendant again telephoned and subsequently wrote on two
separate occasions demanding that the contract be terminated and that
the bills would not be paid.
15. During discussions with plaintiff in December, 2003, plaintiff's
employees suggested that the matter could be resolved for payment of
$100, a payment which was made on December 30, 2003 by the defendant.
16. Despite the plaintiff's assurance that the matter was resolved,
the plaintiff has maliciously filed litigation against the defendant
seeking $1,053.93 plus $319.00 in attorney's fees, none of which is
supported by the charges referenced in the agreement, even if it were
still in force and effect.
17. The defendant seeks of the plaintiff, return of its $156.50 it
paid to the plaintiff in connection with the contract and its
termination; punitive and treble damages based upon plaintiff's
malicious prosecution of a frivolous litigation in the amount of
$3,150; and attorney's fees at a rate and amount to be determined by
**2 The April 4, 2002 agreement provides in paragraph 12, entitled
"LEGAL ACTION" that,
"In any action commenced by NYMP against Lessee, Lessee shall not be
permitted to interpose any counterclaim."
Plaintiff contends that the above clause bars defendant from
asserting the counterclaim. Defendant counters that the waiver of
counterclaim is not applicable because the contract was "formed by
virtue of the fraudulent representations of the plaintiff, its
agents, servants and/or employees ..." see paragraph 3 of defendant's
affirmation in opposition, dated 7/28/04.
Contractual waivers of counterclaims or setoffs are valid and
enforceable in New York. See, Federal Deposit Ins. Corp. v. Frank L.
Marino Corp., 74 A.D.2d 620, 425 N.Y.S.2d 34 (2nd Dep't 1980);
Sterling Nat. Bank & Trust Co. of New York v. Giannetti, 53 A.D.2d
533, 384 N.Y.S.2d 176 (1st Dep't 1976). This rule is not applicable
to counterclaims based upon fraud. See, Federal Deposit, supra. and
Sterling Nat. Bank, supra. Also supporting this principle of law is
Federal Deposit Insurance Corp. v. Borne, 599 F.Supp. 891 (U.S. Dist.
Ct., Eastern Dist.1984).
The issue before this Court is whether the allegations of the
counterclaim constitute fraud or are merely allegations supporting a
breach of contract action. Based upon a review of the allegations,
the Court concludes that the allegations support a breach of contract
action, and not a fraud action. The allegations in the counterclaims
allege representations concerning the defendant's "quality and
promptness" of its security services to be performed in the future.
These allegations are contract based and do not support a viable
independent tort claim of fraud. See, Briefstein v. P.J. Rotondo
Constr. Co., 8 A.D.2d 349 (1st Dept.1959); Metropolitan Life Ins. Co.
v. Noble Lowndes Int'l Inc., 84 N.Y.2d 430; Meehan v. Meehan, 227
A.D.2d 268 (1st Dept.1996); Kotick v. Desai, 123 A.D.2d 744 (2nd
Dept.1986); see also, generally, "When Contract Claims and Fraud
Claims Intersect," N.J.L.J. 1, 9/17/99 (col.1); and Ross v.
DeLorenzo, N.J.L.J., 10/22/04, p. 23, col. 3 (Sup.Ct., Suff. Ct.,
The plaintiff's motion to dismiss the defendant's counterclaim is
granted based upon the waiver in the contract. However, defendant may
assert her allegations as defenses. See, Sterling Nat., supra.
New York Merchants Protective Co., Inc. v. Raia
5 Misc.3d 1011(A), 2004 WL 2532294 (N.Y.Dist.Ct.), 2004 N.Y. Slip Op.
51335(U) Unpublished Disposition
END OF DOCUMENT