New York Commercial and Construction Lawyer Blog

It is a general proposition of New York law (and elsewhere) that contracts should be enforced as they are written. That basic proposition served as the deciding factor in a recent decision which filled in some gaps in case law regarding contractual termination conversion clauses.

In Minelli Construction Corp. v. WDF Inc., et al., N.Y. Co. Index No. 105989/2011, a trial court recently upheld the commonly found clause in construction contracts which allows a party who terminates a contractor or sub-contractor for cause to automatically convert the termination into one for convenience if proper cause for the termination is not later found by a Court. The difference in the nature of the termination is significant. New York law provides that a wrongfully terminated party may pursue a large range of damages, including lost profits for unperformed work, while a party terminated for convenience is typically limited to being paid for work already performed. Thus, if a conversion clause is held not to apply, a finding of a wrongful termination will open the door to damage claims which the owner or general contractor may not have anticipated.

On February 24, 2015, the New York Court of Appeals granted appellants’ motion for leave to appeal in Glick v. Harvey, 2015 WL 753795 (N.Y. Feb. 24, 2015), which should result in a significant ruling by New York’s highest court concerning the parameters of the implied public trust doctrine. The public trust doctrine provides that public parkland is impressed with a public trust, and requires the consent of the State Legislature before parkland can be alienated or used for non-park purposes. The Glick case concerns an Article 78 proceeding challenging a New York City Council resolution approving an expansion plan for New York University which seeks to use four land parcels that had been used as New York City parks since the 1980’s and 1990’s, to be used for non-park purposes. The New York State Legislature has not consented to the use of this parkland for non-park purposes. NYU’s expansion plan called for the construction of four new buildings, and the use of the following four parcels of parkland for non-park purposes: Mercer Playground, LaGuardia Park, LaGuardia Corner Gardens (a community garden), and the Mercer-Houston Dog Run. Accordingly, petitioners, a series of individuals and citizens’ groups, sought to enjoin the implementation of NYU’s plan unless and until they obtained the consent of the State Legislature to use the parkland for non-park purposes. The respondents in the case are various agencies and authorities of the State and the City of New York that had approved NYU’s plan.

Contractual Termination Conversion Clause Upheld

New York Court of Appeals to Address Public Trust Doctrine in Connection With Challenge to NYU Expansion Plan