NIAGARA FOODS INC BENLEY REALTY CO AND THE CHARTER OAK FIRE INSURANCE COMPANY PLAINTIFFS APPELLANTS RESPONDENTS v. APPEAL NO (2013)

MEMORANDUM AND ORDER

Appeal and cross appeal from an order of the Supreme Court, Niagara County (Ralph A. Boniello, III, J.), entered October 16, 2012.   The order granted the motion of defendant Tegg Corporation for summary judgment dismissing the first amended complaint against it, granted those parts of the motion of defendant Ferguson Electric Service Company, Inc., for summary judgment dismissing the causes of action for negligence and strict products liability and otherwise denied the motion of defendant Ferguson Electric Service Company, Inc.

It is hereby ORDERED that said cross appeal is unanimously dismissed and the order is affirmed without costs.

In appeal No. 1, we reject plaintiffs' contention that Supreme Court erred in granting those parts of defendants' respective motions for summary judgment dismissing the negligence cause of action.  “It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated ․ This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract” (Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389;  see Bristol–Myers Squibb, Indus.   Div. v Delta Star, 206 A.D.2d 177, 179–180).   Plaintiffs cannot maintain their tort cause of action because Ferguson, which had a contract with Niagara, owed no legal duty that is independent of the contract (see generally Bristol–Myers Squibb, 206 A.D.2d at 179–180).   Moreover, “a contractual obligation, standing alone, will generally not give rise to tort liability in favor of a third party,” such as Benley (Espinal v. Melville Snow Contrs., 98 N.Y.2d 136, 138).

In addition, even assuming, arguendo, that the negligence cause of action is viable with respect to Ferguson, we conclude that it was properly dismissed against Tegg. That cause of action as against Tegg was premised solely upon its status as a franchisor of Ferguson, inasmuch as Tegg had neither a contract nor a direct relationship with any of the plaintiffs.  “The mere existence of a franchise agreement is insufficient to impose vicarious liability on the franchisor for the acts of its franchisee;  there must be a showing that the franchisor exercised control over the day-to-day operations of its franchisee” (Martinez v. Higher Powered Pizza, Inc., 43 AD3d 670, 671).   Here, the record establishes that Tegg did not exercise “control over the day-to-day operations of” Ferguson (id.).

In appeal No. 2, we agree with Ferguson that the court erred, upon reargument, in denying its motion for summary judgment dismissing the remaining cause of action against it, for breach of contract, which at this stage of the litigation is asserted only by Niagara and, by way of subrogation, Charter Oak. We therefore reverse the order insofar as appealed from.   It is well settled that the elements of a breach of contract cause of action are “the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract, and resulting damages” (JP Morgan Chase v. J.H. Elec. of N.Y., Inc., 69 AD3d 802, 803;  see Clearmont Prop., LLC v. Eisner, 58 AD3d 1052, 1055).   Ferguson contracted to provide a “3–year Electrical Preventive Maintenance Program” (EPMP) for a fee of $2,108 per year, and the contract specified the services to be provided pursuant thereto.   It is undisputed that there was a written contract between Ferguson and Niagara and that Niagara met its obligations under the contract, which in this context was payment for the services rendered.   While plaintiffs allege that Ferguson breached that contract, they do not identify what service or services were either not performed at all or were inadequately performed.   Plaintiffs thus effectively concede that Ferguson performed the services it promised to perform pursuant to the contract, and they instead attempt to prove based on matters outside the agreement that Ferguson failed to perform additional services or to meet certain industry standards for an EPMP.

Frances E. Cafarell

Clerk of the Court