COUNTY OF MONROE v. SIEMENS INDUSTRY INC (2026)

DECISION AND ORDER

INTRODUCTION

Plaintiff County of Monroe (“the County”) brings this breach of contract action against defendant Siemens Industry, Inc. (“Siemens”) alleging that Siemens failed to properly operate and maintain equipment owned by the County. (Dkt. 1-1). Before the Court are three motions: (1) the County's motion to vacate the Clerk's entry of default on Siemens’ counterclaims (Dkt. 50); (2) Siemens’ motion for summary judgment (Dkt. 51); and (3) the County's motion for summary judgment (Dkt. 53). For the reasons that follow, the County's motion to vacate the entry of default (Dkt. 50) is granted; Siemens’ motion for summary judgment (Dkt. 51) is granted in part and denied in part; and the County's motion for summary judgment (Dkt. 53) is denied.

BACKGROUND

I. Factual Background

The following facts are taken from the parties’ statements of undisputed facts (Dkt. 51-33; Dkt. 53-2), the responses thereto (Dkt. 56-5; Dkt. 57-1), and the exhibits submitted in support of the respective motions. Unless otherwise noted, the following facts are undisputed.¹

The County owns a facility that houses three generators, a transformer, and boiler equipment (“Iola Facility”) that provide heat and electricity to several municipal buildings, including Monroe Community Hospital (“MCH”) and the Monroe County Department of Human Services and Department of Public Health (“MCDH”).² (Dkt. 51-33 at ¶¶ 10, 12; Dkt. 57-1 at ¶¶ 10, 12). In December 2015, Siemens and Monroe Newpower Corporation (“Newpower”), a benefit development corporation formed to operate the Iola Facility, entered into an agreement whereby Siemens agreed to operate and maintain the equipment at the Iola Facility (“2015 Agreement”).³ (Dkt. 51-33 at ¶¶ 11, 15; Dkt. 57-1 at ¶¶ 11, 15; see Dkt. 51-3). In February 2017, Newpower dissolved and the County assumed its rights and responsibilities under the 2015 Agreement. (Dkt. 51-33 at ¶ 17; Dkt. 57-1 at ¶ 17; Dkt. 53-2 at ¶ 3; Dkt. 56-5 at ¶ 3). When the 2015 Agreement was set to expire, Siemens and the County entered into a new agreement dated December 13, 2019 (“2019 Agreement”), concerning the operation and maintenance of the equipment at the Iola Facility. (Dkt. 51-33 at ¶ 18; Dkt. 57-1 at ¶ 18; Dkt. 53-2 at ¶ 4; Dkt. 56-5 at ¶ 4; see Dkt. 51-4). The 2019 Agreement was effective from January 1, 2020, to December 31, 2020, with two one-year renewal options. (Dkt. 51-33 at ¶ 19; Dkt. 57-1 at ¶ 19; Dkt. 53-5 at 4).

The parties disagree as to Siemens’ obligations under the 2019 Agreement. The County contends that Siemens was required to “properly and safely maintain and operate the [Iola Facility] in a workmanlike manner—including repairing leaks, replacing or preserving certain parts, and keeping records on site—and to notify [the County] regarding any material damage or system failure.” (Dkt. 53-2 at ¶ 5). Siemens states that its responsibilities were narrower—specifically, that its obligations to the transformer at the Iola Facility was limited to “Maintenance Only; No Repair or Replace.” (Dkt. 51-33 at ¶ 20). Siemens also argues that “at no time was there a problem with the [t]ransformer's performance or its oil.” (Dkt. 56-5 at ¶ 5). Siemens admits that it did not sample the transformer oil between 2011 and 2020 but argues that it was never under an obligation to do so and any attempts to sample the transformer oil were refused by the County. (Id. at ¶ 12).

In November 2019, a power disruption at the Iola Facility required the activation of emergency generators in order to continue powering MCH and MCDH. (Dkt. 51-33 at ¶ 22; Dkt. 57-1 at ¶ 22). Siemens resolved the disruption issue by repairing a switchgear located at a building separate from the Iola Facility and invoiced the County $9,396. (Dkt. 51-33 at ¶¶ 25-26; Dkt. 57-1 at ¶¶ 25-26).⁴ Siemens performed other “necessary work” on other equipment during the power disruption and invoiced the County $10,239.50 for that work. (Dkt. 51-33 at ¶¶ 27-28; Dkt. 57-1 at ¶¶ 27-28).⁵ Siemens contends that the County promised to pay the total amount of $19,635.50 in connection with this work. (Dkt. 51-33 at ¶ 29). The County disputes that it made such a promise, arguing that any such agreement to pay would have to take place under regular statutory purchasing procedures. (Dkt. 57-1 at ¶ 29).

In late November 2019, two of the generators at the Iola Facility needed to be repaired. (Dkt. 51-33 at ¶ 32; Dkt. 57-1 at ¶ 32). Siemens notified the County that the cost to repair one generator was $97,850 and that it would cost $252,986 to complete a “major overhaul” of the second generator. (Dkt. 51-33 at ¶ 33; Dkt. 57-1 at ¶ 33). Without the repairs, the generators were at greater risk of engine malfunction. (Dkt. 51-33 at ¶¶ 34-35; Dkt. 57-1 at ¶¶ 34-25). On February 26, 2020, the County approved Siemens to repair one of the generators. (Dkt. 51-33 at ¶ 36; Dkt. 57-1 at ¶ 36). In September 2020, the County informed Siemens that it would no longer use the generators at the Iola Facility due to financial reasons and opted to power MCH and MCDH directly from the power grid. (Dkt. 51-33 at ¶¶ 37, 39; Dkt. 57-1 at ¶¶ 37, 39). The transformer at the Iola Facility was necessary to connect to the grid. (Dkt. 53-2 at ¶ 27; Dkt. 56-5 at ¶ 27). As a result of the planned shift, the County did not renew the operations and maintenance agreement as to the generators for 2021. (Dkt. 51-33 at ¶ 38; Dkt. 57-1 at ¶ 38).

In preparation for taking the generators offline, the County requested Siemens take an oil sample from the transformer, which Siemens performed through the contractor O'Connell Electric Co. (“O'Connell”) on or about December 15, 2020. (Dkt. 51-33 at ¶¶ 43, 45; Dkt. 57-1 at ¶¶ 43, 45). This was the first time the transformer oil was sampled since 2011. (Dkt. 53-2 at ¶¶ 10, 12; Dkt. 56-5 at ¶¶ 10, 12). Testing from the 2020 oil sample indicated a “severe” condition that required “immediate action.” (Dkt. 51-33 at ¶ 47; Dkt. 57-1 at ¶ 47; Dkt. 51-13). Another oil sample was tested in January 2021, which indicated no change from the conditions identified in the 2020 sample. (Dkt. 51-33 at ¶ 49; Dkt. 57-1 at ¶ 49; Dkt. 51-14). Due to the oil test results, the County directed Siemens not to take the generators offline, and Siemens continued to operate the generators through April 2021, even though the 2019 Agreement as to the generators expired on December 31, 2020. (Dkt. 51-33 at ¶¶ 50-51; Dkt. 57-1 at ¶¶ 50-51). Siemens claims the continued operation of the generators incurred expenses totaling $39,319. (Dkt. 51-33 at ¶ 52; Dkt. 57-1 at ¶ 52).

O'Connell performed an inspection of the transformer and in an inspection report dated March 11, 2021 (“O'Connell Inspection Report”), noted damage to components due to arcing and that the transformer was “not acceptable to put back into service, due to imminent failure of internal components.” (Dkt. 53-2 at ¶ 16; Dkt. 56-5 at ¶ 16; Dkt. 53-20 at 8). After learning that the transformer could not be used, the County ordered a new transformer, which was delivered in August 2021. (Dkt. 53-2 at ¶ 28; Dkt. 56-5 at ¶ 28). In the interim period, the County leased portable diesel generators to power the County buildings. (Dkt. 53-2 at ¶ 29; Dkt. 56-5 at ¶ 29). The County also contracted with Sunbelt-Solomon Solutions (“Sunbelt”) to further inspect the transformer. (Dkt. 51-33 at ¶ 56; Dkt. 57-1 at ¶ 56). Sunbelt's inspection report, dated November 29, 2021 (“Sunbelt Inspection Report”), found, in part, that an explosive relief indicator pin on the transformer had been “pushed up which indicates that the relief device had activated” but concluded that “the cause for the arcing and faults was the result of an external event on the transformer.” (Dkt. 51-33 at ¶¶ 57-58; Dkt. 57-1 at ¶¶ 57-58; Dkt. 53-2 at ¶ 20; Dkt. 56-5 at ¶ 20; Dkt. 53-21 at 3, 8).

II. Procedural Background

The County initiated this action in state court asserting five separate breach of contract claims against Siemens for its alleged violations of the 2019 Agreement and a sixth claim for fraudulent inducement. (See Dkt. 1-1). Siemens then removed the action to this Court on the basis of diversity jurisdiction (Dkt. 1) and filed an answer (Dkt. 8). The matter was assigned to United States District Judge David G. Larimer.⁶ In the course of discovery, Siemens filed an amended answer to the complaint that asserted several counterclaims for breach of contract, unjust enrichment, and quantum meruit. (Dkt. 18). The County moved to dismiss the counterclaims (Dkt. 19) and in a Decision and Order dated May 15, 2024, Judge Larimer granted the County's motion in part by rejecting Siemens’ unjust enrichment claims but permitted Siemens’ breach of contract and quantum meruit claims to proceed (Dkt. 27). Discovery continued (see Dkt. 31; Dkt. 39; Dkt. 43), but the County never filed an answer to the counterclaims.

On August 14, 2025, the day before summary judgment motions were due, Siemens requested the Clerk of Court enter default judgment against the County as to its surviving counterclaims and then filed its summary judgment motion. (Dkt. 49; Dkt. 51). That same day the County moved to vacate the entry of default and sought permission to file a late answer to the counterclaims. (Dkt. 50). The Clerk of Court filed an entry of default against the County the next day. (Dkt. 52). The County also filed a summary judgment motion. (Dkt. 53). Both parties responded to the respective summary judgment motions and filed replies. (Dkt. 56; Dkt. 57; Dkt. 59; Dkt. 60). Opposition and replies were also filed on the County's motion to vacate the entry of default. (Dkt. 55; Dkt. 58).

DISCUSSION

I. Legal Standards

A. Motion to Vacate

Federal Rule of Civil Procedure 55 sets forth the procedural steps for obtaining a default judgment. First, a claimant must seek entry of default where a party against whom it seeks affirmative relief has failed to plead or defend in the action. Fed. R. Civ. P. 55(a). “Having obtained a default, a plaintiff must next seek a judgment by default under Rule 55(b).” New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005); see also Fed. R. Civ. P. 55(b).

A motion to set aside an entry of default or default judgment is also governed by Rule 55. It provides that “[t]he court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).” Fed. R. Civ. P. 55(c). The “good cause” standard under Rule 55(c) is more lenient than the standard under Rule 60(b). Flect LLC v. Lumia Prod. Co. LLC, No. 21-CV-10376 (PKC), 2022 WL 1031601, at *2 (S.D.N.Y. Apr. 5, 2022) (“[T]he standard for setting aside the entry of a default pursuant to Rule 55(c) is less rigorous than the ‘excusable neglect’ standard for setting aside a default judgment by motion pursuant to Rule 60(b).” (quoting Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981))).

In determining whether to set aside a default, a court must consider three criteria: “(1) the willfulness of default, (2) the existence of any meritorious defenses, and (3) prejudice to the non-defaulting party.” Dave's Specialty Imports, Inc. v. Roduce for Less, Inc., No. 19CV7136(LDH)(PK), 2021 WL 1207121, at *1 (E.D.N.Y. Mar. 31, 2021) (citing Bricklayers & Allied Craftworkers Loc. 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 186 (2d Cir. 2015)). Courts may also consider other relevant equitable factors, including whether the failure to comply with the court's procedural rules was a mistake made in good faith and also whether the denial of the motion to set aside the default would result in a harsh or unfair outcome. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). Ultimately, the decision of whether to set aside a default is “left to the sound discretion of a district court because it is in the best position to assess the individual circumstances of a given case and to evaluate the credibility and good faith of the parties.” Id. at 95. “[I]n ruling on a motion to vacate a default judgment, all doubts must be resolved in favor of the party seeking relief from the judgment in order to ensure that to the extent possible, disputes are resolved on their merits.” Green, 420 F.3d at 104.

B. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment should be granted if the moving party establishes “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court should grant summary judgment if, after considering the evidence in the light most favorable to the nonmoving party, it finds that no rational jury could find for that party. Scott v. Harris, 550 U.S. 372, 380 (2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). Once the moving party has met its burden, the opposing party “must do more than simply show that there is some metaphysical doubt as to the material facts․ [T]he nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.” Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec., 475 U.S. at 586-87). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment․” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

II. Analysis

A. Motion to Vacate

The County contends that its failure to timely respond to Siemens’ surviving counterclaims was inadvertent and that the failure did not cause Siemens any prejudice as discovery continued unimpeded. (Dkt. 50-1 at 2). The County further argues that as a municipal entity it may not be held liable on breach of unwritten contract claims and quasi-contract theories, demonstrating a meritorious defense. (Id. at 3). In opposition, Siemens contends that the County's failure to answer was willful, that its proffered meritorious defense was rejected at the motion to dismiss stage, and that Siemens would be prejudiced if the entry of default is vacated due to the late stage of the proceeding. (Dkt. 55 at 11-21). The Court agrees with the County and grants the motion to vacate.

The Court accepts that the County's failure to timely answer the counterclaims was not willful. “ ‘Willfulness,’ in the context of a default, refers to conduct that is more than merely negligent or careless.” Walden v. Lorcom Techs., Inc., No. 05-CV-3600 ARR RER, 2007 WL 608151, at *3 (E.D.N.Y. Feb. 23, 2007) (citing Am. All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) (“We see no reason to expand this Court's willfulness standard to include careless or negligent errors in the default judgment context.”)). The docket reflects that the County did not engage in any bad faith conduct—nor is the County accused of bad faith conduct—in delaying this action as it participated in discovery for more than a year. (See Dkt. 50-2 at ¶ 5 (“Over the course of this action, the County has kept in communication with the defendant, has participated in paper discovery and depositions, and has participated in expert disclosure.”)). Furthermore, “the relevant inquiry for determining willfulness is the defaulting party's actions after it became aware of the existence of the litigation or entry of default.” In re FKF 3, LLC, 501 B.R. 491, 502 (S.D.N.Y. 2013). The County responded to Siemens’ request for the Clerk's entry of default the same day that the request was made. (See Dkt. 49; Dkt. 50).

In consideration of the second factor, “[a] defense is meritorious if it is good at law so as to give the factfinder some determination to make.” Am. All. Ins. Co., 92 F.3d at 61 (quoting Anilina Fabrique de Colorants v. Aakash Chemicals & Dyestuffs, Inc., 856 F.2d 873, 879 (7th Cir. 1988)). The party seeking vacatur need not establish “a likelihood that [the defense] will carry the day, but [only that] the evidence submitted, if proven at trial, would constitute a complete defense.” Enron, 10 F.3d at 98. The County cites New York state and Second Circuit caselaw in support of its argument that a municipality should not be held liable for breach of unwritten contracts or implied contractual theories. (See Dkt. 50-1 at 3). If the facts support the County's position, then its contentions would defeat Siemens’ counterclaims for breach of contract and quantum meruit. Siemens argues that the “law of the case” doctrine bars this defense, asserting that it was previously rejected by Judge Larimer in his Decision and Order, dated May 15, 2024, on the motion to dismiss Siemens’ counterclaims. (Dkt. 55 at 16-17). But the May 15, 2024, Decision and Order rejected the County's argument due to factual disputes and because the County did not raise the argument in its initial motion papers. (See Dkt. 27 at 12-13). Moreover, the “doctrine of law of the case is ‘discretionary and does not limit a court's power to reconsider its own decisions prior to final judgment,’ ” Maraschiello v. City of Buffalo Police Dep't, 709 F.3d 87, 97 (2d Cir. 2013) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)), and “[s]trong public policy favors resolving disputes on the merits,” Am. All. Ins. Co., 92 F.3d at 61. Accordingly, the factor of a meritorious defense weighs in favor of vacatur.

The Court also concludes that the prejudice factor favors vacatur. Siemens’ argument that it is prejudiced by the County's late answer to its surviving counterclaims is unavailing as it is partially to blame for the delay. Judge Larimer entered his Decision and Order on May 15, 2024. (Dkt. 27). The County's answer was due 14 days thereafter. See Fed. R. Civ. P. 12(a)(4)(A). Siemens could have requested the Clerk's entry of default at any point after those 14 days passed but instead waited over a year and after discovery closed to file its request. (See Dkt. 50). Furthermore, it is well-settled that delay alone is not enough to establish prejudice and that the delay must “thwart [claimant's] recovery or remedy, ․ result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion.” Green, 420 F.3d at 110. Siemens does not argue it will suffer such prejudice and it does not identify what additional discovery, if any, it would seek based on the County's late answer. (See Dkt. 55 at 20-21).

Thus, the Court concludes that the relevant factors weigh in favor of granting vacatur. The Clerk of Court is directed to vacate the entry of default against the County, and the County is permitted to file its answer to the surviving counterclaims.

B. Motions for Summary Judgment

Both parties argue that they are entitled to summary judgment on the County's breach of contract and fraudulent inducement claims. (Dkt. 51-34 at 19-28; Dkt. 53-3 at 9-25). For the reasons set forth below, the County's motion is denied, and Siemens’ motion is denied as to the breach of contract claims but granted as to the fraudulent inducement claim.

1. Breach of Contract

The County asserts five breach of contract claims, contending that Siemens violated five provisions of the 2019 Agreement. (Dkt. 1-1 at 19-21). New York law governs this diversity action. See Satispie, LLC v. Travelers Prop. Cas. Co. of Am., 448 F. Supp. 3d 287, 292 (W.D.N.Y. 2020). “Under New York law, a breach of contract claim has four elements: ‘(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.’ ” Acquest Holdings, Inc. v. Travelers Cas. & Sur. Co. of Am., 217 F. Supp. 3d 678, 686 (W.D.N.Y. 2016) (quoting First Invirs Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998)). It is well-settled that “[a] showing of a breach of contract alone does not necessarily entitle a plaintiff to damages.” U S W. Fin. Servs., Inc. v. Marine Midland Realty Credit Corp., 810 F. Supp. 1393, 1397 (S.D.N.Y. 1993). A plaintiff must also establish causation on a breach of contract claim. All. Indus., Inc. v. Longyear Holdings, Inc., 854 F. Supp. 2d 321, 330 (W.D.N.Y. 2012) (“Causation is an essential element in any breach-of-contract claim.”).

a. Breach

The first two elements are not in dispute. But the parties disagree as to what specific maintenance activities Siemens was required to complete under the 2019 Agreement. Because the Court finds the language of the 2019 Agreement to be ambiguous as to Siemens’ maintenance responsibilities, the Court denies the County's motion for summary judgment on the breach of contract claims.

“In a breach of contract action, summary judgment is appropriate ‘[w]here the language of the contract is unambiguous, and reasonable persons could not differ as to its meaning.’ ” Fulton Cogeneration Assocs. v. Niagara Mohawk Power Corp., 84 F.3d 91, 98 (2d Cir. 1996) (quoting Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir. 1985)). “However, where contractual language is susceptible of at least two fairly reasonable interpretations, this presents a triable issue of fact, and summary judgment is improper.” Rothenberg, 755 F.2d at 1019 (citation modified).

The County claims Siemens breached sections 2.1, 5.1, 5.11, 5.12, and 6.1 of the 2019 Agreement. (Dkt. 1-1 at 19-21). Each provision relates to Siemens’ responsibilities to maintain the equipment at the Iola Facility. Section 2.1 provides, in part, that Siemens “shall operate the Facilities in compliance with this [2019] Agreement, in a proper and workmanlike manner, in accordance with the practices, methods and actions customarily engaged in or used by diligent and efficient operators of facilities of a nature similar to the Facilities and in a manner which will enable the [County] to comply with all its obligation[s] to provide Energy Service.” (Dkt. 53-5 at 3). Section 5.1 required Siemens to “operate, maintain, service[,] and repair the Facilities and every part and parcel thereof in accordance with good commercial practice․” (Id. at 5). Section 5.11 provides that Siemens needed to “repair all leaks, replace small damaged sections of pipe, repair or replace individual appurtenant (parasitic) components, and replace wear and tear items as necessary.” (Id. at 7). Section 5.12 required Siemens to “prepare and maintain (store) on-site detailed maintenance logs for all maintenance and repairs performed on the engines, boilers and equipment for the co-generation facilities, which shall be readily available at all times for review by [the County].” (Id.). Finally, Section 6.1 provides that Siemens “will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever.” (Id. at 9).

The County argues that Siemens failed to “sample the transformer oil between 2011 and December 2020” and points to several deficiencies contained in the O'Connell and Sunbelt reports to support its breach of contract claims.⁷ (Dkt. 53-3 at 13-16). O'Connell issued a summary of work report that noted the condition of the transformer after it took a second oil sample in January 2021 (“Summary of Work”). (Dkt. 53-19). The Summary of Work report noted oil leaks and bent internal components. (Id. at 3-4). The follow-up O'Connell Inspection Report dated March 11, 2021, found additional deficiencies, including evidence of “extreme” arcing within the transformer. (Dkt. 53-20 at 6-7). The Sunbelt Inspection Report, dated November 29, 2021, also found “the explosion relief” indicator had been “pushed up,” indicating that the relief device had been activated. (Dkt. 53-21 at 3).

Despite these reports, Siemens contends that it adhered to its obligations under the 2019 Agreement, arguing that it is undisputed that the arcing occurred due to some external event that occurred before the oil sample was taken in December 2020, and that the transformer never failed during the course of the parties’ contracts. (Dkt. 56 at 9-10). But given the general maintenance requirements of the 2019 Agreement, it is unclear what specific maintenance activities Siemens was required to perform in relation to the transformer, and how frequently Siemens was required to perform those maintenance activities. It is undisputed that the transformer was covered in the 2019 Agreement for maintenance. (Dkt. 51-33 at ¶ 20; Dkt. 57-1 at ¶ 20). There is no evidence in the record that Siemens performed any maintenance activities regarding the transformer in 2020, the year covered in the 2019 Agreement, other than to contract with O'Connell to take an oil sample in December at the County's request. The O'Connell Summary of Work noted oil leaks, which are covered under the 2019 Agreement. (See Dkt. 53-5 at 7 (requiring Siemens “repair all leaks”)).

Based on the Court's review of the contract, it appears that Siemens was required to sample the transformer oil. But it is unclear how often that sampling should have occurred. The transformer is covered by the 2015 Agreement for “preventative maintenance” and “repair” and the 2019 Agreement for “preventative maintenance.” (Dkt. 53-7 at 29; Dkt. 53-5 at 26). The 2019 Agreement defines “preventative maintenance” to include “replacing consumables, adjustments, fluid changes, filter changes, equipment overhauls ․ incidental and routine repairs, and all other activities associated with keeping the equipment and appurtenances running in an efficient manner․” (Dkt. 53-5 at 23).⁸ Section 5.1 of the 2019 Agreement provides in part that “all routine maintenance, rebuilds, overhauls on all equipment shall be done in accordance and in compliance with any and all applicable manufacturer warranties and recommendations․” (Id. at 5). The transformer's manual provides that “[m]aintenance inspections must be done regularly” and yearly at a minimum. (Dkt. 53-16 at 35). The manual also provides that “[t]he liquid in a transformer should be sampled and tested at regular intervals, and the results recorded for future comparison.” (Id. at 39). “Regular intervals” is not defined in the manual.

If Siemens was required to sample the transformer oil annually, then it may not have breached the 2019 Agreement in this respect because that agreement was effective from January 1, 2020, to December 31, 2020, and the oil sample was taken in December 2020. (Dkt. 53-5 at 4).⁹ But “regular interval” may require more frequent sampling. After reviewing the record, the Court cannot resolve that issue. Genuine issues of material fact therefore preclude granting summary judgment. In other words, the 2019 Agreement is ambiguous as to the maintenance activities Siemens was required to perform as well as how frequently those activities were to be performed. Accordingly, the Court denies the County's motion for summary judgment as to the breach of contract claims because the County has not established that Siemens breached the 2019 Agreement.

b. Causation

Siemens seeks summary judgment on the breach of contract claims, arguing that “nothing [that it] did or did not do caused any damage to the [t]ransformer” because the transformer was damaged by an “external event.” (Dkt. 51-34 at 20). Siemens thereby contends it is entitled to summary judgment because the County cannot establish that the alleged breaches caused its claimed damages. (Id.).

The County's theory is not that Siemens directly caused damage to the transformer, but that if Siemens had performed the maintenance as required in the 2019 Agreement, it “would have identified and remedied the very faults” discovered by Sunbelt and O'Connell and reduced or otherwise mitigated the costs suffered by the County. (Dkt. 53-3 at 18). In other words, had the County known about the internal damage to the transformer sooner, it would not have taken the “expensive and emergency remedial measures to ensure that the County Buildings ․ received adequate and continuous power.” (Id. at 19). According to the County, “the source of the external event which impacted the [t]ransformer is nearly irrelevant to this causation analysis because it is not the external event that caused the damages [the County] seeks in Court.” (Id. at 18).

Siemens argues that the County should not be able to proceed on the theory that “Siemens caused damage by not earlier discovering and reporting damage Siemens did not cause” because it was not pleaded in the complaint and because the argument is “entirely speculative.” (Dkt. 51-34 at 21). Siemens’ first argument—that the County may not proceed on this “new theory” of liability because it was not pleaded in the complaint—is not supported by the record. Under the heading “SIEMENS’ FAILURE TO MAINTAIN THE TRANSFORMER RESULTS IN SUBSTANTIAL COSTS TO THE COUNTY,” the County outlines its theory of how Siemens’ failure to maintain the transformer caused its damages. (Dkt. 1-1 at 12-19). In this section, the County alleges that:

83. If Siemens had performed its obligations under the 2019 Agreement and made the County aware of the 4200 KVA Transformer's condition, the County would not have terminated services for the Generators in 2020.

84. If Siemens had made the County aware of the 4200 KVA Transformer's degraded condition when the County was assessing whether it was more effective to operate the Iola Cogeneration Facilities or to purchase retail gas and electricity and/or studying the continued economic viability of the Iola Cogeneration Facilities, the County would not have ceased Siemens’ operation of the Generators when it did.

85. Alternatively, if Siemens had made the County aware of the 4200 KVA Transformer's degraded condition, the County would have replaced the 4200 KVA Transformer in 2020 (or earlier upon timely notification) while the Generators were fully operational.

86. This would have saved the County from having to rent and run the diesel generators, as well as: (1) permitted the County the opportunity to determine whether the 4200 KVA Transformer could have been repaired, and/or (2) avoided the increased cost of having to purchase a new 4000 KVA transformer through an emergency purchase order.

․

89. The County was required, as a result of these breaches, inducement, and negligence, to pay for, among other things, a new 4000 KVA transformer, installation of the new 4000 KVA transformer, the leasing of generators and appurtenances, fuel, and associated maintenance, installation, and removal costs.

(Id. at 18-19). These allegations sufficiently cover the County's theory of liability in this regard, and Siemens’ argument that the County failed to plead that its failure to maintain the transformer caused the County to incur costs and damages is rejected.

The Court also disagrees with Siemens’ argument that the County's causation theory is “entirely speculative.” Siemens only cites to premises liability cases to support its argument that the County must establish that a “ ‘damaged’ [t]ransformer condition existed for some length of time wherein Siemens could have discovered it and reported it to the County.” (Dkt. 51-34 at 22). While dismissal of a breach of contract claim may be warranted “[w]here a party has failed to come forward with evidence sufficient to demonstrate damages flowing from the breach alleged and relies, instead, on wholly speculative theories of damages,” Wilder v. World of Boxing LLC, 310 F. Supp. 3d 426, 446 (S.D.N.Y. 2018) (quoting Lexington 360 Assocs. v. First Union Nat. Bank of N. Carolina, 234 A.D.2d 187, 190 (1st Dep't 1996)), aff'd, 777 F. App'x 531 (2d Cir. 2019), this is not such a case.

On this record, the Court cannot conclude as a matter of law that the County's theory of damages is “wholly speculative.” The parties agree that the County seeks $1,240,593.12 in damages for the costs associated with replacing the transformer. (Dkt. 51-33 at ¶ 4; Dkt. 57-1 at ¶ 4). It is also undisputed that the County informed Siemens that it would power MCH and MCDH via the power grid through the transformer rather than the generators before either party knew the transformer oil indicated a “severe” condition requiring immediate action. (Dkt. 51-33 at ¶¶ 37, 46-47; Dkt. 57-1 at ¶¶ 37, 46-47; Dkt. 53-2 at ¶ 27; Dkt. 56-5 at ¶ 27). Sean Murphy, the County's Chief of Engineering in Facilities Management and the County's corporate representative, testified at his deposition that the County based its decision not to do the “major overhaul” required for one of the generators, in part, on the assumption that the transformer would be operational to connect to the power grid. (Dkt. 53-10 at 14, 94). As discussed above, there is an outstanding question of fact regarding how frequently Siemens was required to perform maintenance activities on the transformer. While the County does not offer any evidence to show exactly when the damage to the transformer occurred, the Court cannot conclude on this record, when viewed in a light most favorable to the County as the non-moving party, that Siemens’ potential breach did not cause the County's alleged damages as a matter of law.

c. Damage Offsets

Siemens also argues it is entitled to summary judgment on the amount of damages sought by the County, contending that the County's damages should be offset by the amount it saved due to the alleged breach to avoid a “windfall.” (Dkt. 51-34 at 22-23). The Court disagrees.

“[T]he general rule for measuring damages for breach of contract has long been settled. It is the amount necessary to put the plaintiff in the same economic position [it] would have been in had the defendant fulfilled [its] contract.” Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 495 (2d Cir. 1995) (quoting Adams v. Linblad Travel, Inc., 730 F.2d 89, 92 (2d Cir. 1984)). “[W]hen computing damages for a defendant's wrongful conduct, ‘if any benefit or opportunity for benefit appears to have accrued to the plaintiff because of the breach, a balance must be struck between benefit and loss, and the defendant is only chargeable with the net loss.’ ” Id. (quoting S & K Sales Co. v. Nike, Inc., 816 F.2d 843, 852 (2d Cir. 1987)). Accordingly, damages “due [to] a plaintiff because of a breached contract must be offset by any amount plaintiff saved as a result of the breach.” Id.

First, Siemens argues that it is not liable for the $129,811.69 charge for a new transformer because it was not contractually required to replace the damaged transformer. (Dkt. 51-34 at 24). As discussed above, there is a factual dispute concerning whether Siemens’ failure to maintain the transformer resulted in the need to replace it. Furthermore, Section 13.1 of the 2019 Agreement permits the County to seek any remedy “under law” in the event of a breach by Siemens. (Dkt. 53-5 at 15). If Siemens’ violation of the 2019 Agreement required the County to purchase a new transformer, then the County would be entitled to that cost as compensatory damages. But as that issue remains unresolved, Siemens’ request to reduce the County's damages by this amount is denied

Second, Siemens contends that the County “may not recover damages caused by its own actions and choices,” pointing to the County's decision to rent two interim diesel generators after it discovered the transformer needed to be replaced. (Dkt. 51-34 at 24-25). The County seeks to recover $1,063,065.30 related to the rental cost and fuel necessary to run the interim generators. (Id.; see Dkt. 51-20). Siemens argues that the County could have opted to repair the permanent generators instead. (Dkt. 51-34 at 25). Siemens also argues that the County would have incurred greater costs in utility expenses if the transformer was operational than the amount to rent and fuel the interim diesel generators. (Id.). Siemens has not established its entitlement to summary judgment on its speculative conclusions about alternative actions the County could have pursued. “[T]he amount of recoverable damages is a question of fact” left to be resolved by the jury. Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 F.2d 1003, 1009 (2d Cir. 1991); see Maxim Grp. LLC v. Life Partners Holdings, Inc., 690 F. Supp. 2d 293, 302 (S.D.N.Y. 2010) (“Because a question of fact remains as to whether Maxim breached the Agreement by failing to perform any of the services set forth in the Agreement ․ whether, and to what extent, Maxim is entitled to damages will be left to the jury.”). Accordingly, the Court concludes that neither party has established its entitlement to summary judgment on the breach of contract claims and denies both motions as to those claims.

2. Fraudulent Inducement

Both parties also seek summary judgment on the County's fraudulent inducement claim. (Dkt. 51-34 at 26; Dkt. 53-3 at 19). For the reasons explained below, the Court grants Siemens’ motion as to this claim.

To prevail on a fraudulent inducement claim, a plaintiff must prove “(1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance.” Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 19 (2d Cir. 1996) (citation omitted). “Generally, to recover damages for a tort, such as fraud, in a contract action, plaintiff needs to plead and prove ‘a breach of duty distinct from, or in addition to, the breach of contract.’ ” Xeriant, Inc. v. XTI Aircraft Co., 762 F. Supp. 3d 345, 353 (S.D.N.Y. 2025) (quoting Gosmile, Inc. v. Levine, 81 A.D.3d 77, 81 (1st Dep't 2010)). “New York distinguishes between a promissory statement of what will be done in the future that gives rise only to a breach of contract cause of action and a misrepresentation of a present fact that gives rise to a separate cause of action for fraudulent inducement.” Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 184 (2d Cir. 2007).

[U]nder New York law, parallel fraud and contract claims may be brought if the plaintiff [i] demonstrates a legal duty separate from the duty to perform under the contract; [ii] points to a fraudulent misrepresentation that is collateral or extraneous to the contract; or [iii] seeks special damages that are unrecoverable as contract damages.

Id. at 183.

The County argues it is entitled to summary judgment based on the second prong because Siemens fraudulently misrepresented that it properly maintained the transformer in the years before the 2019 Agreement was executed.¹⁰ (Dkt. 53-3 at 20-21). Generally, to support a fraud claim based on a collateral misrepresented present fact, the misrepresentation should relate to a material fact such as the party's capacity to perform, not merely the party's willingness to perform. See Sanmina Corp. v. Dialight plc, No. 19 CIV. 11710 (KPF), 2023 WL 9022882, at *9 (S.D.N.Y. Dec. 29, 2023) (“The difference between promises to perform and representations about present facts can be subtle, and can boil down to the difference between a statement that a party ‘will’ perform and a statement that a party ‘can’ perform.”) (collecting cases); see also MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 87 A.D.3d 287, 293 (1st Dep't 2011) (“A fraud claim will be upheld when a plaintiff alleges that it was induced to enter into a transaction because a defendant misrepresented material facts․”). While a misrepresentation that a party is not in breach of a current contractual obligation may support a fraudulent misrepresentation claim, see Gosmile, 81 A.D.3d at 81-82 (“Plaintiff's claim for fraudulent inducement․ was based, rather, on an allegation that defendant fraudulently induced plaintiff to enter into the 2008 agreements based on the misrepresentation of a present fact, namely that at the time he entered into the contract, plaintiff had not breached the 2003 non-compete agreement.”), the County neither points to nor presents any evidence showing that Siemens actually made a misrepresentation prior to the execution of the 2019 Agreement. Cf. id. at 79 (“Defendant warranted that he had not breached the 2003 confidentiality and non-compete agreement, and was not then in breach of those agreements.”).

The County only points to two exhibits to support its argument. The first is an email dated December 28, 2020, in which a Siemens representative indicates transformer oil samples were only procured in 2011 and December 2020. (Dkt. 53-14). But that email is dated a year after the 2019 Agreement was executed and therefore cannot establish the misrepresentation element on the County's fraud claim. (See Dkt. 53-5 at 18-20). The County also cites to a 2017 work order completed by Siemens which states that an attempt to retrieve an oil sample was not completed due to cold weather. (Dkt. 53-15). But the existence of the work order does not indicate whether Siemens made a misrepresentation to the County. As the County has not met its burden that it is entitled to judgment as a matter of law, its summary judgment motion as to the fraudulent inducement claim must be denied.

For the same reasons, the Court grants Siemens’ summary judgment motion as to the fraudulent inducement claim. In other words, the County fails to establish that Siemens made a misrepresentation to induce the County into accepting the 2019 Agreement. To be sure, Siemens does not rely on any evidence to support its summary judgment argument and relies almost exclusively on the allegations in the complaint. (See Dkt. 51-34 at 26-28). But the Supreme Court has made clear that there is “no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent's claim.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Siemens contends that “the County has no evidence to support a fraudulent inducement claim,” (Dkt. 51-34 at 28) and based on the evidence submitted on the summary judgment motions, the Court agrees.

The County has failed to “come forward with specific facts showing that there is a genuine issue for trial.” Caldarola, 298 F.3d at 160 (quoting Matsushita Elec, 475 U.S. at 586-87). The only evidentiary support the County points to in its opposition to Siemens’ motion for summary judgment on the fraudulent inducement claim is the complaint. (See Dkt. 57 at 7). And as discussed above, the evidence cited by the County in support of its summary judgment motion on this claim fails. Thus, the Court finds summary judgment should be granted in favor of Siemens on the fraudulent inducement claim. See Celotex Corp., 477 U.S. at 324 (“In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the pleadings, depositions, answers to interrogatories, and admissions on file. Such a motion, whether or not accompanied by affidavits, will be made and supported as provided in this rule, and Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” (citation modified)).

3. Siemens’ Counterclaims

Siemens also seeks summary judgment on its counterclaims. (Dkt. 51-34 at 29-32).¹¹ The breach of contract and first quantum meruit counterclaims are based on repairs Siemens performed to switchgear equipment in order to restore power during an emergency power outage at MCH in November 2019. (Dkt. 18 at 18-21). The second quantum meruit counterclaim is premised on Siemens’ operations of the permanent generators in 2021, during the period after the 2019 Agreement ended and the transformer was not operational. (Id.). Siemens seeks $19,635.50 for the breach of contract and first quantum meruit counterclaims (id. at 20, 21; Dkt. 51-34 at 31) and $39,319.10 for the second quantum meruit counterclaim (Dkt. 18 at 22; Dkt. 51-34 at 32).

As noted above, a breach of contract action requires: “(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.” Acquest Holdings, Inc., 217 F. Supp. 3d at 686 (citation omitted). “In order to recover in quantum meruit, New York law requires a claimant to establish “ ‘(1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services.’ ” ” Longo v. Shore & Reich, Ltd., 25 F.3d 94, 98 (2d Cir. 1994) (citation omitted).

Regarding the breach of contract and first quantum meruit counterclaims, the County does not dispute that Siemens performed work to restore power to MCH during the November 2019 outage but disputes that Siemens’ actions constituted a “repair” and were instead encompassed by Siemens’ responsibilities to perform “maintenance” on the equipment. (Dkt. 57-1 at ¶ 25-26). Mr. Murphy testified that the conduct performed by Siemens was maintenance rather than repair work. (Dkt. 53-10 at 181 (“[Siemens] had done some maintenance, preventative maintenance, so like dusting it off, cleaning things up, oil and greasing it as compared to repair, which would be replacing components that had failed. And there was no indication that there was a repair.”). He noted that the characterization matters because Siemens’ obligations were different depending on whether the activity constituted maintenance or repair work. (See id.). Inherent in Mr. Murphy's testimony is that the switchgear equipment was covered by the parties’ written agreement at the time. While Siemens points to deposition testimony from Mr. Murphey and Siemens’ corporate representative, Thomas Broderick, that the switchgear equipment was located in a building separate from the Iola Facility (Dkt. 51-33 at ¶ 23), it is unclear whether that equipment was covered by the 2015 Agreement.

The County also disputes that it “promised” to pay for any repair work associated with this event. (Dkt. 57-1 at ¶ 29). Indeed, the email exchange between Mr. Murphy and Mr. Broderick cited by Siemens to support its claim that the County “promised” to pay these services does not indicate that a promise was ever made. (See Dkt. 51-9).

Siemens also relies on an email exchange between a Siemens representative and Mr. Murphy to support the contention that the County authorized the replacement of a heat exchanger part during the November 2019 power outage. (Dkt. 51-34 at 31; Dkt. 51-33 at ¶ 27). The County disputes that it directed Siemens to make this repair. (Dkt. 57-1 at ¶ 27). In the email exchange, the County does not agree that the heat exchanger replacement was not covered by the parties’ written agreement at the time and it is unclear who directed Siemens to replace that part. (Dkt. 51-8 at 2-4).

The Court therefore concludes there is a genuine dispute of material fact as to whether Siemens’ repair of the switchgear equipment and replacement of the heat exchanger was covered by the 2015 Agreement and whether the County otherwise agreed to pay those invoices. The Court therefore denies Siemens’ motion for summary judgment on its breach of contract and first quantum meruit counterclaims.

Regarding the second quantum meruit counterclaim, the Court similarly denies the request for summary judgment by Siemens. It remains for a fact finder to determine what services Siemens provided outside the contract and the reasonable value of those services, and those issues cannot be resolved as a matter of law based on the present record.

CONCLUSION

For the foregoing reasons the County's motion to vacate the default (Dkt. 50) is granted; Siemens’ motion for summary judgment (Dkt. 51) is granted in part and denied in part; and the County's motion for summary judgment (Dkt. 53) is denied. The Clerk of Court is directed to vacate the entry of default against the County (Dkt. 52). The County shall file its proposed answer to the counterclaims (Dkt. 50-3) as its own docket entry no later than one week after the date of this Decision and Order. The County's sixth cause of action for fraudulent inducement is dismissed.

SO ORDERED.

FOOTNOTES

1.   The County's reply in further support of its summary judgment motion includes an “Amended Statement of Undisputed Facts” (Dkt. 60-1) and two new exhibits, including a 1998 decision from the Southern District of New York, Coastal Power Int'l, Ltd. v. Transcon. Cap. Corp., 10 F. Supp. 2d 345 (S.D.N.Y. 1998), and the affirmance from the Second Circuit Court of Appeals, Coastal Power Int'l Ltd. v. Transcon. Cap. Corp., 182 F.3d 163 (2d Cir. 1999) (Dkt. 60-2) and the full deposition testimony from Philip Lupia, a fact witness for the County (Dkt. 60-3). Excerpts of Mr. Lupia's deposition are included in Siemens’ motion for summary judgment. (Dkt. 51-23). The County submitted the amended statement of undisputed facts “to reply to [Siemens’] Response and provide the Court with a comprehensive and consolidated recitation of the since-amended or admitted facts.” (Dkt. 60-1 at 1). This Court's Local Rules of Civil Procedure do not permit an amended statement of undisputed facts nor a reply statement of undisputed facts. The County also did not seek leave before filing the amended statement of undisputed facts. Therefore, the Court will not consider the County's amended statement of undisputed facts.

2.   The parties disagree on the precise definition of terms used in their summary judgment papers. Siemens uses the term “Iola Facilities” to refer to MCH and MCDH (Dkt. 51-33 at ¶ 10) and “Iola Cogeneration Plant” to refer to the facility with the generators and boiler system (see id. at ¶ 15). The County, pointing to the unverified complaint, states that the “Iola Facility” is entirely separate from MCH and MCDH (Dkt. 57-1 at ¶ 10; see Dkt. 1-1 at 8), and that the complaint defines “Iola Cogeneration Facilities” to include MCH, MCDH, and the Iola Facility (Dkt. 1-1 at 8). The disagreement regarding the terms used in the summary judgment papers is not material to the resolution of the pending motions.

3.   Siemens’ statement of undisputed facts states that the 2015 Agreement was dated December 31, 2025. (See Dkt. 51-33 at ¶ 15). The County assumes the year is a typographical error and that Siemens intended to state that the 2015 Agreement was dated December 31, 2015. (See Dkt. 57-1 at ¶ 15). The Court concurs with the County's assumption that “2025” is a typographical error.

4.   The parties dispute whether the County directed Siemens to “repair” the transformer or if Siemens was required to perform “maintenance” in order to restore the transformer to a working condition. (Dkt. 51-33 at ¶¶ 25-27; Dkt. 57-1 at ¶¶ 25-27).

5.   The parties also dispute who directed this additional work be completed. (Dkt. 51-33 at ¶ 27; Dkt. 57-1 at ¶ 27).

6.   The case was subsequently randomly reassigned to the undersigned on July 16, 2024. (Dkt. 32).

7.   In its response to the County's statement of undisputed facts, Siemens does not dispute that it did not sample the transformer oil between 2011 and 2020, but denies that it was ever under a contractual obligation to do so. (Dkt. 56-5 at ¶ 12).

8.   The 2015 Agreement does not define “maintenance” or “preventative maintenance.” (See Dkt. 53-7).

9.   The County does not assert a breach of contract claim under the 2015 Agreement.

10.   The County also relies on Sabo v. Delman, 3 N.Y.2d 155 (1957) for the proposition that a plaintiff may also prevail on a fraudulent inducement claim when “a promise was actually made with a preconceived and undisclosed intention of not performing it[.]” (Dkt. 53-3 at 20 (quoting Sabo, 3 N.Y.2d at 160 (1957))). However, in the decades since that decision was issued, both New York and federal courts in the Second Circuit have declined to follow Sabo. See Frontier-Kemper Constructors, Inc. v. Am. Rock Salt Co., 224 F. Supp. 2d 520, 528 (W.D.N.Y. 2002) (“In Bridgestone/Firestone, Inc. v. Recovery Credit Services, Inc., 98 F.3d 13 (2d Cir. 1996), the Second Circuit Court of Appeals essentially declined to follow Sabo, and instead followed decisions of the New York Supreme Court, Appellate Division, which held that intentionally false statements indicating an intent to perform under a contract, by themselves, are not sufficient to support a claim of fraud under New York law.” (citation modified)).

11.   Siemens also sought default judgment on its counterclaims, but as discussed above, the default has been vacated.

ELIZABETH A. WOLFORD, Chief Judge