MACALLOY CORPORATION v. METALLURG INC

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Supreme Court, Appellate Division, First Department, New York.

MACALLOY CORPORATION, Plaintiff-Appellant, v. METALLURG, INC., Defendant-Respondent.

Decided: June 21, 2001

NARDELLI, J.P., MAZZARELLI, RUBIN, SAXE and BUCKLEY, JJ. Richard H. Waxman, for Plaintiff-Appellant. Eric Ordway, for Defendant-Respondent.

Order, Supreme Court, New York County (Martin Schoenfeld, J.), entered August 30, 2000, which granted defendant's motion for summary judgment, dismissing plaintiff's complaint for injunctive and declaratory relief, unanimously modified, on the law, only to the extent of declaring that plaintiff is not relieved from performing under the parties' contract pursuant to the contract's force majeure provision, and otherwise affirmed, with costs to defendant payable by plaintiff.

 Plaintiff was not relieved of its obligations to perform under the contract with defendant based on the “plant shutdown” language contained in the force majeure provision of the contract.   Such force majeure clauses excuse non-performance only where the reasonable expectations of the parties have been frustrated due to circumstances beyond the control of the parties (see, Kel Kim Corp. v. Cent. Mkts., Inc., 70 N.Y.2d 900, 902, 524 N.Y.S.2d 384, 519 N.E.2d 295;  United Equities v. First Natl. City Bank, 52 A.D.2d 154, 157, 383 N.Y.S.2d 6, affd. 41 N.Y.2d 1032, 395 N.Y.S.2d 640, 363 N.E.2d 1385).   Plaintiff shut down its plant voluntarily due to financial considerations brought about by environmental regulations.   Those are not circumstances constituting a force majeure event, and financial hardship is not grounds for avoiding performance under a contract (see, 407 E. 61st Garage v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275, 282, 296 N.Y.S.2d 338, 244 N.E.2d 37;  Matter of Coastal Power Production Co. v. New York State Pub. Serv. Commn., 153 A.D.2d 235, 240, 551 N.Y.S.2d 354).   Furthermore, plaintiff was fully aware of the environmental regulations, and the Environmental Protection Agency's intention to enforce them fully, prior to entering into the contract with defendant.

We modify only to declare in defendant's favor (see, Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670).