Case 16.3
Stonhard, Inc. v. Blue Ridge Farms, LLC
New York Supreme Court, Appellate Division, Second Department,114 A.D.3d 757, 980 N.Y.S.2d 507 (2014).
Background and Facts
Who is liable when the installer of food plant flooring is notpaid?
Stonhard, Inc., makes epoxy and urethane flooring and installs itin industrial and commercial buildings. Marvin Sussman entered intoa contract with Stonhard to install flooring at Blue Ridge Farms,LLC, a food-manufacturing facility in Brooklyn, New York. Sussmandid not disclose that he was acting as an agent for the facility’sowner, Blue Ridge Foods, LLC. When Stonhard was not paid for thework, the flooring contractor filed a suit in a New York statecourt against the facility, its owner, and Sussman to recoverdamages for breach of contract. Stonhard filed a motion for summaryjudgment against the defendants, offering in support of the motionevidence of the contract entered into with Sussman. The courtdenied Stonhard’s motion and dismissed the complaint againstSussman. Stonhard appealed.
In the Words of the Court …
William F. MASTRO, J.P. [Judge Presiding], Reinaldo E. RIVERA,Sandra L. SGROI, and Jeffrey A. COHEN, JJ.
* * * *
An agent who acts on behalf of a disclosed principal willgenerally not be liable for a breach of contract. A principal isconsidered to be disclosed if, at the time of a transactionconducted by an agent, the other party to the contract had noticethat the agent was acting for the principal and of the principal’sidentity. Knowledge of the real principal is the test, and thismeans actual knowledge, not suspicion. The defense of agency inavoidance of contractual liability is an affirmative defense andthe burden of establishing the disclosure of the agencyrelationship and the corporate existence and identity of theprincipal is upon he or she who asserts an agency relationship.[Emphasis added.]
The plaintiff established, prima facie, its entitlement tojudgment as a matter of law on the complaint insofar as assertedagainst the defendant Marvin Sussman with evidence that it enteredinto a contract with Sussman of “Blue Ridge Farms,” pursuant towhich the plaintiff was to install flooring at the “Blue RidgeFarms” food manufacturing facility in Brooklyn, and Sussman failedto disclose that he was acting as an agent for the defendant BlueRidge Foods, LLC, which owns the facility. * * * The documentaryevidence submitted on the plaintiff’s motion * * * indicates atbest that Sussman was acting as an agent for a partially disclosedprincipal, in that the agency relationship was known, but theidentity of the principal remained undisclosed. As an agent for anundisclosed [or partially disclosed] principal, Sussman becamepersonally liable under the contract. [Emphasis added.]
Accordingly, the [lower] Court should have granted that branchof the plaintiff’s motion which was for summary judgment on thecomplaint insofar as asserted against Sussman.
Decision and Remedy
A state intermediate appellate court reversed the lower court’sdismissal of Stonhard’s complaint and issued a summary judgment inthe plaintiff’s favor. The evidence of the parties’ contractindicated that Sussman “at best” was acting as an agent for apartially disclosed principal (or he was acting as an agent for anundisclosed principal). In that capacity, Sussman was personallyliable on the contract with Stonhard.
The Legal Environment Dimension
The court ruled that Sussman was personally liable on thecontract with Stonhard. Is the principal, Blue Ridge Foods, alsoliable? Explain.
The E-Commerce Dimension
The court cited “documentary evidence,” which is evidencecontained in documents, such as a contract offered to prove itsterms. Could documentary evidence include a printout of e-mailexchanged between the parties?
What are the facts of the case?
What is the legal issue of the case?
How did the court decide on the issues?
What reasoning did the court use to substantiate theirfindings?
Do you agree or disagree with how the finding by the court inthis matter? Please discuss why you decided as you did.
