Action or Claim of Rescission in New York

What Is an Action or Claim of Rescission?

Background

“Rescission is a ‘very rarely used equitable tool [that may not be used] to reclaim a right [that a plaintiff] voluntarily contracted away or to obtain relief it never actually requested.’” (MBIA Ins. Corp. v. Countrywide Home Loans, Inc. (2013) 105 A.D.3d 412, 413.)

General Information for Complaints and Motions

Use of Rescission Remedy

“[A] defrauded party to a contract may elect to either disaffirm the contract by a prompt rescission or stand on the contract and thereafter maintain an action at law for damages attributable to the fraud.” (Big Apple Car, Inc. v. City of New York (1992) 4 A.D.2d 109, 110–111, 611 N.Y.S.2d 533; accord J.P. Morgan Sec. Inc. v. Ader (2015) 127 A.D.3d 506, 507–508; Sabby Healthcare Master Fund Ltd. v. Microbot Med. Inc. (2020) 180 A.D.3d 529, 530.)

Further, “[a] contract induced by fraud ... is subject to rescission, rendering it unenforceable by the culpable party.” (Sabo v. Delman, 3 NY2d 155, 161).” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Wise Metals Group, LLC, 19 A.D.3d 273, 275 (N.Y. App. Div. 2005)

Rescission Damages

“Rescissory damages, while not often used in New York, are far from an unknown form of relief. Rescissory damages are an established remedy where rescission, the voiding of a contract, may not be a valid form of relief.”(Syncora Guarantee Inc. v. Countrywide Home Loans, Inc. (2012) 36 Misc. 3d 328, 343.) “As the Delaware chancery court stated in 2003: ‘Rescissory damages are designed to be the economic equivalent of rescission in a circumstance in which rescission is warranted, but not practicable. A solid body of case law so holds.’” (Id., quoting Gotham Partners, L.P. v. Hallwood Realty Partners, L.P. (2003) 855 A.2d 1059, 1072 (Del.Ch.2003) string citing, inter alia, Cinerama, Inc. v. Technicolor, Inc. (1994) 663 A.2d 1134, 1144–47; see also Telstra Corp. Ltd. v. Dynegy, Inc., Civ.A. 19369, 2003 WL 1016984, at *8 (Del. Ch. Mar, 4, 2003) [holding against granting rescissory damages, but stating that “[a]t equity, rescissory damages should only be awarded where the equitable remedy of rescission is impractical' but otherwise warranted.”])

Impracticability of Rescission as Relief

“Impracticability refers to a scenario in which rescission is impracticable or impossible because the subject of the contract sought to be rescinded no longer exists, or is otherwise impossible or impractical to recover.” (MBIA Ins. Corp. supra, 105 A.D.3d at 413 [finding that “rescission is not impracticable in any relevant sense; rather, it is legally unavailable.”])

The Court’s Decision

“Rescission of a contract is permitted for such a breach as substantially defeats its purpose. It is not permitted for a slight, casual or technical breach, but, as a general rule, only for such as are material and willful, or, if not willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in making the contract.” (City of Schenectady v. Edison Exploratorium, Inc. (2017) 147 A.D.3d 1264, 1265 citing O'Herron v. Southern Tier Stores (1959) 9 A.D.2d 568, 568.)

“A cause of action for rescission based on mistake runs from the date of the alleged mistake or actionable wrong.” (Prand Corp. v. County of Suffolk (2009) 62 A.D.3d 681, 682 [holding that “[a] cause of action seeking rescission of the contract of sale on the ground of mutual mistake, which was brought more than six years after the contract was fully executed, was untimely.”])

Documents for Rescission —Action or Claim in New York

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Meis Design Studio, Llc, Perkins Eastman Architects, Dpc v. Daniel Meis, Daniel Meis Architecture Pllc document preview

EXHIBIT(S) - A - Operating Agreement

36 pages

FILED: NEWID: 82F3769C-7245-4558-AF26-A3802DEA7162 YORK COUNTY CLERK 04/24/2024 06:20 PM INDEX NO. 652086/2024 DocuSign Envelope NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/24/2024 LIMITED LIABILITY COMPANY AGREEMENT FOR MEIS DESIGN STUDIO, LLC THE MEMBERSHIP INTER…

Case Name Meis Design Studio, Llc, Perkins Eastman Architects, Dpc v. Daniel Meis, D…