New York Business Litigation Lawyer Blog
Plaintiff Kolodin is a singer who lived with her agent, defendant Valenti. Despite the deterioration of their relationship the parties maintained a professional arrangement and Kolodin continued to sign with Valenti and his company, Jayarvee.
At some point, their relationship turned worse and Kolodin obtained an order of protection against Valenti, which prevented him from contacting her. This protective order was extended on consent a number of times. Kolodin then sued seeking recision of the last contract she signed with Jayarvee arguing that fulfilling the terms of that contract was impossible due to the order of protection signed by Kolodin and Valenti. The parties resolved the issues underlying the order of protection by signing a stipulation by which they agreed to have no further contact with each other. The draft of that stipulation had language allowing contact with employees of Jayarvee, but that language was dropped from the final version. Once this stipulation was in place, the court agreed that the parties’ contract could not be fulfilled and should be terminated due to its impossibility of performance.
In affirming that decision, the First Department first discussed the narrow grounds for recision of a contract based upon of impossibility of its performance. Those grounds are where the “‘the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against n the contract.'” Because the parties’ stipulation “destroyed the means of performance by precluding all contact” between the parties, the First Department found that the parties’ stipulation “rendered objectively impossible by law” the terms of the parties’ contract. As such, the Appellate Division agreed that the contract could be rescinded and cancelled. The court went further and noted that this contract, by its nature, would not allow any relationship, finding that because Valenti had a “central role” in the performance of the Jayarvee contract, his input was material and necessary for the execution of the parties’ responsibilities under the contract.
It is important to recognize this outcome because the contract was between Kolodin and Jayarvee, not between Kolodin and Valenti. The court disregarded this normally critical distinction because it recognized the underlying involvement of Valenti and essentially extended the Kolodin-Jayarvee contract to Valenti. And this outcome was not just a by-product of the core decision. The court specifically rejected Valenti’s argument that because only he was party to the stipulation, but not Jayarvee, there was no reason why Kolodin could not perform for Jayarvee. The Court determined that “[p]ractically speaking [ ] Jayarvee’s employees answer to Valenti, and the company’s decisions are ultimately made by Valenti. It would be impossible for Jayarvee, without Valenti’s input, to engage in communication with Kolodin. It is of no moment that Jayarvee could hypothetically perform the contract[ ] absent Valenti’s involvement; to do so would require a sort of firewall, the very establishment of which would necessitate (direct or indirect) communication between Valenti and plaintiff. Valenti’s own admissions as to his role managing Jayarvee compel the conclusion that the contracts could not be performed without his involvement and, thus, without violating the stipulation.”
Finally, the appeals court noted that even if the breakdown of the relationship could have been a foreseeable act at the time the parties entered into the contract, so that impossibility could not be established, it was the parties signing the stipulation that was the trigger for creating impossibility of performance of the parties’ contract. Thus, what was foreseeable at the time the contract was signed was not relevant.
Kolodin v. Valenti (1st Dept. 2004)