Movant's application for late claim relief pursuant to Court of Claims Act
§ 10 (6) is granted. According to the proposed claim movant is a successor
in interest to CMT Independent Laboratories (CMT) which entered into a contract
on March 29, 2002 with the New York State Office of Mental Retardation and
Developmental Disabilities (OMRDD) for the treatment and elimination of mold at
an OMRDD-operated group home located in Hudson Falls, New York. The proposed
claim alleges that although CMT performed the agreed-upon work an outstanding
contract balance of $6,818.20 remains unpaid despite a written demand for
payment made on December 20, 2002. It is further alleged in the proposed claim
that the instant movant (AQES), as CMT's successor in interest, assumed all
assets and liabilities of CMT including the right to collect monies owed
pursuant to CMT's March 29, 2002 contract. Movant seeks leave to file a late
The defendant opposed the motion on the ground that movant offered no
reasonable excuse for the delay in filing.
Subdivision 6 of section 10 of the Court of Claims Act permits this Court, if
the applicable Statute of Limitations set forth in article 2 of the CPLR has not
expired, to allow the filing of a late claim upon consideration of the
following factors: “whether the delay in filing the claim was excusable;
whether the state had notice of the essential facts constituting the claim;
whether the state had an opportunity to investigate the circumstances underlying
the claim; whether the claim appears to be meritorious; whether the failure to
file or serve upon the attorney general a timely claim or to serve upon the
attorney general a notice of intention resulted in substantial prejudice to the
state; and whether the claimant has any other available remedy".
Movant seeks to assert a cause of action for breach of contract which is
subject to a six-year Statute of Limitations pursuant to CPLR § 213 (2).
The application filed on April 17, 2006 is therefore timely as measured from
movant's alleged demand for payment on December 20, 2002.
Turning to the statutory factors, this Court has broad discretion in deciding a
motion to permit the late filing of a claim (Ledet v State of New York,
207 AD2d 965), and the statutory factors are not exhaustive or one factor
controlling (Matter of Gavigan v State of New York, 176 AD2d 1117). The
most important factor is whether the potential claim has merit, as it would be a
futile exercise to permit litigation of a clearly baseless lawsuit (Savino v
State of New York, 199 AD2d 254).
The excuse advanced for movant's failure to timely serve and file a claim is
that movant "was not fully aware OMRDD was withholding payment for work
performed by [movant] . . .until OMRDD filed an action against CMT on February
1, 2005." This allegation is not credible and hence unreasonable under the
circumstances. No other excuse was offered and this factor weighs against the
The intertwined issues of notice, opportunity to investigate and prejudice will
be considered together. Movant's counsel, who is without direct knowledge,
alleges in conclusory fashion in his supporting affirmation that "OMRDD had
notice of this claim and an opportunity to investigate the circumstances
underlying this claim as evidenced by the fact that OMRDD commenced an action
against CMT originating from the same facts as this claim." Despite the absence
of factual allegations from a person with direct knowledge, the Court finds upon
the supporting papers as a whole that the State had notice of the underlying
facts and an opportunity to investigate the matter and, therefore, the State
would suffer no prejudice if the requested relief were granted. These three
factors favor the movant.
As to the appearance of merit, the movant must only demonstrate that the
proposed claim is not "patently groundless, frivolous or legally defective" and
there is reasonable cause to believe a valid cause of action does exist
(Rosenhack v State of New York, 112 Misc 2d 967, 969, 970).
The Court entertained some doubt as to CMT's legal capacity to have entered
into the March 29, 2002 contract with OMRDD after CMT's alleged dissolution by
the Department of State on June 26, 1996
as to the legal enforceability of a contract entered into by a dissolved
corporation. It appears, however, that while "a corporation that is neither
or de facto
cannot acquire rights by contract or sue or be
, Kiamesha Dev. Corp. v Guild Props.
, 4 NY2d 378, 389),
parties who deal with an entity holding itself out as a corporation and who
receive performance from such entity are estopped from avoiding their
obligations to it (see
, Puma Indus. Consulting v Daal Assocs.
808 F2d 982, 986 [2nd Cir. 1987]; Metered Appliances v 75 Owners Corp.
225 AD2d 338; Lorisa Capital Corp. v Gallo
, 119 AD2d 99, 112)"
(Judarl v Cycletech Inc.
, 246 AD2d 736, 736-737). Therefore the proposed
claim for breach of contract may be maintained.
Similarly, while the Court is aware of State Finance Law § 138's
prohibition against the assignment, transfer, conveying or subletting of a
contracting party's right, title or interest in a State contract without the
prior written consent of the department or official awarding the contract,
neither party submitted a copy of the March 29, 2002 contract and the defendant
did not oppose this motion on any ground other than the absence of a reasonable
excuse for the claim's untimely service and filing.
Accordingly, the Court finds that movant has met the minimal threshold of proof
required to establish the appearance of merit. This factor weighs in favor of
movant. As to the final factor, it does not appear that movant has another
available remedy against the State.
Movant's application for late claim relief is granted and movant is hereby
directed to file a verified claim with the Chief Clerk of the Court and to serve
a copy thereof upon the Attorney General either personally or by certified
mail, return receipt requested, as provided in Court of Claims Act § 11 (a)
(i) within 30 days of service of a copy of this decision and order. Movant is
advised that the proposed claim submitted to the Court with the late claim
application does not satisfy this requirement since it was submitted prior to
the granting of the motion. The claim so filed and served shall be consistent
with the terms of the decision and order herein.