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Jana L. v. West 129th Street Realty Corp.10/11/2005
oregoing action that might have otherwise been taken for its protection."
West Realty contends that Associates did take steps to protect itself when it purchased liability insurance for the entire day of January 25, 2001. West Realty maintains that, consequently, there was nothing "inherently unfair" about either the transaction where Associates signed off on the indemnification provision (months prior to any incident giving rise to liability) or the closing on the property after the assault occurred.
We find merit in West Realty's assertion that Associates agreed to the provision in September 2000 with the knowledge that its very purpose was to allocate responsibility should an incident giving rise to liability occur; and that the assault, in effect, turned a possibility which had been considered into an actuality against which Associates had protected itself.
In any event, Associates has misapplied the "special facts" doctrine to its case. As a threshold matter, the doctrine requires satisfaction of a two-prong test: that the material fact was information "peculiarly within the knowledge" of West Realty, and that the information was not such that could have been discovered by Associates through the "'exercise of ordinary intelligence'" (Black v Chittenden, 69 NY2d 665, 669 , quoting Schumaker v Mather, 133 NY 590, 596 ["if the other party has the means available to him of knowing . . . he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentation"]).
Associates had, at the very least, a duty to inquire. If nothing else, the "exercise of ordinary intelligence" suggests a simple inquiry by Associates at closing as to whether West Realty had any knowledge of any incidents that might implicate the indemnification clause of the agreement signed by Associates. It is insufficient for Associates to simply make the conclusory statement that the information of an incident giving rise to liability "could not have been obtained [by it] through the exercise of ordinary intelligence."
The record, however, does not reveal any such inquiries. Instead, Associates relies on the holding in Strasser to claim that had it known of the incident and of West Realty's intention to apply the indemnification clause to its tort liability, then Associates would not have foregone the opportunity to protect itself and so "would not have proceeded with the closing on the terms set forth in the contract."
This claim belongs in the realm of speculation, and is of dubious legal merit. At the very outset, Associates would have to consider the possibility of forfeiting its deposit of $250,000 if it adjourned a "time is of the essence" closing in order to avoid the very responsibility it had contractually undertaken.
Ultimately, Associates' assertion that it was West Realty's duty to disclose the occurrence of the assault rather than Associates' duty to inquire as to its potential liability under the indemnification provision underscores the fact that the information was less "material" than Associates now purports it to be. Indeed, if any thought at all was given to the possibility of incidents that could give rise to Associates' liability on the day of closing, that thought occurred at the time the parties signed the Sale Agreement in September 2000, as a result of which Associates obtained liability insurance for the entire day of January 25, 2001. Thus, any superior knowledge that Realty had on the day of closing did not render this transaction "inherently unfair" because the indemnity provision was negotiated well before the claim giving rise to liability occurred, and Associates
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