AMERICAN AUDIO SERVICE BUREAU INC., Appellant, v AT & T CORP., Respondent.
Supreme Court, Appellate Division, First Department, New York
November 14, 2006
823 N.Y.S.2d 25
Richard B. Lowe, III, J.
Plaintiff American Audio Service Bureau is a company that provides transmission services for content providers through pay-per-call or “900” services. Between 1992 and 2002, plaintiff entered into numerous successive billing service agreements (BSAs) with defendant (AT & T), whereby defendant billed customers who called the 900 numbers and then passed on the
Sometime in 2002, plaintiff received a statement from defendant indicating that plaintiff had a negative balance of $45,163.05, and learned that this was due to the fact that certain individual customers had built up excessive charges that were uncollectible. For example, one customer incurred charges in excess of $160,000. Plaintiff also learned that defendant did not monitor or block customers who carried excessive balances (abusive callers), but merely passed the losses on to plaintiff.
In February 2003, plaintiff commenced this action by service of an amended complaint seeking damages in excess of $4 million. It alleged that, by failing to block access to the 900 numbers for those customers with excessive unpaid balances, defendant had breached the contract, the covenant of good faith and its fiduciary duty, and had been grossly negligent. In lieu of an answer, defendant moved to dismiss the complaint pursuant to
“[Defendant] reserves the right to block access to all AT & T 900 numbers from the telephone stations of any Caller who, in AT & T‘s sole discretion, is carrying an excessive unpaid balance of charges for calls made to Programs billed by AT & T, or appears to be engaged in any fraudulent or abusive practice.”
By order entered October 18, 2004, the court dismissed plaintiffs breach of contract claim, on the ground that the “sole discretion” language in the BSA gave defendant the right to block calls but did not impose a duty to do so. It found, however, that the question of whether defendant‘s inaction constituted a breach of the implied covenant of good faith and fair dealing was a “subtler” issue, and that plaintiff had stated a claim in this regard by alleging that defendant had done nothing to aid collection other than billing the clients. The court also found that the breach of fiduciary duty and gross negligence claims were viable in light of defendant‘s acknowledgment that it had a fiduciary relationship with plaintiff. The court also found, based on the documentary evidence produced by defendant, that all claims arising from calls made after November 19, 2000 were time-barred, and that a $50,000 contractual limit on damages applied.
On November 24, 2004, plaintiff moved for renewal and reargument
The court denied plaintiff‘s motion to renew, ruling that plaintiff had not articulated a legal justification to renew. Denial of reargument is not appealable and is not before us.
On or about January 26, 2005, defense counsel learned that the court had scheduled a status conference for the next day, January 27, 2005. When plaintiffs counsel failed to appear at the conference, the court‘s law secretary adjourned the conference to January 31, 2005. She directed defense counsel to advise plaintiffs counsel that if he failed to appear, defendant would move to dismiss. When plaintiffs counsel failed to appear on January 31, 2005, defendant‘s motion to dismiss the action was granted by the court.
On February 23, 2005, plaintiff moved by order to show cause to vacate the court‘s January 31, 2005 order. The court declined to vacate the dismissal of the complaint, observing that there was a pattern of noncompliance on plaintiffs part.
On April 7, 2005, plaintiff filed two notices of appeal; one appeals the denial of plaintiffs motion to vacate the order of January 31, 2005 dismissing the complaint; the second appeals the denial of plaintiffs motion to renew and for reconsideration of the court‘s order of October 18, 2004, which dismissed plaintiffs breach of contract cause of action and imposed a $50,000 contractual limitation on damages.
At the outset we note that there is no pending appeal from the underlying order of October 18, 2004, which dismissed plaintiffs breach of contract cause of action. Consequently, we do not address the substance of the underlying order as to whether the court properly dismissed the cause of action alleging breach of contract for defendant‘s failure to block abusive callers.
We also note that even though both plaintiff and defendant argue the issue of whether the court properly denied plaintiffs motion to reargue, an order denying reargument is nonappealable (Bell v Toothsavers, Inc., 213 AD2d 199, 200 [1995]).
For the reasons set forth below we affirm the court‘s order
Pursuant to
We need not determine whether the asserted new facts would change the prior determination as plaintiff failed to exercise “due diligence in making [its] first factual presentation” (see Chelsea Piers Mgt. v Forest Elec. Corp., 281 AD2d 252 [2001], citing Rubinstein v Goldman, 225 AD2d 328 [1996], lv denied 88 NY2d 815 [1996]). Plaintiffs explanation that the documents were overlooked because the files are voluminous is simply not a reasonable justification.
The motion to vacate the dismissal pursuant to the January 31, 2005 order should have been granted by the court in light of the strong public policy of this State to dispose of cases on their merits (see Dokmecian v ABN AMRO N. Am., 304 AD2d 445 [2003]; Harwood v Chaliha, 291 AD2d 234 [2002]; Mediavilla v Gurman, 272 AD2d 146 [2000]). In this case, the court made clear that its grant of defendant‘s dismissal motion was based not only on plaintiffs failure to appear at the conference, but also on the history of the case.
The record, however, does not demonstrate a pattern of delay that would justify dismissal of plaintiff‘s case. The parties entered into a preliminary conference order on March 2, 2004, and defendant served his first discovery demands later that month, to which plaintiff did not fully respond until December 2004. However, at the time of these demands, defendant had
Three weeks before it dismissed the case, the court, denying defendant‘s previous move for dismissal, found that neither plaintiff‘s performance nor the merits of the case warranted granting defendant‘s motion to dismiss for noncompliance.2 The only thing that occurred thereafter is that plaintiff missed the status conference, and this simply was an insufficient basis for a finding of a pattern of delay, and thus for dismissal (see Travelers Ins. Co. v Abelow, 14 AD3d 395 [2005]; Jones v New York City Tr. Auth., 293 AD2d 322 [2002]; cf. Yong Gon Cha v Warwick Hotel, 272 AD2d 154 [2000]; Telep v Republic El. Corp., 267 AD2d 57, 58 [1999]; and Fink Weinberger v Rosenkrantz, 252 AD2d 368 [1998]). Concur—Tom, J.P., Sullivan, Nardelli, Catterson and McGuire, JJ.