In its July 30, 2025 decision inAll Nations Steel Corp. v. KSK Construction Group, LLC, the New York Appellate Division, Second Department, reinforced the legal standards for dismissal and summary judgment motions in breach of contract cases. The case arose from a dispute between a subcontractor (the plaintiff) and the general contractor and project owner (the defendants) over the termination of a subcontract. The subcontractor claimed it was wrongfully terminated, while the defendants argued the termination was justified because the subcontractor did not obtain the required insurance.
The defendants moved to dismiss the complaint, or alternatively for summary judgment, including a request to limit damages to $50,000 based on a liquidated damages clause. The trial court denied the motion in all respects, and the appellate court affirmed.
The appellate court emphasized that dismissal is only appropriate when the documentary evidence "utterly refutes" the complaint's allegations and "conclusively establishes a defense as a matter of law." Here, the defendants' affidavits and insurance documents failed to meet that high bar. Affidavits are not considered documentary evidence, and the insurance policy submitted did not definitively disprove the plaintiff's claim that it complied with the subcontract's requirements.
The court reiterated that on a motion to dismiss the complaint must be liberally construed, with the plaintiff afforded every favorable inference. The complaint sufficiently alleged the elements of a breach of contract claim: the existence of a contract, plaintiff's performance, defendants' breach, and resulting damages. The defendants failed to show that any of these allegations were indisputably false.
The court also rejected the defendants' request for summary judgment. The defendants failed to meet their initial burden of showing that the termination was justified. Because they failed to eliminate all material issues of fact, the court did not even need to address the plaintiff's opposition papers. Similarly, the request to limit damages under the liquidated damages clause was denied because factual disputes remained as to whether the clause applied—specifically, whether the termination was due to a material breach by the plaintiff.
This decision reinforces the legal standards required to succeed on a motion to dismiss or for summary judgment in contract disputes. It also reflects the courts'reluctance to enforce liquidated damages clauses where the underlying breach is contested. The decision is a reminder that conclusory assertions and incomplete records will not suffice to dispose of claims at the pleading or summary judgment stage.
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