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Kel Kim Corp. v. Central Markets, Inc.

Court of Appeals of New York

November 18, 1987, Argued ; December 21, 1987, Decided

No Number in Original


 [*901]   [**295]   [***384]  OPINION OF THE COURT


The order of the Appellate Division should be affirmed, with [****3]  costs.

In early 1980, plaintiff Kel Kim Corporation leased a vacant supermarket in Clifton Park, New York, from defendants. The lease was for an initial term of 10 years with two 5-year renewal options. The understanding of both parties was that plaintiff would use the property as a roller skating rink open to the general public, although the lease did not limit use of the premises to a roller rink.

The lease required Kel Kim to "procure and maintain in full force and effect a public liability insurance policy or policies in a solvent and responsible company or companies * * * of not less than Five Hundred Thousand Dollars * * * to any single person and in the aggregate of not less than One Million Dollars * * * on account of any single accident". Kel Kim obtained the required insurance coverage and for six years operated the facility without incident. In November 1985 its insurance carrier  [***385]  gave notice that the policy would expire on January 6, 1986 and would not be renewed  [**296]  due to uncertainty about the financial condition of the reinsurer, which was then under the management of a court-appointed administrator. Kel Kim transmitted this information to defendants [****4]  and, it asserts, thereafter made every effort to procure the requisite insurance elsewhere but was unable to do so on account of the liability insurance crisis. Plaintiff ultimately succeeded in obtaining a policy in the aggregate amount of $ 500,000 effective March 1, 1986 and contends that no insurer would write a policy in excess of that amount on any roller skating rink. As of August 1987, plaintiff procured the requisite coverage.

On January 7, 1986, when plaintiff's initial policy expired and it remained uninsured, defendants sent a notice of default, directing that it cure within 30 days or vacate the premises. Kel Kim and the individual guarantors of the lease then began this declaratory judgment action, urging that they should be excused from compliance with the insurance provision either because performance was impossible or because the inability to procure insurance was within the lease's force  [*902]  majeure clause. 1 Special Term granted defendants' motion for summary judgment, nullified the lease, and directed Kel Kim to vacate the premises. A divided Appellate Division affirmed.

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70 N.Y.2d 900 *; 519 N.E.2d 295 **; 524 N.Y.S.2d 384 ***; 1987 N.Y. LEXIS 19945 ****

Kel Kim Corporation et al., Appellants, v. Central Markets, Inc., et al., Respondents

Prior History:  [****1]  Appeal from an order of the Appellate Division of the Supreme Court in the Third Judicial Department, entered June 23, 1987, which, with two Justices dissenting, affirmed an order of the Supreme Court (Robert Doran, J.), entered in Saratoga County, inter alia, granting defendants' motion for summary judgment, declaring that a lease between the parties was nullified, and directing plaintiff to vacate the leased premises.

 Kel Kim Corp. v Central Mkts., 131 AD2d 947, affirmed.

Disposition: Order affirmed, with costs, in a memorandum.


procure, lease, excused, premises, force majeure

Business & Corporate Compliance, Contracts Law, Standards of Performance, Impracticability, Commercial Law (UCC), General Provisions, Policies & Purposes, General Overview, Contracts Law, Breach, Excuse & Repudiation, Acceptance of Goods, Excuse From Performance, General Provisions (Article 1), General Provisions, Standards of Performance & Liability, Performance Excused, Impossibility of Performance, Contract Conditions & Provisions