Extrinsic Documents Not Part of Agreement Unless Specifically Incorporated by Reference

On January 23, 2015, Justice Demarest of the Kings County Commercial Division issued an opinion in Zucker v. Waldmann, 2015 NY Slip Op. 30089(U), granting reargument and, on reargument, denying a motion to dismiss on statute of limitations grounds.

In Zucker, the court initially dismissed the plaintiffs' claims on, among other reasons, statute of limitations grounds. The plaintiff granted reargument and, on reargument, the court denied the motion with respect to the statute of limitations, explaining:

Plaintiff argues that the Court misapprehended the law when it ruled that plaintiff's claim for breach of contract against Basel LLC was time-barred based on its finding that the Memorandum, which stated that pre-sales would begin in the first quarter of 2006, was incorporated by reference into the Investment Agreement. . . . [T]he Court agrees that its Prior Decision was in error. Plaintiff correctly argues that the Memorandum was not an agreement between the parties and the language of the Investment Agreement did not express any intent to incorporate any terms of the Memorandum. It was therefore error to incorporate the Memorandum by reference into the Investment Agreement and to apply the representation that pre-sales would begin in the first quarter of 2006 as the accrual date of the alleged breach.

New York law prohibits the incorporation of extrinsic writings into an agreement unless those writings are specifically incorporated by reference. The mere fact that a contract refers to another contract does not mean that it has incorporated the other contract. Under New York law, two essential elements must be satisfied before a document will be deemed to have been incorporated by reference into another instrument or agreement. First, the agreement must specifically reference and sufficiently describe the documents to be incorporated such that they may be identified beyond all reasonable doubt. Second, it must be clear that the parties to the agreement had knowledge of and assented to the incorporated terms. Although it is not disputed that the Memorandum is referenced in the Investment Agreement, there is no indication in the Investment Agreement of the significance or purpose for such reference, except to acknowledge that the Memorandum had been provided to plaintiff. It is further observed that the representation in the Memorandum that pre-sales would begin in the first quarter of 2006 is itself ambiguous and could not serve to establish an accrual date for a cause of action for the breach of a contract which had only been executed in December 2005.

(Internal quotations and citations omitted) (emphasis added).