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It Seems You Can’t Waive The Affirmative Defense Of Illegality After All

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  • Posted on: Jan 6 2017

Your client comes to you with a complaint that was recently served on him. Among other claims, the plaintiff contends that your client breached his agreement to sell widgets. After discussing the claims with your client, you decide to file an answer.

Your analysis of the contract claim leads you to conclude that the contract is void because performance would require your client to violate certain labor laws. In addition to general denials, you assert several affirmative defenses, including the defense of illegality.

New York’s Civil Practice Law & Rules (“CPLR”) § 3018(b) provides that a party must plead as an affirmative defense “all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading.” CPLR 3018(b) lists the defenses commonly asserted, including “facts showing illegality either by statute or common law,” but makes it clear that the list is not exhaustive.

What happens, however, when the defendant fails to plead an affirmative defense? As a general rule, the defense would be deemed waived. However, where the defendant raises the defense in motions (many affirmative defenses can be asserted as a basis for a motion under CPLR 3211), for example, the courts have ruled that the defense may be entertained because there is no surprise or prejudice by its assertion. That was the holding of the Appellate Division, First Department in American Stevedoring, Inc. v. Red Hook Container Terminal, LLC, 2016 NY Slip Op 08470 (1st Dep’t. Dec. 15, 2016).


Red Hook Container Terminal, LLC (“RHCT”) provided stevedoring services at a marine container terminal located in Brooklyn, New York (the “Brooklyn Terminal”). Prior to RHCT, American Stevedoring, Inc. (“ASI”) provided those services at the Brooklyn Terminal. During RHCT’s tenure, RHCT entered an equipment lease agreement with ASI (the “Lease”) for certain inland marine equipment, then valued by ASI at approximately $10 million (the “Equipment”). Most of the Equipment was located at the Brooklyn Terminal. Slip op. at 2.

The Lease included provisions that were designed to protect ASI’s Equipment and to assure an orderly transfer of the Equipment from RHCT at the end of the lease period. The Lease was to terminate on March 31, 2012. After the expiration of the Lease, RHCT retained possession of the Equipment. Id.

On March 27, 2012, a few days before the expiration of the Lease, ASI advised RHCT of the location to deliver the Equipment. RHCT objected to the location because delivery would block city streets for a full day and was not within the 20 mile limit provided in the Lease.

On April 13, 2012, ASI provided RHCT with another location for delivery of the Equipment. Five days later, RHCT informed ASl that the second location was not acceptable, primarily because the owner of the site did not give RHCT permission to store the Equipment at that location. In response, ASI commenced the action.

The Proceedings Before the Motion Court:

ASI asserted many claims against RHCT, including one for breach of contract. ASI sought the return of the Equipment and recovery of compensatory and punitive damages. RHCT counterclaimed for, among other things, its post-Lease storage fees for the Equipment.

Thereafter, the parties moved for partial summary judgment. ASI based its motion on RHCT’s failure to return the Equipment as provided for in the Lease. RHCT sought dismissal of the breach of contract claim, among others, on the grounds that it was not obligated to deliver the Equipment because the delivery sites selected by ASI were unsuitable and/or did not satisfy the requirements of the Lease. RHCT claimed that by delivering the Equipment to the locations identified by ASI, it would have required RHCT to trespass or otherwise violate the law.

The Motion Court granted ASI’s motion with regard to the breach of contract claim. In granting partial summary judgment, the court rejected RHCT’s illegality argument because it was not pleaded as an affirmative defense.

ASI argues that an illegality defense is an affirmative defense which must be pleaded in a responsive pleading or addressed in a motion to dismiss lest it be waived. The defense was not pleaded. . . . While RHCT has referred to the issue of having the permission of the site owner during the pendency of this case, for example, by demanding that ASI provide evidence of permission to use the site when the Third Location was  specified, the issue appears to have been touched on only in the context of questioning whether  RHCT would be able to access the site and complete delivery. RHCT has not shown that it previously raised a concern about trespassing or illegality. Rather, it expressed a concern that it would be denied access. Accordingly, … RHCT has waived the illegality defense.

Slip op. at 8 (citation omitted).

The First Department’s Ruling:

In a unanimous ruling, the First Department reversed the motion court’s holding that Red Hook waived its affirmative defense of illegality. In so doing, the Court noted that “[o]n prior motions [the] defendant had raised the argument that it should not be forced to commit trespass,” which, the Court observed, the “plaintiff had responded to.” Consequently, “[b]ecause [the] plaintiff … was not surprised or prejudiced by its assertion, the defense may be entertained.”


CPLR 3018 is clear: an “affirmative defense” must be pleaded to be preserved. If it is not so pleaded, it is waived. Therefore, the failure to plead an affirmative defense could have significant consequences. But, as American Stevedoring teaches, such consequences may not always follow when the defendant demonstrates that the plaintiff had a full and fair opportunity to respond to, and oppose, the defense being asserted – that is, the plaintiff suffers no prejudice or surprise by the assertion of the defense.

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