Failure to Comply with Notice Provisions under Liability Policies Dispositive as to Survival of Third-Party Complaint: Carpio-Sanchez v Nakamura
In a November 4, 2011, decision by Justice Grays, the court granted defendant/third-party plaintiff’s and third-party defendants’ respective motions for summary judgment dismissing the complaint and third-party complaint. Plaintiff-construction worker was injured on the job and sued defendant-homeowner to recover damages for his injuries. In turn, defendant-homeowner sued third-party defendant-insurers for defense and indemnification under their respective general liability policies. The insurers moved for summary judgment on grounds that defendant-homeowner failed to give timely notice of the lawsuits and that plaintiff’s injury was not covered under the policy. The court granted the insurer’s motions, finding that defendant-homeowner failed to comply with the condition precedent of notice under the policies and that the plain meaning of the language excluding plaintiff as a particular class of employee was dispositive. The court also granted defendant-homeowner’s own motion for summary judgment, finding that as an owner of a single-family dwelling who did not supervise, direct, or control the work of plaintiff, defendant-homeowner was entitled to the protection of the homeowner’s exemption under the Labor Law.
Carpio-Sanchez v Nakamura, Sup Ct, Queens County, November 4, 2011, Grays, J., Index No. 7901/2009
Attorney's Appearance For Party in Default, Without Reserving Objections, Waives Objections to Faulty Service and Lack of Personal Jurisdiction: Frederic and Ade v Israel et al.
In a February 9, 2012 decision by Justice Demarest, the court granted a defendant’s motion to vacate an order finding it in default and granted plaintiffs’ cross motion to amend to modify the caption and assert additional claims against that same party – but denied that defendant’s motion to dismiss. The dispute arose from a construction project. Defendant “T.I.A. of New York, Inc.” (“TIA”) supplied a dumpster to the project. The project was derailed, leaving TIA’s dumpster overflowing with garbage, located behind a large hole in the ground which allegedly making it impossible for TIA to remove the dumpster.
In their complaint plaintiffs originally named TIA as “TIA Rubbish Removal” (not its legal name). TIA was allegedly served through “affix and mail” service. When TIA did not appear plaintiffs obtained an order finding TIA in default. Shortly thereafter TIA appeared by counsel who filed a “Notice of Appearance” but did not file an answer to the complaint, bring a motion, or otherwise raise the defective service (affix and mail service is inapplicable to corporations). The Court found that this appearance “waived TIA’s objection to the propriety of service and th[e] court’s personal jurisdiction over it.” The Court nevertheless granted TIA’s motion to vacate the order finding it in default because TIA raised a reasonable excuse for its default and stated a potentially meritorious defense to plaintiffs’ claims. The Court also considered TIA’s other arguments that the claims against it should be dismissed because plaintiffs failed to properly name TIA before the expiration of the statute of limitations and found those arguments unpersuasive because TIA was not prejudiced by the misnomer. In addition, the Court allowed plaintiffs to amend their complaint to correct TIA’s name and allege additional causes of action against TIA finding there, too, that TIA would not be prejudiced by the amendments and the stated claims are not devoid of merit.
Frederic and Ade v Israel et al., Sup Ct, Kings County, February 9, 2012, Demarest, J, Index No. 20290/06.
Subcontractor Proceeds with Contract Claim Against Property Owner Despite Lack of Privity: Schwing Elec. Supply Corp. v Hunter Roberts Constr. Group LLC
In a December 28, 2011 decision by Justice Whelan, the court denied the defendant’s motion to dismiss the complaint and permitted a subcontractor to proceed with its breach of contract and unjust enrichment claims against the property owner, as well as the claim for fraudulent inducement against the individual defendants who the plaintiff claimed induced its performance under the contract. The contractor entered into a sub-contract with a non-party for electrical goods which, in turn, entered into a sub-contract with the plaintiff. When the non-party stopped paying the plaintiff, the general contractor and the individual defendants convinced the plaintiff to enter into a joint checking account agreement, by which the monies owed to the non-party would be held for the plaintiff’s benefit, so that the plaintiff would continue to supply goods to the project. The plaintiff brought suit when the defendants failed to make payments under the joint checking account agreement.
The defendants moved to dismiss on the grounds that they lacked privity of contract with the plaintiff. Although the court recognized the basic rule of law that a sub-contractor cannot state a breach of contract claim against an owner in the absence of privity of contract, it found that such a claim could be maintained where the owner had direct dealings with the subcontractor, to justify imposing an obligation on the contractor. Finding no dispute that the owner had direct dealings with the plaintiff in order to keep it engaged in the project, and based on the factual allegations and documentation submitted in connection with the motion, the court found the plaintiff stated cognizable claims for recovery. The court also found that the plaintiff sufficiently stated a fraudulent inducement claim against the individual defendants because it satisfied the specificity pleadings requirements of CPLR § 3016(b) and because the plaintiff could state a claim against corporate officers and directors who participated in or had knowledge of the fraud, and where the plaintiff specifically alleged a breach of duty separate from or in addition to the breach of the contract.
Schwing Elec. Supply Corp. v Hunter Roberts Constr. Group LLC, Sup Ct, Suffolk County, December 28, 2011, Whelan, J, Index No. 4328-11
Court Denies Motion for Summary Judgment Made Before Discovery as Premature: Padilla Constr. Servs., Inc. v DeMicco Bros., Inc.
In a January 9, 2012, decision by Justice Bucaria, the court denied plaintiff’s motion for summary judgment as pre-mature and granted defendants’ motion for leave to amend its answer to allege the statute of frauds as an affirmative defense. Plaintiff-contractor sued defendant-general contractor and its surety in connection with unpaid balances on three separate construction projects and moved for summary judgment before the parties engaged in discovery. Defendants opposed the motion as pre-mature and cross-moved for leave to assert the statute of frauds as an affirmative defense based on the alleged absence of written agreements with respect to at least two of the three projects. The court agreed with defendants and denied plaintiff’s motion, stating that “discovery may lead to relevant evidence” regarding, among other things, monies paid on the projects and plaintiff’s damages. The court also granted defendants’ motion for leave to amend, finding that the statute-of-frauds defense was “meritorious” and that plaintiff would not be “prejudiced or surprised” by it.
Padilla Constr. Servs., Inc. v DiMicco Bros., Inc., Sup Ct, Nassau County, January 9, 2012, Bucaria, J., Index No. 4391/11
A Party Preventing Performance of a Condition Precedent Cannot Rely on It: Independent Temperature Control Servs., Inc. v WDF Inc.
In a July 21, 2011 decision by Justice Kitzes, the court denied the defendant M.A. Angeliades, Inc.’s (“MA”) motion to dismiss the cross claims by defendant WDF, Inc. and denied WDF’s cross-motion for sanctions against MA. The action arose out of a public works project at high school in Queens, where MA was the general contractor and WDF a subcontractor. The plaintiff’s (“ITC”) suit alleged that it was owed money by WDF in connection with a subcontractor agreement entered between ITC and WDF. WDF also entered a subcontractor agreement with MA, to provide labor, services and materials for the installation of HVAC facilities on the project. During the course of the project, at MA’s request, WDF performed additional work which was documented by certain “Change Orders.” WDF’s cross-claims sought payment for the work performed under the Change Orders, which MA had not yet made.
On its motion to dismiss WDF’s cross-claims, MA asserted that the contract between WDF and MA established that WDF was not due any payment. The contract provided that no payment was due until WDF submitted evidence that "no unpaid claims existed against it for ‘labor, materials, services, supplies of other obligations incurred by [WDF] in the performance of the Work.’” MA argued that because WDF had not paid its own subcontractors, which it deemed a condition precedent to receiving final payment on the project, it could not seek payment from MA. The court found that an issue existed as to whether MA directly caused the dispute between WDF and its subcontractors leading to the nonpayment. Therefore, the court held that because the condition precedent was directly tied to “the implied obligation of M.A to do something which would have enabled WDF to meet the condition precedent,” it could not then “insist upon the condition precedent, when its non-performance [wa]s its own doing.” Further, the court held that even if the condition precedent had definitively not been met, WDF’s substantial performance under the contract allowed it to recover.
WDF’s motion for sanctions asserted that MA’s conduct in seeking dismissal was frivolous because MA’s material factual statements were blatantly false. The court, however, held that the motion was based upon “assertions that are reasonably related to the evidence presented,” and therefore denied the motion.
Independent Temperature Control Servs., Inc. v WDF Inc., Sup Ct Queens County, July 21, 2011, Orin R. Kitzes, J, Index No. 2107/11
Affirmative Defenses are Barred by Guaranty's Express Waiver Provision: J. Remora Maintenance LLC v Efromovich
In a January 4, 2012 decision by Justice Fried, the court granted the plaintiff’s motion for summary judgment to enforce a guaranty executed by the defendant in connection with the plaintiff’s sale of its interest in a company to a third party. The court found that because the two express conditions set forth in the guaranty for its enforcement were met, the plaintiff established entitlement to summary judgment as a matter of law. The court then determined that the defendant failed to raise an issue of fact through its affirmative defenses of fraudulent inducement and lack of consideration. Based on the Court of Appeal’s decision in Citibank v Plapinger, the court concluded that an express waiver contained in the guaranty barred the defendant from asserting the substantive defenses. The court rejected the defendant’s argument that the waiver did not apply to the two affirmative defenses at issue because it did not contain the words “absolutely and unconditional”, finding that such language was unnecessary under New York law for a waiver to effectively waive substantive defenses. The court also granted the plaintiff’s motion to dismiss the defendant’s fraudulent inducement counterclaim under CPLR § 3016(b) on the grounds that the circumstances surrounding the alleged fraudulent inducement were not alleged in sufficient detail.
J. Remora Maintenance LLC v Efromovich, Sup Ct New York County, January 4, 2012, Fried, J, Index No. 650943/11
Defendant Cannot Vacate Default Judgment By Claiming It Never Received Pleadings: C McCormack Inc. v 6 St. Nicholas LLC
In a December 7, 2011 decision by Justice Driscoll, the court denied the defendant’s motion to vacate a default judgment against it. Based on Second Department law, the court found that the plaintiff presumptively established the right to a default judgment by providing a process server’s affidavit of service of the summons and complaint pursuant to NY LLC Law § 303, and the defendant failed to overcome that presumption by merely denying receipt of the pleadings. The motion was also denied because, the court found, the defendant failed to provide any excuse for its failure to answer the complaint or respond to the prior motion for a default judgment, and the defendant alleged only in conclusory fashion that it had a meritorious defense yet failed to present any facts supporting such defense.
C McCormack Inc. v 6 St. Nicholas LLC, Sup Ct Nassau County, December 7, 2011, Driscoll, J, index No. 011841-10
Contract Guaranty Signed in Massachusetts is Subject to New York Long-Arm Jurisdiction: Summit Const. Servs. Group, Inc. v Act Abatement, LLC
In a December 16, 2011 decision by Justice Scheinkman, the court examined whether a contract guaranty to be performed in New York constituted a contract for services to be performed in New York thereby permitting the court to exercise long-arm jurisdiction over the guarantying party. It concluded that it did and dismissed the defendant’s motion to dismiss the complaint grounded on the lack of personal jurisdiction. The plaintiff alleged that the defendant Act Abatement was required under a contract setting forth a New York choice of forum to provide labor and material to a construction project in New York City. The plaintiff asserted several causes of action against the company and against defendant Jeter, a Massachusetts resident, who personally guaranteed the Act’s payment and performance obligations. The complaint alleged that the defendant provided the Jeter Guaranty, signed in Massachusetts, when it was unable to procure a performance bond as required under its contract with the plaintiff. Recognizing that the Second Department had not addressed the jurisdictional question and that the First and Third Departments rendered conflicting decisions, the court turned to the decisions from the federal courts sitting in diversity which virtually all found that a payment guaranty is within the scope of services in New York to confer personal jurisdiction under CPLR § 302(a)(1). Based on those authorities, the court found no reason to exclude financial services from services that fall under CPLR § 302(a)(1) or distinguish between a payment and performance guaranty.
Summit Constr. Servs. Group, Inc. v Act Abatement, LLC, Supt Ct Westchester County, December 16, 2011, Scheinkman, J, Index No. 54085/11
Equipment Rental Company Dismissed From Action, No Evidence It Employees Worked at the Job Site, Hudson Meridian Constr. Group, LLC v. Kingdom Assoc., Inc.
In an October 3, 2011 decision by Justice Demarest the court granted summary judgment and dismissed from the case a dewatering equipment rental company because it demonstrated that it could not be held liable for the damages which occurred on the construction site. The suit arose from a large construction project which required dewatering (pumping water from the construction site). A neighboring land owner claimed that the dewatering damaged his property because the dewatering cause the ground to shift (or settle). The property owner paid the neighboring landowner his alleged damages and withheld that amount from the payments due the general contractor. The general contractor then brought suit against the various sub-contractors and vendors seeking to recoup those monies.
The dewatering rental equipment company moved to dismiss arguing that it only rented equipment for the project, had no employees physically working at the project and had no control over how the equipment was operated. The company also demonstrated that under its rental contract the subcontractor was required to indemnify the rental company in the event of a lawsuit. The court found that the rental company carried its prima facie burden of proof and the contractor’s attorneys’ affirmation was insufficient to rebut that showing rather the contractor “merely relies solely upon surmise, speculation and conjecture in an effort to create a feigned issue of fact.” The court further found that the contractor did not demonstrate how discovery would have changed this analysis because “mere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient to warrant denial of a motion for summary judgment.”
Hudson Meridian Constr. Group, LLC v. Kingdom Assoc., Inc., Sup Ct, Kings County, October 3, 2011, Demarest J, Index No. 16846/09.
Mechanic's Lien Not Defective Even Though Filed Against Pre-Subdivision Lot Number: Hai Ming Construction Corp. v. 258 Devoe LLC
In an October 19, 2011 decision by Justice Schmidt the court denied a motion to discharge a mechanic’s lien and to cancel a notice of pendency. The plaintiff, construction contractor, was involved with the construction of three eight-unit buildings to be built on a portion of a lot which was already improved by a building and five attached garages. As part of the project the existing lot was to be subdivided into four separate lots: one for the existing building under a new lot number and three new lots for each of the new buildings. The contractor filed a mechanic’s lien against the single existing lot, after an application to alter the lot designations, but before the new lot designations were effective.
The defendant moved to dismiss and discharge the mechanic’s lien and notice of pendency arguing that it was filed against the wrong lot. The court denied defendant’s motion finding that the description included in the lien was not invalid and its face and was in substantial compliance with the lien law because when it was filed the new subdivision was not effective.
Hai Ming Construction Corp. v. 258 Devoe LLC, Sup Ct, Kings County, October 19, 2001, Schmidt, J, Index No. 24561/09.
Right of Removal of Excess Excavation Material Not Bargained for in Land Deal: Circle Assoc., LP v Starlight Props., Inc.
In a July 25, 2011, decision by Justice Whelan, the court granted defendant-seller’s motion for summary judgment dismissing plaintiff-buyer’s fraud action and finding for defendant on its counterclaim for breach of contract. Defendant, owner of a large tract of subdivided real estate, sold plaintiff a 20-acre lot on which plaintiff planned to construct a concrete plant. In connection with the sale, the parties entered into a contract of sale, followed by certain infrastructure contracts involving the removal of excavation material to comply with certain grading and draining regulations, as well as a letter-agreement that 1) reduced the purchase price of the land to reflect any decreases in acreage and credited plaintiff for its affiliate-contractor’s work under the infrastructure contracts; and 2) required plaintiff to pay defendant for material removed from the site under the infrastructure contracts in excess of the grading indicated on the subdivision maps. The letter-agreement further provided that all additional excavation material “belong[ed] to [plaintiff] for disposal as it sees fit.” Unbeknownst to plaintiff, defendant previously had removed approximately 66,000 cubic yards of material from the site. Plaintiff brought suit claiming that had it known about the removal of additional material – which, allegedly could have been sold to a third party for $9 per cubic foot – it would not have entered into the agreements. Defendant counterclaimed in connection with plaintiff’s failure to complete its payment to defendant for removal of material under the infrastructure agreements. The court granted defendant’s motion dismissing plaintiff’s action, finding that there was no evidence in the record, including in the language of the agreements, that the right to remove excess material was part of the contract negotiations or otherwise bargained for by plaintiff. The court also found that plaintiff failed to present its material-breach defense to defendant’s counterclaim in its opposition papers, and granted defendant summary judgment on its claim for breach of contract.
Circle Assoc., LP v Starlight Props., Inc., Sup Ct, Suffolk County, July 25, 2011, Whelan, J., Index No. 41838/2008
Court Finds Broker Entitled to 1½% Commission on $20 Million Construction Project Under Theory of Quantum Meruit : Zere Real Estate Servs., Inc. v Parr
In an April 19, 2011, decision by Justice Pines, the court ruled in favor of plaintiff-real estate broker against defendant general contractor after a five-day trial on a claim to recover a finder’s fee under a theory of quantum meruit. At trial, plaintiff presented evidence that she introduced defendant to an area college in connection with the $20 million construction of a new law-school facility. Because plaintiff presented credible evidence regarding the initial introduction followed by more than a decade of involvement in the project, including research on grant programs, dozens of meetings with the dean, and extensive correspondence with defendant – and particularly because she presented a memorandum drafted by defendant “stat[ing] that if one of [defendant’s] organizations is selected as either the general contractor or the construction manager for the . . . project, [plaintiff] would be recognized as the broker who brought about the deal” – the court found that plaintiff and her firm were entitled to a commission on the project. The court further found, based on expert real-estate testimony regarding broker’s fees on similarly-sized projects, that plaintiff was entitled to one and one-half percent of the initial construction cost of the facility.
Zere Real Estate Servs., Inc. v Parr, Sup Ct, Suffolk County, April 19, 2011, Pines, J., Index No. 39680/2007
Court Denies Dismissal for Prior Action Pending and Consolidates Cases for Purposes of Completing Discovery and Trial: Laquila Group v Pure Earth Transp. & Disposal, Inc.
In an August 1, 2011, decision by Justice Demarest, the court denied defendant-subcontractor’s motion to dismiss based on a prior pending action and granted plaintiff-contractor’s cross-motion to consolidate. Plaintiff, an excavation contractor, hired defendant to dispose of material resulting from its excavation of a construction site. Plaintiff terminated defendant “for cause” and sued for breach of contract in Kings County via summons with notice in August 2010. On January 31, 2011, defendant appeared and demanded a complaint from plaintiff. The next day, defendant sued plaintiff for wrongful termination in the same court via summons and complaint. In response to defendant’s demand, plaintiff filed its complaint on February 23, 2011. Defendant argued that plaintiff’s action should be dismissed because its complaint was filed before plaintiff’s complaint. Both parties agreed that the two actions arose out of the same facts, involved the same parties, and required the court to make similar findings. The court in its discretion, however, denied defendant’s motion “as [plaintiff’s] action is already pending before this court and [defendant’s] action was commenced later and has not yet been assigned to any judge.” Because the actions would require determination of common questions of law and fact, the court granted plaintiff’s motion to consolidate, but in an effort to “preserve the integrity of the two actions,” did so “only to the extent of joining the actions for the purposes of completing discovery and trial.”
Laquila Group v Pure Earth Transp. & Disposal, Inc., Sup Ct, Kings County, August 1, 2011, Demarest, J., Index No. 20018/2010
Action Against Swimming Pool Installer For Defective Installation is Dismissed: Rush v. Swimming Pools by Jack Anthony, Inc.
In an April 25, 2011 decision by Justice Warshawsky, the Court granted defendant’s motion to dismiss all six claims asserted, thus dismissing the action. Plaintiffs had contracted with defendant to install a vinyl swimming pool at plaintiffs’ Water Mill home. Ultimately, the pool was constructed, and plaintiffs complained of various defects. Specifically, plaintiffs complained that the pool depth was too shallow, the dimensions of the “low end” were incorrect, the adjacent spa did not spill over correctly, and chipping of the bricks and concrete. Unable to resolve the dispute, plaintiffs sued defendant, asserting six causes of action based upon breach of contract, warranty, negligence, “unlicensed contractor”, and attorneys’ fees under General Obligations Law sec. 5-327.
In considering the parties’ cross motions, the Court found that plaintiffs did not establish that defendant did not substantially perform it obligations under the contract. The Court noted, at the outset, that the depth of the pool was never a term contained in the contract itself, and that the other defects complained of “could certainly have been easily remedied.” As to the unlicensed contractor status, that allegation was contradicted by da copy of the license produced by defendant in response to the motions.
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Court Finds Fact Issues Regarding Engineer's Negligence on Construction Project and Allows Third-Party Indemnification Claims to Go Forward: RAE Realty Holdings, LLC v 643 E. 11th St. Realty, LLC
In a June 20, 2011, decision by Justice Bransten, the court addressed a third-party defendant’s motion for summary judgment dismissing indemnification claims brought by an owner and general contractor in connection with damages to an adjacent structure caused by a failure to properly excavate and underpin the structure during construction of a commercial condominium building. Third-party defendant, a structural engineer retained in connection with the excavation, contended that the relevant provisions of the New York City Building Code did not require it specifically to inspect the soil under the adjacent building prior to construction and that, in any event, it was not a proper party in a cause of action for loss of lateral support under the law because it was not the owner or excavator on the project. The court, however, largely denied third-party defendant’s motion, finding that it had misstated both the code and the law and that fact issues existed as to whether it was negligent in its underpinning inspections. The court granted third-party defendant’s motion only as to the claim for contractual indemnification because it was not supported by a written contract containing an indemnity provision.
RAE Realty Holdings, LLC v 643 E. 11th St. Realty, LLC, Sup Ct, New York County, June 20, 2011, Bransten, J., Index No. 102264/2007
Oral Promise of Personal Liability Insufficient to Warrant Default Judgment on Breach of Contract Claim By General Contractor: Born to Build, LLC v Saleh
In a May 18, 2011 decision by Justice Warshawsky, the court granted the plaintiff’s motion to enter a default judgment against a defendant on two construction contracts which the defendant breached by failing to pay general contracting fees. However, the court denied the motion as to a third contract on the grounds that the contract was between the plaintiff and a limited liability company, not the defendant. The court held that it could not pierce the corporate veil to hold the defendant liable. Because the plaintiff failed to establish that the defendant entered into a written agreement to be personally liable for the LLC’s contractual obligations, the court further denied the motion because the defendant’s oral promise to be personally liable was unenforceable under § 5-701(a)(2) of the General Obligations Law and was barred by the statute of frauds.
Born to Build, LLC v Saleh, Sup Ct, Nassau County, May 18, 2011, Warshawsky, J, Index No. 002345/11
Court Drops Affirmative Defenses In Mechanics Lien Action for Construction of Stairs: Model Iron Works, Inc. v. Tiago Holdings, LLC
In a May 2, 2011 decision by Justice Oing the Court dismissed a number of the “standard” affirmative defenses pled in a mechanic’s lien/breach of contract action.
The defendants’ affirmative defense that “complaint fails to state a cause of action” was allowed to survive as “mere surplusage.” The defendants’ affirmative defense that “the plaintiff was paid in excess of the fair and reasonable value of any work, labor, materials, services and equipment” was also allowed to survive because it was directly related to the mechanic’s lien claim. The defendants’ affirmative defense that the action was started after the statute of limitations agreed to by contract also survived dismissal because there was an issue whether or not this part of the contract was enforceable.
However, the defendants’ affirmative defense that the “claims are barred in whole or in part by the equitable doctrines of waiver, estoppels and/or unclean hands” was dismissed because there was no showing that these affirmative defenses were viable. Similarly, defendants failed to show how the action did not comply with the Mechanic’s Lien Law so that affirmative defense was dismissed, as was the affirmative defense that plaintiffs’ claims were barred by the parties’ contract.
Model Iron Works, Inc. v. Tiago Holdings, LLC, Sup Ct, New York County, May 2, 2011, Oing, J, Index No. 600857/10
Shorter Period of Limitations in Contract Unreasonable Where Internal Dispute Procedure Deprived Plaintiff of Course of Action: Structural Contr. Servs., Inc. v URS Corp. - NY
In an April 4, 2011, decision by Justice Scheinkman, the court considered cross motions to dismiss and for summary judgment in connection with a waterproofing job at the former Shea and Yankee Stadiums. The parties, plaintiff-contractor and defendant-subcontractor, agreed to a shorter, six-month statute-of-limitations period within which to assert contract-related claims. The court found that the shorter period was reasonable with respect to plaintiff’s claims for breach of contract, account stated, and conversion and granted defendant’s motion to dismiss these claims as untimely. As to plaintiff’s claims based on defendant’s failure timely to submit plaintiff’s labor-rate disputes to the City of New York as required under the subcontracts, however, the court found that the shorter limitations period was unreasonable because plaintiff was contractually precluded from bringing its claims in the Supreme Court until it received an unfavorable disposition from the City. Thus, the shorter period of limitations as to these claims “unreasonably deprive[d] the plaintiff of a course of action.” The court otherwise found triable issues of fact with respect to the merits of plaintiff’s labor-rate disputes.
Structural Contr. Servs., Inc., Sup Ct, Westchester County, April 4, 2011, Scheinkman, J., Index No. 22579/09.
Subcontractor's Claims Under Lien Law Can Proceed as a Class Action: Access Plumbing Corp. v. 1184 Brighton Dev., LLC
In an April 14, 2011 decision by Justice Demarest, the Court considered plaintiff’s motion to amend the complaint brought under the Lien Law by a subcontractor who performed plumbing work on a multi-unit condominium building in Brooklyn. Plaintiff moved to amend the complaint and to request the court to waive the numerosity requirement under CPLR 901 and allow the action to proceed as a class action. Plaintiff also sought direction as to the manner of service of the notice on the members of the proposed class. The proposed amendments relate to the value of change orders and certain agreements made during the job.
Within 8 months of completion of the work, plaintiff filed a mechanic’s lien in the amount of $307,803 against the premises. The owner sold several units. The owner used some of the funds received to pay off mortgage debt. Plaintiff alleges the money received from the sale of the units constituted “trust funds” under the lien law, and that the lender who was paid by the owner, held the money in trust under Lien Law sec. 71.
In finding that the proposed amendments were not palpably insufficient or devoid of merit, the Court permitted the amendments. Turning to the motion for class action certification, the court waived the numerosity requirement under CPLR 901, and determined that the action could be maintained as a class action. The Court also directed service in a manner set forth in CPLR 904(c).
Access Plumbing Corp. v. 1184 Brighton Dev., LLC, Sup Ct, Kings County, April 14, 2011, Demarest, J, Index No. 34488/08.
Court Denies Default Motion On Fraud Claim But Suggests Piercing Claim As Alternative: Kin & Ann Realty Inc. v Renzulli
In a March 16, 2010, decision by Justice Warshawsky, the court granted in part and denied in part plaintiff-owner’s motion for default after defendant-contractor failed to answer the complaint. Plaintiff’s action arose out of a contract to construct a building on its property, under which defendant allegedly failed to perform its obligations. Because plaintiff had submitted a signed contract in support of its properly-pleaded allegations of non-performance, the court granted the motion as to plaintiff’s first cause of action for breach of contract. The court, however, denied the motion as to plaintiff’s causes of action for breach of fiduciary duty, conversion, misrepresentation/fraud, and restitution/unjust enrichment as duplicative of the breach of contract claim. Notably, while finding that plaintiff’s fraud claim was insufficiently pleaded, the court nonetheless suggested that the allegations “may provide the grounds for piercing the corporate veil, an avenue that the plaintiff may wish to investigate.” The court also denied the motion as to plaintiff’s consumer protection claim under GBL § 349 for failure to allege any broader impact on consumers at large.
Kin & Ann Realty Inc. v Renzulli., Sup Ct, Nassau County, March 16, 2011, Warshawsky, J., Index no. 601704/2009
Cannot Use Judgment in Lieu of Complaint When Note Is Part of a Larger Transaction: Delmastro v Rescue Carting Corp. and Diesso
In a March 22, 2011 decision by Justice Pines the Court denied a motion under CPLR 3213 for summary judgment in lieu of complaint and allowed the defendant to submit an answer. The plaintiff moved for judgment based on a note and guaranty which were provided as part of a sale of a business. The loans payments ceased and the plaintiff brought suit.
The court denied plaintiff’s motion because the note was not created in a vacuum, and once considered with the other deal documents, did not qualify as an instrument for the payment of money only under CPLR 3213.
Delmastro v Rescue Carting Corp. and Diesso, Sup Ct, Suffolk County, March 22, 2011, Pines, J, Index No. 41653-2010
Court Reads Clear Condition Precedent to Coverage In Owner Controlled Insurance Policy: Zurich Am. Ins. Co. v Illinois Natl. Ins. Co.
In a December 23, 2010, decision by Justice Fried, the court granted defendant’s motion for summary judgment and denied plaintiff’s cross-motion for the same relief. Plaintiff-subcontractor and its carrier sued defendant-general liability insurer for coverage under an “owner controlled insurance policy” (OCIP). Defendant had declined coverage due to plaintiff’s failure to obtain a written subcontract and to enroll in the OCIP program before the loss, both requirements under the policy. The court granted defendant’s motion and dismissed the complaint, finding that requirements were “unambiguous” conditions precedent to coverage under the policy – namely, that “the language is clear: no enrollment, no coverage.” The court rejected plaintiff’s equitable estoppel argument, finding no evidence that defendant took actions to mislead plaintiff into believing that coverage was available or that plaintiff had relied on such allegedly-misleading activity.
Zurich Am. Ins. Co. v Illinois Natl. Ins. Co., Sup Ct, New York County, December 23, 2010, Fried, J., Index No. 105533/09
2.3% Shareholder Lacks Standing to Seek Dissolution Under BCL §1104-a: Klauss v MacDonald
In a February 9, 2011 decision by Justice Pines, the court dismissed the petitioner’s cause of action for dissolution pursuant to BCL §1104-a on the grounds that the petitioner failed to satisfy his burden and establish that he was a 20% shareholder, as required in order to commence a special proceeding for dissolution. The court denied the respondent’s motion to dismiss the “ancillary claims” for breach of contract, unjust enrichment, fraud, and breach of fiduciary duty. Rather, the court converted the petition into a complaint pursuant to CPLR §103 and permitted those causes of action to proceed.
Klauss v. MacDonald, Sup Ct, Suffolk County, February 9, 2011, Pines, J, Index No. 4771-2020
Claims By Insured Against Insurance Broker for Late Notice to Carrier Survive Summary Judgment: Sorbara Constr. Corp. v. Romeo
In a December 8, 2010 decision by Justice Warshawsky, the Court considered the parties’ motions for summary judgment in an action brought by a contractor against its retail insurance broker. The action was brought against the broker based upon an excess carrier’s disclaimer of coverage because of late notice. Although defendants did not dispute they had the responsibility to notify the excess carrier, the facts surrounding the communications between the parties was in sharp dispute. The Court first dismissed the claims based on the breach of implied covenant of good faith and fair dealing as duplicative of the contract claims. Next, the Court considered the statute of limitations defense, and whether the doctrine of equitable estoppel tolled the running of the statute. After reviewing the parties’ submissions, the Court held issues of fact indeed existed, and denied defendants’ motion for summary judgment on several claims. Finally, the Court considered the motion for summary judgment to dismiss the Third-Party Complaint, granting the motion in its entirety, concluding that neither claims for indemnity nor contribution existed.
Sorbara Constr. Corp. v. Romeo, Sup Ct, Nassau County, Dec. 8, 2010, Warshawsky, J, Index No. 001238/2008.
Special Referee's Report Concluding Documents Not Privileged or Work Product Upheld: Archstone v. Tocci Bldg.Corp. of N.J., Inc.
In a December 20, 2010 decision by Justice Warshawsky, the Court reviewed the decision of Special Referee, Michael Cardello III, in a construction litigation. Special Referee Cardello concluded that two documents, inadvertently produced by plaintiffs, were not protected either by attorney client or work product doctrine. The documents at issue are the handwritten notes of an employee of one of the defendants. In particular, the employee, an architect, had taken notes at a meeting. A portion of the notes contain, according to the defendant, protocols that were developed with and at the direction of counsel for defendant, and that the meeting was held at the direction of defendant’s counsel. In reviewing the Special Referee’s 19-page decision, as well as the documents at issue, the Court concluded that Mr. Cardello’s determination that the "communication" found within the employee’s notes did not amount to the rendering of legal advice or services. According, the Court, upon, de novo review, affirmed the findings and conclusions of Mr. Cardello and incorporated by reference his decision of November 1, 2010.
Archstone v. Tocci Bldg.Corp. of N.J., Inc., Sup Ct, Nassau County, Dec. 20, 2010, Warshawsky, J., Index No. 001018/08
Lack of Employment Contract Dooms Commission Claim and Requires Return of Commission Overpayments: Clifford v Remco Maintenance, LLC et al
In a December 1, 2010 decision by Justice Kitzes, the Court, on summary judgment, dismissed all of plaintiff’s claims and granted defendant summary judgment on its claim against the plaintiff for overpayment of commissions.
Plaintiff brought his claims for allegedly unpaid commissions. Plaintiff, however, did not have a written employment agreement with his employer. Nor did he have an oral agreement. The Court found that, instead, plaintiff was an employee at will. The Court further found that plaintiff was negotiating an employment arrangement with his employer during time in question, but that the employer had only agreed to pay a 3% sales commission during that time period.
Based on those conclusions, the Court dismissed plaintiff’s claims for breach of contract claim predicated on his being fire. The Court also dismissed plaintiff’s claims for failure to pay commissions above the 3% agreed upon rate. The Court further found that the defendant had overpaid commissions during the relevant time period and granted it summary judgment on its claim seeking the return of those monies.
Clifford v Remco Maintenance, LLC et al., Sup Ct, Queens County, December 1, 2010, Kitzes, J, Index No. 3095/08
Court Grants Motion for Summary Judgment in Lieu of Complaint Based on Guaranty: GSO RE Onshore LLC v Sapir
In a November 24, 2010, decision by Justice Fried in connection with an action by plaintiff-lender against defendant-guarantor to recover under a personal guaranty after a default on a construction loan, the court granted plaintiff’s motion for summary judgment in lieu of complaint and denied defendant’s cross-motion to dismiss for lack of personal jurisdiction. The court found that despite the fact that proper documentation was not filed with the county clerk as prescribed by CPLR 318, service of plaintiff’s motion on an agent designated in the guaranty was sufficient because “parties can contractually agree to other methods of service beyond those set forth in the CPLR, and a contract provision designating a party’s service agent is valid.” Because a motion for summary judgment in lieu of complaint may be based on a guaranty, and because the law recognizes waiver-of-defenses provisions in guaranties as valid and enforceable, the court found that plaintiff was entitled to summary judgment as a matter of law and granted the motion. The court also denied defendant’s motion to supplement the record with a medical report suggesting that defendant “lacked the requisite contractual capacity” to enter the guaranty for lack of good cause shown because the motion, initially proposed informally during oral argument, clearly was an afterthought motivated by defendant’s perception that plaintiff was going to prevail.
GSO RE Onshore LLC v Sapir, Sup Ct, New York County, November 24, 2010, Fried, J., Index No. 650367/10
Failure to Oppose Summary Judgment With Evidence Dooms Reargument Motion: Archstone v Tocci Bldg. Corp. of N.J., Inc.
In at September 23, 2010 decision by Justice Warshawsky the Court granted leave to reargue and adhered to its prior determination granting one of the third-party defendants dismissal of the claims against it. The litigation was brought because water infiltration discovered after the completion of a large apartment complex. The general contractor brought third party claims against of the number of suppliers to the project, including the supplied of prefabricated wood panels.
The wood panel manufacturer moved for summary judgment based on its employee’s affidavits that the panels as fabricated and delivered met all specifications and were fit for their purpose. The affidavit further explained that after delivery the panels were cut and altered by whoever erected the panels at the site. Through this affidavit the third-party defendant submitted admissible evidence that there were no defects in the wall panels.
The Court adhered to its prior finding dismissing the wood panel manufacturer from the suit because (i) the third-party plaintiff general contractor did not claim that there was an actual defect in the wall panels (rather the general contractor only brought a claim-over in the event the general contractor was found liable to the plaintiff) so there was no triable issue of fact on that claim and (ii) the plaintiff failed to adduce any admissible evidence that the wall panels were defective.
Archstone v Tocci Bldg. Corp. of N.J., Inc., Sup Ct, Nassau County, Sept. 23, 2010, Warshawsky, J, Index No. 001018/2008
Non-signatories to Arbitration Agreement Bound to Arbitrate: BP Air Conditioning Corp. v. Lasorsa
In an October 27, 2010 decision by Justice Driscoll, petitioners moved for an Order, pursuant to CPLR Art. 75, to dismiss or, in the alternative, to stay, the underlying arbitration brought by respondent before AAA. Respondent was employed by one of the petitioners, pursuant to which the parties entered into a Deferred Compensation Plan. The Plan contained various restrictive covenants, as well as a dispute resolution clause mandating arbitration. Petitioner was later reorganized, and respondent was then employed by one of the other related organizations. Petitioner was ultimately terminated from his employment, after which he commenced arbitration with AAA. His petition sought the following relief:
“Claimant seeks a declaration that he is not bound by restrictive covenants in a Deferred Compensation Plan and may compete against Respondents and solicit Respondents' clients. Claimant also seeks an amount to be determined, but believed to be between $500,000- 1,000,000 for Respondents' breach of contract and all expenses in connection with this arbitration, including attorneys' fees.”
Petitioners sought dismissal or a stay of the arbitration on the grounds that the petition in arbitration was procedurally defective, and that not all petitioners were parties to the Deferred Compensation Plan and therefore did not agree to arbitrate. The Court denied Petitioners’ application, concluding that the doctrine of estoppel precluded the nonsignatories to the arbitration agreement from disavowing arbitration. The Court reasoned that under the estoppel theory, a company knowingly exploiting an agreement containing an arbitration clause can be estopped from avoiding arbitration, despite not having signed the agreement.
BP Air Conditioning Corp. v. Lasorsa, Sup Ct, Nassau County, Oct. 27, 2010, Driscoll, J, Index No. 016032-10
Summary Judgment on a Corporate Guaranty Granted, But Denied as to Personal Guaranty: Colarossi v. Daly
In an August 3, 2010 decision by Justice Warshawsky the Court granted a motion for summary judgment on a corporate guaranty, but denied summary judgment as to a personal guaranty, stemming from the purchase of a truck with a cesspool vacuum tank.
In 2003, both the corporation and its principal guaranteed the monthly payments for the truck; under an agreement that contained an acceleration clause (i.e. if there was a default all of the remaining payments were immediately due). In 2005, the principal lost control over the business and all of its equipment, including the truck. The new business advised the financing company that it had purchase the assets of the old company and began making the monthly payments on the truck. After three years the new business stopped making the monthly payments for the truck and it was repossessed. The financing company then sued the old company and its principal, seeking the difference between the sale price on the repossession and the amount due on the loan (as well as its costs and attorneys’ fees).
The financing company moved for summary judgment on its claims against both the old company and its principal. The Court granted summary judgment against the old company, but denied summary judgment against its principal finding there was an issue of fact whether the transaction whereby the new company took possession of the truck and began making payment on the loan released the principal from his obligations under the guaranty.
Colarossi v. Daly, Sup Ct, Nassau County, August 3, 2010, Warshawsky, J, Index No. 3334/2008
Greenberg v Falco Constr. Corp., Sup Ct, Kings County, September 29, 2010, Demarest , J, Index No. 4267/10
In a September 29, 2010 decision by Justice Demarest, the Court granted a number of motions to dismiss, with leave to replead. The actions stem from a number of closely held corporations owned by two sisters and their mother. One of the sisters alleged that the other sister and her mother were improperly controlling the corporations and entering into “sweet heart” deals with other family owned entities which plaintiff did not own. Plaintiff also brought claims for adding and abetting breach of fiduciary duties against the accountants who were working of the entities and plaintiff individually
The Court granted the motions to dismiss (with leave to replead) the individual and derivative breach of fiduciary duties claims against plaintiff’s sister, mother and accountant, because these claims were intermingled. In dismissing these claims the Court stated that plaintiff could seek punitive damages on her breach of fiduciary duty claims if she was able to demonstrate that the breach involved a “high degree of moral turpitude” or “wanton or reckless disregard of” plaintiff’s rights. The Court also stated that in pari dilecto would not bar the claims against the accountant.
The Court also dismissed plaintiff’s inspection claim under BCL 624 because it was not brought by order to show cause.
400 15th St., LLC v Promo-Pro, Ltd, Sup Ct, Kings County, September 10, 2010, Demarest, J, Index No. 20651/06
In a September 20, 2010 decision by Justice Demarest, the Court granted a performance bond company summary judgment dismissing the claims of a property owner. The property owner contracted for the construction of an eighteen unit condominium building. The contractor failed to properly perform its work, which caused damages to a number of neighboring land owners.
The property owner cancelled the contract “for convenience,” but reserving the right to “reclassify” the termination as one for cause. After an investigation the property owner “reclassified” the termination and sought damages from the performance bond company (the performance bond would only be applicable for a termination “for cause” not a termination for “convenience”).
The Court found that the property owner could “reclassify” the termination, but that because it did not sustain any compensable damages under the performance bond the insurer should be granted dismissal. The Court specifically found that the costs of fixing the neighboring properties were not covered by the performance bond, but likely by a commercial general liability policy. Similarly, because the construction contract had a “no consequential damages” clause, the property owner could not seek its consequential damages from the performance bond company.
Five Star Mechanical Corp. v Mainco Elevator Corp., Sup Ct, NY County, Aug. 10, 2010, Bransten, J, Index No. 600691/08
In an August 10, 2010, decision by Justice Bransten in connection with plaintiff-subcontractor’s action against defendant-general contractor to recover money due on a construction contract, and on plaintiff’s motion for summary judgment, the court granted plaintiff’s motion finding that it had made a prima facie showing of entitlement to judgment as a matter of law based on account stated by submitting evidence that it had sent defendant seven invoices for services rendered, some of which defendants had made partial payment and all of which defendant had assured full payment. The court found that defendant’s submission of an attorney affirmation asserting a defense based on condition precedent was without merit because the affirmation was not accompanied by admissible documentary evidence and because plaintiff had submitted contrary evidence that defendant had imposed no such conditions on payment under the parties’ contract. The court also found defendant’s letter objecting to the invoices, sent a year and a half after the last invoice, was not timely for purposes of defeating a claim based on account stated.
Oppenheim v MoJo-Stumer Assoc. Architects, P.C., Sup Ct, New York County, September 10, 2010, Ramos, J, index No 602408/06
In a September 10, 2010 decision by Justice Ramos the Court partially granted a motion to amend a complaint and denied a cross-motion for sanctions. The action was originally brought against plaintiffs’ architectural firm, one of its owners and plaintiffs’ general contractor alleging a scheme by which the architects directed clients to the contractor and approved inflated bills tendered by the contractor, and in exchange the contractor paid the architect kick-backs.
Plaintiffs sought to amend their complaint to add claims against one of the owners of the architectural firm (who was not a party to the action), to add mail and wire fraud RICO charges and to add details to their bribery RICO charges. The court denied the motion to add claims against the individual owner of the architectural firm based on statute of limitations. The Court also denied the motion to amend to add mail and wire fraud charges because the proposed pleading did not contain sufficient particularity and did not allege a viable mail and wire fraud RICO claim. But the Court granted plaintiffs motion to the extent it sought to add additional detail to the bribery RICO claim. The Court also denied defendants’ cross-motion for sanctions.
Owssom Bldrs., LLC v J&F Refrig, A.C. & Heating, Inc., Sup Ct, Kings County, Aug. 5, 2010, Demarest, J, Index No. 22146/08
In an August 5, 2010 decision by Justice Demarest, the court dismissed an action for breach of contract and failure to comply with NYC building codes brought by a general contractor and owner of the premises against a subcontractor, because all of the claims were barred by the doctrines of collateral estoppel and res judicata. The court noted that the subcontractor had previously brought an action against the general contractor for breach of contract and negligence relating to the same job alleged in the matter at bar. The general contractor asserted counterclaims which the court had dismissed. The general contractor and the owner of the premises then commenced a new action against the subcontractor which, the court found, were the same allegations as the previously dismissed counterclaims.
First the court found that all of the general contractor’s claims were (1) barred by collateral estoppel they were identical to its prior insufficient counterclaims, and (2) barred by res judicata because the new allegations could have been raised in that prior action. Second, the court rejected the owner’s argument, that it had independent standing to sue, based on the general rule that a subcontractor is in privity with the general contractor and not the owner of the premises, even if the owner benefits from the contractor’s work. Additionally, because the owner was in privity with the general contractor, the owner was barred by the same collateral estoppel and res judicata principles as the general contractor.
The court then awarded the subcontractor attorney’s fees under 22 NYCRR § 130-1.1, finding that the plaintiff’s “continued efforts to relitigate issues from a prior action” when they were on notice that they claims had already been decided, constituted frivolous conduct.
Novogratz v. MIA Contr., Inc., Sup Ct, NY County, Aug. 4, 2010, Yates, J., Index No. 600556/2010
In an August 4, 2010 decision by Justice Yates, the court granted in part and denied in part a motion filed by homeowners to stay arbitration brought by a home improvement contractor. The court found that one of the contracts entered into was a “home improvement contract” under the NYC Administrative Code and therefore was unenforceable since defendants were unlicensed contractors. As to the two other contracts, the court concluded that they were not “home improvement contracts”, thus could be enforced, notwithstanding the unlicensed status. The court also found the individual respondent had no standing to maintain the arbitration in his personal capacity, holding that the purported assignment to him was not valid.
Century-Maxim Construction Corp. v. One Bryant Park LLC et al., NY Slip Op 50858(U), 23 Misc 3d 1120[A] [April 7, 2009, 2009 Sup Ct Westchester County]
In an April 7, 2009 decision, Justice Scheinkman partially granted defendants’ motion to dismiss a complaint arising out of a contract for concrete for a 520story skyscraper in New York City. The concrete contractor sued for damages on multiple bases, including breach of contract; quantum meruit; account stated rescission; and attorneys fees.
The Court partially granted the motion to dismiss because the claims either failed to state a cause of action or were contradicted by the documentary evidence (in this case the contract underlying the parties’ agreement).
The Court did not dismiss part of plaintiff’s account stated claim (which it allowed the plaintiff to replead in a more cogent manner). The Court also allowed the plaintiff the opportunity to replead a separate and distinct cause of action for rescission and a separate and distinct claim for quantum meruit (the viability of which would rest upon plaintiff’s success on his rescission claim).
