W.W. Glass Systems, Inc. v. Cohen Brothers Realty Corp. et al.

(Sup. Ct. N.Y. Cty. 12/12/03)

We represented: Defendant

Charles Edward Ramos, J.S.C.

DECISION and ORDER Defendants move for an order, pursuant to CPLR 3211[a][7], dismissing the complaint upon the grounds that it fails to state a cause of action; or, in the alternative, pursuant to CPLR 3212, granting summary judgment dismissing the complaint.¹

Plaintiff cross-moves for an order, pursuant to CPLR 3212, granting summary judgment dismissing defendants' demand for punitive damages, as set forth in the counterclaims asserted in the answer.

In or about March 1999, plaintiff W&W Glass Systems, Inc. ("W&W") and defendant 622 Building Company, LLC ("622 Building"), as owner, entered into an agreement, whereby W&W agreed to perform certain work at the premises located at 622 Third Avenue, New York (the "Premises"). Defendants agreed to pay W&W the money set forth in the terms and conditions of the agreement. Subsequent to the execution of the agreement, W&W alleges that it performed the services it agreed to perform under the terms of the agreement and did so in a professional and workmanlike. W&W has demanded compensation for the work performed under the agreement, but 622 Building has refused to pay it, despite due demand.

The first cause of action is for breach of contract against 622 Building.

The second cause of action alleges is for breach of contract against Cohen Brothers Realty Corporation ("Cohen Brothers"), as general contractor.

The third cause of action in against all defendants for unjust enrichment.

The fourth and final cause of action is against 622 Third Avenue Company LLC ("622 Third Avenue"), the record owner in fee of the premises under the Lien Law for $202,654.00.

Defendants deny the material allegations of the complaint and assert five affirmative defenses and three counterclaims in the answer.

On a motion to dismiss a complaint for failure to state a cause of action, the Court must accept each and every allegation and reasonable inferences therefrom as true, and, if plaintiff is entitled to recovery based upon any reasonable view of the stated facts, the complaint as a pleading is legally sufficient (see, 219 Broadway Corp. v. Alexander's Inc., 46 NY2d 505, 509 [1979]).

The court's inquiry is limited to ascertaining whether the pleading states any cause of action, and not whether there is evidentiary support for the complaint (see, Guggenheimer v. Ginzburg, 43 NY2d 268, 27S (1977]). The complaint must be liberally construed in the light most favorable to the plaintiff, and all factual allegations must be accepted as true (Ibid; Morone v. Morone, 50 NY2d 481, 484 [1980]). However, when documentary evidence is introduced, as here, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one (see, Rovello v. Orofino Realty Co., 40 NY2d 633, 634 [1976]).

Moreover, "[t]he proponent of summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issue of fact…[o]nce this showing has been made…the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (see, Alaverz v. Prospect Hosp., 68 NY2d 320, 324 [1986](citations omitted).

A claim alleging breach of contract must plead the terms of the agreement, the consideration, the performance of the agreement, and the basis of the alleged breach of the agreement by defendant (see, Furia v. Furia, 116 AD2d 694, 695 [2nd Dept. 1986]). Moreover, as a general rule, a signer of a written agreement is conclusively bound by its terms unless there is a showing of fraud, duress or some other wrongful act on the part of any party to the contract (see, Columbus Trust Co. v. Campolo, 110 AD2d 616, affirmed 66 NY2d 701 [1985]). The rule has particular applicability to experienced business people (see, Marine Midland Bank N. A. v. Embassy East, Inc., 160 AD2d 420, 421 [1st Dept. 1990]).

In interpreting a contract, the intent of the parties governs. A contract should be construed so as to give full meaning and effect to all of its provisions. Words and phrases are given their plain meaning and rather than rewrite an unambiguous agreement, a court should enforce the plain meaning of that agreement. Where the intent of the parties can be determined from the face of the agreement, interpretation is a matter of law and the case is ripe for summary judgment. On the other hand, if it is necessary to refer to extrinsic facts, which may be in conflict, to determine the intent of the parties, there is a question of fact, and summary judgment should be denied (see, American Express Bank, Ltd. v. Uniroyal, Inc., 164 AD2d 275, 277 [1st Dept. 1990]).

Here, inasmuch as defendants have submitted documentary evidence in support of the motion, the court's inquiry with respect to the motion is whether plaintiff has a cause of action, not whether he has stated one (see, Rovello v. Orofino Realty Co., supra). Article V of the agreement executed by 622 Building, as owner, and W&W, as contractor, on March 18, 1999, states that "[a]s consideration for the full and complete performance of the [w]ork and all of [c]ontractor's obligations…,[o]wner shall pay to [c]ontractor the [c]ontract sum of $950,000…subject to additions and deductions as provided in Article VII Applications for Payment…"

Article V, Section 5.02 of the agreement states that "[b]ased upon [a]pplications for [p]ayment submitted to the [o]wner by [c]ontractor, the [o]wner shall make progress payment on account of the [c]ontract sum to [e)ontractor as provided elsewhere in Article VII." Article V, Section 5.03 states that each application for payment "shall" be based upon the "schedules of values" submitted by the contractor in accordance with Article VII, and that the schedule of value "shall" allocate the entire contract sum among various portions of the work and "be prepared in such form and supported by such data to substantiate its accuracy as the [o]wner may require."

Article V, Section 5.04 of the agreement states that applications for payment "shall" indicate the percentage of completion of each portion of the work as of the end of the period covered by the application for payment, and Article V, section 5.05 of the agreement states that the contract amount "shall" be payable, subject to "holdback" or "retainage" of lot, until the work is finally complete, as "defined in this agreement."

Article VI, section 6.06 of the "Date of Final Completion" or "Final Completion Date" "shall" mean the date upon which "all of the [w]ork set forth on the Final Punch List…) has been fully and satisfactorily completed" in "strict conformance with the [c]ontract [d]ocuments and in full compliance with all applicable laws, rules, requirements and regulations. . and all other documents required under this [a]greement to be delivered to the [o]wner by the [c]ontractor shall have been issued and delivered to [o]wner; and. . .[o]wner has issued a Certificate of Final Completion."

Article VII, entitled: "Payment to Contractor," Section 7.01, states that the contract sum "shall" be paid in accordance with a particular procedure set forth in the agreement, and Section 7.08 of the agreement states that final payment pursuant to the agreement "shall" not be made unless certain conditions were satisfied, including those set forth in Section 7.08 (f), which states that there "shall" have been delivered to the owner "written certification" of the architect that the work has been completed in accordance with the agreement "all of the [c]ontract documents."

Clearly, then, the plain language of the parties' agreement required that 622 Building make periodic payments to W&W during the course of its performance of the work, conditioned upon W&W's submission of certain documents, and that final payment on the contract would not be made unless certain conditions were satisfied as well, including, as contended by defendants, delivery to the owner, by the architect, a written certification that the work at the subject premises had been completed (see, American Express Bank, Ltd. v. Uniroyal, Inc., supra).

Further, it is also clear that Article VII of the parties' agreement governs payments to be made to W&W, as contractor, by 622 Building, as owner, and that as such, there exists no ambiguity with regard to W&W's obligations, pursuant to Section 7.08 (f), to deliver to 622 Building, a written certification from the architect, when seeking final payment under the agreement (id.) Moreover, inasmuch as W&W now contends that the conditions for final payment under the agreement "have not yet arisen," given the "billings and retainage that remain outstanding," the first cause of action alleged in the complaint must be dismissed as a matter of law, in that W&W has not fully performed under the parties' agreement as alleged in the complaint, specifically with respect to Article VI, Section 6.06, or Article VII of the agreement (see, Furia v. Furia, supra).

Accordingly, that branch of defendants' motion seeking to dismiss the complaint upon the grounds that it fails to state a cause of action is granted as to the first cause of action.

Moreover, with regard to the second cause of action alleged in the complaint, there is insufficient evidence that Cohen Brothers and W&W executed an agreement in June, 1999, as "general contractor," and "subcontractor," respectively. The plain language of the agreement indicates that the agreement was executed by 622 Building, as owner, and W&W, as contractor (see, American Express Bank, Ltd. v. Uniroyal, Inc. , supra). More specifically, the agreement indicates that "Charles Steven Cohen" executed the agreement on behalf of 622 Building in his capacity as "President," and that "Michael Haber," executed the agreement on behalf of W&W in his capacity as "vice-president,"² and as such, the parties are conclusively bound by the terms of the agreement absent a showing of fraud, duress, or some other wrongful act on the part of any party, which has not been offered here (see, Columbus Trust Co. v. Campolo, supra). W &W's contention, therefore, that factual issues exists as to whether Cohen Brothers served as general contractor under the agreement, given that it is allegedly included as an indemnified party and that its alleged duties and responsibilities are customarily those of a general contractor, need not be reached by the court (.id).

Accordingly, that branch of defendants' motion to dismiss the complaint upon the grounds that it fails to state a cause of action as against Cohen Brothers is granted as to the second cause of action.

The third cause of action alleged in the complaint must be dismissed as well. Generally, the existence of a valid and enforceable agreement precludes quasi-contractual recovery. The exception to this rule is when a bona fide dispute exists as to the existence of an agreement. In such instances, the plaintiff may proceed. on both breach of contract and quasi-contract theories (see, Nakamura v. Fujii, 253 AD2d 387, 390 [1st Dept. 1998]). Here, however, there is no dispute as to the existence of the two agreements which WEM alleges has been breached. As a consequence, the third cause of action alleging unjust enrichment may not be maintained as a matter of law (.id).

Accordingly, that branch of defendants' motion to dismiss the complaint upon the grounds that it fails to state a cause of action is granted as to the third cause of action.

Notice of the Mechanic's Lien

In support of the motion to dismiss the fourth cause of action, defendant contends that the Notice of Lien is fatally defective on its face because it neither minimally nor accurately includes information describing the nature of the claim against 622 Third Avenue, as required by law. Additionally, it is contended that the Notice of Lien improperly refers to work performed under two separate contracts, one of which is time-barred by the 8-month statute of limitations under the Lien Law. In response, W&W contends that the Notice of Mechanic's Lien is legally sufficient, despite the clerical error with respect the start date of the work performed at the subject premises.

Pursuant to Lien Law, Section 9(9), a Notice of Lien "shall" state the labor performed or materials furnished and the agreed price or value thereof, or materials actually manufactured for but not delivered to the real property at the agreed price or value thereof. Moreover, as a general rule, a Notice of Lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within eight months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished (see, Lien Law 10(1)).

Here, the Notice of Lien filed by W&W in the County Clerk's Office, New York County on January 9, 2001, describes the labor performed at the subject premises as "glass and glazing," and further indicates, inter alia, that the agreed price and value of the labor performed was approximately $581,200.50; that the first item of work performed occurred on or about July 23, 2000; and that the last item of work performed occurred on or about November 5, 2000.

In parties' agreement dated March 18, 1999, however, the work to be performed as "architectural/metal and glass" work, at the contract price of $950,000. The parties' agreement executed in or about June, 1999, describes the work to be performed as "installation, fabrication, and delivery of interior storefronts," at the contract price of $120,000. Consequently, it is the court's determination that the Notice of Claim filed by W&W fails to adequately describe the labor supplied pursuant to either agreement executed by the parties and that the notice also fails to correctly identify the agreed price and value of the labor performed as to either contract. When taken together, the Notice cannot be deemed to substantially comply with Lien Law 9 (see, Matter of Diamond Architecturals, Inc. v. EFCO Corp., 179 AD2d 420, 421 [1st Dept. 1992]; C&D Rodriguez General Contracting, Inc. v. Gatell, 295 AD2d 550 [2nd Dept. 2002]).

Accordingly, that branch of defendants' motion to dismiss the complaint upon the grounds that it fails to state a cause of action is granted as to the fourth cause of action.

Default Judgment-Counterclaims

Defendants' motion for a default judgment against W&W, upon the grounds that it has failed to serve a reply to the counterclaims asserted in the answer, must be denied. The documentary evidence indicates that defendants served an answer in this action on or about May 7, 2001, and that W&W's reply was served on or about May 30, 2001. As such, W&W did not fail to respond or plead to the counterclaims (see, CPLR 3215(a)). The motion, therefore, is denied.

Cross Motion-Punitive Damages

The counterclaims essentially allege, inter alia, that 622 Building and its successor-in-interest, 622 Third Avenue, are entitled to compensatory and punitive damages, as a result of W&W's performance of its obligations under both agreements, with regard to substantial delays and negligent construction.

Defendants contend, inter alia, that the cross motion is untimely and should not, therefore, be considered by the court. W&W contend that it has good cause for the delay in making this motion, in that the delay was due to attempts made by it to persuade defendants to withdraw their demand for punitive damages. W&W submits that it advised defendants that there was no legal basis for such claims. It is also contended that the cross-motion should be granted on these grounds as well.

CPLR 3212(a) states that a party may not make a summary judgment motion more than 120 days after filing a note of issue unless it obtains "leave of court on good cause shown." The court thus has discretion in determining whether to consider a motion for summary judgment. more than 120 days after the note of issue has been filed (see, Gonzalez v. 98 Mag Leasing Corp., 95 NY2d 124, 128-129 [2000].

Here, the court is persuaded that W&W attempted to resolve this issue without making this crops motion, as evidenced by letters dated October 19 and 31, 2001, from W&W to defendants. As such, it is the court's determination that W&W has demonstrated "good cause" for its delay in making the cross motion, and that the motion should be, therefore, considered by the court (.id).

The court may award punitive damages in cases alleging breach of contract when: (1) The conduct is actionable as an independent tort; (2) the tortious conduct must be of egregious nature; (3) the egregious conduct is directed at the [party); and (4) the conduct is directed at the public generally (see, New York University v. Continental Ins. Co., 87 NY2d 308, 316 [1995] . Further, punitive damages may be awarded in cases alleging negligence where there is evidence of willful or wanton negligence or recklessness with respect to a party (see, Heller v. Provenzano, 303 AD2d 20, 25-26 [1st Dept. 2003]).

Here, there is insufficient evidence that W&W's alleged conduct at the subject premises, while performing its obligations under the parties, agreements, was egregious in nature and directed at defendants and the public generally, and that such alleged conduct moreover constitutes willful or wanton negligence or recklessness with respect to defendants (.id). Consequently, W&W has made a prima facie showing o? entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issue of fact (see, Alaverz v. Prospect Hosp., supra). Additionally, defendants have failed to produce any evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action (.id). W&W's cross motion must be therefore granted.

Accordingly, the cross motion for summary judgment dismissing defendants' demand for punitive damages, as asserted in the counterclaims, is granted.

To reiterate, defendants' motion to dismiss the complaint upon the grounds that it fails to state a cause of action is granted. Defendants' motion for a default judgment on its counterclaims is denied. Plaintiff's cross motion for an order granting it summary judgment dismissing the defendants' demand for punitive damages, as alleged in the counterclaims, is granted.

ORDERED that the motion to dismiss the complaint is granted and the complaint is hereby severed and dismissed as against defendants; and it is further

ORDERED that the cross motion for an order granting summary judgment dismissing the defendants' demand for punitive damages, as alleged in the counterclaims, is granted, and that the Clerk is directed to enter judgment in favor of plaintiff; and it is further

ORDERED that the remainder of the action shall continue.

Dated: December 12, 2003

Endnotes

¹Defendants also move for a default judgment on their counterclaims upon the grounds that plaintiff has failed to serve a reply to such claims.
²The document actually states: "V.P."