Opinion
651354/2017
12-05-2018
610 PARK 8E LLC, Plaintiff(s), v. BEST & COMPANY, INC., and Best & Company Construction Services, LLC, Defendant(s).
Attorneys for Plaintiff: LEPATNER & ASSOCIATES LLP, 10 East 40th Street, 17th Floor, New York, New York 10016, By: Barry B. LePatner Attorney for Defendant Best & Company Construction Services, LLC: Rosalyn Maldonado P.C., 108 S. Franklin Avenue, Suite 11, Valley Stream, NY 11580, By: Rosalyn Maldonado
Attorneys for Plaintiff: LEPATNER & ASSOCIATES LLP, 10 East 40th Street, 17th Floor, New York, New York 10016, By: Barry B. LePatner
Attorney for Defendant Best & Company Construction Services, LLC: Rosalyn Maldonado P.C., 108 S. Franklin Avenue, Suite 11, Valley Stream, NY 11580, By: Rosalyn Maldonado
Robert R. Reed, J.
This action arises out of a dispute over alleged renovations to apartment units 8D and 8E in a residential building located at 610 Park Avenue in Manhattan. Plaintiff commenced the instant litigation alleging causes of action for: breach of the applicable Construction Management Agreement; breach of the applicable Delay Memo; breach of the applicable Completion Agreement; an Article 3-A Trust Fund violation; fraud in the inducement; fraud; negligent misrepresentation; rescission and disgorgement; and attorney's fees, pursuant to General Business Law (GBL) 349(h).
Defendant Best & Company Construction Services, LLC now moves to dismiss the complaint, pursuant to CPLR 3211 (a) (1), as barred by documentary evidence, and pursuant to CPLR 3211 (a) (7), for failure to state a cause of action. Defendant's motion to dismiss plaintiff's complaint under CPLR 3211 (a) (1) is denied, but defendant's motion under CPLR 3211 (a) (7) is granted in part and denied part.
DISCUSSION
To succeed on a CPLR 3211 (a) (1) motion to dismiss, defendant has the "burden of showing that the relied-upon documentary evidence ‘resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim’ " ( Fortis Fin. Servs. v. Fimat Futures USA, Inc., 290 AD2d 383, 383 [1st Dept 2002], quoting Scadura v. Robillard , 256 AD2d 567, 567 [2d Dept 1998] ). To be considered "documentary," the evidence must be unambiguous and of undisputed authenticity ( Amsterdam Hospitality Group, LLC v. Marshall-Alan Assoc, Inc., 120 AD3d 431, 432 [1st Dept 2014] ). Affidavits and summary notes do not constitute documentary evidence; they raise issues of credibility for a jury to decide ( Art & Fashion Group Corp. v. Cyclops Prod., Inc., 120 AD3d 436, 438 [1st Dept 2014] ).
In support of its CPLR 3211 (a) (1) motion, defendant submits the (1) contracts, (2) licenses, (3) permit applications, (4) payment requisitions, and affidavits from its principals. Plaintiff contends that the documents submitted by defendant do not constitute documentary evidence sufficient to dismiss a claim pursuant to CPLR 3211(a)(1). The court agrees: such documents are not indisputable. Defendant's motion to dismiss under CPLR 3211 (a) (1), therefore, is denied.
On a motion to dismiss under CPLR 3211 (a) (7), the court accepts the facts as alleged in the complaint as true, accords plaintiff the benefit of any possible favorable inference, and determines only whether the facts as alleged fit within any cognizable legal theory ( Leon v. Martinez , 84 NY2d 83 [1994] ).
a. First, Second, and Third Causes of Action (Breach of the Construction Management Agreement, Breach of the Delay Memo, Breach of Completion Agreement)
"The essential elements of a cause of action for breach of contract are the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of the contract, and resulting damages" ( Morpheus Capital Advisors LLC v. UBS AG , 105 AD3d 145, 150 [1st Dept 2013] ; see Elisa Dreier Reporting Corp. v. Global NAPs Networks, Inc., 84 AD3d 122, 127 [2d Dept 2011] ; see JPMorgan Chase v. J.H. Elec. of NY, Inc. , 69 AD3d 802 [2d Dept 2010] ). Plaintiff's complaint alleges that defendant had a duty to perform various services pursuant to the agreements and that defendant materially breached the contract by failing, neglecting, and refusing to perform the work in a good and workmanlike manner. Defendant alleges that it performed its duties under the Completion Agreement which superseded the Delay Memo.
Accepting as true the allegations therein, the complaint properly pleads the existence of an agreement and defendant's alleged breach of said agreement. At this early stage, plaintiff need not overcome defendant's factual challenges, or establish the merits of its complaint. Plaintiff has done enough to state a cause of action for breach of contract and, thus, the branch of defendant's motion seeking to dismiss the first, second, and third causes of action is denied.
b. Fourth Cause of Action (Conversion)
The First Department has held that "[a] cause of action for conversion cannot be predicated on a mere breach of contract" ( Fesseha v. TD Walerhouse Inv. Services, Inc., 305 AD2d 268, 269 [1st Dept 2003] ). Plaintiff alleges no facts for conversion that are independent of the facts supporting the breach of contract causes of action. Thus, plaintiff's conversion claim is duplicative of plaintiff's breach of contract claim (see Jeffers v. Am. Univ. of Antigua , 125 AD3d 440, 443 [1st Dept 2015] ). Defendant's motion to dismiss the fourth cause of action, for conversion, is granted.
c. Fifth Cause of Action (Article 3-A Trust Fund Violation)
Assuming the truth of its allegations, the complaint here sufficiently pleads the existence of facts that support a cause of action for a trust fund diversion under Article 3-A. Funds paid to a contractor pursuant to a home improvement contract remain the property of the homeowner until (1) proper payment or application of such funds to the purposes of the home improvement contract; (2) default or breach by the owner sufficient to excuse the contractor's continuing performance under the contract, but only to the extent of any reasonable liquidated damages amount and only after seven days prior written notice to the owner; or (3) substantial performance of the contract (see Ippolito v. TJC Dev., LLC , 83 AD3d 57, 65-66 [ 2d Dept 2011] ). Such deposits are to be held in trust subject to the provisions of the Lien Law, and the homeowner is a beneficiary of any such trust created and has standing to maintain suit to enforce the trust fund provisions of Lien Law article 3-A ( id. , p. 66-67 ). There is an issue of fact on the present record with respect to whether trust funds were fully applied to the purposes of the home improvement contract. Defendant's motion to dismiss the fifth cause of action is denied.
d. Sixth and Seventh Causes of Action (Fraud in the Inducement and Fraud)
Plaintiff does not sufficiently allege a cognizable claim for fraud. The elements of fraud are "a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages" ( Eurycleia Partners, LP v. Seward & Kissel, LLP , 12 NY3d 553, 559 [2009] ; Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc. , 115 AD3d 128, 135 [1st Dept 2014] ). Fraud claims must be pleaded with the heightened specificity required by CPLR 3016 (b) ( Pludeman v. Northern Leasing Sys., Inc. , 10 NY3d 486, 491 [2008] ). This heightened specificity "imposes a more stringent standard of pleading than otherwise applicable" ( DDJ Mgmt., LLC v. Rhone Grp. L.L.C., 78 AD3d 442, 443 [1st Dept 2010] ).
In its complaint, plaintiff alleges that defendant did not disclose that it did not have a New York City home improvement license, and otherwise made misrepresentation regarding it licensure status. The complaint fails, however, to plead with the specificity required of a cognizable claim for fraud: offering no detail about the actual language used, or the particular circumstances in which the language was uttered or tendered (including whether the offending language was made in response to any specific inquiry by plaintiff). To the extent the fraud claim relates to false misrepresentations beyond defendant's licensure status, the additional allegations suffer from the same lack of specificity. Thus, the motion to dismiss the fraud claim is granted. Plaintiff also alleges fraud in the inducement. This cause of action is subject to the same heightened pleading standard as fraud ( Abrahami v. UPC Const. Co., Inc. , 176 AD2d 180, 181 [1st Dept 1991] ). Thus, both the fraud in the inducement (sixth cause of action) and fraud (seventh cause of action) claims are dismissed.
e. Eighth Cause of Action (Negligent Misrepresentation)
"A claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" ( J.A.O. Acquisition Corp. v. Stavitsky , 8 NY3d 144, 148 [2007] ). As plaintiff has not adequately alleged a special relationship between it and defendant that pre-existed the transaction here, its cause of action for negligent misrepresentation is dismissed.
f. Ninth Cause of Action (Rescission and Disgorgement)
Rescission "should be granted only when a party's breach is material and willful, or if not willful, so substantial and fundamental as to strongly tend to defeat the object of the parties in making the contract. More specifically, to warrant rescission, a party must allege fraud in the inducement of the contract; failure of consideration; an ability to perform the contract after it is made; or a breach in the contract which substantially defeats the purpose thereof" (see Sabby Healthcare Master Fund Ltd. v. Microbot Medical Inc. , 2018 WL 4668427 at 1 ; quoting Premiere Acquisition Corp. v. Blue Jade Enterprises, Inc. , 2015 WL 1307203, at 2 [SDNY Mar. 23, 2015] [internal quotations and citations omitted] ). Rescission is an equitable remedy that "is to be invoked only when there is lacking complete and adequate remedy at law and where the status quo may be substantially restored" ( Sokolow v. Lacher , 299 AD2d 64, 71 [1st Dep't 2002] ; quoting Rudman v. Cowles Communications, Inc. , 30 NY2d 1, 13 (1972) ).
Here, the complaint's claim for rescission and disgorgement is premised upon its allegations that defendant made material and false representations to plaintiff. These allegations have been deemed inadequate thus far to support the complaint's sixth and seventh causes of action -- and cannot, without more, serve as the theoretical underpinning to support the complaint's ninth cause of action. As such, it is the court's determination that plaintiff has not adequately pleaded a rescission cause of action, and that branch of defendant's motion seeking to dismiss the rescission cause of action should be granted.
g. Tenth Cause of Action (Damages, Treble Damages and Attorneys' Fees Pursuant to GBL § 349(h) )
The complaint alleges that plaintiff, as a consumer of defendant's services, was the victim of materially deceptive and misleading acts which were done with the intent to deceive. Plaintiff thus seeks treble damages and attorneys' fees pursuant to GBL § 349 (h). To prevail on a claim based on GBL § 349 (h), plaintiff must demonstrate that the defendant engaged in a consumer-oriented act or practice, that such act or practice was materially deceptive or misleading, and that it caused the plaintiff injury (see Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank , 85 NY2d 20, 24-26 [1995] ). Plaintiff must make a threshold showing that the challenged act or practice was consumer-oriented — i.e. , that it has a broad impact on consumers at large ( Oswego , 85 NY2d at 25-27 ). By contrast, private contract disputes which are unique to the parties do not fall within the ambit of the statute (id. ). Here, plaintiff does not allege that defendant engaged in deceptive business practices directed at members of the public at large, and, thus, does not state a valid cause of action under the statute. Accordingly, that branch of defendant's motion seeking dismissal of plaintiff's claim alleging a violation of GBL § 349 and seeking damages under § 349 (h) is granted, and said cause of action is dismissed.
Accordingly, it is hereby
ORDERED that defendant's motion is granted in part, to the extent that plaintiff's fourth, sixth, seventh, eighth, ninth and tenth causes of action are dismissed, and the motion is otherwise denied; and it is further
ORDERED that defendant is directed to serve a copy of this decision and order with notice of entry; and it is further
ORDERED that defendant must serve and file its answer within 20 days of entry of this decision and order; and it is further
ORDERED the counsel are directed to appear for a preliminary conference in room 581 at 111 Centre Street on January 24, 2019, at 9:30 am.