Opinion
600109/17
05-31-2018
Kelley MILLET and Erika Millet, Plaintiffs, v. Jeffrey L. KAMEN and Terry Morabito, Defendants.
Matthews, Kirst, & Cooley, PLLC, 241 Pantigo Road, East Hampton, NY 11937, Attorneys for the Plaintiffs. Michael F. Schwartz, 40 Fulton Street, 7th Fl., NY, NY 10038, Attorney for the Defendant.
Matthews, Kirst, & Cooley, PLLC, 241 Pantigo Road, East Hampton, NY 11937, Attorneys for the Plaintiffs.
Michael F. Schwartz, 40 Fulton Street, 7th Fl., NY, NY 10038, Attorney for the Defendant.
Randy Sue Marber, J.
Upon the foregoing papers, the motion by the Defendants, pursuant to CPLR § 3211(a)(7) and (a)(1), seeking dismissal of the newly added claims in the Plaintiffs' amended complaint, is determined as hereinafter provided.
This action arises out of the construction and sale to the Plaintiffs of a new single-family residence located at 62 Hoaglands Lane, Old Brookville, New York (the "Premises"). On October 20, 2014, the Plaintiffs and the Defendant, JEFFREY L. KAMEN ("Kamen"), entered into a Residential Contract of Sale, which provides that Kamen would convey the Premises, with all buildings and improvements thereon, to the Plaintiffs for the purchase price of $2,887,500.00 ("Contract") [See Residential Contract of Sale, annexed to Defendants' Motion as Exhibit "B"]. While Kamen is a licensed architect, the Contract defines Kamen as the "Seller" of the Premises. The Plaintiffs seek to recover for various defects discovered after taking possession of the Premises. The gravamen of the parties' dispute concerns a "Single Family Home Limited Warranty" (the "Limited Warranty") annexed to the Contract.
The Limited Warranty, made exclusively by Kamen, replaced all other warranties, specifically providing as follows:
THIS LIMITED WARRANTY IS IN LIEU OF AND REPLACES ALL OTHER WARRANTIES ON THE CONSTRUCTION AND SALE OF THE HOME, THE BUILDINGS AND ITS COMPONENTS, BOTH EXPRESS AND IMPLIED (INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE FACE HEREOF. THE PURPOSE OF THIS LIMITED WARRANTY IS TO IDENTIFY THE SELLER'S RESPONSIBILITIES FOR CONSTRUCTION DEFECTS OF A LATENT OR HIDDEN NATURE THAT COULD NOT HAVE BEEN FOUND OR DISCLOSED ON FINAL INSPECTION OF THE HOME.
[See Limited Warranty, Exhibit "B" at p. 10]. For obvious or patent defects or any unfinished work, the Limited Warranty provided the Plaintiffs an opportunity to conduct a final inspection of the Premises with Kamen prior to their acceptance of the deed [Id. at p. 10 at ¶ 3]. All defects and unfinished items were to be set forth on a "Final Inspection Sheet" and signed by both parties.
The "Effective Date" of the warranty period was the earlier of (i) the Plaintiffs' occupancy of the Premises; or (ii) delivery of the deed. However, as to defects noted on the Final Inspection Sheet, the effective date was when the defects were corrected. [Id. ].
The scope of coverage and warranty periods were broken down by category and duration. For a period of one year from the Effective Date, the Limited Warranty covered latent defects by Kamen, his agent, employee or subcontractor, arising from (a) defective workmanship; (b) defective materials; (c) defective design by an architect engineer, surveyor or other design professional retained exclusively by Kamen; or (d) defective installation of appliances sold as part of the Premises.
For a period of two years from the Effective Date, the Limited Warranty covered latent defects arising from Kamen's defective installation of "major systems", including (a) plumbing; (b) electrical; and (c) heating, cooling and ventilation ("HVAC"). Each major system to which this coverage applied was also defined.
Lastly, for a period of six years from the Effective Date, the Limited Warranty covered latent "major structural defects" arising from defective workmanship, materials or design by an architect, engineer, surveyor or other design professional retained exclusively by Kamen. Major structural defects are defined as defects resulting in physical damage to load-bearing portions of the home affecting their functionality and causing the home to be unsafe, unsanitary or otherwise unlivable. Load-bearing portions include foundation systems and footings, beams, girders, lintels, columns, walls and partitions, floor systems, and roof framing systems.
The Limited Warranty did not cover any work or materials ordered or directed by the Plaintiffs from Kamen's subcontractors or suppliers. Nor did it cover any patent defects shown on the Final Inspection Sheet or those that ought to have been discovered prior to the Effective Date. Notably, Kamen's total monetary liability was limited to $500,000.00, less any insurance proceeds received by the Plaintiffs. Also, the Limited Warranty expressly excluded bodily injury, death, or damage to personal property; and consequential, incidental, special and indirect damages [See Limited Warranty at ¶ 5, subdivisions "(q)" and "(s)"].
In the event of a defect covered therein, the Limited Warranty provided a cure period of sixty (60) days within which Kamen was obligated to repair, replace or pay the Plaintiffs the reasonable cost of repairs [Id. at ¶ 6]. This provision reiterated Kamen's limit of liability to the aggregate amount of $500,000. Further, the Plaintiffs were required to follow a "Step by Step Claims Procedure" in the event of a covered defect [Id. at ¶ 7]. In response to a claim, Kamen had the right to inspect and test the claimed defect and the Plaintiffs had to provide Kamen reasonable access to conduct such inspection [Id. at ¶ 7(d) ].
After the Plaintiffs took possession of the Premises, and during the applicable warranty periods, the Plaintiffs discovered latent defects in the home resulting from defective installation of the plumbing, HVAC and electrical systems. In accordance with the procedures outlined in the Limited Warranty, the Plaintiffs served a notice of claim outlining the defects discovered. In or about December 2016, Kamen gave written notice of his rejection of the Plaintiffs' claim. The instant action followed.
The Plaintiffs originally commenced this action by the electronic filing of a summons and complaint solely against Kamen asserting two causes of action, to wit, breach of contract and unjust enrichment. The Plaintiffs subsequently filed a supplemental summons and amended complaint adding as a Defendant, TERRY MORABITO ("Morabito"), who was involved with constructing the Premises with Kamen. The amended complaint also asserts a negligence claim against both Defendants and an architectural malpractice claim against Kamen, as well as a demand for punitive damages. The instant motion seeks dismissal of the Plaintiffs' Third Cause of Action for negligence and Fourth Cause of Action for architectural malpractice as duplicative of the breach of contract claim, as well as the Plaintiffs' demand for punitive damages.
In their amended complaint, the Plaintiffs allege in their breach of contract claim that, since taking possession of the Premises and during the warranty period, the Plaintiffs discovered latent defects in the home resulting from the alleged defective installation by Kamen of, inter alia , the plumbing, HVAC and electrical systems [See Amend. Compl. at ¶ 11, annexed to Defendants' Motion as Exhibit "A"]. Due to Kamen's alleged defective and/or negligent installation of the foregoing systems, the Plaintiffs complain of eleven (11) major water leaks, damage to the floors, and the heating system's failure to maintain a temperature. They further allege that Kamen's defective installation of the electrical wires poses a safety and health risk. [Id. at ¶¶ 12–15]. As a result, the Plaintiffs claim to be damaged in a sum no less than $266,892.22 [Id. at ¶ 25].
The negligence claim alleges that the Defendants owed a duty to build, construct, alter, repair, maintain or oversee the building and construction in a safe and reasonable manner and to a standard of good and reasonable workmanship and craftmanship. It is alleged that the Defendants breached their duty by failing to exercise reasonable care allegedly resulting in twenty-two specifically enumerated defects. [See Amended Compl. at ¶¶ 34–37]. The Plaintiffs further assert that they have been "forced to reside in a home with constantly failing major systems, and were forced to expend monies to make substantial repairs and replace certain systems which posed a threat to health and public safety including, but not limited to, substantial work to repair the HVAC system and the replacement of all of the hot water lines in Plaintiffs' finished and decorated basement and substantial restoration of the walls, ceiling and damaged furniture thereafter." [Id. at ¶ 40]. Notably, the Plaintiffs seek the identical sum in damages as a result of the alleged breach, to wit, no less than $266,892.22 [Id. at ¶ 41].
The allegations in the architectural malpractice claim asserted against Kamen are virtually identical to the negligence claim, including the amount sought for economic loss, except that the Plaintiffs allege a breach of the reasonable standard of care for professional architects [See Amend. Compl. at ¶¶ 44–52]. The architectural malpractice claim also includes a demand for punitive damages to the tune of $3,500,000.00. To that end, the Plaintiffs allege that Kamen's "negligence rises to the level of exceptional and/or outrageous conduct and demonstrates reckless or wanton disregard for safety or rights" [Id. at ¶ 53].
Counsel for the Defendants seeks dismissal of the Plaintiffs' third (negligence) and fourth (architectural malpractice) causes of action on the grounds that these claims merely restate and replicate the breach of contract claim and are based upon an identical set of facts. Defendants' counsel argues that the tort claims are grounded upon the theory that the Defendants failed to perform their obligations pursuant to the parties' Contract, and that the monetary loss alleged are in effect contract damages which are not recoverable under a tort theory of liability. Counsel continues that the damages sought—a sum of "no less than $266,892.22"—are designed to provide the Plaintiffs with the benefit of the bargain.
As to the punitive damages claim, the Defendants' counsel submits that dismissal is warranted because punitive damages are not available for mere breach of contract as it only involves a private wrong and not a public right. In this regard, counsel argues that the express terms of the Limited Warranty exclude "special" damages, and the circumstances presented here do not warrant piercing the limitation of liability clause.
In opposition, the Plaintiff, Erika Millet, submits a sworn affidavit. Following the closing which was held on December 5, 2014, the Plaintiffs delayed taking possession of the Premises for approximately eight (8) or nine (9) months so as to not disrupt their daughter's schooling [See Millet Aff. sworn to on 12/1/17 at ¶ 11]. Upon taking possession of the Premises in or about August 2015, problems with the home began to arise [Id. at ¶ 12]. Millet attempted to contact Morabito to remedy the issues without success [Id. at ¶ 13]. She then claims to have hired outside contractors to correct the defects all of whom advised her that such defects were caused by the Defendants' negligent installation and construction [Id. at ¶ 14].
The damages Millet claims to have incurred are twofold: first, physical damage to the Premises and her personal belongings; and second, being forced to hire contractors and repairmen to clean and repair the Premises. Millet asserts that the ongoing construction at the home for cleaning and repairs caused and continues to cause a great disruption and interferes with their peaceful enjoyment of the home [Id. at ¶ 17].
By way of example, Millet attests that "sinkholes up to 6' deep and 10' across developed in [their] backyard, presenting a very dangerous condition for [her] family, guests, and anyone else who comes on [their] property " [Id. ]. Millet alleges that her landscaping contractor advised her that "the sink holes were the result of the Defendants burying construction debris rather than hauling it off site and improper compacting of soil post-construction" [Id. ]. She further claims that many of their substantial and mature trees have died, one of which fell on their neighbor's fence. Millet claims to have suffered emotional distress because the electrical wiring was not capped which led to a possibility that "this could have caused a fire in [her] daughter's playroom." [Id. at ¶ 21].
Millet attests that, on advice of counsel, many of the defects arising out of the Defendants' negligence are outside the scope of coverages afforded by the Limited Warranty [See Millet Aff. at ¶ 20].
Millet also submits a supplemental affidavit describing additional damages incurred by the Plaintiffs since the filing of the original opposition papers. Specifically, Millet describes additional leaks that were discovered and further costs that had to be expended to remedy the ongoing issues.
Legal Analysis
On an application interposed pursuant to CPLR § 3211(a)(7), the complaint is to be liberally construed and the facts as alleged therein are to be accepted as true and the plaintiff afforded every favorable inference which may be drawn therefrom ( Leon v. Martinez , 84 N.Y.2d 83, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ). In entertaining such an application, the function of the court is only to determine whether the facts as alleged fall within a cognizable legal theory ( id. ). In assessing a motion to dismiss under CPLR § 3211(a)(7)... a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint" ( id. ; Leon v. Martinez , 84 N.Y.2d 83, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ). When an affidavit is presented for the court's review, "the criterion is whether the proponent of a pleading has a cause of action, not whether he has stated one" ( Guggenheimer v. Ginzburg , 43 N.Y.2 268, 401 N.Y.S.2d 182, 372 N.E.2d 17 [1977] ).
"It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated" ( Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co. , 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 516 N.E.2d 190 [1987] ). "[M]erely alleging that the breach of a contract duty arose from a lack of due care will not transform a simple breach of contract into a tort." ( Sommer v. Federal Signal Corp. , 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365 [1992] ). Professionals may be held liable in tort for failure to exercise reasonable care, irrespective of their contractual duties ( Id. ). In such circumstances, "it is policy, not the parties' contract, that gives rise to a duty of care." ( Id. at 552, 583 N.Y.S.2d 957, 593 N.E.2d 1365 ). In determining whether a legal duty independent of a contractual obligation should be imposed, courts look to the nature of the services performed and the parties' relationship—"specifically, where the defendant ‘perform[s] a service affected with a significant public interest [and where the] failure to perform the service carefully and competently can have catastrophic consequences.’ " ( Dormitory Authority of the State of New York v. Samson Construction Co. , 30 N.Y.3d 704, 711, 70 N.Y.S.3d 893, 94 N.E.3d 456 [2018], citing Sommer , 79 N.Y.2d at 553, 583 N.Y.S.2d 957, 593 N.E.2d 1365 ). In addition to considering the relationship between the parties, courts also evaluate the nature of the injury, how the injury occurred and the harm it caused ( Dormitory Authority , 30 N.Y.3d at 711, 70 N.Y.S.3d 893, 94 N.E.3d 456 ). The Court of Appeals has made clear that "where plaintiff is essentially seeking enforcement of the bargain, the action should proceed under a contract theory" ( Dormitory Authority , 30 N.Y.3d at 711, 70 N.Y.S.3d 893, 94 N.E.3d 456, citing Sommer , 79 N.Y.2d at 552, 583 N.Y.S.2d 957, 593 N.E.2d 1365 )
One of the legal issues addressed by the New York Court of Appeals in Dormitory Authority is precisely the issue presented here—whether the plaintiff's negligence claim asserted against the defendant architect was duplicative of the breach of contract claim. Dormitory Authority was decided by the Court of Appeals on February 15, 2018, one day after the instant motion was fully briefed and submitted. As the parties did not have the opportunity to reference this recent opinion in their papers, pertinent portions are noted and relied upon herein.
Dormitory Authority involved a construction project to build a lab for use by the Office of the Chief Medical Examiner in New York City adjacent to Bellevue Hospital. Pursuant to a contract with the City, the plaintiff was responsible for financing and managing the design and construction of the lab. Pursuant to a contract between Dormitory Authority and Perkins (defendant architect), Perkins was to provide design, architectural, and engineering services for the project and supervise its construction. Ultimately, the failure to properly install an excavation support system led to substantial damage and delays, including causing an adjacent building to "settle" by eight inches and damage to sidewalks, sewers and water mains, requiring emergency repairs. ( Dormitory Authority , 30 N.Y.3d at 707–708, 70 N.Y.S.3d 893, 94 N.E.3d 456 ). The Plaintiff's breach of contract claim alleged that Perkins failed to provide adequate designs; failed to properly supervise subcontractors it retained; failed to monitor the progress of their work to ensure it was being completed properly and in substantial compliance with design recommendations; failed to ascertain the actual field conditions and the foundation beneath the adjacent building; and failed to advise Dormitory Authority of the risks posed by the installation of the excavation support system and taking precautions against such risks. ( Dormitory Authority , 30 N.Y.3d at 708–709, 70 N.Y.S.3d 893, 94 N.E.3d 456 ). The Court of Appeals described the allegations set forth in plaintiff's negligence claim as "virtually identical in every respect, but with an introductory phrase that references Perkins' failure to ‘comply with professional standards of care’ instead of breach of contract. The damages for both claims were described as the "significant additional expenses" necessary to complete the project. However, the damages sought pursuant to plaintiff's professional malpractice claim was $4 million higher than for its breach of contract.
In dismissing the negligence claim as duplicative of the breach of contract claim, the Court of Appeals found, as it did in Clark–Fitzpatrick , that the negligence allegations were "merely a restatement, albeit in slightly different language, of the ‘implied’ contractual obligations asserted in the cause of action for breach of contract" ( Id. at 711–712, 70 N.Y.S.3d 893, 94 N.E.3d 456 ). The Court noted that there was no distinction in the allegations between the damages applicable to either claim. The Court also found significant that the contract itself contemplated the defendant architect's responsibility for additional costs or expenses due to the architect's design errors or omissions, and addressed it in the contract terms.
In the instant matter, dismissal of the Plaintiffs' negligence claims is warranted. Affording the Plaintiffs every reasonable inference, as required on a pre-answer motion, the Court finds that the negligence allegations are all based upon acts or omissions pursuant to the explicit terms of the Limited Warranty in the parties' Contract. In the First Cause of Action, labeled breach of Limited Warranty as against Architect, the Plaintiffs allege latent defects resulting from defective installation of the plumbing, HVAC and electrical systems resulting in major water leaks, damaged floors, failure to maintain a temperature and risk to health and safety. Other than employing language that Defendants "[failed] to exercise reasonable care in fulfilling [their] duty to Plaintiffs", the negligence claims merely include a more detailed description of the defects resulting from the Defendants' alleged "negligent and/or substandard workmanship or craftmanship in violation of industry standard and/or the applicable building codes".
As to the relationship between Kamen and the Plaintiffs, nothing in the Contract, amended complaint, or submissions herein suggest that Kamen was retained to provide architectural services or to design a home specifically for the Plaintiffs herein. Rather, while the Defendants were involved in constructing the Premises, the nature of the parties' relationship is in contract.
With regard to damages, the Plaintiffs allege in their negligence claims that their property was substantially damaged due to the Defendants' alleged "breach of their duties and negligent actions" which forced them "to expend monies to make substantial repairs and replace certain systems which posed a threat to health and public safety including, but not limited to, substantial work to repair the HVAC system and the replacement of all of the hot water lines in Plaintiffs' finished and decorated basement and substantial restoration of the walls, ceiling and damaged furniture thereafter." [See Amend. Compl. at ¶ 40]. As a result of the foregoing, the Plaintiffs seek damages in a sum "no less than $266,892.22". Notably, the Plaintiffs seek the identical sum under their breach of contract claim. The Plaintiffs also seek the identical sum of $3.5 million in punitive damages under both theories of liability.
Analogous to Dormitory Authority , in the Contract at issue here, particularly the comprehensive terms of the Limited Warranty, the parties contemplated Kamen's responsibility for defects and damages resulting from defective workmanship, materials, or design by Kamen or those retained by him, and addressed it in the contract terms. The unambiguous terms detailed in the Limited Warranty were bargained for by the parties and determine the rights and obligations of the parties. Indeed, the parties also agreed to limit Kamen's total liability to $500,000.00; and exclude all consequential, incidental, special, and indirect damages. The Court sees no reason to disturb the parties' clear and unequivocal agreement. Further, the facts presented here do not fall within the class of cases where a duty is imposed on a professional architect to exercise due care in the performance of contractual obligations. The Court of Appeals has "distinguished between circumstances where the harm was an ‘abrupt, cataclysmic occurrence’ not contemplated by the contracting parties and one where the plaintiff was essentially seeking enforcement of contract rights ( Dormitory Authority , 30 N.Y.3d at 713, 70 N.Y.S.3d 893, 94 N.E.3d 456 ). In that case, damage to adjacent structures and sidewalks and the settling of an adjacent building was not considered an "abrupt" or "catastrophic" consequence. Nor do we find here that the alleged harm rises to the level of "catastrophic". Rather, in line with long-standing precedent, the damages alleged fall squarely within the contemplation of the parties under the contract. Where the rights and obligations of the parties arise out of their contractual relationship, a duplicative negligence claim should not be permitted to proceed against an architect simply because the defendant is an architect. ( Brushton–Moira Cent. School Dist. v. Thomas Assoc. , 91 N.Y.2d 256, 669 N.Y.S.2d 520, 692 N.E.2d 551 [1998] ). Since the Plaintiffs ostensibly seek economic damages recoverable under a breach of contract theory, the Plaintiffs' negligence claims must be dismissed as duplicative of their breach of contract claim.
Lastly, the Plaintiffs' punitive damages demand must also be dismissed as "punitive damages are not available for mere breach of contract, for in such a case only a private wrong, and not a public right, is involved." ( Garrity v. Lyle Stuart, Inc. , 40 N.Y.2d 354, 358, 386 N.Y.S.2d 831, 353 N.E.2d 793 [1976].
Accordingly, it is hereby
ORDERED , that the motion by the Defendants seeking dismissal of the Plaintiffs' Third Cause of Action for negligence, Fourth Cause of Action for architectural malpractice, and punitive damages demand, is GRANTED ; and it is further
ORDERED , that the Defendants shall serve and file an answer within twenty (20) days of the date of entry of this Order; and it is further
ORDERED , that counsel for the parties are directed to appear for the scheduled Certification Conference on August 30, 2018 at 9:30 a.m. before the Hon. Randy Sue Marber.
This constitutes the Decision and Order of the Court.