Opinion
CV-4983-20/HU
03-04-2021
POND CONSTRUCTION CORP., Plaintiff v. ITALINE, INC., Ian Chaikin and Cesar Chaikin, Defendant.
Lee J. Mondshein, Attorney for Plaintiff, 445 Broad Hollow Road, Suite 419, Melville, New York 11747 Chaikin, PLLC, Attorney for Defendant, 1 Penn Plaza, Suite 5310, New York, N.Y. 10019
Lee J. Mondshein, Attorney for Plaintiff, 445 Broad Hollow Road, Suite 419, Melville, New York 11747
Chaikin, PLLC, Attorney for Defendant, 1 Penn Plaza, Suite 5310, New York, N.Y. 10019
C. Stephen Hackeling, J.
Upon the following papers numbered 1-14 Read on this motion by defendant
Notice of Motion and supporting papers1-8
Notice of Cross Motion and supporting papers
Answering Affidavits and supporting papers
Affidavit in Opposition and supporting papers 9-14
Replying Affidavits and supporting paper N/A
Filed papers ________
Other paper
it is,
Relief Requested
The defendants Ian Chaikin, Cesar Chaikin and Italine, Inc., have made application for an order pursuant to CPLR § 3211, dismissing the plaintiff's complaint. The plaintiff submits opposition thereto. Said application is granted.
Background
The plaintiff commenced this action sounding in breach of contract, unjust enrichment, and fraud, stemming from work allegedly performed on the defendants' property at 91 Yukon Drive, Woodbury, New York, in August 2018.
Prior to the commencement of this Suffolk County District Court action, the defendant Italine, Inc. (as plaintiff) commenced a Suffolk County Supreme Court action dated September 23, 2018 against A-H Construction, LLC (hereafter "A-H") and Pond Construction Corp. (hereafter "Pond") sounding in breach of contract. Paragraph #13 of said complaint avers that Ian Chaikin and Italine, Inc. undertook the construction of a "newly built residence". Thereafter, A-H Construction (as plaintiff) commenced a Nassau County action dated October 29, 2018 against defendants Ian and Cesar Chaikin and Italine, Inc. seeking to foreclose upon a mechanic's lien it had filed against the subject property as well as seeking a money judgment for breach of contract.
On November 19, 2018, Italine Inc. and the Chaikins made an application to the Nassau County Supreme Court to vacate the A-H mechanics lien and dismiss its complaint. Paragraphs #6 and #7 of Ian Chaikin's affidavit in support states the verbage "as part of the construction of a new dwelling". Pursuant to order and decision dated February 8, 2019, the Nassau County Supreme Court dismissed A-H's complaint as to its cause of action for breach of contract and denied the Italine/Chaikin application to vacate the A-H's mechanic's lien.
Pursuant to application dated March 5, 2019, Italine/Chaikins requested reargument of the Supreme Court February 8, 2019 decision. Reargument was granted. In the reargument papers, Italine/Chaikins, for the first time, raised the issue that the A-H complaint should be dismissed as A-H did not have a Nassau County Home Improvement license. A-H via the affirmation of its counsel dated April 10, 2019, asserted in paragraphs # 23 and #25 that it did not need a Nassau County Home Improvement license as the subject project involved construction of a "new residence" and was therefore expressly exempt from the law's requirements.
On July 1, 2019 the Nassau County Supreme Court entered a short form decision and order vacating the A-H's mechanic's lien and dismissing its complaint. The reason for the dismissal was opined as follows:
It is well settled that a contractor who is unlicensed in the municipality where the work is performed is barred from recovery in contract or under the theories of recovery of quantum meruit and unjust enrichment ( Price v. Close, 302 AD2d 374 ; see also Vatco Contr., Ltd v. Kirchenbaum, 73 AD3d 1163 ). The subcontractor's right to recover is derivative of the right of the general contractor to recover ( C.C.C. renovations, Inc. v. Victoria Towers Dev. Corp., 168 AD3d 664 ). It follows that a subcontractor may not maintain a mechanic's lien against the subject premises if the subcontractor is standing in the shoes of an unlicensed contractor
(see Cont'l Ins. Co. v. Consumer Towing & Collision, Inc., 189 Misc 2d 172 ; see also In re Ratner , 689 NY S. 2d 625 ).
In support of their initial motion, the defendants provided, inter alia, a contract between defendant Italine, Inc. and non-party Pond Construction Corp. (hereinafter referred to as "Pond"), as well as invoices from Pond and copies of checks made out to Pond. Of consequence, Pond is an unlicensed contractor.
Issues Presented
The issue presented to this Court is whether the claim preclusion doctrines of "res judicata" and/or "collateral estoppel" bar the reinstitution of this action via the substitution of a new party plaintiff subcontractor, Pond Construction Corp. in place of A-H Construction? More specifically, does the diminimus raising of the "new home" exemption to Nassau County's Home Improvement law (first raised upon reargument) bring the issue within the claim preclusion doctrines, even if not considered, in the prior decision by the Supreme Court?
Collateral Estoppel/Res Judicata
As determined by the Nassau County Supreme Court, the law concerning the prohibition on the utilization of the Courts to enforce the contractual rights of an unlicensed home improvement contractor is clear and broadly construed. See CPLR§ 3015(e); Forman Construction, Inc. v. P.D.F. Construction , 175 AD3d 1491 (N.Y.A. D 2d Dept. 2019). To the extent that a dispute involves a home improvement contract, the plaintiff in Nassau County must possess a home improvement license. Once a Court of competent jurisdiction decides that matter, all claims arising out of the settled dispute, whether asserted or not in the initial action, are barred from re- litigation. See In re Hunter , 4 NY3d 260 (NY 2005). Djoganpoulos v. Polkes , 67 AD3d 726 (N.Y. AD2d Dept. 2009). The legal doctrines of Res Judicata and Collateral Estoppel serve to bar relitigation of claims by parties "or" those in privity with the same cause of action. Jamal v. Caroline Garden Tenants Corp. , 173 AD3d 843 (N.Y. AD2d Dept. 2019) ; Winkler v. Weiss, 294 AD2d 428 (N.Y. AD2d Dept. 2002).
Res judicata generally involves "claim" relitigation preclusion (same parties) while collateral estoppel involves "transaction relitigation preclusion". See generally Ryan v. New York Telephone Co., 62 NY2d 494 (NY 1984). As the subject action involves a different plaintiff (Pond not A-H); res judicata generally is not applicable. Collateral estoppel is the more appropriate legal doctrine defense when different parties are involved in the same factual transaction. The Second Department in the previously cited Jamal v. Caroline Garden Tenants Corp. cite supra , details the requirements for "collateral estoppel" as follows:
"The doctrine of collateral estoppel ... precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of actions are the same" Ryan v. New York Tel. Co., 62 NY2d 494, 500 (1984). "Collateral estoppel comes into play when four conditions are fulfilled: (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits", Conason v. Megan Holding, LLC, 25 NY3d 1, 17 (2015) ; See Clifford v. County of Rockland, 140 AD3d 1108, 1109 (2016).
The Nassau County Administrative Code (Sec. 21-11.1(3) expressly exempts "new home" construction from its "home improvement" law. As such, to the extent that plaintiff can prove its claim involves a "new home" its claim is not statutorily prohibited, provided Pond is not collaterally estoppel from bringing this action.
The Nassau County Supreme Court made a factual finding that the subject dispute involves a home improvement covered by the Nassau County licensing agency. No finding is made as to a "new home" project which is statutorally exempt. The record presented to both this Court and the Supreme Court reveals only the fact that the disputed services involved "Demolition" ($24,000); "Excavation/Backfill for 10ft Basement" ($6,500) and assorted drainage work for over ($15,000). See contract dated January 29, 2018. While a colorable (if not meritful) argument could be made that these services fit the "new home" definition, it is undeniable that the Supreme Court's determination that a home improvement license was required presumes a determination that this transaction did not involve a "new home". The determinative preclusion standard is "whether the objecting party seeks to again assert issues which were discernable from documents submitted in the prior proceeding". In re Hunter , 4 NY3d 260 (NY 2005). Though mentioned fleetingly, Pond proffered its "new home' exemption argument in its complaint and opposition papers. As such, it cannot be asserted that it did not have the "full and fair opportunity" to litigate the issue as required by the collateral estoppel doctrine.
This department's Appellate Courts have clarified the "new home" vs. "home improvement" distinction stated in the Nassau County licensing law when it was opined that where there is an existing home on the property, (as in this case) the existing structure must be entirely removed from the property, "such that not even the existing foundation can be used in constructing the new home". Enko Construction Corp. v. Aronshtein , 89 AD3d 676 (N.Y. AD2d Dept. 2011). See also, Cinelli Builders Inc. v. Steven Ferris, et al, 78 AD3d 881 (N.Y. AD2d Dept. 2010) for similar holding concerning Village of East Hampton home improvement licensing statute. While probable that Pond's demolition and excavation work removed the existing foundation; the record is sufficiently sparce so as to allow for the Supreme Court to conclude this case did not involve a "new home".
As the determinative issue has been decided, the plaintiff's remedy lies not with a collateral attack brought in this Court but with an appeal or reargument of the Supreme Court decision. The substitution of subcontractor Pond for A-H as plaintiff does not change the nature of this contractual transaction. In this action the parties are in privity as there is no dispute that the owners of both are similar if not identical.
Accordingly, the plaintiff's complaint is dismissed as violative of the doctrine of collateral estoppel.
Both parties request for sanctions are denied.