Opinion
7278-04.
Decided January 3, 2006.
Finkelstein Feil, LLP, Garden City, New York, COUNSEL FOR PLAINTIFF.
Elias C. Schwartz, Esq., Garden City, New York, COUNSEL FOR DEFENDANT.
Plaintiff BT Building Systems, LLC ("BT Building") moves for summary judgment.
BACKGROUND
BT Building casts this action as a simple claim for goods sold and delivered. It alleges that it was retained to provide building materials. Payment for the materials was due on delivery. The materials were delivered but BT Building was paid for only of the portion of the goods delivered. BT Building seeks to recover the unpaid balance.
However, this case is not that simple.
North Hills Holding Company, LLC ("Holding") is the owner and developer of a residential town house development in Manhasset. The development is known as The Chatham at North Hills and consists of 86 luxury townhouses.
Holding retained Defendant North Hills Building Systems, LLC ("Systems") as the general contractor for the project.
Systems retained BT Building pursuant to a written agreement dated April 19, 2002 to fabricate and supply a truss system to be used in connection with the construction. The truss system was to be used instead of the traditional floor joist and beams. The truss system was to be used in all 86 units at the project.
Systems and Holding decided to use the truss system because they were advised by BT Building that this system would provide significant savings over traditional building methods.
The plans and specifications for the construction required that the floors on the project meet the industry "L720 Criteria" for stiffness. BT Building advised Systems and Holding that the truss system could be fabricated to meet this standard.
BT Building delivered the truss system for 24 units. Upon installation, Systems determined that the truss systems did not meet the required stiffness standard. Systems and Holding allege that they immediately advised BT Building that the trusses did not meet the stiffness criteria. Because of the significant cost that would be incurred in ripping out the already installed trusses, Systems and BT Building tried to work together to repair the trusses so that they would meet the required stiffness criteria. Systems and Holding allege that they incurred significant expenses in repairing the trusses.
BT Building did not deliver the trusses and prefabricated wall panels for the remaining 62 units. Systems and Holding allege that as a result of BT Building not delivering the trusses for the remaining 62 units, it was required to switch to more expensive traditional construction methods. Systems and Holding have counterclaimed to recover the costs claimed to have been incurred in repairing the trusses and the additional expenses incurred as a result of being required to construct 62 units using traditional construction methods.
Systems paid a portion of the contract price for the 24 trusses that were delivered. When Systems did not pay the balance alleged to be due, BT Builders filed a mechanic's lien. The lien was subsequently bonded.
BT Building demanded payment from the bonding company which refused to make payment.
DISCUSSION
A motion for summary judgment must be supported by a copy of the pleadings. CPLR 3212(b). The pleadings encompass the complaint and the answer which may include counterclaims. CPLR 3011. If the answer contains a counterclaim, the Plaintiff is required to serve a reply. CPLR 3011. The reply to the counterclaim is also a pleading. CPLR 3011; and Siegel, New York Practice 4th § 229. Failure to serve a reply to a counterclaim is a default on the counterclaim. Siegel, New York Practice 4th § 229.
The failure to supply a complete set of the pleadings with a motion for summary judgment requires denial of the motion. Wider v. Heller, ___ A.D.3d ___, 2005 WL 3304131 (2nd Dept. 2005); Sted Tenants Owners Corp. v. Chumpitaz, 5 AD3d 663 (2nd Dept. 2004); and Lawlor v. County of Nassau, 166 AD2d 692 (2nd Dept. 1990).
The motion papers served by Plaintiff contain only a copy of the summons and complaint. They do not contain either a copy of the answer or the reply to the counterclaim. For that reason alone, BT Buildings' motion for summary judgment must be denied.
This omission in submission of the pleadings is partially cured by Defendants' answering papers which contain a copy of the answer which contains their counterclaims. However, their papers do not contain a copy of the reply.
Since the Court has not been provided with a full set of the pleadings, the motion must be denied.
In any event, the court should not award summary judgment to the plaintiff when the defendant has asserted a meritorious counterclaim in which the damages sought in the counterclaims is equal to or in excess to of the amount demanded in the complaint. Illinois McGraw Electric Co. v. John J. Walters, Inc., 7 NY2d 874 (1959); and Titan Corp. v. Cellular Vision Technology Telecommunications, L.P., 271 AD2d 437 (2nd Dept. 2000); and Tyree Brothers Environmental Services, Inc v. Ferguson Propeller, Inc., 247 AD2d 376 (2nd Dept. 1998).
Plaintiff seeks to recover $104,098.94, the difference between the amount paid for the trusses delivered and the amount billed.
The answer contains three counterclaims. The first counterclaim seeks to recover the cost incurred to remedy the defects resulting from the 24 truss systems that were delivered not meeting the prescribed stiffness standard and the additional costs incurred as a result of being required to use traditional construction methods for the 62 units for which the truss system was not furnished. The damages sought are an amount to be determined at trial which is alleged to be in excess of $2,500,000. The second counterclaim seeks damages for slander of title relating to BT Building's filing of a mechanic's lien. The third counterclaim seeks to cancel the mechanic's lien and notice of pendency.
The counterclaims appear to be meritorious and seek damages in excess of the amount demanded by Plaintiff. Defendants assert that the trusses did not conform to the required stiffness standard, as promised. They further assert that they did not and could not determine that the trusses did not meet the required stiffness criteria until they were erected. Once the trusses were erected and did not work properly, Harvey Gessin, the managing partner of Holding and Systems avers that he advised BT Building by telephone almost immediately after the installation of the trusses began that the trusses were not functioning properly and that modifications had to be made to assure the proper stiffness criteria.
BT Buildings' claim of entitlement to summary judgment is premised upon Systems' alleged acceptance of the trusses and the provisions of the contract the provided for payment upon delivery of the materials.
Uniform Commercial Code § 2-606 provides:
(1) Acceptance of goods occurs when the buyer
(a) after reasonable opportunity to inspect the good signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or
(b) fails to make an effective rejection (subsection (1) of Section 2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
(2) Acceptance of a part of any commercial unit is acceptance of that entire unit.
BT Building claims that it delivered trusses. Payment was due on delivery. Systems accepted delivery and installed the trusses. Therefore, BT Building is due payment. This is a misstatement of the provisions of the contract and a misinterpretation of the Uniform Commercial Code.
In interpreting a contract, the court must give ". . . practical interpretation to the language employed and the parties reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd, 79 NY2d 1916 (1992). See also, AFBT-II, LLC v. Country Village on Mooney Pond, Inc., 305 AD2d 340 (2nd Dept. 2003); and Del Vecchio v. Cohen 288 AD2d 426 (2nd Dept. 2002). The court must give full meaning to and effect to all of the provisions of the agreement. V.C. Vitanza Sons, Inc. v. New York City Housing Auth., 7 AD3d 398 (1st Dept. 2004). The court should interpret an agreement so as to give meaning to each provision. Hudson Iron Works, Inc. v. Beys Specialty Contracting, Inc., 262 AD2d 360 (2nd Dept. 1999).
Article XV (A) of the contract between Systems and BT Building provides that, by the 8th day of the month, the subcontractor (BT Buildings) was to provide the general contractor (Systems) with an accurate schedule of the materials furnished or to be furnished and the work done or to be done during the month. By the 7th day of the following month, the general contractor was required to pay the subcontractor for 90% of the value of the work performed provided that the subcontractor's rate of progress was satisfactory.
Payment was further conditioned upon all improper or rejected work being made good. Payment for work was not be considered an acceptance of defective work.
Paragraph XV(D) permitted the general contractor to withhold payment if the general contractor determined that the work was defective and the defects had not been corrected.
Paragraph XV(C) provides for 10% retainage pending completion and final approval of the work including the issuance of a certificate of occupancy for each unit.
BT Building's interpretation of the contract ignores these provisions and relies exclusively upon the final sentence of Paragraph XV(A) which provided for payment upon delivery. However, a full reading of that paragraph demonstrates that payment was contingent upon BT Building providing Systems with a statement of the materials furnished, the material being furnished in is in accordance with the rate of progress established by the contract and improper or rejected work being made good.
BT Building has failed to establish any of these conditions precedent to its right to payment. If has failed to place before the Court any evidence of its having billed Systems for the work in accordance with the terms of the contract, delivery of the goods in accordance with the terms of the contract or that it made good on those defects in the goods.
A party seeking summary judgment must establish a prima facie entitlement to judgment as a matter of law. Winegrad v. New York Univ Med. Ctr., 64 NY2d 851 (1985); and Zuckerman v. City of New York, 49 NY2d 557 (1980). If the party seeking summary judgment fails to establish a prima facie entitlement to judgment as a matter of law, the motion must be denied. Winegrad v. New York Univ Med. Ctr., supra; Widmaier v. Master Products Mfg., 9 AD3d 362 (2nd Dept. 2004); and Ron v. New York City Housing Auth., 262 AD2d 76 (1st Dept. 1999).
Since BT Building has not established its compliance with the payment provisions of the contract, it has failed to establish a prima facie entitlement to judgment as a matter of law. Therefore, its motion for summary judgment must be denied notwithstanding the deficiency in its submission on this motion.
In addition, Uniform Commercial Code § 2-602(1) requires that rejection of the goods be made in a reasonable time after delivery. This section requires purchaser to seasonably notify seller of the rejection.
The question of whether purchaser's retention of goods constitutes acceptance is ordinarily a question of fact. ICS/Executone Telecom, Inc. v. Performance Parts Warehouse, Inc., 171 AD2d 1066 (4th Dept. 1991): and Fil-Coil Co., Inc. v. International Power Systems Equip. Corp., 123 AD2d 599 (2nd Dept. 1986). Timely rejection is also a question of fact. Rice Aircraft, Inc. v. Grumman Aerospace, Corp., 196 AD2d 583 (2nd Dept. 1993); and Tabor v. Logan, 114 AD2d 894 (2nd Dept. 1985).
Even if Systems' receipt and use of the trusses is considered acceptance of the goods, BT Builders is not entitled to summary judgment. A buyer who accepts delivery of non-conforming goods must give the seller notice of that the goods are non-conforming within a reasonable time after the buyer discovered or should have discovered that the goods are non-conforming. Parzek v. New England Log Homes, Inc., 92 AD2d 954 (3rd Dept. 1983); and Uniform Commercial Code § 2-607(3)(a). If the buyer gives the required notice, it may sue for damages resulting from tender of non-conforming goods. Uniform Commercial Code § 2-714. The measure of damages is the actual cost to remedy the defect. See, City of New York v. Pullman, Inc., 662 F.2d 910 (2nd Cir.), reh. den., 9 Fed.R.Evid. Serv. 241 (2nd Cir. 1981), cert. den., 454 U.S. 1164 (1982).
Thus, the existence of triable issues of material fact along with the technical defects on this motion mandate a denial of summary judgment.
Accordingly, it is,
ORDERED, that Plaintiff's motion for summary judgment is denied; and it is further,
ORDERED, that counsel for the parties are directed to appear for a preliminary conference on February 3, 2006 at 9:30 a.m.
This constitutes the decision and Order of the Court.