Opinion
No. 650379/2012.
08-12-2014
COLONIAL SURETY COMPANY, Plaintiff, v. MILLENNIUM CENTURY CONSTRUCTION, INC., Andon Veizi, and Umarani Reddi, Defendants.
Plaintiff is represented by Adam R. Schwartz and Scott A. Levin of McElroy, Deutsch, Mulvaney & Carpenter, LLP. Defendants Millennium Century Construction, Inc., and Andon Veizi are represented by Peter Mammis of The Mammis Law Firm, Inc. Defendant Umarani Reddi is represented by Avish Dhaniram of Pitchayan & Associates, P.C.
Plaintiff is represented by Adam R. Schwartz and Scott A. Levin of McElroy, Deutsch, Mulvaney & Carpenter, LLP.
Defendants Millennium Century Construction, Inc., and Andon Veizi are represented by Peter Mammis of The Mammis Law Firm, Inc.
Defendant Umarani Reddi is represented by Avish Dhaniram of Pitchayan & Associates, P.C.
Opinion
EILEEN BRANSTEN, J.
Before the court is Plaintiff Colonial Surety Company's motion for summary judgment. Defendants Millennium Century Construction, Inc. (“MCC”), and Andon Veizi oppose the relief sought in Plaintiff's motion. Defendant Umarani Reddi has answered the complaint but has not opposed the relief sought in this motion. For the reasons that follow, Plaintiff's motion is granted.
Plaintiff confirmed on the record at the hearing on June 23, 2014, that Defendant Reddi was served with a copy of Plaintiff's motion.
BACKGROUND
Plaintiff is a Pennsylvania corporation with its principal place of business in New Jersey. Plaintiff's business includes, among other things, the issuance of performance and payment bonds in connection with construction projects. Defendant MCC is a New York corporation which provides a variety of construction services. Defendant Veizi appears to have been MCC's president during the period in question, though whether he still retains that title is unclear. Besides her role as a signatory to the contract upon which Plaintiff is suing, Defendant Reddi's relationship with MCC is altogether unclear. The parties' submissions contain scant background information and do not explain how Defendants are connected to each other.
As a general matter, “[a] performance bond is a type of surety bond which places a financially responsible party behind the general contractor. If the general contractor does not perform any aspect of the work properly, ... the surety will ensure that sufficient funds are available to properly complete the contractual duties of the contractor.” 2 Steven G.M. Stein, Construction Law ¶ 4.09 (2014). Similarly, a “labor and material payment bond runs in favor of the owner, subcontractors, and materials suppliers, and guarantees payment for labor and materials supplied for the project.” 1 Stein, Construction Law ¶ 3.02 [2][d].
On March 18, 2010, Plaintiff and Defendant MCC executed an indemnity agreement (the “Indemnity Agreement”) pursuant to which multiple performance and payment bonds were issued. The bonds were issued in connection with certain public and private construction projects, including several that were administered by the New York City Housing Authority, as well as by an entity known as United Technologies, Inc. In each project, Defendant MCC was retained to provide a range of different services, such as roof replacement, external masonry repair, and replacement of bricks and mortar joints. The bonds at issue obligated Plaintiff to facilitate and pay for, among other things, the completion of Defendant MCC's work in the event of its default, as well as any outstanding amounts or compensation owed by Defendant MCC to employees, laborers or materialmen.
Defendant Veizi executed the Indemnity Agreement on Defendant MCC's behalf, signing in his capacity as MCC's president. Also, as noted above, Defendants Veizi and Reddi signed the agreement in their individual capacities, making themselves personally liable thereunder. Their reason for doing so, whether by virtue of ownership or for some other reason, is not clearly set forth in the parties' submissions.
Plaintiff commenced this action on February 10, 2012, seeking indemnification of payments made with respect to bonds issued for four construction projects-Davidson, Forest Houses, Independence Tower, and Corsi Houses-as well as other related expenses (such as legal fees), for which reimbursement is provided under the Indemnity Agreement. The complaint sets forth the following seven causes of action: contractual indemnification as to all Defendants; exoneration, subrogation, and common law indemnification as to Defendant MCC only; and specific performance of the right to inspect books and records, statutory trust fund violations, and contractual trust fund violations as to all Defendants.
In the instant motion, Plaintiff seeks summary judgment only with respect to its first cause of action for contractual indemnification as to all Defendants. Accordingly, though styled as a motion for summary judgment, this motion is actually a motion for partial summary judgment. It is well-settled that “[p]arties will not be permitted to make successive fragmentary attacks upon a cause of action but must assert all available grounds when moving for summary judgment. There can be no reservation of any issue to be used upon any subsequent motion for summary judgment.' “ Phoenix Four v. Albertini, 245 A.D.2d 166, 167 (1st Dep't 1997) (quoting Levitz v. Robbins Music Corp., 17 A.D.2d 801, 801 (1st Dep't 1962) ). To the extent that Plaintiff seeks summary judgment in the future, it may be precluded from doing so.
ANALYSIS
I.The Standard on a Motion for Summary Judgment
“On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party.” Vega v. Restani Constr. Corp., 18 NY3d 499, 503 (2012). Summary judgment is a drastic remedy and should only be granted where the moving party has demonstrated the absence of any triable issue of fact through sufficient evidence. Vega, 18 NY3d at 503. “The moving party's failure to make a prima facie showing of entitlement to summary judgment requires a denial of the motion, regardless of the sufficiency of the opposing papers.” Vega, 18 NY3d at 503. “Once this burden is met, the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial.” Kershaw v. Hosp. for Special Surgery, 114 AD3d 75, 82 (1st Dep't 2013).
II.The Indemnification Agreement
The First Department has explained that “[e]ntitlement to full contractual indemnification requires a clear expression or implication, from the language and purpose of the agreement as well as the surrounding facts and circumstances, of an intention to indemnify.” Martins v. Little 40 Worth Assocs., Inc., 72 AD3d 483, 484 (1st Dep't 2010).
The Indemnity Agreement begins, “THIS AGREEMENT of indemnity ... is executed by the undersigned (jointly and severally, including the Principal as defined below, hereinafter collectively Indemnitor') for the purpose of indemnifying [Plaintiff].” (Complaint (“Compl.”), Exhibit (“Ex.”) A (“Indemnity Agreement”) at 1.) Each Defendant is a signatory to the Indemnity Agreement. (Indemnity Agreement at 3–4.)
Section 3 of the Indemnity Agreement addresses the extent to which Defendants agreed to indemnify Plaintiff, or “Surety,” as follows:
Indemnitor and your successors agree ... to indemnify and save harmless Surety from and against any and all (i) demands, liabilities, losses, costs, damages or expenses of whatever nature or kind, including all fees of attorney and all other expenses, including but not limited to costs and fees of investigation, adjustment of claims, procuring or attempting to procure the discharge of Bonds, enforcement of any Contract with Indemnitor, and in attempting to recover losses or expenses from Indemnitor, or third parties, whether or not Surety shall have paid out any or all of such sums, (ii) amounts sufficient to discharge any claim made against Surety on any Bond, which amounts may be used by Surety to pay such claim, or may be held by Surety as collateral security against any loss on any Bond, and (iii) any premiums due on Bonds issued by the Surety on behalf of the Principal....
(Indemnity Agreement at 1.) Indeed, Section 3 unquestionably reflects an intention on the part of Defendants to indemnify Plaintiff.
A. The Indemnity Agreement's “Prima Facie” Clause
Section 4.D of the Indemnity Agreement, which sets forth the “Rights of Surety,” provides that “[i]n any claim or suit hereunder, an itemized statement of the aforesaid loss and expenses, sworn to by an officer of Surety, or the vouchers or other evidence of disbursement by surety, shall be prima facie evidence of the fact and extent of the liability hereunder of Indemnitor.” (Indemnity Agreement at 1.)
Courts, including the First Department, have upheld the efficacy of such “prima facie” clauses, recognizing that such an itemized statement of loss and expenses may properly constitute prima facie evidence of entitlement to indemnification, as well as the amount to be indemnified. See, e.g., Prestige Decorating & Wallcovering, Inc. v. United States Fire Ins. Co., 49 AD3d 406, 406–07 (1st Dep't 2008) (holding that “USFIC made a prima facie showing of entitlement to summary judgment by submitting Rochotte's affidavit, which, pursuant to P 10 of the Indemnity Agreement, provided an itemized statement of loss and expense of $514,418.64 incurred by USFIC by reason of having executed the bonds”); see also Int'l Fid. Ins. Co. v. Kulka Constr. Corp., 100 AD3d 967, 968 (2d Dep't 2012) (finding that “the plaintiff surety's submission of documentation demonstrating its payment of a settlement on behalf of the defendants, as well as an itemized list of expenses paid in connection therewith and the affidavit of personal knowledge of the plaintiff's Senior Managing Claims Counsel, was sufficient admissible evidence to demonstrate the plaintiff's prima facie entitlement to judgment as a matter of law on the first cause of action under the terms of the parties' indemnification agreement”).
III.Whether Plaintiff Has Established Its Entitlement to Summary Judgment
In support of its motion, Plaintiff submitted the affidavit of Wayne Nunziata, Plaintiff's president, which includes an itemized statement of Plaintiff's losses and expenses in connection with the Indemnity Agreement and the bonds issued in connection therewith, as well as other evidence, including copies of the bonds with respect to which Plaintiff seeks indemnification and copies of checks evidencing payment. (Affidavit of Wayne Nunziata (“Nunziata Aff.”) ¶¶ 13–17, Exs. 6–10.) Nunziata's affidavit itemizes the amount of loss and expenses related to each bond, as well as other related fees and costs incurred, including attorney's fees for the prosecution of this action, for a total of $451,413.43. Based on the foregoing, Plaintiff has satisfied the standard set forth by the First Department in Prestige Decorating and made a prima facie showing of entitlement to that amount.
Defendants MCC and Veizi have submitted only two documents in opposition to this motion: the affirmation of their attorney, Peter Mammis, and Defendant Veizi's affidavit. Defendants have also not submitted a Rule 19–a statement of material fact, as mandated by Commercial Division Rule 19–a (22 NYCRR 202.70(g), Rule 19–a). Rule 19–a(c), provides that “[e]ach numbered paragraph in the statement of material facts required to be served by the moving party will be deemed to be admitted for purposes of the motion unless specifically controverted by a correspondingly numbered paragraph in the statement required to be served by the opposing party.” 22 NYCRR 202.70(g), Rule 19–a(c). Nevertheless, the First Department has explained that courts are “not compelled to grant summary judgment solely on the basis of blind adherence to the procedure set forth in rule 19–a” and may properly consider whether the opposing parties' submissions include “sufficient evidence in the record to raise triable issues of fact.” Abreu v. Barkin & Assocs. Realty, Inc., 69 AD3d 420, 421 (1st Dep't 2010).
It bears mentioning that Mammis's affirmation impermissibly combines legal argument with factual statements. This Court's Part Rules provide that “[a]ffirmations submitted in support of or in response to dispositive motions must be separate from any memoranda of law submitted in relation to the motion. Affirmations should not include arguments of law.” In addition, Commercial Division Rule 17 addresses page limits for motion papers and in that context distinguishes between memoranda of law and affidavits or affirmations. 22 NYCRR 202.70(g), Rule 17. Uniform Rule 202.8(c) similarly provides that “[a]ffidavits shall be for a statement of the relevant facts, and briefs shall be for a statement of the relevant law.” 22 NYCRR 202.8(c).
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Defendants MCC and Veizi raise a number of sweeping, generalized arguments in opposition to the motion, including that Plaintiff failed to substantiate the amounts sought and that Plaintiff has failed to include proof of payment of such amounts. Such arguments are, on their own, insufficient to raise triable issues of fact. In addition, Defendants MCC and Veizi specifically controvert four categories of payments, each of which is addressed in turn below.
A. Payments to Defendants MCC and Veizi's Former Attorney, George Sitaras
Among the payments for which Plaintiff seeks indemnification, are payments made to Defendants MCC and Veizi's former attorney, George Sitaras, totaling $77,174.70. (Nunziata Aff. ¶ 14.) Plaintiff's evidentiary submissions in support of this portion of its claim include e-mail correspondence between Sitaras, Smart Devine (an accounting firm), Nihill & Riedley, P.C. (another accounting firm), and Mohammed Aziz (an employee of MCC) “establishing that Mr. Sitaras issued payments to MCC's employees at MCC's request, in order to ensure that payroll taxes were properly paid.” (Plaintiff's Memorandum in Reply (“Pl.'s Reply Mem.”) at 12; Supplemental Affidavit of Wayne Nunziata (“Nunziata Reply Aff.”), Ex. 1.)
Plaintiff has also submitted “a spreadsheet listing each of the payments issued through Mr. Sitaras' trust account, totaling $77,174 .70 as indicated by Colonial's itemized statement of losses and expenses.” (Pl.'s Reply Mem. at 12; Nunziata Reply Aff., Ex. 2.) With the submission of these documents, coupled with the itemization provided in Nunziata's affidavit, Plaintiff has satisfied the standard set forth by the First Department in Prestige Decorating and made a prima facie showing of entitlement to summary judgment with respect to the payments to George Sitaras. See Prestige Decorating & Wallcovering, Inc. v. United States Fire Ins. Co., 49 AD3d 406, 406–07 (1st Dep't 2008).
Defendant Veizi states that he “do[es] not understand all of the disbursements to George Sitaras' ostensibly to cover my labor and overhead expense.” (Affidavit of Andon Veizi (“Veizi Aff.”) ¶ 8.) Defendant Veizi states further that he “never requested or authorized any money to be released to George Sitaras.” ' (Veizi Aff. ¶ 9.) As a general rule, courts are disinclined to find the existence of triable issues of fact, solely on the basis of a party's self-serving affidavit. See Gettinger Assocs., L.P. v. Abraham Kamber Co., 83 AD3d 412, 414 (1st Dep't 2011) (finding that plaintiffs' “self-serving affidavit .... [was] insufficient to raise an issue of fact as to whether the sub-sublease would have been consummated but for' defendant's refusal to provide” certain documents); see also Beaubrun v. N.Y. City Transit Auth., 9 AD3d 258, 259 (1st Dep't 2004) (holding that in the absence of “objective medical evidence specifically supporting [plaintiff's] alleged Insurance Law § 5102(d) 90/180 serious injury.... Plaintiff's self-serving statements [in his affidavit] standing alone are insufficient to raise a triable issue of fact' on this issue”). As such, Defendants MCC and Veizi's statements in opposition, unsupported by any additional evidence, are insufficient to raise a triable issue of fact.
B. Payments to Akro General Construction
Defendants MCC and Veizi dispute payments made to Akro General Construction (“Akro”) totaling $127,218.46, with respect to the “Independence Tower Bonds.” Specifically, Defendant Veizi states that “when Millennium was substituted by Akro Gen, the deal which I made with Akro was that Akro would get paid $50,000 plus ownership of my some [sic] material and equipment” and that Defendant Veizi “tendered all these items of materials to Akro.” (Veizi Aff. ¶ 10.) Thus, argue Defendants MCC and Veizi, Akro should have only been paid $50,000.
While Plaintiff acknowledges that there was, at one time, such an agreement between Defendant MCC and Akro, Plaintiff contends that it was actually required to pay Akro a total of $127,218.46 in connection with its work on the Independence Tower project, “[d]ue to non-conforming and emergency work required by [United Technologies, Inc. (“UTB”) ], as obligee, certain extra-contractual work was demanded by UTB and Colonial chose to have Akro perform that work.” (Pl.'s Reply Mem. at 12.) In support of this contention, Plaintiff submits copies of the “Completion Agreement” between itself and Akro, as well as Akro's invoices and checks payable to Akro totaling $127,218.46. (Nunziata Reply Aff., Exs. 3–4.)
Plaintiff contends that Defendant MCC's default under the terms of its contract with UTB entitled Plaintiff to retain Akro to complete the Independence Tower project and pay Akro the amount now sought. Indeed, Section 6.B of the Indemnity Agreement provides that “[i]n the event of Default, ... Surety [Plaintiff] may at its option and sole discretion ... assume the administration of any Contract and arrange for its completion.” (Indemnity Agreement at 1.) Furthermore, under Section 5.B, “Default” occurs when “[a]ny beneficiary of a Bond or obligee of a Contract declares Principal [Defendant MCC] to be in default.” (Indemnity Agreement at 1.) “Contract” is defined to include “[a]ny agreement of or other undertaking by Principal, the performance of which is bonded by Surety.” (Indemnity Agreement at 1.)
In its statement of material fact, Plaintiff states that “UTB–United Technologies, Inc. (UTB) declared MCC to be in default and terminated MCC s rights to complete the bonded contract known as CM7015024 Roof Replacement at Independence Towers, Brooklyn, New York.” (Plaintiff's Rule 19–a Statement of Material Fact ¶ 4.) As noted above, in light of Defendants MCC and Veizi's failure to file their own Rule 19–a statement, this fact is deemed admitted, pursuant to Rule 19–a(c). Defendants MCC and Veizi's assertion that “Plaintiff failed to establish that Defendants were in default” and Defendant Veizi's statement that he had reached a different agreement with UTB are, without more, insufficient to raise a triable issues of fact. (Affirmation of Peter Mammis ¶ 21; Veizi Aff. ¶ 10.)
Plaintiff separately argues that even in the absence of a default, it was entitled to pay Akro a total of $127,218.46 for its work completing the Independence Tower project. As noted above, Section 3(i) of the Indemnity Agreement provides in pertinent part that “Indemnitor and your successors agree ... to indemnify and save harmless Surety from and against any and all (i) demands, liabilities, losses, costs, damages or expenses of whatever nature or kind, ... including but not limited to costs and fees of investigation, adjustment of claims, procuring or attempting to procure the discharge of Bonds, [or] enforcement of any Contract with Indemnitor.” (Indemnity Agreement at 1.) Section 4.B further provides that “Surety shall have the right to incur such expenses in handling a claim as it deems necessary or advisable, ... and Surety's good faith determination as to the necessity or advisability of any such expense shall be final and conclusive upon Indemnitor.” (Indemnity Agreement at 1.)
Courts have interpreted similar discretionary language in indemnity agreements to mean that Plaintiff, “as surety, was entitled to indemnification under the indemnity agreement regardless of whether the principal was actually in default or liable under its contract with the obligee.' “ Humphreys & Harding, Inc. v. Universal Bonding Ins. Co., 52 AD3d 324, 326 (1st Dep't 2008) (quoting Frontier Ins. Co. v. Renewal Arts Contr. Corp., 12 AD3d 891, 892 (3d Dep't 2004) ). Indeed, “the surety is entitled to indemnification upon proof of payment, unless payment was made in bad faith or was unreasonable in amount.' “ Prestige, 49 AD3d at 406 (quoting Frontier, 12 AD3d at 892) ).
Here, Plaintiff asserts that UTB made a demand upon Plaintiff and that Plaintiff selected Akro, rather than Defendant MCC, to perform that work. (Nunziata Reply Aff. ¶¶ 10–11.) The Completion Agreement between Plaintiff and Akro confirms in its recitals that “by way of letter dated May 27, 2011, UTB advised that Millennium was terminated for cause, and UTB made demand on Colonial to perform in accordance with its obligations under the Performance Bond.” (Nunziata Reply Aff., Ex. 3 at 1.) Plaintiff has submitted evidence of the payments totaling $127,218.46 to Akro by Plaintiff for completing that work. (Nunziata Reply Aff., Ex. 4.) Under Section 4 .D of the Indemnity Agreement, such “other evidence of disbursement by Surety” is “prima facie evidence of the fact and extent of the liability hereunder of Indemnitor.” (Indemnity Agreement at 1.) There is nothing in the record to suggest that those payments were made in bad faith or were unreasonable in amount. As such, Plaintiff has established that it was entitled to make the payments to Akro even in the absence of a default. Without more, Defendants MCC and Veizi's submissions are insufficient to raise a triable issue of fact as to the disputed payments to Akro. See Gettinger Assoc., L.P. v. Abraham Kamber Co. LLC, 83 AD3d 412, 414 (1st Dep't 2011) (self-serving affidavit was on its own insufficient to raise a triable issue of fact).
C. Payments to Bradco Supply and Microtech Contracting
Defendants Veizi and MCC also dispute itemized payments made to Bradco Supply and Microtech Contracting. Specifically, Defendant Veizi states that “with regard to Bradco Supply, I negotiated a settlement with them for $70,000, yet Plaintiff paid it $100,000.” (Veizi Aff. ¶ 11.) Defendant Veizi states further that “with regard to the alleged losses on the Corsi Houses' project, I negotiated a settlement with Microtech Contr. for $10,000, yet Plaintiff paid it $20,000.” (Veizi Aff. ¶ 11.)
As explained above, the itemized statement contained in the affidavit of Plaintiff's president, Wayne Nunziata, on its own, establishes Plaintiff's prima facie entitlement to summary judgment with respect to these payments. In addition, Plaintiff has submitted copies of the notarized proofs of claim that were presented to Plaintiff by Bradco Supply and Microtech Contracting in the amounts of $103,491.11 and $20,000 respectively. (Nunziata Reply Aff. ¶¶ 13–14, Exs. 5–6.) Plaintiff also submitted a copy of a check for $100,000 evidencing payment to Bradco, as well as a “Release and Assignment and Satisfaction and Discharge of a Public Improvement Mechanic's Lien, evidencing” Plaintiff's payment of $20,000 to Microtech. (Nunziata Reply Aff. ¶¶ 17–18, Exs. 7–8.) As with the payments to Akro General Construction discussed above, Defendants MCC and Veizi's submissions are, without more, insufficient to raise a triable issue of fact with respect to either of these payments.
CONCLUSION
Accordingly, it is hereby
ORDERED that Plaintiff Colonial Surety Company's motion for summary judgment is granted as to the first cause of action in the amount of $451,413.43, together with interest at the statutory rate, as calculated by the Clerk, together with costs and disbursements to be taxed by the Clerk upon submission of an appropriate bill of costs, the first cause of action is severed, and the Clerk is directed to enter judgment in favor of Plaintiff against Defendants accordingly; and it is further
ORDERED that the action shall continue as to the remaining causes of action; and it is further
ORDERED that the parties are directed to appear for a preliminary conference at 60 Centre Street, Room 442, on Tuesday, October 6, 2014, at 10:00 a.m.
This constitutes the decision and order of the Court.