Opinion
No. 306204/09.
2010-07-30
Jose M. GONZALEZ and Maria Del Gonzalez, Plaintiff, v. Rafael VIDAL, Oneida Vidal, M.I.R. Construction Inc., Wells Fargo Bank, N.A., Public Trust Realty Group and Kasree Harlal, Defendants.
Posner & Posner, Jose M. Gonzalez, Maria Del Gonzalez, by Marshall Posner, Esq., New York, Attorney for Plaintiffs. Hogan & Hartson, LLP, Wells Fargo Bank, N.A. by Christine Wagner, Allison J. Schoenthal, David Dunn, Hardin, Kundla, McKeon & Poletto, Public Trust Realty Group, by Stephen P. Murray, New York, Attorney for Defendant.
Posner & Posner, Jose M. Gonzalez, Maria Del Gonzalez, by Marshall Posner, Esq., New York, Attorney for Plaintiffs. Hogan & Hartson, LLP, Wells Fargo Bank, N.A. by Christine Wagner, Allison J. Schoenthal, David Dunn, Hardin, Kundla, McKeon & Poletto, Public Trust Realty Group, by Stephen P. Murray, New York, Attorney for Defendant.
KENNETH L. THOMPSON, J.
Defendant WELLS FARGO BANK, N.A.'s (“Wells Fargo”) motion for an Order pursuant to CPLR §§ 3211(a)(1) & (7) dismissing the Complaint based on documentary evidence and for failing to state a cause of action upon which relief may be granted, and Defendant PUBLIC TRUST REALTY GROUP's (“Public Trust”) motion for an Order pursuant to CPLR § 3211(a)(8) dismissing the Complaint for lack of personal jurisdiction are consolidated for decision herein.
Well Fargo's motion is granted in its entirety.
Public Trust's motion is granted on default.
Wells Fargo
Plaintiffs entered into a “Residential Construction Loan Agreement” (“Agreement”) with Wells Fargo in November 2006, to borrow $375,000 for the construction of a three-family home (“Residence”). ( Pl. Aff. Opp. at ¶¶ 2, 3.) They contracted Defendants M.I.R. CONSTRUCTION (“MIR”) and RAFAEL VIDAL (“Vidal”) to build the Residence. ( Id. at 4.) The proceeds of the loan were to be “advanced” periodically, “as construction of the Residence progresse [d].” ( C. Wagner Aff. Supp. at Ex. B, at § 3(a).)
According to the Agreement, “[t]he amount of each advance shall be the value of the work completed and approved by [Wells Fargo] measured by the proportion that the work done bears to the work to be done using contract price, less the total of all monies previously advanced.” ( Id. at ¶ § 3(b).)
The advances were to be paid after Wells Fargo received confirmation that work was actually done. Again, according to the Agreement, “[a]t least five (5) business days prior to the date on which each advance is to be made, the Requisition and all other documents, instruments, and writings which may then be required by [Wells Fargo] shall be delivered to [Wells Fargo].” ( Id. at § 3(c).)
The Agreement also provided that:
“Presentation of the Requisition to [Wells Fargo] by or on behalf of [Mr. & Mrs. Gonzalez] shall constitute [Mr. & Mrs. Gonzalez's] representation to [Wells Fargo] that all representations and warranties set forth herein are and continue to be true and correct, all work completed through the date of the Requisition has been fully accepted by [Mr. & Mrs. Gonzalez], completed in good and workmanlike manner, in conformity with Plans and Specifications and shall additionally constitute [Mr. & Mrs. Gonzalez's] unconditional waiver of any claims to the effect that such work was not performed in such manner.”
( Id. at § 3(d).)
“[Wells Fargo] shall have no obligation, either expressed or implied, to [Mr. & Mrs. Gonzalez], to Contractor or to any third parties, to verify that advances made pursuant to this Agreement are actually used to pay for labor or materials furnished in connection with the construction of Residence. [Mr. & Mrs. Gonzalez] agrees to assume all risks in the event Contractor fails to pay for any labor or material so furnished.”
( Id. at § 3(f).)
“[Wells Fargo] shall have no liability or obligation, either expressed or implied, to [Mr. & Mrs. Gonzalez], to Contractor, or to any third parties, in connection with the Residence or its construction, except to advance monies as provided under this Agreement. Further, [Wells Fargo] is not liable for the performance of Contractor or any other third parties nor for any failure to construct, complete, protect, or insure the Residence or Property. Nothing under this Agreement shall be construed as a representation or warranty, express or implied, on [Wells Fargo's] part.”
( Id. at § 3(g).)
“Lender shall have the right, but not the obligation, to inspect the Property and Residence from time to time, at [Mr. & Mrs. Gonzalez] cost and expense, and [Mr. & Mrs. Gonzalez] agrees to provide proper facilities for making such inspections by such inspector or inspectors as may be appointed by [Wells Fargo]; provided, however, that [Wells Fargo] shall not be obligated to make any such inspections and, if such inspections are made, [Wells Fargo] shall have no responsibility or liability for the failure or default of any Contractor or any original contractor, subcontractor, material supplier or laborer to construct the Residence with the Plans and Specifications ... it being agreed that neither [Mr. & Mrs. Gonzalez], Contractor, nor any person having an interest in the Property or Residence shall have a right to rely on the procedures employed by [Wells Fargo], such procedures being for the sole benefit of [Wells Fargo].”
( Id. at § 4.)
Mrs. Gonzalez explains that Defendant KASREE HARLAL “was going to work on [their] loan and conduct inspections of all work to be done by M.I.R. and Mr. Vidal.” ( M.D. Gonzalez Aff. at ¶ 6.) She further avers that “[e]very time that [she] would meet with Harlal at the Home to discuss the construction which was not done, he would tell me that everything was alright and that the work was proceeding on schedule. He would prepare inspection reports and take pictures and approved all of the inadequate work which was performed by the contractors and submit it [to] Wells Fargo for payment.” ( Id. at ¶ 9.)
This alleged scenario is what led Mr. & Mrs. Gonzalez to commence the instant lawsuit, wherein they allege that although MIR and Mr. Vidal were “required to complete and submit disbursement requests, signed by [Mr. & Mrs. Gonzalez] for authorization” ( S & C at ¶¶ 18, 61), they did not in fact perform the work as represented to Wells Fargo in the disbursement requests ( Id. at ¶¶ 30, 46–48). They further allege that Wells Fargo is liable for failing to inspect the Residence prior to advancing monies, and that they relied on inspectors who were not qualified to report on the progress of the construction. ( Id. at ¶¶ 16–37.) They additionally allege that Wells Fargo's “breach” of the Agreement prevented the Residence from being completed, which caused Mr. & Mrs. Gonzalez to default on the Agreement. ( Id. at ¶¶ 42–43.)
Wells Fargo is now moving to dismiss the Complaint on the grounds that 1) the express terms of the Agreement do not contain any requirements that Wells Fargo either inspect the Residence or the construction thereto before advancing monies to Mr. & Mrs. Gonzalez's contractor and that 2) Plaintiffs' failure to repay the construction loan as required under the Agreement precludes their breach of contract claims against Wells Fargo.
“On a motion to dismiss pursuant to CPLR § 3211 the court may grant dismissal when documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.” Beal Sav. Bank v. Sommer, 8 NY3d 318, 324 (citations omitted). “On a motion to dismiss pursuant to CPLR § 3211 the pleading is to be afforded a liberal construction. [The Court] accept[s] the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.” Leon v. Martinez, 84 N.Y.2d 83, 87 (citations omitted).
“The elements of a breach of contract claim are formation of a contract between the parties, performance by the plaintiff, the defendant's failure to perform, and resulting damage.” Flomenbaum v. New York Univ., 71 AD3d 80, 91. “In order to plead a breach of contract cause of action, a complaint must allege the provisions of the contract upon which the claim is based.” Atkinson v. Mobil Oil Corp., 205 A.D.2d 719, 720.
Where the language is clear, unequivocal and unambiguous, a contract is to be interpreted by its own language, and courts are not at liberty to look at extrinsic circumstances surrounding the transaction, or elsewhere, for reasons to ascertain its intent; the understanding of the parties must be deemed to be that which their own written agreement declares.
Springsteen v. Samson, 32 N.Y. 703, 705.
Simply stated, the Court reads Plaintiffs' Complaint as alleging that: 1) Wells Fargo should have inspected the construction of the Residence; 2) had Wells Fargo done these inspections, they would have known that the construction was not progressing according to the representations made by the Contractors and verified by Plaintiffs; and 3) since they did not conduct these inspections, Plaintiffs had to hire another Contractor to complete the work that the prior Contractor failed to accomplish.
As an initial matter, there is no dispute that there was a binding Agreement between Plaintiffs and Wells Fargo. The Agreement itself, however, contradicts Plaintiffs' claims that Wells Fargo was obligated to conduct “inspections before monies were to be released to the contractor” in at least three aspects. ( M.D. Gonzalez Aff . at ¶ 18.)
First, the Requisitions provided “by or on behalf” of the Plaintiffs were “representations” that the construction was acceptable, completed “in a good and workmanlike manner,” and “in conformity with the Plans and Specifications.” The Requisitions also constituted an “unconditional waiver of any claims to the effect that such work was not performed.” ( C. Wagner Aff. Supp. at Ex. B, at § 3(d).) Therefore, Wells Fargo was entitled to rely on the Requisitions provided by the Contractor and verified by Plaintiffs as a basis to advance monies—regardless of whether the work was actually done. Furthermore, Plaintiffs waived the right to pursue the very claims they make in their Complaint—that Wells Fargo breached the Agreement by paying for work that was not done.
Second, Wells Fargo had “no obligation” to verify that the advances were being used to pay for labor or materials connected with the construction. ( Id. at § 3(f).) Also, Wells Fargo had “no liability or obligation” to anyone “in connection with the Residence or its construction, except to advance monies as provided by this Agreement.” ( Id. at § 3(g).) Nor is Wells Fargo liable for “any failure to construct, complete, protect or insure the Residence or Property.” ( Id.) Ergo, the Agreement did not require Wells Fargo to conduct inspections of any sort, and absolves Wells Fargo of any liability in connection with said construction.
Finally, the Agreement expressly states that Wells Fargo “shall have the right, but not the obligation, to inspect the Property and Residence from time to time ... and, if such inspections are made, [Wells Fargo] shall have no responsibility or liability for the failure or default of Contractor ... to construct the Residence.” ( Id. at § 4.) (emphasis added). These provisions mirror the above-cited sections. Under the Agreement, Wells Fargo was not required to conduct inspections as Plaintiffs claim. Moreover, Wells Fargo cannot be held liable for a failure to complete construction of the Residence.
These provisions are clear and unambiguous, thus—regardless of Plaintiffs' claims of ignorance, and being taken advantage of and defrauded—“the understanding of the parties must be deemed to be that which their own written agreement declares.” As such, the Court finds that Wells Fargo was not obligated to conduct inspections of the Residence, or the construction thereof, prior to advancing monies. Nor may it be held liable for any construction that was not done as represented by Plaintiffs or their Contractors. Consequently, absent provisions in the Agreement requiring otherwise, it cannot be found to have breached the Agreement for failing to have conducted inspections as claimed by Plaintiffs.
Public Trust
Public Trust is a real estate broker with its only place of business located in New Jersey. It has presented sufficient evidence that: it is not licensed or authorized to transact business in New York; it is not controlled by an entity that transacts business in New York; it does not have any offices in New York; it does not own any property in New York; it does not solicit business in New York; it does not have any agents or employees that collect monies from New York residents; and it has not committed any tortious acts in New York. It also presented evidence that it did not employ Defendant KASEREE HARLA during the period covering the construction at issue. Therefore, there is no basis for this Court to exercise jurisdiction over that Defendant.
The foregoing shall constitute the decision and order of this Court.