Opinion
Index No. 522413/2017
03-13-2019
ON LAM AND GREGORY MANN, Plaintiff, v. ARNOLD MONTAG ARCHITECT, AM/PM DESIGN & CONSULTING, P.C. A/K/A AM/PM DESIGN & CONSULTING, P.C. [AND] ARNOLD MONTAG, BAHRAM TEHRANI, BTE DESIGN, INC., BTE DESIGN SERVICES, BTE DESGIN SOURCING, LLC., & JOHN DOES 1-10, Defendants.
NYSCEF DOC. NO. 35 At an IAS Term, Part 41 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, at 360 Adams Street, Brooklyn, New York, on the 13th day of March, 2019. PRESENT: HON. PAMELA L. FISHER, Justice
DECISION, ORDER and JUDGMENT
Motion Sequence Nos. 1-3 The following papers numbered 1 to 14 read herein:
| Papers Numbered | |
|---|---|
| Notice of Motion/Order to Show Cause/Petition/Cross Motion andAffidavits (Affirmations) Annexed | 1-3, 4-6 7-11 |
| Opposing Affidavits (Affirmations) | 8-11 12-13 |
| Reply Affidavits (Affirmations) | 12 14 |
Upon the foregoing papers in this breach of contract and professional malpractice action regarding the sale of a newly constructed home, (1) defendants Arnold Montag Architect, AM/PM Design & Consulting, P.C. a/k/a AM/PM Design & Consulting, P.C. and Arnold Montag (collectively, Montag Architects) move (in motion sequence [mot. seq.] 1), for an order, pursuant to CPLR 3211 (a) (1) and (a) (7), dismissing the complaint of plaintiffs, On Lam and Gregory Mann (collectively, plaintiffs); (2) defendants Bahram Tehrani and Best Engineering Techonology Design, Inc. sued herein as [s/h/a] BTE Design, Inc., BTE Design Services and BTE Design Sourcing, LLC (collectively, BTE) move (in mot. seq. 2), for an order, pursuant to CPLR 3211, dismissing plaintiffs' complaint, or, alternatively, for an order, pursuant to CPLR 3212 granting it summary judgment dismissing the complaint; and (3) plaintiffs cross-move (in mot. seq. 3) for an order, pursuant to CPLR 602, consolidating this action with the action entitled On Lam & Gregory Mann v ZR Equities, LLC, et al., Kings County index No. 503518/17.
Montag Architects' notice of motion states that they seek "summary judgment" pursuant to "Rule 3212 of the CPLR." However, both the supporting affirmation and memorandum of law from Montag Architects counsel that accompany the notice of motion clearly identify and show that these defendants present a dismissal motion pursuant to CPLR 3211 (a) (1) and (a) (7). In addition, plaintiffs' opposition recognizes and trests the Montag Architects' motion as such a dismissal motion. Hence, the mistaken reference to summary judgment and CPLR 3212 is disregarded as permitted by CPLR 2001.
Background
On March 4, 2013, BTE entered into a contract with nonparty JNE Development (JNE) to provide architectural and engineering services for the construction of a two-family duplex located at 1582A Pacific Street in Brooklyn (property). Subsequently, on May 7, 2014, Montag Architects entered into a written agreement with nonparties Yaniv Zohar and GHIB, LLC (collectively, developers) to perform services in connection with the Preparation of Architectural Plans & Expediting to Supercede Previous Applicant" for the property (see Montag Architects moving papers, exhibit C, affidavit of Arnold Montag [Montag affidavit] at ¶ 2 and exhibit C-1, Montag Architects contract with the nonparty developers at 1).
In November 2014, plaintiffs purchased the real property. Plaintiffs contend that the purchased property has numerous design and construction defects. Plaintiffs further contend that the work performed by defendants BTE and later Montag Architects was defective, and, as a result of BTE's and Montag Architects' negligence and malpractice, plaintiffs have incurred $2,000,000 damages.
On February 22, 2017, plaintiffs commenced an action under Kings County index No. 503518/17 against ZR Equities LLC, Yaniv Zahir and Sam Rabbani, as developers of the property, and allege seven causes of action including breach of contract, breach of warranty and unjust enrichment.
Plaintiffs later commenced the current action, on November 17, 2017, against defendants Montag Architects and BTE, also alleging breach of contract. Plaintiffs have additionally asserted separate causes of action for professional malpractice, unjust enrichment, fraud, negligent misrepresentation, deceptive acts or practices and for a declaratory judgment imposing alter ego liability on defendants.
Montag Architects has made its present pre-answer motion to dismiss the complaint, pursuant to CPLR 3211 (a) (1) and (a) (7), allegedly based both upon the existence of documentary evidence and plaintiffs' failure to state a cause of action. Montag Architects contend that no privity existed between themselves and plaintiffs and that no duty was owed to plaintiffs because they were not intended beneficiaries of the May 7, 2014 contract with the nonparty developers. Montag's affidavit highlights that Montag Architects' contract with the nonparty developers was solely for the benefit of those entities and that no third-party beneficiaries are intended (see Montag Architects' moving papers, exhibit C at 3, ¶ 10). Specifically, the referenced contract states that "[n]othing contained in this agreement shall create a contractual relationship with or a cause of action for a third party against either AM/PM Design & Consulting, P.C. or then Yaniv Zohar, GHIB LLC" (id. at exhibit C-1 at 5, beginning 5th line from top of page).
Similarly, BTE has moved for an order, pursuant to CPLR 3211, dismissing plaintiffs' complaint based on lack of privity and plaintiff's failure to allege facts evidencing that plaintiffs were intended beneficiaries of BTE's contract with nonparty JNE. Alternatively, BTE seeks an order, pursuant to CPLR 3212, granting summary judgment dismissing the complaint.
In opposition, plaintiffs have submitted the affidavits of plaintiff Gregory Mann, architect Brian Baer, R.A. and engineer James P. Quinn P.E. addressing the alleged defective work, its causes and impact. Shortly after moving into the property, plaintiff Mann alleges that there was water in the basement and leaking from the roof and windows. Due to strong winds, plaintiffs experienced the house swaying and observed cracks in the walls. The affidavits of architect Baer and engineer Quinn observed that, after inspection of the property, cheaper materials were used to lower building costs resulting in the building's current condition. In both their opinions, the actions of Montag Architects and BTE fell below the professional standard of care in complying with rules governing building and design.
Discussion
Where a defendant moves to dismiss pursuant to CPLR 3211 (a) (1), asserting the existence of a defense founded upon documentary evidence, it "must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (Fleming v Kamden Properties, LLC., 41 AD3d 781, 781 [2d Dept 2007]). A motion to dismiss based upon documentary evidence may be granted "where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; see CPLR 3211 [a] [1]).
A motion to dismiss a complaint or counterclaim(s) pursuant to CPLR 3211 (a) (7) requires accepting all facts alleged in the pleading as true, according the pleader the benefit of every favorable inference and determining only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88, [1994]; Sokol v Leader, 74 AD3d 1180, 1181-1182 [2d Dept 2010]).
In determining whether a complaint is sufficient to withstand a motion pursuant to CPLR 3211 (a) (7), "the sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). The court must accept the facts alleged in the complaint to be true and determine only whether the facts alleged fit within any cognizable legal theory (see Dye v Catholic Med. Ctr. of Brooklyn & Queens, 273 AD2d 193, 193-194 [2d Dept 2000]). The court "is not concerned with determinations of fact or the likelihood of success on the merits" (Detmer v Acampora, 207 AD2d 477, 477 [2d Dept 1994], citing Stukuls v State of New York, 42 NY2d 272, 275 [1977]). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v. Goldman Sachs & Co., 5 NY3d 11, 19 [2005]).
The elements for a breach of contract cause of action are (1) the existence of a contract, (2) the performance by plaintiff's (3) the defendants' breach of their contractual obligations and (4) damages resulting from the breach (see Palmetto Partners, L.P. v AJW Qualified Partners, LLC, 83 AD3d 804, 806 [2d Dept 2011]; JP Morgan Chase v J.H. Elec. of N.Y., Inc., 69 AD3d 802, 803 [2d Dept 2010]).
Based on the contracts submitted, Montag Architects and BTE have established that the plaintiffs were not in privity of contract with either defendant. However, plaintiffs do not even allege that they were in contract with either Montag Architects or BTE. Instead, plaintiffs allege that they are intended beneficiaries under the agreement between Montag Architects and the developers. To establish that they were intended third-party beneficiaries, plaintiffs must establish
"(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for his/her benefit and (3) that the benefit to him/her is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost" (State of California Public Employees' Retirement System v Sherman & Sterling, 95 NY2d 427, 435 [2000]; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314, 336 [1983]; Cahill v Lazarski, 226 AD2d 572, 573 [2d Dept 1996]).Under this analysis, a professional may be held liable for negligence or malpractice even when they are not retained by plaintiff if a relationship exists between the parties that is so close as to approach privity (see Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 425 [1989]). To establish such a relationship, there must be a showing that (1) the professional was aware that their work would be used for a particular purpose, (2) upon which a known party was intended to rely, and (3) that there was some conduct on the part of the professional linking them to the plaintiff (see Caprer v Nussbaum, 36 AD3d 176, 196 [2d Dept, 2006]).
Although plaintiffs allege that they are intended beneficiaries, they fail to allege facts sufficient to establish a relationship approaching privity. Plaintiffs were neither parties to, nor express third-party beneficiaries of, either contract at issue. In fact, the contract between Montag Architects and the nonparty developers specifically excludes the creation of a contractual relationship with third parties (see Dormitory Auth. of the State of N.Y. v Samson Constr. Co., 30 NY3d 704, 710 [2018]; Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 44 [1985]). Plaintiffs rely on a telephone call conducted with defendant Montag; however this conversation alone is insufficient to establish a relationship approaching privity.
Similarly, there is no relationship with BTE. There is no intent to benefit plaintiffs that is apparent from the face of the contract. Although BTE's contract does not expressly exclude third parties, plaintiffs do not even allege that any relationship existed linking themselves to BTE during the period in which the contract was executed or even during the time BTE alleges it terminated their relationship with the nonparty developers. Plaintiffs rely solely on an email dated March 23, 2017, almost four years after BTE's contract with nonparty JNE. Absent privity, plaintiffs have no right to recover from either defendant for the economic losses alleged under a theory of breach of contract. Plaintiffs' first cause of action against both defendants is therefore dismissed.
A viable cause of action alleging professional negligence or malpractice requires that the underlying relationship between the parties be one of privity of contract, or that the bond between them be so close as to be the functional equivalent of privity (see Ossining Union Free School Dist., 73 NY2d at 424; Perfetto v CEA Engrs., P.C., 114 AD3d 835, 836 [2d Dept 2014]; Tambrands, Inc. v Lockwood Greene Engrs., 178 AD2d 406, 408 [2d Dept 1991]). As discussed above, Montag Architects and BTE established, prima facie, that no such contractual relationship existed between the parties. In the absence of privity or a relationship approaching privity, plaintiffs' second cause of action as against both defendants for professional malpractice is dismissed.
The primary basis of an unjust enrichment claim is that the defendant has obtained a benefit which in "equity and good conscience" should be paid to the plaintiff (Corsello v Verizon N.Y., Inc., 18 NY3d 777, 790-791 [2012]; see also Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011], quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972]). An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim (Corsello, 18 NY3d at 790-791; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388-389 [1987]; Samiento v World Yacht Inc., 10 NY3d 70, 81 [2008]; Town of Wallkill v Rosenstein, 40 AD3d 972, 974 [2d Dept 2007]). Here, the third cause of action for unjust enrichment claim warrants dismissal as the facts alleged are the same as those alleged in the breach of contract claim.
A cause of action alleging fraud does not lie where the only fraud claim relates to a breach of contract (see Tiffany at Westbury Condominium v Marelli Dev. Corp., 40 AD3d 1073, 1076 [2d Dept 2007]; Ross v DeLorenzo, 28 AD3d 631, 636 [2d Dept 2006]; WIT Holding Corp. v Klein, 282 AD2d 527, 528 [2d Dept 2001]). Here, plaintiffs' cause of action for fraud was wholly derived from their claim for breach of contract, and plaintiffs set forth no argument as to how its fraud damages claim is different from its breach of contract damages claim. Therefore, plaintiff's' fourth cause of action based on fraud must be dismissed.
Similarly, plaintiffs' fifth and sixth causes of action in negligent misrepresentation and deceptive acts or practices are also dismissed. The elements of a cause of action sounding in negligent misrepresentation include; (1) an awareness by the maker that the statement is to be used for a particular purpose, (2) reliance on the statement by a known party in furtherance of that purpose, and (3) some conduct by the maker of the statement linking the statement maker to the relying party and evincing the statement maker's understanding of that reliance (see Securities Investor Protection Corp. v BDO Seidman, 95 NY2d 702, 711 [2001]; Parrott. Coopers & Lybrand, 95 NY2d 479, 484 [2000]; Ford v Sivilli, 2 AD3d 773, 774 [2d Dept 2003]).
A cause of action based on negligent misrepresentation requires proof that a defendant had a duty to use reasonable care to impart correct information due to a special relationship existing between the parties, that the information was false, and that a plaintiff reasonably relied on the information (Fresh Direct v. Blue Martini Software, 7 AD3d 487, 489 [2d Dept 2004]). "[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., 70 NY2d at 389; see also Dormitory Auth. of the State of N.Y., 30 NY3d at 711). "This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract" (Clark-Fitzpatrick, Inc., 70 NY2d at 389; see Board of Mgrs. of Beacon Tower Condominium v 85 Adams St., LLC, 136 AD3d 680, 684 [2d Dept 2016]). "Merely charging a breach of a 'duty of due care', employing language familiar to tort law, does not, without more, transform a simple breach of contract into a tort claim" (Clark-Fitzpatrick, Inc., 70 NY2d at 390; Dormitory Auth. of the State of N.Y., 30 NY3d at 711; Clemens Realty, LLC v New York City Dept. of Educ., 47 AD3d 666, 667[2d Dept 2008]). "[W]here [a] plaintiff is essentially seeking enforcement of the bargain, the action should proceed under a contract theory" (Sommer v Federal Signal Corp., 79 NY2d 540, 552 [1992]; Dormitory Auth. of the State of N.Y., 30 NY3d at 711).
Both Montag Architect and BTE have established, prima facie, that they lacked privity of contract with the plaintiffs and had no special relationship with them that approached privity. The complaint does not plead facts showing that either Montag Architects or BTE owed a legal duty to plaintiffs: Other than the two communications mentioned above, plaintiffs' affirmation in opposition to defendants' motions similarly fail to establish any relationship rising to the level of privity. Plaintiffs' claim for negligent misrepresentation and deceptive acts or practices are therefore dismissed.
"Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful" (General Business Law [GBL] § 349 [a]). To state a cause of action under GBL § 349, plaintiff must allege (1) that the act, practice or advertisement was consumer-oriented, (2) misleading, and (3) that the plaintiff was injured as a result of the deceptive practice, act or advertisement (see Stutman v Chemical Bank, 95 NY2d 24, 29 [2000]). A claim under GBL § 349 cannot be maintained absent an allegation of "consumer-oriented" deceptive conduct (Koch v Acker, Merrall & Condit Co., 18 NY3d 940, 941 [2012]). Here, plaintiffs failed to allege any acts, advertisement or practices of defendants that were consumer-oriented.
Plaintiffs' final cause of action to declare defendants herein as alter egos of the nonparty developers and impose liability on defendants herein is dismissed in light of the above findings.
Plaintiffs' cross motion to consolidate the current action with On Lam & Gregory Mann v ZR Equities, LLC, Yaniv Zahir and Sam Rabbani, Kings County index No. 503518/17, pursuant to CPLR 602 (b), is denied as moot. Accordingly , it is
ORDERED AND ADJUDGED that plaintiffs' complaint is dismissed in its entirety against defendants Arnold Montag Architect, AM/PM Design & Consulting, P.C. a/k/a AM/PM Design & Consulting, P.C. and Arnold Montag; and it is further
ORDERED AND ADJUDGED that plaintiffs' complaint is dismissed in its entirety against defendants Bahram Tehrani and Best Engineering Techonology Design, Inc. s/h/a BTE Design, Inc., BTE Design Services and BTE Design Sourcing, LLC; and it is further
ORDERED that plaintiffs' cross motion to consolidate On Lam & Gregory Mann v ZR Equities, LLC, Yaniv Zahir and Sam Rabbani, Kings County index No. 503518/17 is denied as moot; and it is further
ORDERED that the action is severed and continued against the unnamed defendants John Does "1" - "10," and the caption is amended accordingly.
This constitutes the decision, order and judgment of the court.
ENTER
/s/_________
J. S. C.