Opinion
150457/2017
11-21-2018
Juan TORIBIO and Yulcaria Toribio, Plaintiffs, v. 575 BROADWAY LLC, 575 Broadway Associates, L.P., Defendants. 575 Broadway LLC and 575 Broadway Associates, L.P., Defendants/Third-Party Plaintiffs, v. West New York Restoration of CT, Inc. and Alert Action Contracting, Inc., Third-Party Defendants.
Eustace, Marquez, Epstein, Prezioso & Yapchanyk, Attorneys for Defendants/Third-Party Plaintiffs 575 Broadway LLC AND 575 Broadway Associates, L.P., 55 Water Street, 29th Floor, New York, New York 10041, By: Miles Linefsky, Esq. Gorayeb & Associates, P.C., Attorneys for Plaintiffs Juan Toribio and Yulcaria Toribio, 100 William Street, Suite 1900, New York, New York 10038, By: Christopher J. Gorayeb, Esq. Law offices of Nora Constance Marino, Attorneys for Cross-Claimant-Defendant-Third-Party Defendant Alert Action Contracting Inc., 175 East Shore Road, Suite 230, Great Neck, New York 11023, By: Nora Constance Marino, Esq. Stradley Ronon Stevens & Young, LLP, Attorneys for Cross-Claimant Third-Party-Defendant West New York Restoration of CT, Inc., 100 Park Avenue, Suite 2000, New York, New York 10017, By: Scott H. Bernstein, Esq.
Eustace, Marquez, Epstein, Prezioso & Yapchanyk, Attorneys for Defendants/Third-Party Plaintiffs 575 Broadway LLC AND 575 Broadway Associates, L.P., 55 Water Street, 29th Floor, New York, New York 10041, By: Miles Linefsky, Esq.
Gorayeb & Associates, P.C., Attorneys for Plaintiffs Juan Toribio and Yulcaria Toribio, 100 William Street, Suite 1900, New York, New York 10038, By: Christopher J. Gorayeb, Esq.
Law offices of Nora Constance Marino, Attorneys for Cross-Claimant-Defendant-Third-Party Defendant Alert Action Contracting Inc., 175 East Shore Road, Suite 230, Great Neck, New York 11023, By: Nora Constance Marino, Esq.
Stradley Ronon Stevens & Young, LLP, Attorneys for Cross-Claimant Third-Party-Defendant West New York Restoration of CT, Inc., 100 Park Avenue, Suite 2000, New York, New York 10017, By: Scott H. Bernstein, Esq.
Robert R. Reed, J.
Motion sequence nos. 001, 003 and 004 are consolidated for disposition herein.
In motion sequence no. 001, third-party defendant Alert Action Contracting Inc. (Alert) moves, pursuant to CPLR 3211 (a) (1), (5) and (7), for pre-answer dismissal of the third-party complaint and the cross claims asserted against it. Two weeks after Alert filed the motion, third-party defendant West New York Restoration of CT, Inc. (West) served an amended summons and verified amended cross claims upon Alert (NY St Cts Elec Filing [NYSCEF] Doc Nos. 67-68), which led Alert to file a cross motion for dismissal of West's amended cross claims (NYSCEF Doc No. 100). The court observes that Alert has filed a notice withdrawing its cross motion (NYSCEF Doc No. 103), in favor of moving for dismissal of West's amended cross claims, pursuant to CPLR 3211 (a) (1), (5) and (7), in motion sequence no. 003. In response, West, in motion sequence no. 004, moves, pursuant to CPLR 3025 (b), for leave to serve an amended answer and cross claims.
Alert and West rely on the same arguments and exhibits on both motions to dismiss.
BACKGROUND
Plaintiffs commenced this Labor Law action against defendants 575 Broadway LLC and 575 Broadway Associates, L.P. (together, 575 Broadway) to recover damages for personal injuries sustained by plaintiff Juan Toribio (Toribio) on December 8, 2014 (affirmation in support of Alert's counsel, exhibit B [complaint], ¶ 34). The incident occurred in a building undergoing construction owned by 575 Broadway Associates, L.P. at 575 Broadway, New York, New York (NYSCEF Doc No. 5 [575 Broadway answer], ¶ 3] ). 575 Broadway brought a third-party action against West, its general contractor on the project, and Alert, West's subcontractor and Toribio's employer, asserting claims for indemnification, contribution and breach of contract for their failure to procure insurance (affirmation in support of Alert's counsel, exhibit A). In its answer to the third-party complaint, West asserted cross claims for contribution, indemnification and breach of contract against Alert (affirmation of in support Alert's counsel, exhibit C).
CONTENTIONS
Alert moves to dismiss the third-party complaint, the cross claims and the "amended" cross claims asserted against it. First, Alert argues that the indemnification provision in its subcontract with West (the Subcontract) violates General Obligations Law § 5-322.1. The relevant portion of the indemnification provision in the Subcontract reads as follows:
"A. Subcontractor agrees to defend, indemnify and hold Contractor harmless and, if requested by Contractor, the Owner, their consultants, agents and employees of any of them, from and against any and all claims, suits, losses or liability, including attorneys' fees and litigation expenses, for or on account of injury to or death of persons, including subcontractor's employees, subcontractor's subcontractors or their employees, or damage to or destruction of property, or any bond obtained for same, caused, in whole or part, by any act or omission, or alleged act or omission, of Subcontractor, its employees or agents, whether caused in party [sic] by a party indemnified hereunder"
(affirmation in support of Alert's counsel, exhibit D at 1). Alert posits that the indemnification provision purports to indemnify West and 575 Broadway for their own negligence, without regard to Alert's fault.
In the alternative, Alert contends that West is not entitled to indemnification because West's actions are the sole cause of Toribio's accident. Following Toribio's accident, the New York City Department of Buildings (DOB) issued a notice of violation to West for its failure to "safeguard all persons and property affected by construction operations" (affirmation in support of Alert's counsel, exhibit E at 1). The notice of violation alleged a violation of New York City Building Code (Administrative Code of City of NY, tit 28, ch 7) § BC 3301.2, which reads, in part, that, "[c]ontractors, construction managers, and subcontractors engaged in construction or demolition operations shall institute and maintain all safety measures required by this chapter and provide all equipment or temporary construction necessary to safeguard the public and property affected by such contractor's operations." At a hearing before the New York City Environmental Control Board (ECB) on April 2, 2015, at which representatives from West and Alert were present, the ECB upheld the DOB's notice of violation and imposed a civil penalty of $12,000 (affirmation of Alert's counsel, exhibit F at 1). Alert argues that West is collaterally estopped from litigating the issues of liability and negligence because the ECB has already found West solely at fault for Toribio's accident.
Alert also contends that West's service of amended cross claims was procedurally improper because cross claims must be asserted in an answer. To the extent that West has moved for leave of court to amend its answer, Alert submits that the proposed amendments are patently devoid merit, and refers the court to the arguments in its two motions for dismissal.
West opposes the applications and argues that the indemnification provision is enforceable because its liability is vicarious and purely statutory. West also contends that there is no basis to collaterally estop it from asserting a cross claim. First, West claims that the DOB could not have issued a notice of violation to Alert because Alert was not the general contractor or permit holder of record for the project. Second, the issue before the ECB was a determination on an alleged violation of the Building Code, and a violation is not determinative of negligence, i.e., that West (or 575 Broadway or Alert) were at fault for Toribio's accident. In addition, neither 575 West nor Toribio were parties to that proceeding. Thus, West could not have had a full and fair opportunity to litigate the issue of its negligence.
Furthermore, West argues that General Obligations Law § 5-322.1 does not affect its cross claim for breach of contract for failure to procure insurance. The relevant part of the Subcontract reads, "Subcontractor shall provide a Certificate of Insurance prior to starting work. Contractor shall be added as an Additional Insured on each subcontractor GL policy" (affirmation in support of Alert's counsel, exhibit D at 2). The indemnification provision has no bearing on the breach of contract cross claim, which West maintains is viable because Alert's insurer has denied coverage (West's memorandum of law in opposition at 6).
West also argues that it properly asserted cross claims for common-law indemnification and contribution, as Alert was solely responsible for directing Toribio's work, as indicated in the exhibits annexed to West's amended cross claims. The exhibits include an injury report prepared by Alert's site supervisor, Andrezj Nowak, an account of the accident from eyewitness Cesar Tello and a letter dated December 19, 2014 from Michal Kucharski of Alert confirming new procedures for removing waste material bags (affirmation in support of West's counsel, exhibit C). West alleges that Alert acknowledged its responsibility for the accident by reimbursing West for the $12,000 civil penalty ECB had assessed, as evidenced in the invoices and change orders (West's memorandum of law in opposition at 14). Finally, West requests leave to amend its answer to assert amended cross claims against Alert.
In addition to adopting the factual and legal arguments advanced by West, 575 Broadway argues that Alert ignores the section of the indemnification provision which reads "caused, in whole or part, by an act or omission, of Subcontractor." Such language limits indemnification to claims caused by Alert's acts or omissions, and Alert failed to describe any acts of omissions by 575 Broadway. 575 Broadway contends that the indemnification provision may be enforced in conjunction with the insurance provision in the Subcontract, which shifts the risk of liability to a third-party. 575 Broadway also submits that Alert's motion is premature because none of the parties have been deposed and discovery is outstanding.
Alert, in reply, claims that the cause of the accident was a defectively built and designed hoist, scaffold or platform by West, and that Alert's employees took no part in those activities (reply affirmation of Alert's counsel, ¶ 46). It refutes West's claim that Alert voluntarily paid the $12,000 civil penalty, stating that "West actually extorted fifty percent of the $12,000 fine from Alert" (id. , ¶ 26). Alert repeats its argument that the ECB had concluded that West was solely at fault for the accident, as Building Code § 3301.2 is inapplicable to subcontractors like Alert. Alert also claims that the exclusivity provision of Worker's Compensation Law § 11 precludes the common-law indemnification and contribution claims. Finally, Alert argues that 575 Broadway is not an indemnitee because it never "requested" indemnification.
DISCUSSION
Motion Sequence No. 004 (West's Motion to Amend its Answer)
It is well settled that a motion for leave to amend the pleadings should be freely granted unless there is prejudice or surprise from the delay or if the amendment is "palpably insufficient or patently devoid of merit" (see JPMorgan Chase Bank, N.A. v Low Cost Bearings NY Inc. , 107 AD3d 643, 644 [1st Dept 2013], quoting MBIA Ins. Corp. v Greystone & Co., Inc. , 74 AD3d 499, 499 [1st Dept 2010] ). The court must examine the sufficiency of the merits of the proposed amendment and is not required to accept plaintiff's allegations as true (see Bag Bag v Alcobi , 129 AD3d 649, 649 [1st Dept 2015] ). A party moving to amend its pleadings need not prove the facts alleged (see Daniels v Empire-Orr, Inc. , 151 AD2d 370, 371 [1st Dept 1989] [citations omitted] ), but must tender an affidavit of merit or an offer of evidence similar to that used to support a motion for summary judgment (see Bag Bag , 129 AD3d at 649 [1st Dept 2016] ). A party opposing the motion bears a heavy burden of showing "prejudice or surprise resulting directly from the delay" ( McGhee v Odell , 96 AD3d 449, 450 [1st Dept 2012] [internal quotation marks and citation omitted] ), or demonstrating that the facts as alleged are "obviously unreliable or insufficient to support the amendment" (see Peach Parking Corp. v 346 W. 40th St., LLC , 42 AD3d 82, 86 [1st Dept 2007], citing Daniels , 151 AD3d at 371] ).
CPLR 3011 provides that "[a]n answer may include ... a cross-claim against a defendant." Here, West served amended cross claims separately from its answer, which is technically impermissible, and without leave of court. Nonetheless, West has demonstrated the potential merit to its amended cross claims, discussed infra. Additionally, there is no prejudice to Alert if the court were to grant the amendment, as there has been little discovery in this matter.
Accordingly, West's motion for leave to amend its answer is granted.
Motion Sequence Nos. 001 and 003 (Alert's Motions to Dismiss)
Dismissal under CPLR 3211 (a) (1) is warranted "only 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 NY , 98 NY2d 314, 326 [2002] ). "To be considered ‘documentary’ under CPLR 3211 (a) (1), evidence must be unambiguous and of undisputed authenticity" ( Fontanetta v John Doe 1, 73 AD3d 78, 86 [2d Dept 2010] [citation omitted] ). Judicial records, mortgages, deeds and contracts constitute documentary evidence ( id. at 84 ), but affidavits and deposition testimony are not considered documentary evidence (see Lowenstern v Sherman Sq. Realty Corp ., 143 AD3d 562, 562 [1st Dept 2016] ; Correa v Orient-Express Hotels, Inc. , 84 AD3d 651, 651 [1st Dept 2011] ). "[T]he paper's content must be ‘essentially undeniable and ..., assuming the verity of [the paper] and the validity of its execution, will itself support the ground on which the motion is based" ( Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc. , 120 AD3d 431, 432 [1st Dept 2014] [internal quotation marks and citation omitted] ).
CPLR 3211 (a) (5) provides for dismissal based on collateral estoppel. "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 action are the same" ( Ryan v New York Tel. Co. , 62 NY2d 494, 500 [1984] [internal citations omitted] ). Thus, the two elements necessary to invoke collateral estoppel are "an identity of issue which has necessarily been decided in the prior action and is decisive of the present action" and "a full and fair opportunity to contest the decision now said to be controlling" ( Buechel v Bain , 97 NY2d 295, 303-304 [2001], cert denied 535 US 1096 [2002] [internal citation omitted] ). "[T]he burden rests upon the proponent of collateral estoppel to demonstrate the identicality and decisiveness of the issue, while the burden rests upon the opponent to establish the absence of a full and fair opportunity to litigate the issue in the prior action or proceeding" ( Ryan , 62 NY2d at 501 ).
On a motion to dismiss brought under CPLR 3211 (a) (7), the court must "accept the facts as alleged in the complaint as true, accord the plaintiff 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 NY2d 83, 87-88 [1994] [citations omitted] ). Ambiguous allegations must be resolved in plaintiff's favor (see JF Capital Advisors, LLC v Lightstone Group, LLC , 25 NY3d 759, 764 [2015] ). A motion to dismiss will be denied "if from [the pleading's] four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law" ( Guggenheimer v Ginzburg , 43 NY2d 268, 275 [1977] ). However, "the court is not required to accept factual allegations that are plainly contradicted by the documentary evidence or legal conclusions that are unsupportable based upon the undisputed facts" ( Robinson v Robinson , 303 AD2d 234, 235 [1st Dept 2003] ). "When documentary evidence is submitted by a defendant ‘the standard morphs from whether the plaintiff stated a cause of action to whether it has one’ " ( Basis Yield Alpha Fund (Master) v Goldman Sachs Group, Inc. , 115 AD3d 128, 135 [1st Dept 2014] [internal citation omitted] ).
It is well settled that "[a] party is entitled to full contractual indemnification provided that the ‘intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances’ " ( Drzewinski v Atlantic Scaffold & Ladder Co. , 70 NY2d 774, 777 [1987], quoting Margolin v New York Life Ins. Co. , 32 NY2d 149, 153 [1973] ). General Obligations Law § 5-322.1, though, imposes certain restrictions on the scope of an indemnification provision contained in a contract. Importantly, the statute provides that agreements "purporting to indemnify or hold harmless the promisee against liability for damage ... caused by or resulting from the negligence of the promisee ... whether such negligence be in whole or in part, is against public policy and is void and unenforceable" ( General Obligations Law § 5-322.1 [1] ). Thus, the statute prohibits contractual agreements that provide for full indemnification regardless of the indemnitee's fault ( Itri Brick & Concrete Corp. v Aetna Cas. & Sur. Co. , 89 NY2d 786, 796 [1997], rearg denied 90 NY2d 1088 [1997] ). But, if an indemnification provision includes language limiting the indemnitor's obligation, then the provision does not violate General Obligations Law § 5-322.1 (1) (see Brooks v Judlau Contr. Inc. , 11 NY3d 204, 210 [2008] [finding that the phrase " ‘to the fullest extent permitted by law ...’ contemplates partial indemnification and is intended to limit [a subcontractor's] contractual indemnity obligation solely to [the subcontractor's] own negligence"] ).
At first blush, the indemnification provision at issue is broad and expansive with regards to Alert's indemnification obligations. Nevertheless, the court declines to grant dismissal on this ground. An "indemnification clause ... [that] runs afoul of General Obligations Law § 5-322.1 (1) is enforceable in the event the indemnitee is found not negligent but nevertheless held vicariously liable to the plaintiff" ( Linarello v City Univ. of NY , 6 AD3d 192, 193-194 [1st Dept 2004] [internal citations omitted]; see also Collozzo v National Ctr. Found., Inc. , 30 AD3d 251, 252 [1st Dept 2006], rearg denied 2006 NY App Div LEXIS 11778 [1st Dept 2006] [finding that the indemnity provision was enforceable even though "on its face," the provision ran afoul General Obligations Law § 5-322.1 ] ). As this is a pre-answer motion to dismiss, and because there has been no determination that West is vicariously liable to plaintiffs, Alert's motions to dismiss the third-party claims and the cross claims for contractual indemnification are denied.
Likewise, Alert's motions for dismissal of the common-law indemnification or contribution claims on the basis that West is collaterally estopped from maintaining them is denied. Alert predicates this argument upon the ECB's determination that West had violated Building Code § 3301.2. The parties do not dispute that the hearing before the ECB was a quasi-judicial proceeding or that the hearing officer sustained DOB's notice of violation. However, a violation of the Building Code "only constitutes ‘mere evidence of negligence and not negligence per se’ " ( Jainsinghani v One Vanderbilt Owner, LLC , 162 AD3d 603, 604 [1st Dept 2018], quoting Vasquez v Soriano , 106 AD3d 545, 545 [1st Dept 2013] ). Moreover, the hearing before the ECB did not determine whether West's negligence was a "substantial cause" of Toribio's injury ( Verdugo v Seven Thirty One Ltd. Partnership , 70 AD3d 600, 601 [1st Dept 2010] [finding that the defendant construction manager, against whom the ECB had determined was in violation of two provisions of the Building Code, was estopped from denying the violations but was not estopped from contesting its liability before a jury] ). Rather, the hearing resolved only whether there was a violation of the Building Code. And while DOB did not issue a notice of violation to Alert, Building Code § 3301.2 applies equally to subcontractors such as Alert. Thus, there was no identicality of issues in the ECB proceeding and in the present action.
Furthermore, neither plaintiffs nor 575 Broadway were parties to the proceeding before the ECB, although the fact that they were not parties is immaterial for purposes of the privity element of the doctrine of collateral estoppel (see Casa de Meadows Inc. [Cayman Is.] v Zaman , 76 AD3d 917, 922 [1st Dept 2010] ). Privity is an "amorphous concept not easy of application" ( D'Arata v New York Cen. Mut. Fire Ins. Co. , 76 NY2d 659, 664 [1990] [internal citation omitted] ). A nonparty to a prior litigation may be deemed in privity with a party in that litigation if "his [or her] own rights or obligations in the subsequent proceeding are conditioned in one or another on, or derivative of, the rights of the party to the prior litigation" (id. [internal citations omitted] ). The initiation of the third-party action placed 575 Broadway, West, and Alert in an adversarial posture against each other, and none of those parties' rights are conditioned or derivative of either West's or Alert's rights in the ECB proceeding.
Additionally, the documentary evidence does not utterly refute 575 Broadway's and West's claims for common law-indemnification or contribution. Common-law indemnification is available to a party that "has been held vicariously liable without proof of any negligence or actual supervision on its part ... [and where] the proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work" ( Naughton v City of New York , 94 AD3d 1, 10 [1st Dept 2012] [internal citations omitted] ). CPLR 1401 provides for contribution where "two or more persons ... are subject to liability for damages for the same personal injury, injury to property or wrongful death ...." The ECB decision reads that Alert was "hoisting material from the roof to the sidewalk shed in a bucket ... when a bag from the roof fell down onto the injured worker" (affirmation in support of Alert's counsel, exhibit F at 2). The decision further indicates that West's representatives were not present at the site when Toribio's accident occurred ( id. at 3 ). Hence, it cannot be determined, at this juncture, that 575 Broadway and West are unable to plead causes of action for common-law indemnification or contribution. In addition, Alert's assertion that 575 Broadway never "requested" indemnification is not supported by any evidence, and it is apparent that 575 Broadway is now requesting indemnification. Further, the Subcontract did not identify a process or procedure by which 575 Broadway should have requested indemnification. As for the exclusivity provision in the Workers' Compensation Law, Alert did not raise this contention until its reply, which is impermissible.
Finally, other than alleging that the breach of contract for failure to procure insurance claims are moot, Alert advanced no other legal arguments in support of dismissal.
Consequently, Alert's motions to dismiss the third-party complaint and the cross claims and amended cross claims asserted against it are denied.
Accordingly, it is
ORDERED that the motion of third-party defendant West New York Restoration of CT, Inc. for leave to amend its answer (Motion Sequence No. 004) is granted; and it is further
ORDERED that the amended answer in the proposed form annexed to the moving papers as Exhibit C shall be deemed served upon service of a copy of this order with notice of entry thereof; and it is further
ORDERED that the motions of third-party defendant Alert Action Contracting, Inc. for dismissal of the third-party complaint and the cross claims and amended cross claims asserted against it (Motion Sequence Nos. 001 and 003) are denied; and it is further
ORDERED that the third-party defendant Alert Action Contracting, Inc. shall serve an answer to the third-party complaint and to the amended answer of third-party defendant West New York Restoration of CT, Inc. within 20 days from the date of said service of this order with notice of entry; and it is further
ORDERED that counsel are directed to appear for a status conference in Part 43, Room 581, 111 Centre Street, on January 3, 2019, at 11:00 a.m.