Volt Elec. NYC Corp. v. A.M.E., Inc.

Full title: VOLT ELECTRIC NYC CORP., Plaintiff, v. A.M.E., INC., and Hemant R. Patel…

Court: United States District Court, S.D. New York.

Date published: Feb 16, 2022

586 F. Supp. 3d 262 (S.D.N.Y. 2022)

Opinion

20 Civ. 4185 (PAE) 21 Civ. 1743 (PAE), 21 Civ. 2986 (PAE)

2022-02-16

VOLT ELECTRIC NYC CORP., Plaintiff, v. A.M.E., INC., and Hemant R. Patel, Defendants. Volt Electric NYC Corp., Plaintiff, v. Amit Patel, Glenn Hertzberg, and Paul Yingling, Defendants. A.M.E., Inc., Plaintiff, v. Jimmy Branna, Elite Consulting LLC, and John Kempf, Defendants.

Karl Judah Silverberg, Silverberg P.C., Central Islip, NY, for Volt Electric NYC Corp., Jimmy Branna, Elite Consulting LLC, and John Kempf. Danielle Elizabeth Cohen, Tesser & Cohen, Hackensack, NJ, for A.M.E., Inc., Hemant R. Patel, Amit Patel, Glenn Hertzberg, and Paul Yingling.

PAUL A. ENGELMAYER, District Judge

Karl Judah Silverberg, Silverberg P.C., Central Islip, NY, for Volt Electric NYC Corp., Jimmy Branna, Elite Consulting LLC, and John Kempf.

Danielle Elizabeth Cohen, Tesser & Cohen, Hackensack, NJ, for A.M.E., Inc., Hemant R. Patel, Amit Patel, Glenn Hertzberg, and Paul Yingling.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Two subcontractors, A.M.E., Inc. ("AME") and Volt Electric NYC Corp. ("Volt"), entered into an agreement for Volt to do certain electrical work for AME on a building project for the Jewish Theological Seminary in New York City. The central issue in this litigation is whether that agreement obligated Volt to complete "final terminations" for the project. "Final terminations" is an engineering term of art referring to the meticulous work needed to connect loose wires to devices and panels. Volt did not complete that work because it did not believe it was obligated to do so. Conversely, believing that Volt was required—and failed—to complete final terminations, AME withheld full payment of the contract price and expended resources to complete the job. Volt and AME, each contending the other owes it money arising from these events, has sued the other (and associated entities and persons) in three related lawsuits.¹

1 Each claim in these actions arises under New York state law. The Court has diversity jurisdiction over the dispute because each party is a citizen of a different state and the amount in controversy exceeds $75,000. See Herrick Co. v. SCS Commc'ns, Inc. , 251 F.3d 315, 322 (2d Cir. 2001) ; 28 U.S.C. § 1332 ; No. 20 Civ. 4185 (S.D.N.Y.), Dkt. 14; No. 21 Civ. 2986 (S.D.N.Y.), Dkt. 11.

In the first lawsuit, Volt brings—against AME and its president, Hemant R. Patel—common law claims for breach of contract, unjust enrichment, and account stated, and a claim for breach of trust under Article 3-A of the New York Lien Law, see N.Y. Lien Law § 70 et seq. ("Lien Law"). See No. 20 Civ. 4185 (S.D.N.Y.) ("Volt I "), Dkt. 1 ("Volt I Compl."). In that suit, AME has counterclaimed for breach of contract, construction defects, breach of covenant of good faith and fair dealing, delay, and lost profits. Volt I , Dkt. 6.

In a second lawsuit brought by Volt arising from the same events, Volt brings—against AME executives Amit Patel, Glenn Hertzberg, and Paul Yingling—claims for breach of trust and fiduciary duty under the New York Lien Law. See No. 21 Civ. 1743 (S.D.N.Y.) ("Volt II "), Dkt. 1 ("Volt II Compl.").

In the third lawsuit, AME brings (1) against Jimmy Branna, Volt's owner, a claim of fraud, and (2) against Elite Consulting LLC ("Elite"), a consultant Volt hired for the project, and John Kempf, an electrician at Volt, claims of negligence. See 21 Civ. 2986 (S.D.N.Y.) ("AME "), Dkt. 1 ("AME Compl.").

Volt now moves for summary judgment on its breach of contract claim in Volt I and Lien Law claims in Volt I and Volt II. It also, on behalf of Branna and Kempf, moves to dismiss AME's fraud and negligence claims in AME. ² AME moves for partial summary judgment, limited to Volt's Lien Law claims in Volt I and Volt II.

2 Given the procedural posture of this case, the Court converts Volt's motion to dismiss to a motion for summary judgment. See infra Section IV.A.

For the following reasons, the Court grants in part and denies in part Volt's motions, and grants AME's motion for partial summary judgment.

I. Background

A. Factual Background ³

3 This account draws from the parties’ submissions in support of and opposition to the motion for summary judgment and cross-motion for partial summary judgment. Those filings, as referenced by their docket number in Volt I , include the parties’ joint statement of undisputed facts, Dkt. 72 ("JSF"); Volt's Local Rule 56.1 statement, Dkt. 76 ("Volt 56.1"); AME's Local Rule 56.1 counter-statement, Dkt. 85 ("AME 56.1"); the declaration of Karl Silverberg, Esq., Dkt. 78 ("Silverberg Decl."), and supporting exhibits. These include the deposition transcripts of William Merrit, Dkt. 78-1, Robert La Chiana, Dkt. 78-2 ("La Chiana Depo."), Paul Yingling, Dkt. 78-3 ("Yingling Depo."), Amit Patel, Dkt. 78-4, and Glenn Hertzberg, Dkt. 78-5 ("Hertzberg Depo."), and AME's Rule 26 disclosures in Volt I , Dkt. 78-6 ("Volt I Discl."), and AME , Dkt. 78-7 ("AME Discl."); the declaration of Jimmy Branna, Dkt. 79 ("Branna Decl."), and select supporting exhibits, including the Volt Proposal, Dkt. 79-1 ("Volt Proposal"), AME Purchase Order, Dkt. 79-2 at 26 ("AME PO"), an email from Hertzberg to Branna transmitting certain documents, Dkt. 79-2 ("February 4, 2019 email") at 1–3, Volt Change Order, Dkt. 79-6, AME Change Order, Dkt. 79-7; the declaration of James Scaturro, Dkt. 80 ("Scaturro Decl."); the declaration of John Kempf, Dkt. 81 ("Kempf Decl."); the declaration of Danielle Cohen, Esq., Dkt. 87 ("Cohen Decl."), and select supporting exhibits, including the deposition transcripts of Jimmy Branna, Dkt. 87-5 ("Branna Depo."), and James Scaturro, Dkt. 87-4 ("Scaturro Depo."); the declaration of Paul Yingling, Dkt. 88 ("Yingling Decl."), and supporting exhibits, including the Subcontract, Dkt. 88-1 ("Subcontract"), the construction project's plans, Dkt. 88-2–6 ("Project Plans"), select email correspondence, Dkt. 88-8–14, 17, a list of allegedly defective work, Dkt. 88-15, AME change orders, Dkt. 88-16; the declaration of Amy Miller, Dkt. 89 ("Miller Decl."), and a supporting exhibit; and the reply declaration of Jimmy Branna, Dkt. 92 ("Branna Reply Decl."), and a supporting exhibit.

1. The Parties

Non-party Henick-Lane, Inc. ("Henick-Lane") is the mechanical contractor for a construction project at the Jewish Theological Seminary, located at 3080 Broadway, New York, New York (the "JTS Project"). JSF ¶ 3; Volt 56.1 ¶ 1; Volt I , Dkt. 46 at 1. Henick-Lane engaged AME as a subcontractor on the JTS Project. AME in turn engaged Volt as a sub-subcontractor, to perform certain electrical work on the JTS Project. JSF ¶¶ 1, 3; see infra Section I.A.2.

AME is a building management systems control contractor that performs work in New York City and surrounding areas. JSF ¶ 1. Hemant R. Patel is alleged to be AME's President and CEO.⁴ Volt I Compl. ¶ 3. Amit Patel is alleged to be an AME Vice President, responsible for AME's day-to-day operations. Volt II Compl. ¶ 2. Glenn Hertzberg is an AME Vice President. He is the AME representative who engaged in the initial contract negotiations with Volt. Hertzberg Decl. ¶¶ 1, 3. Paul Yingling is AME's Operations Manager. He oversaw the AME project managers who managed day-to-day installation on the JTS Project. Yingling Decl. ¶¶ 1, 6.

4 Hemant Patel's precise role in the JTS Project or at AME is unclear. On May 4, 2021, the parties filed a letter seeking to voluntarily dismiss him from the action. Volt I , Dkt. 71. The Clerk of Court rejected that submission as deficiently filed, and the parties never resubmitted a properly filed letter for court approval. Hemant Patel is, therefore, still a defendant in this case.

Volt is an electrical subcontractor that performs work throughout New York. JSF ¶ 2. Jimmy Branna is Volt's president. Branna Decl. ¶ 1. From about the beginning of 2020, James Scaturro has been Volt's Vice President. Scaturro Decl. ¶ 1.⁵ Scaturro at all relevant times also has been (and continues to be) Elite's only member and employee. Id. ¶¶ 2, 6. For the JTS Project, Elite supported Volt by acting as a senior supervisor, ensuring that projects had the proper manpower and supplies, and addressing issues that arose during performance. Id. ¶¶ 7, 9. Scaturro at all times reported directly to Branna. Id. ¶ 8. John Kempf is a licensed Master Electrician who has been employed by Volt since about August 2018. Kempf Decl. ¶¶ 4–5. Kempf states that he had no role in the JTS Project. Id. ¶ 7.

5 Scaturro's email signature in an email he purportedly sent on June 2, 2019 identifies Scaturro as Volt's Vice President. See Volt I , Dkt. 88-7.

2. Volt's Involvement with the JTS Project

In early January 2019, Hertzberg reached out to Branna to discuss Volt's potential involvement in the JTS Project as a sub-subcontractor to perform electrical work on the building. Branna Decl. ¶ 5. Soon thereafter, the two met at the JTS Project site and discussed the project. Id. ¶ 6; Volt 56.1 ¶ 2; AME 56.1 ¶ 1.

During that conversation, Branna told Hertzberg that Volt, although able to do the electrical work needed for the JTS Project, would be unavailable to complete final terminations—meticulous work involving the connection of loose wires to devices and panels—for the project. Branna Decl. ¶ 8; Hertzberg Decl. ¶ 4; AME 56.1 ¶ 2. Branna attests:

I expressly told Glenn [Hertzberg] at the project walk-through that Volt would not do the final termination work. I excluded final terminations because the manpower I had available would not support termination work under the compressed schedule expected on the JTS Project. Volt's work was focused on installing electrical conduit piping and pulling wires through the conduit—as I like to call it, the "grunt work." Glenn [Hertzberg] told me that AME had plenty of men that could handle the more intricate final termination work, telling me, "AME has 200 technicians and will be able to take on that part of the job."

Branna Decl. ¶ 8.

a. The Volt Proposal and AME Purchase Order

On January 12, 2019, AME sent Branna, via email, a series of documents purporting to show plans for the overall JTS Project. The cover email states, inter alia , that it attached the "AME Scope of work." Yingling Decl. ¶ 5; see Project Plans. The Project Plans span hundreds of pages and show highly detailed engineering and architectural specifications. The first page of the plans states at the top, "Tod Billiesien Architects | Partners," identifies as the "Project" "The Jewish Theological Seminary – 21st Century Campus," and lists as the "Date Returned" July 5, 2018. Project Plans at 5.

On January 16, 2019, Volt submitted to AME a written proposal with a quote for Volt's estimated labor on the JTS Project. JSF ¶ 4(a); see Volt Proposal. The top of the Volt Proposal states, in bolded, underlined, and italicized font, "Scope of Work"; the only item below that header reads, "Furnish labor and material to install control wiring as per Tod Williams Billiesien architect drawings M-100.02, M-101.02, M-102.02, M-103.02, M-104.02, M-105.02, and M-106.02 dated 07/24/17." Volt Proposal. Below the "Scope of Work" section is another header in bolded, underlined, and italicized font, which reads "Qualifications." Among the various items in the hyphenated lists that follows is the sentence, "Final terminations are to be done by others." Id. The Volt Proposal lists a purchase price of $356,000. Id.

On January 30, 2019, Hertzberg signed the Volt Proposal, which includes a note stating, "Will replace with formal AME PO by Feb 1, 2019." Id.

On February 4, 2019, Hertzberg signed, and AME sent to Volt, a purchase order virtually identical to the Volt Proposal. JSF ¶ 4(b); see AME PO. Like the Volt Proposal, the AME Purchase Order includes bolded, underlined, and italicized "Scope of Work" and "Qualifications" sections, along with the "Final terminations are to be done by others" language and a purchase price of $356,000. AME PO.

b. The Subcontract

Sometime in early February 2019, AME sent Volt a contract entitled "Subcontract Agreement," which lists a start date of February 1, 2019 and purchase price of $356,000. See Subcontract at 1, 16. Volt adduces evidence that AME sent it the Subcontract on February 4, 2019—the same day AME sent Volt the AME Purchase Order. See Volt 56.1 ¶ 3(c); see also February 4, 2019 email (email correspondence on February 4, 2019 in which Hertzberg forwards Branna an email stating, inter alia , "[a]ttached is the subcontract & PO"). Volt asserts that when AME sent Volt the Subcontract, it attached the Volt Proposal and AME Purchase Order. Volt 56.1 ¶ 3(c); February 4, 2019 email. On February 11, 2019, Branna signed the Subcontract. Subcontract at 16. Nobody signed the Subcontract on AME's behalf.

The Subcontract is the governing agreement.⁶ Its relevant provisions are reproduced below⁷ :

6 Volt states, without authority, that the Subcontract is unenforceable because AME never signed it. Volt I , Dkt. 77 at 10 (citing JSF ¶ 4(d)). That is wrong. "To form a valid contract under New York law, there must be an offer, acceptance, consideration, mutual assent and intent to be bound." Peterson v. Regina , 935 F. Supp. 2d 628, 635 (S.D.N.Y. 2013) (quoting Register.com, Inc. v. Verio, Inc. , 356 F.3d 393, 427 (2d Cir. 2004) ). Volt's acceptance (via its own signature) of AME's offer (the Subcontract) established an enforceable contract. That AME did not sign its offer is not determinative, as AME's overall conduct reflects its intent to be bound. See Leibowitz v. Cornell Univ. , 584 F.3d 487, 507 (2d Cir. 2009) (rejecting argument that lack of signature belies mutual assent where other party's conduct indicates intent to be bound), superseded by statute on unrelated grounds.

7 "Owner" refers to Henick-Lane; "Subcontractor" refers to Volt. Subcontract at 1.

1.1 The "Subcontract" consists of the following documents: (1) this instrument, which shall be known as the "Subcontract Form"; (2) all exhibits to the Subcontract Form; (3) the Prime Contract between the Owner and AME, including all incorporated plans, specifications and other documents forming the Prime Contract; and (4) any subsequent amendments or modifications to both the Prime Contract and this Subcontract, including, but not limited to, Change Orders. Together, these shall be known as the "Subcontract Documents." The documents forming the Subcontract and issued prior to the Subcontract Form's execution have been made available to the Subcontractor for review, except for any financial information which AME reserves the right to withhold. The Subcontractor acknowledges that it has reviewed all the aforementioned documents previously issued.

....

3.3 The Subcontractor further agrees to furnish all labor, material, equipment or services reasonably inferable from the Subcontract Documents, including, but not limited to, the Project's plans and specifications, the Prime Contract, and this Subcontract Form so that the Work is fully functional in its scope as a part of the whole of the Project. The Subcontractor shall properly perform and finally complete the Work in the best and most workmanlike manner, and to the satisfaction of AME, the Owner and any of the Owner's consultants or design professionals.

....

4.2.1 If there appears to be any conflict between the terms and conditions set forth in the Subcontract Documents, including, but not limited to, any plans and specifications, then the more stringent or burdensome requirements shall control unless AME expressly agrees to the contrary in a writing signed by its Project Manager.

....

4.3 AME shall have the sole discretion to interpret the Subcontract Documents. So long as AME's interpretation is made in good faith, the Subcontractor recognizes those interpretations to be final and binding.

....

11.1 Default. If the Subcontractor fails or neglects to carry out the Work, or to otherwise perform in accordance with this Subcontract, and then fails, within three (3) calendar days after transmittal of oral or written notice by AME to the Subcontractor to commence and complete correction of such failure or neglect, then the Subcontractor shall be in "Default." Upon Default, AME may, without prejudice to any other remedy: (a) terminate the Subcontract and seek damages ("Default Termination"); (b) perform and complete the Work by whatever method AME deems expedient and charge the Subcontractor for all costs, expenses and damages relating thereto, together with fifteen (15%) percent for AME's overhead; (c) seek any other remedy permitted by law or the Subcontract; or (d) any combination of the above.

....

13.12 The Subcontract represents the entire and integrated agreement between the parties, and supersedes all prior negotiations, representations or agreements, whether written or oral. No Subcontractor proposals to AME shall form a part of this Subcontract unless expressly identified.

....

13.14 The following are made a part of this Subcontract. They have been read, understood, and agreed to by the parties:

- Work Scope

- Payment, Retainage, et al.

- Current Schedule

- Insurance Requirements – See Attached requirements

Subcontract at 1–3, 12, 15.

AME claims that, at some point before sending Volt the Subcontract, Hertzberg spoke with Branna and Scaturro about the scope of the JTS Project. Hertzberg Decl. ¶ 4; AME 56.1 ¶¶ 2–3; but see Hertzberg Depo. at 30–31 (Hertzberg testimony that he is not sure whether the conversation with Branna and Scaturro took place before or after February 4, 2019). Hertzberg states that he advised Branna and Scaturro that Volt needed to perform final terminations, and that Volt agreed to do so. Had Volt not agreed to do so, Hertzberg states, AME would not have awarded Volt the Subcontract. Hertzberg Decl. ¶¶ 5–9. Hertzberg states that Branna confirmed that Volt could do the necessary work within the JTS Project time schedule. Id. ¶ 8.

Conversely, Branna adamantly denies that Volt ever agreed to do final termination work. He calls Hertzberg's statements to the contrary "blatantly false." Branna Reply Decl. ¶ 5. Branna maintains that he informed Hertzberg all along that "Volt did not have the manpower to perform the final termination work." Id.

c. Volt's Work on the Project

In February 2019, Volt began work on the JTS Project. JSF ¶ 5. On June 2, 2019, Robert La Chiana, a Volt project supervisor, sent Scaturro an email with the subject line, "Regarding assembling control panel interior on 15 panels" and a body message, "Looking for verification if this is part of our scope of work." Volt I , Dkt. 88-7. Within minutes, Scaturro responded to La Chiana, cc'ing Yingling, stating, "All panels, controls or equipment should come to the jobsite assembled. We install and terminate. It's not in our scope to build/assemble any panels or equipment." Id.

At various points during the JTS Project's construction, AME became dissatisfied with Volt's performance, viewing Volt as having breached its obligations under the Subcontract by providing incomplete or substandard work. See Yingling Decl. ¶ 14; Volt I , Dkt. 88-15 (list of allegedly deficient work). The parties dispute whether and how AME notified Volt of those alleged deficiencies or instructed Volt to correct the work. Hertzberg claims that he had discussed manpower and other issues with Branna "[d]uring the course of the Project." Hertzberg Decl. ¶ 11. Branna responds that requests for additional manpower is typical in the industry, and that Volt provided as much to help meet project deadlines. Branna Reply Decl. ¶ 7.

Paul Yingling claims that "Volt was provided with oral notifications of its defective and incomplete work on various occasions during on-site meetings." Yingling Decl. ¶ 11. Yingling also points to email exchanges between June and August 2019 purportedly demonstrating written notice AME gave Volt of its alleged default. Id. ¶ 12; Volt I , Dkt. 88-8–14, 17. Yingling further submits that "Volt was aware that replacement contractors were working on the Project as Volt was physically working alongside them and attended meetings with them." Yingling Decl. ¶ 16. Branna counters that "AME never issued any default notices to Volt that would make [him] believe that AME intended to hire another contractor to perform Volt's work," and that "AME never gave Volt any notice that would indicate that AME deemed Volt in default under the contract." Branna Decl. ¶¶ 20, 22.

In early June 2019, AME hired Vanguard Maintenance & Electrical, Inc. ("Vanguard"), an additional sub-subcontractor, purportedly to correct and/or finish Volt's allegedly incomplete or substandard work. See Volt I , Dkts. 89 ¶ 4, 89-1 at 4, 6, 103. In early August 2019, AME hired another sub-subcontractor, JTE Electrical Services, LLC ("JTE"), to do the same. Id. , Dkts. 89 ¶ 4, 89-1 at 1, 105. At unknown points during the JTS Project, AME also had its own laborers perform additional work. Dkt. 89 ¶ 5. Branna, however, attests that at "no time did Glenn Hertzberg ever say that if Volt failed to meet a schedule deadline that AME was going to hire replacement contractors." Branna Reply Decl. ¶ 7.

In July 2019, Hertzberg claims, he met with Branna, Scaturro, and representatives from Vanguard to discuss the JTS Project and the need to supplement Volt's manpower, as well as backcharges being assessed against Volt for the same. Hertzberg Decl. ¶ 12. Hertzberg states that it was his "understanding that Volt was aware that replacement contractors had been retained to complete and correct Volt's work and Volt would be backcharged accordingly." Id. ¶ 13.

Branna recalls the July 2019 meeting differently. He states that the meeting took place at a restaurant bar, lasted only 30 minutes, and that there were no discussions of backcharging. Branna Reply Decl. ¶ 9. Instead, Branna attests, the purpose of the meeting was to discuss the smooth transition between work phases, and to ensure that "Volt and Vanguard, who was performing the final termination work, were coordinating as necessary." Id.

Volt's last day of work on the JTS Project was September 30, 2019. JSF ¶ 10.

d. Payments

Volt sent AME three invoices for its work on the JTS Project. On February 6, 2019, Volt sent AME an invoice for $96,120. Id. ¶ 6(a). On February 22, 2019, Volt sent AME another invoice for another $96,120. Id. ¶ 6(b). On July 8, 2019, Volt sent AME an invoice for $163,760. Id. ¶ 6(c). On July 26, 2019, Volt sent AME an email requesting an additional $14,000 for work done apparently at the direction of Henick-Lane. Id. ¶ 9; Dkt. 79-6. In sum, Volt charged AME $370,000.

Henick-Lane paid AME $850,843.60, which AME spent as follows:

• On March 5, 2019, AME paid Volt $96,120. JSF ¶ 7(a).

• On March 31, 2019, AME sent Volt two additional payments, in the amounts of $36,120 and $10,000. Id. ¶ 7(b)–(c). In sum, AME paid Volt $142,240. Id. ¶ 11.

• AME paid JTE $139,411.39. Id.

• AME paid Vanguard $94,420.15. Id.

• AME paid its own labor force $269,806.14. Id. AME spent $204,965.92 on material. Id. AME avers that its total labor cost was approximately $500,000. Id.

Between July 26, 2019 and September 27, 2019, AME issued six change orders, pursuant to which AME deducted from the contract price the amount it viewed itself as owing Volt. The first change order, dated July 26, 2019, deducted $24,239.64 for insurance-related expenses, along with two other deductions for "other sub time." See Dkt. 79-7 at 3. Volt does not dispute that the insurance expense was properly deducted from the contract price. JSF ¶ 8(a); Branna Decl. ¶ 20. Volt disputes that AME's remaining change orders—for $43,895.18, $51,291.09,⁸ $41,381.96, $79,380, and $25,620—were valid deductions. JSF ¶ 8(b); Branna Decl. ¶ 20; Miller Decl. ¶ 5.

8 The change order AME sent Volt on July 26, 2019 lists the third deduction, for "other sub time in July," as $51,291.09, Dkt. 79-7 at 3, whereas a declaration from AME's Controller lists the third deduction for "other sub time in July" as $55,245.98, see Miller Decl. ¶ 5. Although the apparent discrepancy has no bearing on the instant motions, it will require resolution if and when this case reaches the damages phase.

Volt claims that AME owes it $203,521. Branna Decl. ¶ 19. AME, on the other hand, has submitted a declaration from Amy Miller, its controller, listing the various charges it claims to have suffered due to Volt's alleged failure to perform—i.e. , the costs AME incurred in making up for Volt's allegedly incomplete or substandard work. It tabulates its damages as $293,813.14. Miller Decl. ¶ 5.⁹ B. Procedural Background

9 Miller's declaration states that Volt claims it is owed $213,760. Miller Decl. ¶ 5. That figure slightly overstates what Volt claims it is owed ($203,521). See Branna Decl. ¶ 19.

On June 1, 2020, Volt filed its complaint in the original action. Volt I Compl. On July 2, 2020, AME answered, bringing counterclaims. Id. , Dkt. 6. On July 14, 2020, Volt answered AME's counterclaims, including for breach of contract. Id. , Dkt. 10. Fact discovery in the original action closed on April 2, 2021. Id. , Dkt. 58.

On February 27, 2021, Volt filed a second action, against Amit Patel, Hertzberg, and Yingling. Volt II , Dkt. 1. On March 30, 2021, AME moved to dismiss the complaint as duplicative of Volt's original action. Id. , Dkt. 9. On April 13, 2021, Volt opposed the motion to dismiss. Id. , Dkt. 11. On April 21, 2021, AME filed a reply. Id. , Dkt. 14. On April 26, 2021, the Court accepted Volt II as related to Volt I. Id. , Dkt. 15. AME's motion to dismiss the claims in Volt II as duplicative had not been resolved or withdrawn as of AME's filing for summary judgment, but AME now moves to withdraw it in deference to its motion for summary judgment on these claims.¹⁰ The Court therefore treats the motion to dismiss as moot, and analyzes Volt's claims in Volt II under the standards governing motions for summary judgment.

10 In a declaration submitted in connection with Volt's motion for summary judgment, Volt's attorney stated that "upon information and belief, [AME] withdrew the motion as superseded by the summary judgment briefing schedule." Volt I , Dkt. 78 at 2. Although AME now so moves, in fact, the briefing schedule on the docket does not so state. See id. , Dkt. 70.

On April 7, 2021, AME filed an action against Branna, Kempf, and Elite. AME , Dkt. 1. On April 27, 2021, the Court accepted AME's action as related to Volt I. Id. , Dkt. 21.

On May 3, 2021, the Court set a schedule for limited discovery occasioned by the new complaints, and for briefing summary judgment. Volt I , Dkt. 70. On July 12, 2021, Volt filed a motion for summary judgment and memorandum of law in support. Id. , Dkts. 75, 77 ("Volt Mot."). On August 6, 2021, AME filed an opposition to Volt's motion, and a cross motion for partial summary judgment and supporting memorandum of law. Id. , Dkts. 84, 86 ("AME Opp'n"). On August 23, 2021, Volt filed a reply in support of its summary judgment motion and an opposition to AME's cross motion for partial summary judgment. Id. , Dkt. 95 ("Volt Reply"). On September 15, 2021, AME filed a reply to Volt's opposition to AME's cross motion for partial summary judgment. Id. , Dkt. 96.

II. Legal Standards Governing Summary Judgment Motions

To prevail on a motion for summary judgment, the movant must "show[ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant bears the burden of demonstrating the absence of a question of material fact. In making this determination, the Court must view all facts "in the light most favorable" to the non-moving party. Holcomb v. Iona Coll. , 521 F.3d 130, 132 (2d Cir. 2008).

If the movant meets its burden, "the nonmoving party must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment." Jaramillo v. Weyerhaeuser Co. , 536 F.3d 140, 145 (2d Cir. 2008). "[A] party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Hicks v. Baines , 593 F.3d 159, 166 (2d Cir. 2010) (citation omitted). Rather, to survive a summary judgment motion, the opposing party must establish a genuine issue of fact by "citing to particular parts of materials in the record." Fed. R. Civ. P. 56(c)(1)(A) ; see also Wright v. Goord , 554 F.3d 255, 266 (2d Cir. 2009).

"Only disputes over facts that might affect the outcome of the suit under the governing law" will preclude a grant of summary judgment. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether there are genuine issues of material fact, a court is "required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Johnson v. Killian , 680 F.3d 234, 236 (2d Cir. 2012) (quoting Terry v. Ashcroft , 336 F.3d 128, 137 (2d Cir. 2003) ).

III. Summary Judgment Motions on Claims Brought by Volt

On claims brought by Volt, Volt seeks summary judgment on both its breach of contract and Lien Law claims. AME moves for summary judgment on only Volt's Lien Law claims.

A. Breach of Contract Claim

1. Applicable Legal Principles

Under New York law, a cause of action for breach of contract requires "(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of the contract by the defendant, and (4) damages." Eternity Glob. Master Fund Ltd. v. Morgan Guar. Trust Co. of New York , 375 F.3d 168, 177 (2d Cir. 2004) (quotation omitted); see also Palmetto Partners, L.P. v. AJW Qualified Partners, LLC , 83 A.D.3d 804, 921 N.Y.S.2d 260 (2011) (same). The plaintiff must allege the specific provisions of the contract upon which liability is predicated. Sud v. Sud , 211 A.D.2d 423, 621 N.Y.S.2d 37 (1995). It is a fundamental principle of contract law that agreements are interpreted in accordance with the parties’ intent, and the best evidence of the parties’ intent is what they expressed in their written contract. Schron v. Troutman Sanders LLP , 20 N.Y.3d 430, 963 N.Y.S.2d 613, 986 N.E.2d 430 (2013).

Judgment as a matter of law "is generally proper in a contract dispute only if the language of the contract is wholly unambiguous." Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc. , 232 F.3d 153, 157 (2d Cir. 2000) ; see SR Int'l Bus. Ins. Co., Ltd. v. World Trade Ctr. Props., LLC , 467 F.3d 107, 138 (2d Cir. 2006). A contract is unambiguous if on its face it is "reasonably susceptible of only one meaning[.]" Selective Ins. Co. of Am. v. Cnty. of Rensselaer , 26 N.Y.3d 649, 27 N.Y.S.3d 92, 47 N.E.3d 458 (2016) (quotation omitted). A written contract that is unambiguous on its face is enforced according to the plain meaning of its terms.

Conversely, a contract is ambiguous if it is "capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." Olin Corp. v. Am. Home Assur. Co. , 704 F.3d 89, 99 (2d Cir. 2012) (citation omitted). Whether a contract is ambiguous "is an issue of law for the courts to decide." Innophos, Inc. v. Rhodia, S.A. , 10 N.Y.3d 25, 852 N.Y.S.2d 820, 882 N.E.2d 389 (2008) (quotation omitted). That the parties interpret a contract provision differently does not make it ambiguous. CT Inv. Mgmt. Co., LLC v. Chartis Specialty Ins. Co. , 130 A.D.3d 1, 9 N.Y.S.3d 220 (2015).

Where the language of a contract is held ambiguous, the factfinder may properly consider "extrinsic evidence as to the parties’ intent." JA Apparel Corp. v. Abboud , 568 F.3d 390, 397 (2d Cir. 2009) ; see also Collins v. Harrison–Bode , 303 F.3d 429, 433–34 (2d Cir. 2002) ("[W]here ... there are internal inconsistencies in a contract pointing to ambiguity, extrinsic evidence is admissible to determine the parties’ intent.") (citation omitted). "Where there is such extrinsic evidence, the meaning of the ambiguous contract is a question of fact for the factfinder." JA Apparel Corp. , 568 F.3d at 397 (citing Revson v. Cinque & Cinque, P.C. , 221 F.3d 59, 66 (2d Cir. 2000) ; Consarc Corp. v. Marine Midland Bank, N.A. , 996 F.2d 568, 574 (2d Cir. 1993) ); accord, Compagnie Financiere , 232 F.3d at 158 ; U.S. Naval Inst. v. Charter Commc'ns, Inc. , 875 F.2d 1044, 1048 (2d Cir. 1989) ("In determining the meaning of an ambiguous contract term, the finder of fact seeks to fathom the parties’ intent. That intent may be proven by extrinsic evidence."); see also Benihana of Tokyo, LLC v. Angelo, Gordon & Co., L.P. , 259 F. Supp. 3d 16, 33 (S.D.N.Y. 2017), aff'd , 712 F. App'x 85 (2d Cir. 2018) (summary order).

Review of extrinsic evidence may include looking to "negotiations ... made prior to or contemporaneous with the execution of a written contract which may tend to vary or contradict its terms." U.S. Fire Ins. Co. v. Gen. Reins. Corp. , 949 F.2d 569, 571 (2d Cir. 1991) (alteration omitted) (quoting 67 Wall St. Co. v. Franklin Nat'l Bank , 37 N.Y.2d 245, 248–49, 371 N.Y.S.2d 915, 333 N.E.2d 184 (1975) ); accord Shann v. Dunk , 84 F.3d 73, 80 (2d Cir. 1996). The review of the surrounding facts and circumstances may also include consideration of industry custom and practice, see U.S. Naval Inst. , 875 F.2d at 1048–49, and any relevant course of performance or course of dealing, see Hoyt v. Andreucci , 433 F.3d 320, 332 (2d Cir. 2006).

Even though "[s]ummary judgment normally is inappropriate when a contractual term is ambiguous because ‘a triable issue of fact’ exists as to its interpretation," Burger King Corp. v. Horn & Hardart Co. , 893 F.2d 525, 528 (2d Cir. 1990) (quoting Leberman v. John Blair & Co. , 880 F.2d 1555, 1559 (2d Cir. 1989) ), it is appropriate on summary judgment to "examine extrinsic evidence of the parties’ intent in order to determine whether there is a genuine issue of material fact as to their understandings of the [contract's] meaning," Indep. Energy Corp. v. Trigen Energy Corp. , 944 F. Supp. 1184, 1193 (S.D.N.Y. 1996). And "summary judgment would be appropriate if, after all the facts alleged to be material to the meaning of an ambiguous contract have been presented, a rational fact-finder could only find for the movant." Id. (citing Pryor v. USX Corp. , 806 F. Supp. 460, 463 (S.D.N.Y. 1992) ); see also Simas v. Merrill Corp. , No. 02 Civ. 4400 (RCC), 2004 WL 213013, at *3 (S.D.N.Y. Feb. 4, 2004) ("Summary judgment may still be appropriate, however, if after considering all the material evidence, a rational fact finder could only find for the movant."); Dreyfuss v. eTelecare Glob. Sols.-US, Inc. , No. 08 Civ. 1115 (RJS), 2010 WL 4058143, at *7 (S.D.N.Y. Sept. 30, 2010) (same).

Accordingly, here, were the contract's text found ambiguous and were Volt "able to present undisputed extrinsic evidence that buttressed its interpretation of the [Subcontract] to such an extent that no reasonable fact-finder could resolve the ambiguity against [AME], that would constitute grounds for summary judgment." Indep. Energy Corp. , 944 F. Supp. at 1193 (citing Pryor , 806 F.Supp. at 463 ; Adipietro v. Chubb Life Am. , 736 F. Supp. 29, 32–33 (E.D.N.Y. 1990) (considering extrinsic evidence of parties’ intent with regard to ambiguous agreement)). However, "when ambiguity exists and the resolution of the ambiguity hinges on such extrinsic matters as the credibility of witnesses or documents or upon choosing one among several reasonable inferences that may be drawn from such extrinsic evidence, a jury, and not a court, should decide what meaning is to be ascribed to the contract." Chase Manhattan Bank, N.A. v. Keystone Distribs., Inc. , 873 F. Supp. 808, 811 (S.D.N.Y. 1994) (quoting Brass v. Am. Film Techs., Inc. , 987 F.2d 142, 148 (2d Cir. 1993) ). "In such case, summary judgment is inappropriate." Brass , 987 F.2d at 149 (citing Seiden Assocs., Inc. v. ANC Holdings, Inc. , 959 F.2d 425, 428 (2d Cir. 1992) ; Cable Sci. Corp. v. Rochdale Vill., Inc. , 920 F.2d 147, 151 (2d Cir. 1990) ("only where the language and the inferences to be drawn from it are unambiguous" may a district court grant summary judgment) (emphasis in original)).

2. Application

Volt alleges that AME breached the Subcontract by not paying Volt the full value of its work on the JTS Project. AME denies breaching. It argues that Volt breached the Subcontract, because Volt was required, but failed, to perform final termination work.

This dispute turns on whether the Subcontract required Volt to do such work.¹¹ While both parties have submitted arguments regarding the interpretation of the Subcontract and who has breached it, Volt alone—not AME—has moved for summary judgment on the breach-of-contract claim. Thus, Volt has the burden of showing that no rational fact finder could find that the parties intended for Volt to perform final termination work. The Court measures the evidence against that high burden.

11 Although AME maintains that Volt performed substandard work separate from Volt's failure to complete final terminations, the final termination work is the focal point of the instant dispute.

Volt's argument is twofold. First, it argues that the Subcontract and the documents it incorporates by reference unambiguously reflect that Volt did not have an obligation to complete final terminations. Second, it argues, even if Volt had such a duty and breached the Subcontract by failing to perform final terminations, AME did not have a right to deduct from Volt's payout the expenses AME incurred in having other laborers complete such work. That is because, Volt argues, the Subcontract required AME to first notify Volt of the alleged shortcomings and give it a chance to cure.

For the reasons below, although there is substantial evidence on which a finder of fact could find for Volt on either theory of contract breach, competing evidence favoring AME prevents the Court from entering summary judgment for Volt on either ground.

a. The Face of the Subcontract and Incorporated Materials

Although the Subcontract itself does not expressly address final termination work, it plausibly incorporates by reference documents that support Volt's position that such work was excluded from the scope of Volt's work. Specifically, Section 13.14 of the Subcontract states:

The following are made a part of this Subcontract. They have been read, understood, and agreed to by the parties:

- Work Scope

- Payment, Retainage, et al.

- Current Schedule

- Insurance Requirements – See Attached requirements

Volt contends that the "Work Scope" documents "made a part of th[e] Subcontract" are the Volt Proposal and AME Purchase Order—and those documents expressly exempt final terminations from the scope of Volt's work final terminations.

"To determine whether a contract has incorporated a document by reference, courts look to whether a reasonable person would understand the specific document to be incorporated by reference, in other words, an objective standard." Miller v. Mercuria Energy Trading, Inc. , 291 F. Supp. 3d 509, 517 (S.D.N.Y. 2018), aff'd , 774 F. App'x 714 (2d Cir. 2019) (summary order). "Courts consider two factors in making this determination: (1) whether the allegedly incorporated document is expressly identified and ‘so referred to and described in the instrument that the paper may be identified beyond all reasonable doubt[,]’ and (2) whether the language incorporating the document ‘clearly communicates that the purpose of the reference is to incorporate the referenced material into the contract.’ " Id. (quoting Chiacchia v. Nat'l Westminster Bank USA , 124 A.D.2d 626, 507 N.Y.S.2d 888, 890 (1986) and then Nat'l Union Fire Ins. of Pittsburg v. Beelman Truck Co. , 203 F. Supp. 3d 312, 322 (S.D.N.Y. 2016) ); see Whitestone Constr. Corp. v. Yuanda USA Corp. , No. 20 Civ. 1006 (GHW), 2021 WL 5234395, at *8 (S.D.N.Y. Nov. 9, 2021).

Volt's argument that the Subcontract incorporates by reference the provisions in the Volt Proposal and AME Purchase Order that relieve Volt from completing final terminations has undeniable force. Both of those documents state, in bolded, underlined, and italicized font, "Scope of Work." See Volt Proposal; AME PO. And on the record before the Court, there is no other document potentially incorporated by reference that bears such clear language.¹² Those facts supply persuasive evidence, favoring Volt, that the Volt Proposal and AME Purchase Order are the "Work Scope" documents referenced in the Subcontract. See Samuel L. Hagan II, P. Co. v. J.P. Morgan Chase Bank, N.A. , 33 Misc. 3d 1211(A), 939 N.Y.S.2d 744 (2011) (concluding that reference to "Terms and Conditions for Business Accounts" adequately identified a document titled "Terms and Conditions for Business Accounts and Services ") (emphasis added). And both the Volt Proposal and AME Purchase Order state explicitly: "Final terminations are to be performed by others." Thus, insofar as the Subcontract incorporates the Volt Proposal and AME Purchase Order, these materials support that the parties intended to exclude final terminations from the scope of Volt's work.¹³ Volt's bid for summary judgment is, however, complicated by the fact that the Subcontract also explicitly incorporates the Project Plans. Section 1.1 of the Subcontract incorporates the "plans, specifications and other documents forming the Prime Contract [between Henick-Lane and AME]."¹⁴ AME argues—and Volt does not contest—that those documents reference the Project Plans. Those plans, which were shared with Volt before it signed the Subcontract, detail the work needed for the JTS Project. Yingling Decl. ¶ 5; Dkt. 88-2; AME Opp'n at 7. And AME viably argues that the Project Plans obliged Volt to perform final termination work. Section 3.3 of the Subcontract requires Volt to perform "all labor, material, equipment or services reasonably inferable from the ... Project's plans and specifications ... so that the Work is fully functional in its scope as part of the whole of the Project."¹⁵ And Section 4.3 of the Subcontract grants AME the "sole discretion to interpret the Subcontract Documents[, which include the Project Plans, so] long as AME's interpretation is made in good faith." AME's interpretation, of course, is that the Project Plans require final terminations to be completed.

12 The cover email forwarding Volt the Project Plans states that, inter alia , the "AME Scope of work" was attached. Yingling Decl. ¶ 5; Dkt. 88-2. AME points to this email as circumstantial evidence that the Project Plans, as opposed to the Volt Proposal or AME Purchase Order, were the "Work Scope" documents the parties had in mind. Accord Accadia Site Contracting, Inc. v. Nw. Sav. Bank , No. 14 Civ. 00341 (RJA) (JJM), 2016 WL 11264713, at *4 (W.D.N.Y. Dec. 5, 2016), report and recommendation adopted , No. 14 Civ. 341 (MAT), 2017 WL 510238 (W.D.N.Y. Feb. 8, 2017) (finding that "beyond all reasonable doubt" element of incorporation by reference doctrine cannot be resolved on summary judgment where question of fact exists as to whether document is sufficiently identified). However, the Project Plans do not themselves bear any language along the lines of "Scope of Work" or "Work Scope." And the Court's initial review of the meaning of the Subcontract—i.e. , before considering extrinsic evidence—is limited to the face of the Subcontract and the documents it incorporates by reference. The email is not among such materials.

13 That is so notwithstanding the Subcontract's merger clause, which states, inter alia , "No Subcontractor proposals to AME shall form a part of this Subcontract unless expressly identified." Section 13.12. That is because the Volt Proposal and AME Purchase Order, if incorporated by reference, are , expressly identified as forming a part of the Subcontract. And, separately, the AME Purchase Order is not a "Subcontractor proposal[ ] to AME" and thus would not be disregarded under Section 13.12.

14 It is unclear whether the Volt Proposal and AME Purchase Order themselves incorporate the Project Plans. The only item below the "Scope of Work" header in the Volt Proposal and AME Purchase Order is the language, "Furnish labor and material to install control wiring as per Tod Williams Billiesien architect drawings M-100.02, M-101.02, M-102.02, M-103.02, M-104.02, M-105.02, and M-106.02 dated 07/24/17." Volt Proposal; PO. The first page of the Project Plans states at the top, "Tod Billiesien Architects | Partners," but that page is not dated 7/24/17. See Project Plans at 5. It is unclear what the "M-100.02" et seq. drawings reference.

15 Similarly, Section 4.1 of the Subcontract states that Volt "agrees to be bound to AME, and to assume towards AME, all of the obligations and responsibilities which AME has assumed towards the Owner with respect to the Prime Contract, including, but not limited to, AME's own work under the Prime Contract."

To be sure, AME has not identified any page in the Project Plans—which, as noted, span hundreds of pages and comprise highly technical engineering and architectural specifications—that discuss final termination work. Had AME moved for summary judgment on the basis of the contract documents, that fact would hobble its bid (as would the evidence, reviewed above, that Volt has mustered). But only Volt has so moved. AME may thus defeat this motion provided that it supplies a reasonable interpretation of the Subcontract—which need not be the only reasonable interpretation. See Olin Corp. , 704 F.3d at 99. And for the reasons above, AME's interpretation of the Subcontract is facially reasonable. Each side can reasonably argue that the Subcontract incorporates by reference materials that favor its construction as to whether final terminations were included within the scope of Volt's work.

The Subcontract's provision addressing how to resolve conflicting provisions does not clearly resolve this conflict. That provision, Section 4.2.1, states that, in the event of "conflict between the terms and conditions set forth in the Subcontract Documents, including[ ] ... any plans and specifications, then the more stringent or burdensome requirements shall control unless AME expressly agrees to the contrary in a writing signed by its Project Manager." The more stringent requirement is that requiring Volt to perform final terminations. But the exclusion embedded in the conflict provision appears to apply here. It excludes circumstances where "AME expressly agrees to the contrary in a writing signed by its Project Manager." The AME Purchase Order—which exempts Volt from completing final terminations and is signed by Hertzberg—appears to reflect such an express agreement.

The Court accordingly finds the Subcontract ambiguous on the point at issue. The face of the Subcontract is silent as to final termination work; the materials that the Subcontract actually or arguably incorporates by reference point in different directions as to whether Volt was obliged to perform such work; and the Subcontract's conflict provision does not supply a sure resolution.

b. Extrinsic Evidence

Finding the Subcontract ambiguous as to the scope of Volt's work, the Court turns to the extrinsic evidence of the parties’ intent. Volt argues that this evidence fortifies its construction that the agreement excludes final termination work from Volt's duties.

At the outset, the Court considers AME's argument that a provision in the Subcontract limits the extrinsic evidence that may be considered. Section 13.12 provides: "The Subcontract represents the entire and integrated agreement between the parties, and supersedes all prior negotiations, representations or agreements, whether written or oral. No Subcontractor proposals to AME shall form a part of this Subcontract unless expressly identified." Such an integration, or merger, clause, where effective, can "require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing." OneBeacon Am. Ins. Co. v. Comsec Ventures Int'l, Inc. , No. 07 Civ. 900 (GLS), 2010 WL 114819, at *4 (N.D.N.Y. Jan. 7, 2010) (quoting Primex Int'l Corp. v. Wal–Mart Stores, Inc. , 89 N.Y.2d 594, 599, 657 N.Y.S.2d 385, 679 N.E.2d 624 (1997) ). "Whether an integration or merger clause in a contract suffices to defeat a party's reliance on representations made during the process leading up to the contract depends on the specificity of the clause disclaiming those representations." Tradeshift, Inc. v. Smucker Servs. Co. , No. 20 Civ. 3661 (MKV), 2021 WL 4463109, at *7 (S.D.N.Y. Sept. 29, 2021).

Here, Section 13.12 is specific and clear, such that it does appear to bar consideration of extrinsic evidence predating the agreement. See, e.g. , Healy v. Williams , 30 A.D.3d 466, 818 N.Y.S.2d 121, 123 (2006) ("As a general rule, where a contract has a provision which explicitly prohibits oral modification, such clause is afforded great deference."). Section 13.12 would not, however, bar much of the extrinsic evidence upon which Volt relies, as such post-dates the agreement, and thus falls outside the merger clause bar. See Schwarz v. ThinkStrategy Cap. Mgmt. LLC , No. 09 Civ. 9346 (PAE), 2012 WL 2026365, at *18 (S.D.N.Y. May 31, 2012) ("Furthermore, to the extent plaintiffs relied on representations or material omissions by Kapur and ThinkStrategy which post-date plaintiffs’ subscription agreements, defendants’ arguments as to any merger clause or disclaimers in the Offering Memorandum are irrelevant.").

In the interest of thoroughness, the Court reviews all of the relevant extrinsic evidence. For a movant on summary judgment to prevail on the basis of extrinsic evidence, the evidence must so buttress its position that no reasonable fact-finder could resolve the ambiguity for the other side. See Indep. Energy Corp. , 944 F. Supp. at 1193. Here, although there is force to the extrinsic evidence marshalled by Volt, such evidence—whether considered in full or limited to post-Subcontract evidence—falls short of permitting summary judgment to be entered for Volt. Accord, CCR Int'l, Inc. v. Elias Grp., LLC , No. 15 Civ. 6563 (PAE), 2020 WL 7629325, at *13 (S.D.N.Y. Dec. 22, 2020) (rejecting plaintiffs’ motion for summary judgment on breach of contract claim after considering parol evidence notwithstanding merger clause).

Extrinsic Evidence Pre-Dating the Subcontract : The parties marshal competing evidence as to oral statements during the contracting process about the scope of Volt's work. Volt relies on Branna's testimony that he consistently maintained to Hertzberg that Volt was unwilling and unable to perform final termination work. Branna Decl. ¶ 8. AME counters by citing Hertzberg's testimony that, before awarding Volt the Subcontract, he confirmed with Branna that Volt could, in fact, perform the work. Hertzberg Decl. ¶¶ 5–6. Branna disputes this account as "blatantly false"; he states that he actually told Hertzberg that "Volt did not have the manpower to perform the final termination work" throughout the duration of the project. Branna Reply Decl. ¶ 5. To the extent that extrinsic evidence predating the Subcontract is cognizable at all, this testimony must be treated as disfavoring a grant of summary judgment to Volt. On Volt's motion, reasonable inferences must be drawn in favor of AME, the non-movant. And assessing the credibility of these competing accounts is, in all events, a task for the ultimate fact-finder, not for a court on summary judgment. See New Jersey Rail Grp., LLC v. Lumbermens Mut. Cas. Co. , No. 06 Civ. 4946 (LAK) (AJP), 2007 WL 2296506, at *9 & n.14 (S.D.N.Y. Aug. 13, 2007) (citing cases), report and recommendation adopted , No. 06 Civ. 4946 (LAK), 2007 WL 2609894 (Sept. 5, 2007).

Volt next points to evidence that the Subcontract during negotiations attached the Volt Proposal and AME Purchase Order—each, again, stating that "Final terminations are to be done by others," not Volt. In support of Volt's argument is Yingling's declaration, which presents a version of the Subcontract exchanged during negotiations, which includes, after the signature page, a copy of the Volt Proposal. See Yingling Decl. ¶ 4; Dkt. 88-1, at 18. Also in support of Volt's argument is Branna's declaration, which attaches another version of the Subcontract, and a mid-negotiations email from AME's Hertzberg to Volt's Branna attaching this Subcontract. See Branna Decl., Dkt. 79-4, at 6. The subject line to Hertzberg's transmittal email reads, "JTS – Volt Subcontract & PO – GH19-01579V." Hertzberg's email attaches documents entitled "Volt Subcontract-GH19-01579V_Blank.pdf" and "Volt PO GH19-01579V_Signed.pdf." See JSF ¶ 4(b); Dkt. 79-2, at 1. This extrinsic evidence, if considered, would have obvious circumstantial force. It indicates that the Volt Proposal and AME Purchase Order were contemporaneously sent with the Subcontract, the implication being that AME, in real time, viewed these as "Work Scope" documents within the meaning of Section 13.14. At the same time, as noted, the inferences favoring Volt from the incorporation of these materials are offset by the incorporation of the Project Plans, which can be read, favoring AME, to indicate that Volt's duties included final termination work. See supra Section III.A.2.a. Volt, finally, points to the contract price of its services as indicating, when viewed alongside the Volt Proposal and AME Purchase Order, that the parties did not intend it to have the duty to perform final terminations. These list a $356,000 purchase price and relieve Volt of that duty. The Subcontract, Volt notes, also lists a $356,000 purchase price, notwithstanding that, under AME's reading, Volt was taking on the added labor of completing final terminations. Volt argues that it would not have taken on more work without greater compensation. That, Volt argues, is revealing, given the high sums AME eventually paid JTE and Vanguard to do final termination work on the JTS Project: a combined nearly $250,000. See Miller Decl. ¶¶ 105–108. AME counters that merely because Volt had sought $356,000 for work on the JTS project exclusive of final termination work, it is not implausible that Volt would have agreed, in return for the same sum, to do that and final termination work.

In sum, although there is considerable doubt whether pre-Subcontract extrinsic evidence is cognizable at all to illuminate the meaning of the agreement, the evidence of this nature that Volt marshals has undeniable circumstantial force. However, it falls well short of precluding a reasonable juror from viewing the evidence in AME's favor and concluding that the parties intended for Volt to perform final terminations.

Extrinsic Evidence Post-Dating the Subcontract : The Court next considers the parties’ course of conduct during the contract's performance. See Starr Indem. & Liab. Co. v. Brightstar Corp. , 388 F. Supp. 3d 304, 329 (S.D.N.Y. 2019) ("[The] parties’ course of performance under the contract is considered to be the most persuasive evidence of the agreed intention of the parties.") (quoting Fed. Ins. Co. v. Ams. Ins. Co. , 258 A.D.2d 39, 691 N.Y.S.2d 508, 512 (1999) ), aff'd , 828 F. App'x 84 (2d Cir. 2020) (summary order). This area of extrinsic evidence, although not barred by the Subcontract's integration clause, is insufficiently conclusive to resolve the parties’ intent.

During performance, AME argues, Volt at one point acknowledged that it understood itself to have committed to performing final terminations. AME points to a June 2, 2019 email exchange between Scaturro and La Chiana. La Chiana's email to Scaturro carries the subject line, "Regarding assembling control panel interior on 15 panels," and its body reads, "Looking for verification if this is part of our scope of work." Volt I , Dkt. 88-7. In response, Scaturro, cc'ing Yingling, states, "All panels, controls or equipment should come to the jobsite assembled. We install and terminate. It's not in our scope to build/assemble any panels or equipment." Id. (emphasis added). Volt interprets this email as favoring its argument that its duties excluded final termination work. Drawing on Scaturro's deposition testimony, Volt explains that building and/or assembling panels—the labor that Scaturro identified as outside Volt's scope of work—is a term of art synonymous with final termination work. See Volt Reply at 2 (citing Scaturro Depo. at 64–67).

For two reasons, the Scaturro email does not resolve the contractual ambiguity.

First, by its nature, the email, sent months after the Subcontract was signed, reflects little more than the subjective understanding of one person (Scatturo) as to the scope of Volt's duties. See JA Apparel Corp. , 568 F.3d at 306 n.10 (witness's subjective interpretation of a contract is of little value to court's analysis of it); Hotchkiss v. Nat'l City Bank , 200 F. 287, 293 (S.D.N.Y. 1911) (Hand, D.J.) ("A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties.").

Second, as reflected above, Scaturro's email is not pellucid as to what that understanding even was. Scaturro testified that, by "we install and terminate," he meant to convey that Volt mounted equipment to the wall, as distinct from completing "final termination work"—the area of work at issue here. See Scaturro Depo. at 65–67; see also La Chiana Depo. at 46 (testifying that although Volt performed some final terminations, it did so to help AME "push on the job" when "there was nobody on-site ... yet to do those terminations").¹⁶ But AME is at liberty to, and does, challenge that testimony as unpersuasive and/or unworthy of credibility. The Court cannot enter summary judgment as to the construction of a facially ambiguous contract based on the disputed meaning of terms of art in an email. See Process Am., Inc. v. Cynergy Holdings, LLC , No. 12 Civ. 772 (BMC), 2014 WL 3844626, at *4 (E.D.N.Y. Apr. 30, 2014) ("[T]he post-hoc and often self-serving testimony of the parties’ witnesses as to their subjective interpretations of the contract ... [is] of little value to the Court's present analysis of the Agreement.") (alternations in original) (quotation omitted).

16 A statement in the record by Vanguard, a subcontractor which AME claims it hired to perform final termination work Volt did not do, arguably lends support to Volt's construction of the terms used in the email. Vanguard proposed to AME that it would "[f]urnish labor to build and wire panels on the jobsite." See Volt I , Dkt. 89-1, at 4. But non-party Vanguard's choice of language does not and cannot definitively establish Scaturro's—let alone the contracting parties’—understanding of Volt's contractual commitments.

Viewing the evidence (textual and extrinsic) as a whole, the parties’ behavior can be reasonably argued to favor either side's narrative as to their agreement. Crediting the testimony and other evidence adduced by Volt and drawing reasonable inferences therefrom, a juror could conclude that (1) Branna informed Hertzberg from the outset that Volt could not perform final terminations, see Branna Decl. ¶¶ 6–8; Hertzberg Decl. ¶ 4; Volt 56.1 ¶ 2; AME 56.1 ¶ 1–2; (2) Volt later sent AME a proposal offering to take on the project save for final termination work, see Volt Proposal; (3) AME acknowledged and agreed to that limitation, as indicated by its signing the Volt Proposal and reproducing its terms verbatim in AME's purchase order, see AME PO; and (4) in recognition of the parties’ understanding that Volt would not perform final terminations, AME finalized and sent to Volt a final Subcontract, attaching the documents bearing that limitation and incorporating them into the Subcontract, and listing a purchase price identical to that which the parties had already agreed would be an appropriate amount for Volt's work on the project, save for final terminations, see JSF ¶ 4(b); Volt I , Dkts. 88-1, at 18; 79-2, at 1.

But Volt has failed to adduce evidence precluding a reasonable juror from finding the opposite. Crediting the testimony and other evidence adduced by AME and drawing reasonable inferences therefrom, a juror could conclude that (1) at some point before Volt signed the Subcontract, Branna and Scaturro had another conversation with Hertzberg, in which Volt agreed to do final terminations—as Hertzberg attests happened, Hertzberg Decl. ¶ 6; (2) AME needed this work done and preferred to have its existing electrical contractor do this work, rather than hiring others; (3) Volt, although initially resisting such work, took on the final termination work so as to assure that it did not lose the opportunity to work on the JTS project altogether, see id. ¶ 6; Hertzberg Depo. at 23 ("My operations team wanted to give the contract to someone else.... I felt it was worth [giving Volt] ... the final say and the last look whether they wanted the job or not including the terminations."); (4) having made clear to Volt that the contract would either include final terminations or not be awarded to Volt at all, AME sent over a Subcontract incorporating Project Plans requiring final terminations to be done, which Volt signed, and (5) consistent with AME's expectation, Volt's workers completed at least some final terminations.

At bottom, the parties’ central dispute as to whether Volt was contractually responsible for final terminations cannot be resolved on summary judgment. Rather, "the resolution of the ambiguity [in the Subcontract] hinges on such extrinsic matters as the credibility of witnesses or documents or upon choosing one among several reasonable inferences that may be drawn from such extrinsic evidence." Chase Manhattan Bank , 873 F. Supp. at 811 (quoting Brass , 987 F.2d at 148 ). A factfinder, fully empowered to make credibility assessments and to weigh competing inferences, is required to resolve the parties’ intent. Id. ; see Burger King , 893 F.2d at 528 (where "extrinsic evidence of intent before the district court ... conflict[s]," summary judgment is inappropriate). The Court accordingly denies Volt's motion for summary judgment on the breach of contract claim, to the extent this claim rests on the theory that Volt's contractual responsibilities did not include final termination work.

c. Notice

Volt next argues that, even if it had but failed to carry out a contractual commitment (such as final terminations), AME breached the Subcontract by withholding payment from Volt. Volt argues that AME never notified Volt of its alleged failure to carry out the work and give it an opportunity to cure—a condition precedent to AME's right to claim that Volt was in default and to withhold payment. This, Volt argues, independently entitles it to summary judgment.

The Subcontract's operative notice provision provides, in relevant part:

If the Subcontractor fails or neglects to carry out the Work, or to otherwise perform in accordance with this Subcontract, and then fails, within three (3) calendar days after transmittal of oral or written notice by AME to the Subcontractor to commence and complete correction of such failure or neglect , then the Subcontractor shall be in "Default." Upon Default, AME may, without prejudice to any other remedy: ... (b) perform and complete the Work by whatever method AME deems expedient and charge the Subcontractor for all costs, expenses and damages relating thereto, together with fifteen (15%) percent for AME's overhead.

Subcontract Section 11.1 (emphasis added). The parties appear to agree—as is correct—that Section 11.1 operates as a contractual condition precedent to AME's withholding funds from Volt on the basis that Volt had breached the contract. See Northeast Constr. Grp., Inc. v. Deconstruction, Inc. , 16 A.D.3d 357, 793 N.Y.S.2d 17, 357 (2005) (holding that defendant failed to establish entitlement to the claimed offsets where "subcontract required giving notice as a condition precedent to taking such deductions" and defendant "failed to comply with the three-day notice requirement") (citing Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co. , 86 N.Y.2d 685, 636 N.Y.S.2d 734, 660 N.E.2d 415 (1995) ; 153 Hudson Dev., LLC v. DiNunno , 35 A.D.3d 350, 826 N.Y.S.2d 392 (2004) ).

The Court has found it challenging to assess Volt's argument here that a reasonable jury could not find that AME gave it the necessary "oral or written notice" of a failure to carry out required work and an opportunity to cure that deficiency. As set forth below, the record reflects abundant evidence of written communications from AME finding fault with work of Volt's, including as to final terminations. There is also testimony about AME's having made oral statements to the same effect.

However, determining AME's compliance with Section 1.1's notice provision requires the Court to assess not whether there were expressions of discontent, but whether, as to specific asserted breaches, AME gave Volt the required notice and an opportunity to cure. Only if that were so was AME authorized to deduct from its payments due Volt money corresponding to the costs AME provably incurred in "perform[ing] and complet[ing]" the particular work Volt failed to perform. Subcontract Section 11.1. On a project as large and multifaceted as the JTS Project, on which Volt had many responsibilities, there are many conceivable duties as to which AME could have sought such relief, provided that, as to that distinct work, it gave Volt notice and an opportunity to cure and then expended money correcting Volt's work. Indeed, the final termination electrical work which is the basis of AME's central grievance itself appears to have been an aspect of numerous workstreams of the JTS project.

AME has alleged numerous instances of allegedly errant work by Volt. See Dkt. 88-15 (139 discrete items of allegedly incomplete or defective work); Yingling Decl. ¶ 14. But the parties—including movant Volt—have not clearly explicated the evidence as to any particular grievance. It is thus unclear whether AME deducted from Volt only the expenses it incurred in completing final termination work or whether its deductions implicated other aspects of Volt's work on the JTS Project. The record as presented also leaves it hard to gauge whether, as to specific workstreams, AME gave Volt the required "oral or written notice" of its position that Volt was in breach. AME has marshaled communications to the effect that Volt had failed to complete certain final terminations work, for example, but these communications were often informal—such as in emails—and opaque. They reveal AME's expressions of dissatisfaction with respect to aspects of Volt's work including the absence of final termination work. But the failure of the parties to assemble in a coherent, breach-specific manner the communications bearing on the elements of (1) notice, (2) opportunity to cure, (3) failure to cure, (4) expenditure by AME of money to cure the particular breach, and (5) deduction by AME make the record too opaque to grant summary judgment to the movant, Volt.

A review of the written and oral evidence on this point is illustrative.

As to written notice, AME points to a host of emails AME sent to Volt between June 5, 2019 and August 29, 2019. See Yingling Decl. ¶ 12; Volt I , Dkt. 88-8–14, 17. Some emails appear likely targeted at Volt's failure to complete final termination work, but do not establish whether AME did or did not comply with the notice provision. For example:

• In a June 25, 2019 email, Yingling asked Scaturro when certain termination work would be complete. Yingling noted that "[w]e were supposed to complete several days ago." Volt I , Dkt. 88-9. Neither party, however, supplied the Court with Volt's response, leaving it unclear whether Volt performed the specific termination work in question.

As to other work Volt allegedly failed to complete, it is unclear whether AME fully complied with the notice requirement—i.e. , gave Volt an opportunity to cure, and whether Volt in fact did, or even whether the work had actually been completed in the first instance despite AME's view to the contrary. For example:

• In a June 5, 2019 email, Scaturro informed Yingling that one unspecified aspect of the job had been "held up." Id. , Dkt. 88-8 at 3. In response, Yingling wrote: "Volt cannot claim delays when you are this far behind, have failed on several prior commitments, and have a significant amount of work yet to be complete." Id. at 2. Scaturro followed up, seeking clarification of how exactly Volt failed a commitment. Yingling then vaguely responded that Volt had a " ‘miscommunication’ with working hours yesterday[,] ... a failed commitment in front of the owner Henik [sic] Lane" and that AME would "reserve, and take, any reasonable action to protect [its] relationship with Henick Lane and complete the installation." Id. at 1. The exchange, though indicative of AME's dissatisfaction, cannot be said to identify, specifically, how Volt failed to perform in accordance with the Subcontract.

• In a June 28, 2019 email, Yingling emailed La Chiana a picture of loose wiring, and states, "[s]till looks like there is some work to complete?" Id. , Dkt. 88-10. AME's email did not clarify precisely what work on Volt's part remained to be completed. Nor do the parties’ submissions contain Volt's response—or establish whether Volt thereupon remedied the deficiency to which Yingling's email referred.

• In a separate June 28, 2019 email exchange, Yingling and Scaturro discussed whether certain work had been completed, as would leave AME "ready to terminate." Id. , Dkt. 88-11. Yingling stated that the work was not finished and Scaturro countered that it was. Id. The exchange appears concerned less with final termination work itself, so much as work requisite to completing final terminations. And even assuming that failure to complete the tasks in question would constitute a material breach, the exchange—in which the parties stake out opposing positions about whether Volt completed that work—would not permit entry of summary judgment for Volt, because a finder of fact could find, with AME, that it had not satisfactorily performed.

• In a July 17, 2019 email, AME's Steve Meehan advised Scaturro and La Chiana that certain thermostats would need to be replaced. Id. , Dkt. 88-12. This email leaves unresolved whether Volt was obliged to perform that work under the Subcontract, and whether Volt thereafter availed itself of its opportunity, under the Subcontract's notice clause, to cure.

• In a July 31, 2019 email, Meehan forwarded to Scaturro, La Chiana, and William Merritt (a Volt project foreman, see Scaturro Decl. ¶ 14) a list of "items [that] still needed to be installed & wired to date." Volt I , Dkt. 88-13. That outstanding tasks remained for Volt as of that date again does not establish a failure by Volt either to perform or cure under the Subcontract.

• Finally, in an August 29, 2019 email, Yingling wrote to Scaturro, "Please revisit how you supported your conduit and distances of flex in to end devices. The Cx Agent will write this up and VOLT will need to correct." Id. , Dkt. 88-14. Again, AME has not

adduced evidence that Volt failed to timely perform the work to which Yingling's email hazily references or to timely cure its deficiency after receiving this notice.

Critically, on this point, Volt alone has moved for summary judgment. Therefore, it is obligated to show the absence of evidence raising a genuine issue of fact to prevail at this stage. See Jaramillo , 536 F.3d at 145. On the record presented, the Court cannot say with confidence that, as to any particular workstream, a finder of fact would have to find a failure by AME to comply with the notice and other obligations of Section 11.1. Although an able marshaling of the record might have so shown as to one or more deficiencies, the hazy record disables the Court from entering summary judgment for Volt.

Reinforcing this conclusion are writings to which AME points in the form of backcharges, which Volt received as early as July 26, 2019. See id. , Dkt. 79-7 at 3. These are not conclusive proof that AME complied with its notice obligations. Branna and Scaturro attested that they did not know why AME was backcharging Volt. See Branna Decl. ¶ 20 ("At the time I had no idea why AME issued deduct change orders ## 2 and 3 to Volt. I assumed it was a mistake. AME provided no back-up documentation for its change orders."); Scaturro Decl. ¶ 17 (same). And the backcharges are unspecific. See Volt I , Dkt. 79-7 at 3 (backcharges stating only that deductions were being imposed for "other sub time" for June and July). Indeed, Volt may argue that the backcharges fell short of AME's contractual obligation, when issuing a change order, to provide Volt a signed writing "contain[ing] a description of the alternations, additions, changes or deduction to be made to the Work." See Subcontract Section 6.1. But AME can muster these writings in support of its claim to have given Volt the required notice. The backcharges are circumstantial evidence that, at least as to some work, AME viewed Volt as at least temporarily in non-compliance and that it notified Volt of these determinations. Volt, for its part, has not adduced solid proof that, after receiving these backcharges, it addressed AME's concerns.

There is other circumstantial evidence that AME found fault with Volt's performance and that Volt was on notice of this. Vanguard's and JTE's presence at the JTS jobsite to do electrical work not done by Volt, including final terminations, see Branna Reply Decl. ¶ 9, may so suggest. JTE, for example, appears to have first submitted a bid to AME on August 5, 2019, see Volt I , Dkt. 89-1 at 1, reinforcing the notion that it was hired to correct deficiencies flagged by AME in its June and July 2019 emails to Volt.¹⁷ Although AME's explication of the record on this point leaves much to be desired, so too does Volt's, and it is ultimately up to Volt, as movant, to prove the absence of a genuine dispute of material fact on the issue.

17 On the other hand, the evidence shows that AME hired Vanguard before it sent Volt the emails purportedly notifying Volt of its alleged failures. Dkt. 89-1 at 4, 6, 103 (documents showing that Vanguard submitted a proposal to AME on June 3, 2019 and performed work shortly thereafter).

Finally precluding summary judgment on this question is the conflicting evidence as to oral notification of Volt's alleged defaults. The witnesses have conflicting recollections—and interpretations—of relevant conversations. Hertzberg attests that he had discussed manpower and other issues with Branna "[d]uring the course of the Project." Hertzberg Decl. ¶ 11. Branna counters that requests to a subcontractor for additional manpower are typical in the industry, and that Volt was responsive to these requests. Branna Reply Decl. ¶ 7. Branna also attests that at "no time did Glenn Hertzberg ever say that if Volt failed to meet a schedule deadline that AME was going to hire replacement contractors." Id.

Hertzberg's and Branna's recollections of their July 2019 meeting with Scaturro and Vanguard also differ. Hertzberg attests that it was his "understanding that Volt was aware that replacement contractors had been retained to complete and correct Volt's work and Volt would be backcharged accordingly." Hertzberg Decl. ¶ 13. By contrast, Branna attests that the meeting did not involve a discussion of backcharges at all, and that its purpose was to discuss the smooth transition between work phases, to ensure that "Volt and Vanguard, who was performing the final termination work, were coordinating as necessary." Branna Reply Decl. ¶ 9. These versions present credibility disputes that leave resolution on summary judgment unavailable as to whether AME satisfied the Subcontract's notice clause.

In the end, the record as to AME's compliance with Subcontract Section 11.1—in general and as to specific deficiencies for which it deducted funds from Volt—is too opaque and underdeveloped on the issues of nonperformance, notice, and cure to make a grant of summary judgment to Volt proper.

* * *

The Court accordingly denies Volt's motion for summary judgment on its breach of contract claim. There are disputes of material fact both as to whether Volt was required to perform final termination work, and—on the sparse unsatisfying record presented on this motion—whether AME satisfied the Subcontract's notice provision before deducting from Volt the costs it incurred in making up for Volt's alleged shortcomings.

B. Lien Law Claims

The parties agree that the money Henick-Lane paid AME for its work on the JTS Project is covered by Article 3-A of the New York Lien Law. That law makes certain funds received by a property owner or contractor for the payment of building and construction work trust funds subject to specific limited uses. See N.Y. Lien Law § 70 ; see also Tutor Perini Bldg. Corp. v. New York City Reg'l Ctr., LLC , 525 F. Supp. 3d 482, 504 (S.D.N.Y. 2021) ("[F]unds received by a subcontractor become part of a subcontractor trust, of which the subcontractor is trustee, for the benefit of the subcontractor's subcontractors."). The parties also agree that Volt was entitled to a portion of those funds as a trust fund beneficiary. The gravamen of Volt's Lien Law claims is that AME improperly diverted trust funds by paying its own laborers for their work on the project, rather than paying Volt in full for its services. Both parties seek summary judgment on Volt's Lien Law claims.

1. Applicable Legal Principles

New York's Lien Law provides special protections, through the automatic establishment of statutorily protected trust funds, to ensure payment of contractors and laborers on construction projects. "Article 3-A of the Lien Law creates ‘trust funds out of certain construction payments or funds to assure payment of subcontractors, suppliers, architects, engineers, laborers, as well as specified taxes and expenses of construction.’ " Aspro Mech. Contracting, Inc. v. Fleet Bank , 1 N.Y.3d 324, 328, 773 N.Y.S.2d 735, 805 N.E.2d 1037 (2004) (quoting Caristo Constr. Corp. v. Diners Fin. Corp. , 21 N.Y.2d 507, 512, 289 N.Y.S.2d 175, 236 N.E.2d 461 (1968) ). It is "designed to protect subcontractors, tax collectors, and parties who expend labor or extend financing in construction projects, by impressing with a trust any funds paid to a contractor or received by an owner in connection with an improvement of real property in the state." Interworks Sys., Inc. v. Merch. Fin. Corp. , 604 F.3d 692, 695 (2d Cir. 2010) ; LeChase Data/Telecom Servs., LLC v. Goebert , 6 N.Y.3d 281, 289, 811 N.Y.S.2d 317, 844 N.E.2d 771 (2006) ("[T]he primary purpose of article 3-A ... [is] to ensure that those who have directly expended labor and materials to improve real property [or a public improvement] at the direction of the owner or a general contractor receive payment for the work actually performed.") (citation omitted).

An Article 3-A trust "arises automatically by operation of law when fees are paid to the contractor or received by the owner in connection with an improvement of real property" or a public improvement. Interworks , 604 F.3d at 695. "Until all trust fund beneficiaries have been satisfied, it is an unlawful diversion of trust fund assets for the contractor or owner to use any of the trust fund assets for any purpose other than satisfying the claims of beneficiaries." Id. "If the contractor or owner unlawfully diverts the trust assets before a trust beneficiary is satisfied, that beneficiary may recover the trust assets from anyone who has received the assets with knowledge of their trust status." Id. (citing N.Y. Lien Law §§ 77(1), 77(3)(a)(vi) ). Liability under Article 3-A extends to the "officers and directors of a corporate trustee," and, if they "cause the corporation to misappropriate trust property," they "will be personally liable for participation in a breach of trust." Atlas Bldg. Sys., Inc. v. Rende , 236 A.D.2d 494, 653 N.Y.S.2d 694, 695 (1997).

Any action to recover diverted funds under the Lien Law must "conform as nearly as may be to the [procedures] in a class action," although, under New York law, courts have discretion to waive the numerosity requirement of state law. N.Y. Lien Law § 77(1) ; ADCO Elec. Corp. v. McMahon , 38 A.D.3d 805, 835 N.Y.S.2d 588, 589 (2007) (action to enforce Article 3-A trust "must be brought as a class action"). This requirement is "aimed at safeguarding an equitable pro rata distribution of the funds to all suppliers of material and labor who have improved the real property." Quantum Corp. Funding, Inc. v. Bast Hatfield, Inc. , No. 04 Civ. 137 (FJS), 2005 WL 1926610, at *6 (N.D.N.Y. June 8, 2005) (citation omitted).

2. Application

a. Volt's Claims Against AME ( Volt I)

Henick-Lane paid AME $850,843.60 in connection with AME's and its sub-subcontractors’ work on the project. JSF ¶ 11. Of that sum, AME paid $269,806.14 to its own labor force, $142,240 to Volt, $139,411.39 to JTE, and $94,420.15 to Vanguard, and spent $204,965.92 on material. Id. Volt charged AME, in total, $370,000: $356,000 from the base Subcontract, and an additional $14,000 for work done at the direction of Henick-Lane. Id. ¶ 9; Volt I , Dkt. 79-6.

Volt argues that AME's decision to pay its own laborers rather than paying Volt the full amount allegedly owed was an illegal diversion of trust funds. See N.Y. Lien Law § 72(1) ("Any transaction by which any trust asset is paid, transferred or applied for any purpose other than a purpose of the trust ... before payment or discharge of all trust claims with respect to the trust, is a diversion of trust assets."). Volt relies on Section 70(3) of Article 3-A, which provides, in relevant part, that a trust of which a subcontractor is the trustee—as AME is here—shall exist until every trust claim has been paid or discharged, only after which does the subcontractor's beneficial interest in the remaining trust assets vest.

Importantly, Volt does not argue that AME has paid its laborers for their work on matters unrelated to the JTS Project or otherwise attempted to defraud the trust beneficiaries by making illegal payments to itself. See, e.g. , Ingalls Iron Works Co. v. Fehlhaber Corp. , 327 F. Supp. 272, 284 (S.D.N.Y. 1971) ("It would be inconsistent for the purposes of the law to protect subcontractors to permit the general contractor to interpose itself as a sub and to allow the general contractor to turn over trust funds to itself as a sub to the detriment of those who have every reason to believe that a trust protects the values supplied by them to the project."). Rather, Volt takes issue with the fact that AME used trust funds to pay its own laborers at all, calling that an improper diversion of trust funds.

That argument misses the mark. Volt ignores the vital distinction between payments to a corporate entity and to the individuals who work for it. The trust funds AME paid its laborers for work on the JTS project ended up in those laborers’ pockets—not in AME's. That matters under Article 3-A. Trust assets transferred or applied for a trust purpose, as defined in Section 71, are not unlawful diversions. See N.Y. Lien Law § 72(1) ("Any transaction by which any trust asset is paid, transferred or applied for any purpose other than a purpose of the trust as stated in subdivision one or subdivision two of section seventy-one , before payment or discharge of all trust claims with respect to the trust, is a diversion of trust assets.") (emphasis added). Section 71, in turn, provides that the "trust assets of which a contractor or subcontractor is trustee shall be held and applied for the following expenditures arising out of the improvement of real property[:] ... payment of claims of subcontractors, architects, engineers, surveyors, laborers and materialmen." Id. § 71(2)(a) (emphasis added). Volt does not dispute that the AME laborers to whom trust funds were paid here are "laborers" as defined in the statute. See id. § 2(11) (defining "laborer" as "any person who performs labor or services upon [a qualifying project]"). AME's laborers are therefore trust beneficiaries entitled to the trust funds they received. See id. § 71(4) ("Persons having claims for payment of amounts for which the trustee is authorized to use trust assets as provided in this section are beneficiaries of the trust."). Paying the AME laborers who worked on the JTS Project, then, was a valid trust purpose—not an unlawful diversion.

Volt has not come forward with any authority prohibiting subcontractor trustees from using trust funds to pay their own laborers for their work on a trust project. Any such rule would conflict with Article 3-A's purpose to ensure that " ‘those who have directly expended labor and materials to improve real property at the direction of the owner or a general contractor’ receive payment for the work actually performed." Aspro Mech. , 1 N.Y.3d at 328, 773 N.Y.S.2d 735, 805 N.E.2d 1037 (quoting Matter of RLI Ins. Co. v. New York State Dep't of Labor , 97 N.Y.2d 256, 264, 740 N.Y.S.2d 272, 766 N.E.2d 934 (2002) ); see also Interworks , 604 F.3d at 695 (citing cases). The statute aims to put money in workers’ pockets, as AME did here.

AME's use of trust funds to pay other workers on the JTS project thus contrasts with the use by a trustee of trust funds to repay itself for funds it had advanced for a project. Absent advance notice to the other trust beneficiaries, that scenario does constitute an unlawful diversion by way of self-dealing. See Aspro Mech. , 1 N.Y.3d at 330–32, 773 N.Y.S.2d 735, 805 N.E.2d 1037 ; N.Y. Lien Law § 73 (providing affirmative defense to transferee of trust assets in action for recovery of diverted trust funds where transferee is named in a "Notice of Lending" stating that the transfer is made for or in consideration of repayment of advances made to or on behalf of the trustee).

Finally, to the extent that Volt implicitly urges that Article 3-A elevates one class of workers (those hired by a subcontractor) over other workers on the same project, there is no authority for that claim, either. Volt does not cite any part of Article 3-A or caselaw applying it that requires a trustee in this context to pay in full outside subcontractors—to the extent they are owed additional money¹⁸ —before paying its own internal laborers for work on the project. To the contrary, Section 74(1) of Article 3-A provides that "the trustee is authorized to determine the order and manner of payment of any trust claims and to apply any trust asset to any purpose of the trust." Volt has not adduced any evidence that AME exercised that discretion with partiality or otherwise violated its duty as fiduciary to all trust beneficiaries in making trust payments. See Frontier Excavating, Inc. v. Sovereign Constr. Co. , 30 A.D.2d 487, 294 N.Y.S.2d 994, 997 (1968) ("The trust concept was intended precisely to forbid that an owner, contractor or subcontractor act merely as entrepreneur and was intended to require that he act, instead, as fiduciary manager of the fixed amounts provided for the operation.").

18 The premise of Volt's Lien Law claim is that Volt is entitled to more trust funds than it has already received. As reviewed in connection with Volt's breach of contract claim, AME disputes that premise, and this conflict cannot be resolved on summary judgment.

The Court accordingly enters summary judgment for AME, and denies Volt's mirror-image motion for summary judgment, on Volt's Lien Law claim against AME.

b. Volt's Claims Against AME Officers (Volt II)

Volt's clams against the AME executives are derivative of its claims alleging an unlawful diversion of trust funds by AME. As such, with Volt having failed to adduce evidence sufficient to reach a jury of diversion of trust funds by AME, Volt's claims against the AME executives for their alleged participation in such a diversion necessarily fail. See Atlas , 653 N.Y.S.2d at 695 ("[O]fficers and directors of a corporate trustee are under a duty to the beneficiaries of a trust administered by the corporation not to cause the corporation to misappropriate trust property and will be personally liable for participation in a breach of trust. ") (emphasis added); Tutor Perini , 525 F. Supp. 3d at 501 ("Liability under Article 3-A extends to the officers and directors of a corporate trustee, ... if they cause the corporation to misappropriate trust property") (internal quotations omitted); N.Y. Lien Law § 72(1) (describing breach of trust as occurring "if the diversion [of trust assets] occurs by the voluntary act of the trustee or by his consent such act or consent is a breach of trust") (emphasis added).

The Court accordingly enters summary judgment for the AME officers on Volt's Lien Law claims against them, and denies Volt's motion for summary judgment on these claims.¹⁹ IV. Summary Judgment Motions on Claims Brought by AME

19 In light of this ruling, the Court denies as moot AME's separate challenge to Volt's Lien Law claims—that Volt brought these claims other than in a representative action as required by Article 3-A § 77(1). See Tutor Perini , 525 F. Supp. 3d at 501–04 (canvassing doctrine and noting, inter alia , that "New York courts have allowed parties to cure the failure to bring class claims at much later stages in the litigation [than the pleading stage]").

Volt, on behalf of Branna, Elite, and Kempf,²⁰ moves against AME's tort claims in AME : for fraud against Branna and negligence against Elite and Kempf.

20 The Court uses "Volt" interchangeably with "Branna," "Elite," and "Kempf" in this Section.

A. Conversion of Motion to Dismiss to Motion for Summary Judgment

Volt's motion against these claims was presented as a motion to dismiss. See Volt Mot. at 15. In their arguments on that motion, the parties all relied upon materials beyond the face of the complaint in AME and the materials it incorporates by reference. These include AME's Rule 26 disclosures in Volt I and AME ; declarations from Branna, Scaturro, Kempf, Yingling, and Miller; the Project Plans; interrogatory responses; and deposition testimony elicited during discovery. The Court accordingly first assesses sua sponte the propriety of converting Volt's motion to dismiss to one for summary judgment.

Federal Rule of Civil Procedure 12(d) provides that "[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R. Civ. P. 12(d). "The essential inquiry in determining whether it is appropriate to convert a motion [to dismiss] into a motion for summary judgment is ‘whether the non-movant should reasonably have recognized the possibility that the motion might be converted into one for summary judgment or was taken by surprise and deprived of a reasonable opportunity to meet facts outside the pleadings.’ " Costor v. Sanders , No. 07 Civ. 11311 (NRB), 2009 WL 1834374, at *2 (S.D.N.Y. June 16, 2009) (quoting Krijn v. Pogue Simone Real Estate Co. , 896 F.2d 687, 689 (2d Cir. 1990) (citations omitted)); see also Brown v. Kay , 889 F. Supp. 2d 468, 479–80 (S.D.N.Y. 2012), aff'd , 514 F. App'x 58 (2d Cir. 2013) (summary order).

That standard is clearly met here. Volt has submitted material far outside the pleadings. In response, AME has not argued a lack of notice that Volt's motion might be converted to one for summary judgment. Instead, its response also relies on a bevy of facts outside the pleadings, and draws upon the full discovery record. Accordingly, the Court converts Volt's Rule 12(b)(6) motion to one for summary judgment.

B. Fraud

AME's fraud claim against Branna makes two broad allegations.

First, AME asserts that Branna misrepresented Volt's qualifications and ability to perform the work needed for the JTS Project—that Volt could and would perform final terminations. See AME Compl. ¶ 24; Volt I , Dkt. 78-7 at 2 (AME interrogatory response stating that Branna's alleged misrepresentation as to Volt's qualifications regarded Volt's "ability to perform the required scope of work on the JTS project"); Hertzberg Decl. ¶ 5 (Hertzberg stating he advised Branna and Scaturro that "Volt's scope of work needed to include final terminations").

Second, AME alleges that Branna knowingly submitted to AME, during the construction, payment requisitions misrepresenting the percentage of work Volt had completed and the value of the work performed. See AME Compl. ¶¶ 9–11, 23. AME claims to have relied on those misrepresentations in seeking payment from its client for the JTS Project. Id. ¶ 12.

1. Applicable Legal Principles

Under New York law, the elements of a fraud claim are "a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury." Pasternack v. Lab'y Corp. of Am. Holdings , 27 N.Y.3d 817, 827, 37 N.Y.S.3d 750, 59 N.E.3d 485 (2016) (internal quotation marks omitted); Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d 173, 178, 919 N.Y.S.2d 465, 944 N.E.2d 1104 (2011) ; Lama Holding Co. v. Smith Barney Inc. , 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370 (1996) ; see also Integrated Constr. Enters., Inc. v. GN Erectors, Inc. , No. 16 Civ. 5561 (PAE), 2020 WL 614991, at *5 (S.D.N.Y. Feb. 10, 2020).

As the moving party, Volt's Branna, the defendant on the fraud claim, has "the burden of demonstrating an absence of clear and convincing evidence substantiating [AME's] claim[ ]" of fraud. Century Pac., Inc. v. Hilton Hotels Corp. , 528 F. Supp. 2d 206, 219 (S.D.N.Y. Oct. 17, 2007) ; see also Woo v. Times Enter., Inc. , No. 98 Civ. 9171 (SAS), 2000 WL 297114, at *4 (S.D.N.Y. Mar. 22, 2000) (summary judgment issue is whether there is "enough proof to allow a reasonable jury to find by clear and convincing evidence the existence of each of the elements necessary to make out a claim for fraud") (citation omitted).

Clear and convincing evidence is defined as:

[E]vidence that makes the fact to be proved highly probable. This evidentiary standard demands a high order of proof and forbids the awarding of relief whenever the evidence is loose, equivocal or contradictory. This means that fraud will not be assumed on doubtful evidence or circumstances of mere suspicion. Clear and convincing evidence may, however, be circumstantial, even on summary judgment.

Century Pac. , 528 F. Supp. 2d at 219 (cleaned up).

Courts in this District have cautioned that "summary judgment should be considered skeptically in cases alleging fraud[ ] ... because the issues typically turn on the parties’ credibility as to their state of mind." Id. ; see also Sound Video Unltd., Inc. v. Video Shack Inc. , 700 F. Supp. 127, 135 (S.D.N.Y. 1988) (denying summary judgment on fraud claim where factual issue of defendants’ intentions at time of transaction "hinges upon the credibility of the various parties").

2. Application

Branna has not shown the absence of sufficient evidence upon which a reasonable jury could find, by clear and convincing evidence, that he engaged in fraud by knowingly misrepresenting material facts to AME.

Insofar as the fraud claim against Branna concerns his representations about Volt's capacity and willingness to complete final termination work, that issue hinges on witnesses’ credibility. Branna maintains that he truthfully told Hertzberg at the outset that Volt would not perform final termination work. Branna Decl. ¶ 8. AME counters that, before awarding Volt the Subcontract, Hertzberg confirmed with Branna that Volt could and would perform the work. Hertzberg Decl. ¶¶ 5–6. Branna terms this a "blatantly false statement"; he asserts that he always told Hertzberg that "Volt did not have the manpower to perform the final termination work." Branna Reply Decl. ¶ 5.

This issue presents a classic credibility dispute. As explained above in connection with the breach of contract claim, the dispute between Branna and Hertzberg about the representations Volt made during the contracting process about the scope of work Volt was prepared to perform turns on credibility. It requires resolution by a factfinder. See Integrated Constr. 2020 WL 614991, at *7 ("This presents a clear factual dispute which, if resolved by the jury in [non-movant's] favor, would support its claim of fraud."); New Jersey Rail Grp. , 2007 WL 2296506, at *9 n.14 (citing cases). To be sure, extrinsic evidence may shed light on that credibility dispute insofar as it may tend to make it more, or less, likely that Branna represented that Volt could do such work. But here, as noted, such evidence itself presents a mixed portrait, as different strands of extrinsic evidence support each side's account. See supra , Section III.A.2.b.

Insofar as AME's fraud claim contends that Branna knowingly submitted to AME, during construction, payment requisitions misrepresenting the percentage and value of the work Volt had completed, this claim turns on the invoices Branna sent AME periodically during the JTS Project, which AME in turn submitted to Henick-Lane. Miller Decl. ¶ 3. AME claims that these invoices fraudulently overstated Volt's progress on the JTS Project.

On this theory of fraud, too, material disputes of fact preclude summary judgment. Take, for example, AME's claim that Branna knowingly misrepresented, in late February 2019, that Volt's work was 60% complete. See Branna Depo. at 81–85; AME Opp'n at 15.²¹ A reasonable juror could find, by clear and convincing evidence, that this claim was not a misrepresentation, including based on Volt's shifting work responsibilities and the inherent subjectivity of using a single number to capture progress: Branna testified that distilling the many parts of a project as complex as the JTS Project into one "percentage completion" number is a subjective and imprecise exercise. See, e.g. , Branna Depo. at 84–87 (describing how the multifaceted aspects and parallel work streams on discrete subprojects make a single progress-completion percentage misleading). He also testified that new requests could reopen a job that earlier appeared complete. See, e.g. , id. at 91–93 (terming Volt's percentage completion a moving target, as AME and others made new or modified work requests). On the other hand, a reasonable juror, again by clear and convincing evidence, could find the 60% figure knowingly false, were she to find it implausible that Volt would be over halfway done with its work on the JTS Project—a large and multifaceted project slated to take months—by the end of the first month in which its work began. The need to resolve Branna's state of mind in making various representations counsels leaving this determination to a finder of fact following live testimony.

21 A separate fraud element would require AME to establish, by clear and convincing evidence, that it justifiably relied to its detriment on Volt's false representation. The parties have not briefed this point. The Court assumes arguendo that there is sufficient evidence on which a jury could find for AME on this element.

In pursuing summary judgment against AME's fraud claim, Volt notes that there is evidence (predominantly Branna's testimony) that he and Hertzberg discussed Volt's invoices before they were submitted. And Volt emphasizes Branna's stated belief that AME, before authorizing payments on these invoices, "presumably" inspected Volt's work. See Branna Decl. ¶¶ 14–15. Branna's premise appears to be that, if AME performed such inspections, it presumably relied on them, not on his representations, in finding payment to Volt justified. But although there is force to this logic, AME has not conceded that it performed these inspections. AME 56.1 ¶¶ 4, 21(d). Therefore, even assuming that an AME pre-payment inspection would defeat its claim of reliance on Branna's representation as to the work it had performed, summary judgment cannot be entered for Branna on this basis.

In sum, for multiple reasons, the facts are too indeterminate and equivocal to enable entry of summary judgment for Branna on AME's fraud claim against him. See Fire & Cas. Ins. Co. of Conn. v. 2207 7th Ave. Rest. Corp. , No. 03 Civ. 4739 (HB), 2004 WL 1933781, at *3 (S.D.N.Y. Aug. 30, 2004) ("[Fraud] will not be assumed on doubtful evidence or circumstances of mere suspicion.") (quoting Brayer v. John Hancock Mut. Life Ins. Co. , 179 F.2d 925, 928 (2d Cir. 1950) ). The Court therefore denies Branna's motion for summary judgment on this claim. See Century Pac. , 528 F. Supp. 2d at 219.

C. Negligence

Volt next seeks summary judgment on AME's negligence claims in the third action (AME ) against Kempf (a Volt electrician) and Elite (a consultancy business, whose sole member was Volt's Scaturro). It argues that these duplicate AME's breach-of-contract counterclaim against Volt in Volt I , on which neither party has moved for summary judgment. Volt argues that AME cannot sue Kempf or Elite in tort because it is already suing—and seeking the same damages from—Volt on a contract-breach theory. Volt is correct.

1. Economic Loss Doctrine

A body of New York decisions address the "borderland between tort and contract"—commonly, involving circumstances where "the parties’ relationship initially is formed by contract, but there is a claim that the contract was performed negligently." Sommer v. Fed. Signal Corp. , 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992). In such cases, under New York law, damages that arise from the failure of a party to perform pursuant to a bargained-for agreement are recoverable in contract, and not in tort, unless a legal duty independent of the contract itself has been violated. See Kalimantano GmbH v. Motion in Time, Inc. , 939 F. Supp. 2d 392, 415–16 (S.D.N.Y. 2013) (citing Bellevue S. Assocs. v. HRH Constr. Corp. , 78 N.Y.2d 282, 294–95, 574 N.Y.S.2d 165, 579 N.E.2d 195 (1991) ); Carmania Corp. N.V. v. Hambrecht Terrell Int'l , 705 F. Supp. 936, 938 (S.D.N.Y. 1989) ("New York law ... [restricts] plaintiffs who have suffered ‘economic loss’ but not personal or property injury to an action for the benefits of their bargains. If the damages suffered are of the type remediable in contract, a plaintiff may not recover in tort."). The doctrine is known as the "economic loss" rule. It aims to "prevent contract law from drowning in a sea of tort." Robehr Films, Inc. v. Am. Airlines, Inc. , No. 85 Civ. 1072 (RPP), 1989 WL 111079, at *2 (S.D.N.Y. Sept. 19, 1989) (quoting E. River S.S. Corp. v. Transam. Delaval , 476 U.S. 858, 866, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986) ).²² This case differs from the typical "borderland" case in one respect: AME brings its contract and tort claims against different parties and in different (albeit consolidated) lawsuits. AME has counterclaimed against Volt in Volt I for breach for contract. And it has sued Kempf and Elite in AME for negligence. Nonetheless, AME's tort claims against Elite and Kempf are premised on the theory that they are in part responsible for the incomplete or inadequate work underlying AME's contract-breach counterclaim against Volt. Thus, in both its contract and tort actions, AME argues that Volt, or its agents, delivered substandard work for which AME is entitled to recompense. See Royal Ins. Co. of Am. v. RU-VAL Elec. Corp. , 918 F. Supp. 647, 652 (E.D.N.Y. 1996) ("The general New York tort rule is that employers are liable for the negligence of employees, but not—with certain exceptions inapplicable here—for that of independent contractors.") (citing Kleeman v. Rheingold , 81 N.Y.2d 270, 273–74, 598 N.Y.S.2d 149, 614 N.E.2d 712 (1993) ; Restatement (Second) of Torts § 409 (1965) ). The Court accordingly applies the economic loss rule here, notwithstanding the uncommon procedural posture in which the present motion arises.

22 See BDG Gotham Residential, LLC v. W. Waterproofing Co., Inc. , No. 19 Civ. 6386 (AJN), 2020 WL 6825679, at *2 n.1 (S.D.N.Y. Nov. 20, 2020) (noting confusion in caselaw that has arisen from use of the term "economic loss" as a means to describe distinct legal doctrines).

2. Application of the Economic Loss Rule

In defending its tort claims against Kempf and Elite, AME argues that "a legal duty independent of contractual obligations may be imposed by law as an incident to the parties’ relationship," and that "professionals ... may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties." See AME Opp'n at 14 (quoting Sommer , 79 N.Y.2d at 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365 ). Such occurs where "policy, not the parties’ contract, ... gives rise to a duty of due care." Sommer , 79 N.Y.2d at 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365. For a professional negligence claim to be sustainable, the parties must be either be in privity or "the bond between them [must be] so close as to be the functional equivalent of privity." Stapleton v. Barrett Crane Design & Eng'g , 725 F. App'x 28, 31 (2d Cir. 2018) (summary order) (quoting Perfetto v. CEA Eng's, P.C. , 114 A.D.3d 835, 980 N.Y.S.2d 788, 789 (N.Y. App. Div. 2014) ); Ossining Union Free Sch. Dist. v. Anderson LaRocca Anderson , 73 N.Y.2d 417, 541 N.Y.S.2d 335, 339, 539 N.E.2d 91 (1989) (setting out three-part test to determine whether such functional privity exists).

AME's argument is, however, beside the point. Even if the prerequisite of functional privity were found between AME and Kempf or Elite, the economic loss rule would still bar AME's negligence claims against them.

The New York Court of Appeals has "made clear that ‘where plaintiff is essentially seeking enforcement of the bargain, the action should proceed under a contract theory.’ " Dormitory Auth. v. Samson Constr. Co. , 30 N.Y.3d 704, 711, 70 N.Y.S.3d 893, 94 N.E.3d 456 (2018) (quoting Sommer , 79 N.Y.2d at 552, 583 N.Y.S.2d 957, 593 N.E.2d 1365 ). Applying that principle, New York courts have repeatedly rejected negligence claims against professionals that duplicate breach of contract causes of actions. That result is warranted, such courts have held, where, "the negligence allegations in the complaint are ... ‘merely a restatement, albeit in slightly different language, of the "implied" contractual obligations asserted in the cause of action for breach of contract.’ " Id. (quoting Clark-Fitzpatrick, Inc. v. Long Island R.R. Co. , 70 N.Y.2d 382, 390, 521 N.Y.S.2d 653, 516 N.E.2d 190 (1987) ). Confronting such a situation, the New York Court of Appeals, in Dormitory Authority , explained:

[T]he factual allegations set forth in each cause of action are identical, except that the negligence claim is framed in terms of [defendant's] failure to comply with professional standards of care. Moreover, despite the fact that the complaint seeks an additional unspecified $4 million in damages under the negligence cause of action, it fails to include a single allegation that contains any distinction between the damages applicable to either claim. The only damages alleged under either theory of recovery are the additional expenses required to complete the project, including the costs to repair the damage to adjacent structures. Significantly, in the contract itself, the parties contemplated responsibility for additional costs or expenses incurred by or the client ... as a result of the [defendant's] design errors or omissions, and addressed it in the contract terms. Likewise, during discovery, the total amount of damages was detailed by [plaintiff], with no distinction between the "additional expenses" incurred based on one claim or the other.

30 N.Y.3d at 711–12, 70 N.Y.S.3d 893, 94 N.E.3d 456.

The same is so here. The alleged conduct underlying AME's contract and tort claims is identical, or virtually so. AME's breach-of-contract counterclaim asserts that Volt failed to meet its contractual obligations, that its work "was defective and/or incomplete," and that it failed to "perform its contractual obligations in a good and workmanlike manner," causing AME damages in the form of "costs incurred to repair Volt's defective and incomplete work." Volt I , Dkt. 6 at 7. AME's negligence claim against Elite alleges that it failed properly to perform project management services on the JTS Project, resulting in delays and other issues that prevented Volt from performing its work properly. AME Compl. ¶¶ 13–16. And AME's negligence claim against Kempf alleges, upon information and belief, that "part of Kempf's responsibilities was to inspect and review the work performed by Volt's employees on the Project," which AME viewed as substandard, and that therefore Kempf is liable for Volt's failure to perform. Id. ¶ 18.

The injuries that AME claims from the alleged contract breaches and torts are also identical. The damages AME claims on its breach-of-contract counterclaim in Volt I are solely those caused by Volt's allegedly incomplete or deficient work on the JTS Project. Volt I , Dkt. 78-6, at 3 (Rule 26 disclosures in Volt I ). Its tort claims assert the very same damages. Id. , Dkt. 78-7, at 1–2 (Rule 26 disclosures in AME ; in response to inquiry regarding damages suffered due to Elite's and Kempf's alleged negligence, AME cross references to damages AME allegedly suffered due to Volt's alleged breach of contract in Volt I ).

And, as in Dormitory Authority , the Subcontract itself contemplates—and addresses in contract terms—Volt's responsibility for additional costs or expenses incurred by AME as a result of a failure or neglect of duties by Volt. See Subcontract Section 11.1 (default provision); id. Section 11.2 ("The Subcontractor's failure to comply with any of the terms or conditions of this Subcontract shall be grounds for holding the Subcontractor in default under Section 11.1."). Indeed, under the Subcontract, breaches arising from negligence on the part of Elite or Kempf would appear to trigger contractual liability. See id. Section 7.1 ("These indemnity and defense obligations shall apply to any acts or omissions, negligence or willful misconduct of the Subcontractor, its employees or agents, subcontractors or suppliers, regardless whether active or passive."); see also Royal Ins. Co. , 918 F. Supp. at 652 ("The general New York tort rule is that employers are liable for the negligence of employees, but not—with certain exceptions inapplicable here—for that of independent contractors.") (citing Kleeman , 81 N.Y.2d at 273–74, 598 N.Y.S.2d 149, 614 N.E.2d 712 ; Restatement (Second) of Torts § 409 (1965) ).

The same outcome would apply if AME's negligence claims against Elite and Kempf were treated as alleging ordinary (rather than professional) negligence. Applying the economic loss rule in that context, New York courts assess the "nature of the injury, the manner in which the injury occurred and the resulting harm." BDG , 2020 WL 6825679, at *3 (quotation marks omitted). The fundamental question, as in the professional negligence context, is whether "plaintiff is essentially seeking enforcement of the bargain, [in which case] the action should proceed under a contract theory," id. (quoting Sommer , 79 N.Y.2d at 552, 583 N.Y.S.2d 957, 593 N.E.2d 1365 ); see also Regent Ins. Co. v. Storm King Contracting, Inc. , No. 06 Civ. 2879 (LBS), 2008 WL 563465, at *3–4 (S.D.N.Y. Feb. 27, 2008), adhered to on reconsideration , No. 06 Civ. 2879 (LBS), 2008 WL 1985763 (S.D.N.Y. May 7, 2008) (citing Bellevue , 78 N.Y.2d at 294, 574 N.Y.S.2d 165, 579 N.E.2d 195 ), or whether, on "the opposite end of the spectrum," BDG , 2020 WL 6825679, at *3, the contract's negligent performance is claimed to "cause[ ] abrupt damage to the plaintiff's person or property," such that the injuries "extend far beyond a failure to receive the benefit of the bargain," id. (citing cases). In the latter circumstance, tort actions may proceed.

This case falls decisively into the former category. It closely resembles Bellevue , where the New York Court of Appeals disallowed a tort claim where "[t]he injury ... was not personal injury or property damage, but solely injury to the product [purchased under the contract] itself." 78 N.Y.2d at 294, 574 N.Y.S.2d 165, 579 N.E.2d 195. It is a far afield from Sommer and like cases, where the negligence resulted in "abrupt, cataclysmic occurrence" causing damages unanticipated by the contracting parties. Sommer , 79 N.Y.2d at 553, 583 N.Y.S.2d 957, 593 N.E.2d 1365. AME has never suggested that Elite's or Kempf's negligence resulted in damages other than the same ones occasioned by Volt's alleged breach.

In its tort claims, AME seeks little more than the benefit of its bargain with Volt. Its grievances sound in breach of contract. The Court accordingly enters summary judgment for Volt on AME's negligence claims against Kempf and Elite.

CONCLUSION

For the foregoing reasons, the Court (1) denies Volt's motion for summary judgment on Volt's breach-of-contract claim in Volt I ; (2) grants AME's cross motion for partial summary judgment and denies Volt's motion for summary judgment on Volt's New York Lien Law claims in Volt I and Volt II ; (3) denies Volt's motion for summary judgment on AME's fraud claim in AME ; and (4) grants Volt's motion for summary judgment on AME's negligence claims in AME.

The Clerk of the Court is respectfully directed to terminate the motions at docket entries 75 and 84 in No. 20 Civ. 4185, docket entries 23 and 32 in No. 21 Civ. 1743, and docket entries 35 and 44 in No. 21 Civ. 2986. An order as to next steps will issue shortly.

SO ORDERED.