Opinion
No. 14982/2012.
11-07-2014
BOARD OF MANAGERS OF THE 125 NORTH 10TH CONDOMINIUM, Plaintiff, v. 125 NORTH 10, LLC d/b/a 125 North 10 LLC, 125N 10 d/b/a 125 North 10 LLC 125 N 10 d/b/a 125 North 10 MM, LLC, Savanna Services L.L.C. d/b/a Savanna Partners d/b/a Savanna Fund, Christopher Schlank, Nicholas Bienstock a/k/a Nicholas C. Bienstock a/k/a Nicholas Cburnham Bienstock, Peter Petron, John Fraser a/k/a John R. Fraser, Investcorp International Holdings Inc. d/b/a Investcorp, Ryder Construction, Inc., Carl Jaccarino, Robert M. Reich, LLC, Robert M. Reich, Anthony Cucich Architects d/b/a A. Cucich Architects, Anthony Cucich a/k/a Anthony A. Cucich, Scarano Architect, PLLC, d/b/a Scarano & Associates Architects, Robert M. Scarano, Jr. a/k/a Robert Scarano, AE Design Incorporated d/b/a Andres Escobar & Associates, Sharon Engineering P.C., Ronan Sharon, Penmark Realty Corporation. d/b/a Penmark Realty Corp., d/b/a Penmark, Core Group Marketing LLC d/b/a Core Group Marketing, LLC, S. Schwartz Engineering, PLLC d/b/a Schwartz S d/b/a S. Schwartz Associates Consulting Engineers, Simon Schwartz, Frank Seta & Associates, LLC, Saied S. Seta a/k/a Frank Seta, “John Doe No.1 through John Doe # 10,” inclusive, the last ten names being fictitious and unknown to Plaintiff, the persons or parties intended being the persons or corporations or entities who provided constructions services and/or design and fabrication services at the Premises described herein, Defendants.
Jennifer Bock, Esq., Law Firm of Elias C. Schwartz PLLC, Great Neck, Attorney for Plaintiff. Shaun W. Pappas, Esq., Starr Associates LLP, New York, Attorney for Third–Party Plaintiff Sponsor. John Hannum Esq., Hannum Feretic Prendergast & Merlino LLC, New York, Attorney for Third–Party Plaintiff Ryder. Betsy D. Baydala, Esq., Kaufman Borgeest & Ryan LLP, New York, 10271 Attorney for Defendant Penmark. Leslie Bennet, Esq., Singer & Robinson, Great Neck, Attorney for Defendant Reich. James Kuebler, Esq., Traub Lieberman Straus & Shrewsberry LLP, Hawthorne, Attorney for Defendant Sharon. Mark Anesh, Esq., Lewis Brisbois Bisgaard & Smith LLP, New York, Attorney for Defendant Seta.
Jennifer Bock, Esq., Law Firm of Elias C. Schwartz PLLC, Great Neck, Attorney for Plaintiff.
Shaun W. Pappas, Esq., Starr Associates LLP, New York, Attorney for Third–Party Plaintiff Sponsor.
John Hannum Esq., Hannum Feretic Prendergast & Merlino LLC, New York, Attorney for Third–Party Plaintiff Ryder.
Betsy D. Baydala, Esq., Kaufman Borgeest & Ryan LLP, New York, 10271 Attorney for Defendant Penmark.
Leslie Bennet, Esq., Singer & Robinson, Great Neck, Attorney for Defendant Reich.
James Kuebler, Esq., Traub Lieberman Straus & Shrewsberry LLP, Hawthorne, Attorney for Defendant Sharon.
Mark Anesh, Esq., Lewis Brisbois Bisgaard & Smith LLP, New York, Attorney for Defendant Seta.
Opinion
CAROLYN E. DEMAREST, J.
This action arises out of the design and construction of 125 North 10th Street, Brooklyn, New York, an 86–unit luxury condominium (the “Project”). On June 27, 2006, the Sponsor Defendants acquired the property for the purposes of constructing a residential building, consisting of two connected towers and a cellar-level parking garage (the “Building”). Sponsors disseminated an Offering Plan, effective January 28, 2008, that set forth specific descriptions of the Building and improvements to be accomplished by the Project, stated that all warranties extended to the Sponsor would be assigned by the Sponsor to the board of managers, and named a number of individuals who were involved with the Project.
The “Sponsor Defendants” are comprised of 125NORTH10, LLC d/b/a 125 North 10 LLC, 125N 10 d/b/a 125NORTHLO LLC, 125 N 10 d/b/a 125NORTH10 MM, LLC, Savanna Services L.L.C. d/b/a Savanna Partners d/b/a Savanna Fund, Christopher Schlank, Nicholas Bienstock, Peter Petron, John Fraser a/k/a John R. Fraser, Investcorp International Holdings Inc. d/b/a Investcorp, and Core Group Marketing, LLC d/b/a Core Group Marketing.
According to plaintiff, Sponsors, however, did not deliver a Building in accordance with the Plans and Specifications set forth in the Offering Plan, but, instead, the Building was “rife with construction problems,” including improperly designed and constructed walls, roofs, and foundation, which have resulted in water infiltration and significant property damage, as well as non-compliance with New York City Department of Building (“DOB”) Codes. Other issues complained of include scalding hot water that flows through the residential fixtures, the persistent break down of the building's heating and cooling systems, severe drafts from the windows, extensive leaking from ceilings, flooding in the cellar garage, noxious odors permeating the units, and a dangerous condition created by terrace railings at the top of the ten-story building, which are designed so that it is possible for children to climb over them.
When the defects were discovered, the Sponsor-controlled Board requested that all defendants return to the Building to inspect their designs, plans, and work, to determine how to rectify the problems. However, despite numerous inspections, plaintiff claims that the defects remained unresolved. Accordingly, in 2011, the Board, which was no longer Sponsor-controlled, retained a non-party firm, RAND Engineering & Architecture, P.C. (“Rand”) to perform a visual survey of the building to determine the cost of making repairs, which were estimated to cost at least $2 million. Plaintiff claims to have performed essential repairs to the roof, in addition to other repairs, which have cost much more than estimated by Rand. Despite these expenditures, plaintiff contends, numerous defects still require repair
Plaintiff Board of Managers of the 125 North 10th Condominium (“Board”) commenced this action on July 23, 2012, on its own behalf and on behalf of the residential unit owners of the condominium, against, in addition to the Sponsor defendants, project managers, architects, managing agent, consultants, engineers, providers of interior design services, and the general contractor involved with the Project. The defendants had the following roles in the Project: Robert M. Reich, LLC and Robert M. Reich (the “Reich Defendants”) were the project managers for the Project, Anthony Cucich Architects d/b/a A. Cucich Architects and Anthony Cucich a/k/a Anthony A. Cucich (the “Cucich Defendants”) and Scarano Architect, PLLC d/b/a Scarano & Associates Architects and Robert M. Scarano, Jr., a/k/a Robert Scarano (the “Scarano Defendants”) were architects, Core Group Marketing LLC d/b/a Core Group Marketing, LLC (“Core”) is the selling agent for the Building, Penmark Realty Corporation. d/b/a Penmark Realty Corp., d/b/a Penmark (“Penmark”) is the managing agent for the Building, Frank Seta & Associates, LLC, Saied S. Seta a/k/a Frank Seta (the “Seta Defendants”) were consultants, S. Schwartz Engineering, PLLC d/b/a S. Schwartz Associates LLC d/b/a Schwartz S d/b/a S. Schwartz Associates Consulting Engineers and Simon Schwartz (the “Schwartz Defendants”) and Sharon Engineering P.C. d/b/a Sharon Engineering, P.C. and Ronan Sharon (the “Sharon Defendants”) were engineers, AE Design Incorporated d/b/a Andres Escobar & Associates (“AE Design”) provided interior design services, Ryder Construction, Inc. (“Ryder”) was the general contractor, and Carl Jaccarino (“Jaccarino”) was an employee and later an owner of Ryder.
A number of the above listed defendants moved to dismiss the plaintiff's Complaint. In its Decision and Order of January 6, 2014 (the “Prior Decision”), this Court dismissed the Complaint as against the following defendants: the Scarano Defendants, the Cucich Defendants, the Seta Defendants, the Sharon Defendants, AE Design, Simon Schwartz individually, Carl Jaccarino individually, and Penmark. The Court gave plaintiff leave to re-plead with respect to any viable contract causes of action related to the Condominium Apartment House Management Agreement that Penmark entered into with plaintiff on March 25, 2009 (the “Management Agreement”). Accordingly, plaintiff filed an Amended Complaint on February 3, 2014. The first through tenth causes of action in the Amended Complaint are identical to those of the original Complaint, but plaintiff adds an eleventh through fourteenth cause of action against Penmark based on the Management Agreement for breach of contract, breach of express warranty, negligence, and strict liability.
The Decision and Order of January 6, 2014 also dismissed all cross-claims against the moving defendants without prejudice and permitted any aggrieved defendants to bring a third party action within thirty days. The Sponsor Defendants and Ryder filed third-party complaints on February 27, 2014 and February 28, 2014, respectively. The Sponsor Defendants bring third party claims against the Cucich Defendants, the Scarano Defendants, the Sharon Defendants, the Schwartz Defendants and the Seta Defendants (the “Sponsor TPC”). Ryder brings third party claims against a vast array of subcontractors who performed work or furnished materials in connection with the Project (the “Ryder TPC”). As of the date that these motions became sub judice with the Court, the following third party defendants have filed answers to the Ryder TPC: Rotavele Elevator, Inc. (“Rotavele”), Castle Construction Group, Inc. (“Castle”), Doortec Architectural Metal & Glass (“Doortec”), Dynamic Sheet Metal LTD (“Dynamic”), Hi–Lume Corporation (“Hi–Lume”), Maspeth Steel Fabricators, Inc. (“Maspeth”), and Brook Plumbing & Heating Corp. (“Brook”).
The following defendants answered the original Complaint and asserted cross-claims against various co-defendants: the Sponsor Defendants, the Reich Defendants, the Cucich Defendants, the Sharon Defendants, and the Schwartz Defendants.
Ryder and the Sponsor Defendants have also answered the Amended Complaint and have asserted cross-claims. Ryder asserts cross-claims against all of its co-defendants for contractual and common law indemnification and failure to obtain insurance coverage. Sponsor Defendants assert cross-claims against the Ryder and the Reich Defendants for contractual and common law indemnification and contribution.
APPLICABLE STANDARDS OF REVIEW
Upon a motion to dismiss pursuant to CPLR 3211(a)(7), “the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Breytman v. Olinville Realty, LLC, 54 AD3d 703, 703–04 [2d Dept 2008] ). However, the court must base its judgment on factual allegations rather than legal conclusions and can afford no deference to assertions that are “inherently incredible or flatly contradicted by documentary evidence” (O'Donnell, Fox & Gartner v. R–2000 Corp ., 198 A.D.2d 154, 154 [1st Dept 1993] ). Pursuant to CPLR 3211(a)(1), a party “may move for judgment dismissing one or more causes of action against him on the ground that ... a defense is founded upon documentary evidence.” “A motion to dismiss pursuant to CPLR 3211(a)(1) will be granted only if the documentary evidence resolves all factual issues as a matter of law, and conclusively disposes of plaintiff's claim” (Fontanetta v. John Doe 1, 73 AD3d 78, 83 [2d Dept 2010], quoting Fortis Fin. Servs. v. Fimat Futures USA, 290 A.D.2d 383, 383 [1st Dept 2002] ).
Upon motion for summary judgment, pursuant to CPLR 3212, the moving party bears the initial burden to produce affidavits and documentary evidence sufficient to “warrant the court as a matter of law in directing judgment in [its] favor” (CPLR 3212(b) ; see Friend of Animals, Inc. v. Assoc. Fur Mfrs., Inc., 46 N.Y.2d 1065, 1078 [1979] ). Once the movant establishes prima facie entitlement to judgment, the burden shifts to the opposing parties to “demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action” (Zuckerman v. City of New York, 49 N.Y.2d 557, 560 [1980] ). While “all facts must be viewed in the light most favorable to the non-moving party” ‘ (Vega v. Restani Constr. Corp., 18 NY3d 499, 503 [2012], quoting Ortiz v. Varsity Holdings, LLC, 18 NY3d 335, 339 [2011] ), mere conclusory allegations or defense are insufficient to preclude summary judgment (see Zuckerman, 49 N.Y.2d at 562 ).
DISCUSSION
Motion Sequence 9—Penmark
Penmark moves pursuant to CPLR 3211(a)(7) to dismiss plaintiff's first through sixth, ninth, and tenth causes of action in the Amended Complaint, for failing to state valid causes of action based on the law of the case. In its original Complaint, plaintiff asserted the following causes of action against Penmark: breach of contract, breach of express warranties, negligence (third and fourth causes of action), strict liability, fraud, deceptive trade practices under GBL § 349, and false advertising under GBL § 350. In the Prior Decision, this Court dismissed all of these causes of action as against Penmark. In its Amended Complaint, plaintiff's first through sixth, ninth, and tenth causes of action are identical to those pleaded in the original Complaint. Plaintiff does not dispute Penmark's motion to dismiss these causes of action, and accordingly, the first through sixth, ninth, and tenth causes of action of the Amended Complaint are dismissed based on the law of the case (see Frankson v. Brown & Williamson Tobacco Corp., 67 AD3d 213 [2d Dept 2009] ; White v. Murphy, 290 A.D.2d 704 [3d Dept 2002] ).
The Prior Decision also gave plaintiff leave to replead with respect to any viable contract causes of action related to the Management Agreement with Penmark. In its Amended Complaint, plaintiff asserts new causes of action against Penmark for breach of the Management Agreement between Sponsor and Penmark, for breach of an express warranty, for negligence, and for strict liability. Penmark moves to dismiss these eleventh through fourteenth causes of action pursuant to CPLR 3211(a)(7) for failure to state a valid cause of action and pursuant to CPLR 3211(a)(1) based on documentary evidence. Penmark also seeks attorneys' fees and costs associated with preparing their instant motion.
Penmark is the managing agent for the building pursuant to the Management Agreement that Penmark entered into with the Sponsor on March 25, 2009. Pursuant to the terms of the Offering Plan, plaintiff assumed Sponsor's rights in the Management Agreement with Penmark at the closing of the first unit. The terms of the Management Agreement indicate that Penmark was responsible to “[c]ause the building to be maintained in good condition, in keeping with a first class luxury residential Building, ... and cause repairs and alterations of the building to be made, including but not limited to, electrical, plumbing, steam fitting, carpentry, masonry ...,” to hire, pay and supervise personnel necessary to maintain the Building, and to market units for sale upon the owner's request. Plaintiff alleges that Penmark breached the Management Agreement by failing to cause the Building and its common elements to be maintained in good condition, failing to cause repairs and alterations of the Building to be made, and failing to correct, repair or replace any and all defects relating to the construction of the Building.
In its Amended Complaint, plaintiff states that the “problems and defects complained of herein are all due to substantially improper design, fabrication, workmanship or construction practices by the Sponsor's Architects, Engineers, Consultants, and Contractors or the use of materials that are substantially and materially at variance with the Plans and Specifications” (¶ 120). Penmark argues, and the Court agrees, that Penmark had no contractual obligation under the Management Agreement to correct, repair or replace the alleged construction defects in the Building. Penmark contends that based on the documentary evidence, it is the sole responsibility of the Sponsor to correct and repair the alleged construction defects. The Offering Plan, which references and incorporates the Management Agreement, Purchase Agreement, and Condominium By–Laws, provides that:
Sponsor will correct, repair, or replace any and all defects relating to the construction of the Building, Common Elements or the Units or in the installation or operation of any appliances, fixtures, or equipment therein, or will cause the same to be corrected, repaired, or replaced, but only if (1) such defects are due to substantially improper workmanship or construction practices or the use of materials that are substantially and materially at variance with the Plans and Specifications for the same; and (2) Sponsor is notified by the Condominium Board ... (p. 96, section m) Further, the Purchase Agreement provides: 17.2 The construction of the Building and the Unit and the correction of any defects in the construction thereof to the extent required under the Plan are the sole responsibility of the Sponsor.
These documents are all part of the same transaction and must be read and interpreted together (Perlbinder v. Board of Managers of 411 E. 53rd Street Condominium, 65 AD3d 985, 988 [1st Dept 2009] ).
It is undisputed that Penmark had no role in the construction of the Building. As plaintiff only seeks damages to correct the design and construction defects of the Building, and Penmark has shown that it was not responsible for the alleged defective design and construction, Penmark is not liable for such defects (see Tiffany at Westbury Condominium v. Marelli Development Corp., 40 AD3d 1073 [2d Dept 2007] ). There is nothing in the Management Agreement that requires Penmark to cure construction defects, and moreover, the Management Agreement states that Penmark's obligation to make repairs is subject to limitations contained in the Management Agreement and in the Condominium By–Laws (¶ 2[b] ). The Offering Plan provides that “[t]he method of correcting any defect will be selected by Sponsor in its sole discretion” (p. 97, section m[2] ). This suggests that not only does Penmark have no obligation to cure construction defects, but that Penmark does not even have authority to repair construction defects without instructions from the Sponsor.
Plaintiff argues that Penmark's obligation to “[c]ause the building to be maintained in good condition, in keeping with a first class luxury residential Building” creates a responsibility to correct the construction defects in the Building. However, this contention is contradicted by the Offering Plan and other documents related to the Building, which provide that responsibility for construction defects lies with the Sponsor. Additionally, plaintiff's argument that “the exorbitant amount of defects existing at the Building is in of itself evidence of the breach of Defendant Penmark's contractual duties to Plaintiff” (Plaintiff's Memorandum of Law in Opposition To Defendant Penmark's Motion to Dismiss, p. 12), is unavailing because it is undisputed and was already held in the Prior Decision that Penmark had no involvement with the construction or design of the Building. Plaintiff's attempt to distinguish Tiffany from the instant action by arguing that the plaintiff in Tiffany only sought damages arising from alleged defective design and construction is unconvincing because the plaintiff in the instant action is in fact alleging that the problems with the Building are all due to defective construction and design. Further, the fact that plaintiff has already incurred significant costs to repair certain construction defects does not endow Penmark with responsibility for these types of defects. The Condominium By–Laws provide that the cost of all repairs “whether structural or non-structural, ordinary or extraordinary” must be charged to the Unit Owners as a Common Expense (Section 5.1). This shows that Penmark may in no way be held liable for the cost of repairing construction defects.
Moreover, the Management Agreement contains a hold harmless provision that provides that plaintiff will hold Penmark harmless from “any liability, damages, costs and expenses ... incurred for injury to any person or property ... in connection with the Building” unless such injury is caused by Penmark's own negligence or failure to comply with its obligations (¶ 3). As it has already been established that Penmark was not involved in the construction of the Building, none of the defects complained of by the plaintiff can have been caused by any negligence or failure of Penmark. Accordingly, the language of this hold harmless provision protects Penmark from liability for the very damages sought by plaintiff (see L & S Motors, Inc. v. Broadview Networks, Inc., 25 AD3d 767 [2d Dept 2006] ).
Penmark also argues that it cannot be held liable to plaintiff because Penmark was no longer the managing agent of the Building when the construction defects were discovered on or about May 22, 2010. Penmark claims that it was the managing agent for the Building from March 25, 2009 until November 4, 2009, when it sold its real property management business to Penmark Management, LLC, which Penmark says is a separate entity. Penmark argues that plaintiff's claim for breach of contract fails as a matter of law because there was no contractual relationship between Penmark and the plaintiff at the time the construction defects were discovered. According to the affidavit of Bernard Friedman, he was the President of Penmark Realty Corporation until the business was sold pursuant to an Asset Purchase Agreement, and that he does not own any interest in the new entity, Penmark Management, LLC. Pursuant to the Asset Purchase Agreement, Penmark Management, LLC assumed all of the liabilities and obligations relating to the Management Agreement on November 4, 2009. Plaintiff responds that its allegations encompass the time period during which Penmark was the managing agent of the Building and so Penmark is still responsible for remedying these defects. However, plaintiff's contention is defeated by the terms of the Condominium By–Laws which require Unit Owners to promptly notify the Board or the managing agent of any problems requiring repair (p. 387, section 5.1). Accordingly, any possible duty to repair could not have been triggered prior to May 22, 2010 when the numerous construction defects were discovered by the Board.
Plaintiff also brings a twelfth cause of action for breach of express warranty against Penmark, alleging that Penmark promised and expressly warranted that it would keep the Building and its common elements in good condition. It is well established that “[n]o warranty attaches to the performance of a service. If the service is performed negligently, the cause of action accruing is for that of negligence. Likewise, if it constitutes a breach of contract, the action is for that breach” (Town of Poughkeepsie v. Espie, 41 AD3d 701, 706 [2d Dept 2007], citing Aegis Prods. v. Arriflex Corp. of Am., 25 A.D.2d 639, 639 [3d Dept 1966] ; see also Milau Assoc. v. North Ave. Dev. Corp., 42 N.Y.2d 482, 488 [1977] ; Mallards Dairy, LLC v. E & M Engineers & Surveyors, P.C., 71 AD3d 1415, 1417 [4th Dept 2010] (because contract was for services, cause of action for breach of warranty could not lie). Here, the warranty plaintiff claims was breached is a contractual promise to perform services in a certain manner, which forms the basis for plaintiff's cause of action for breach of contract against Penmark. Accordingly, plaintiff's twelfth cause of action for breach of express warranty is dismissed.
Plaintiff's thirteenth cause of action against Penmark is for negligence. Plaintiff pleads that Penmark had a duty to exercise due diligence and reasonable care to ensure that the Building was maintained in good condition and to cause necessary repairs to be made. Claims based on negligent performance of a contract are not cognizable (City of New York v. 611 West 152nd St., Inc., 273 A.D.2d 125, 126 [1st Dept 2000] ). “[A] simple breach of contract is not to be considered a tort unless a legal duty independent of the contract has been violated ... This legal duty must spring from circumstances extraneous to, and not constituting elements of the contract, although it may be connected therewith and dependent upon the contract” (Board of Mgrs. of Riverview at Coll. Point Condominium III v. Schorr Brothers Development Corp., 182 A.2d 664, 666 [2d Dept 1992], citing Clarke–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389 [1987] ). No independent legal duty to plaintiff has been alleged. Accordingly, plaintiff's thirteenth cause of action is also dismissed.
Plaintiff brings a fourteenth and final cause of action against Penmark for strict liability, alleging that Penmark has failed to repair the Building so that it conforms with New York City regulations. Plaintiff claims that the Building lacks a proper protective railing as required by Building Code § 27–334, fails to comply with fire protection construction requirements under Building Code § 27–341, fails to comply with ADA accessibility standards, fails to comply with the National Electric Code, fails to comply with standards for the proper discharge of exhaust gases as required by Building Code § 27–754(e), and fails to comply with the regulations of the National Fire Protection Association. A cause of action for strict liability seeks to provide a remedy for an individual injured because of another's violation of an obligation imposed, not by contract, but by law. “It does not attempt to afford the injured party the benefit of any bargain but rather endeavors to place him in the position he occupied prior to the injury” (Steckmar Nat. Realty and Inv. Corp., Ltd., v. J.I. Case Co., 99 Misc.2d 212, 214 [Sup Ct, N.Y. County 1979] ). The economic loss plaintiff complains of is “not the character of harm contemplated by the rule which renders a manufacturer liable for negligence or strict products liability” ‘ (Hole v. General Motors Corp., 83 A.D.2d 715, 717 [3d Dept 1981]quoting Steckmar, 99 Misc.2d at 214 ).
Further, any obligation that Penmark may have to repair is imposed by contract, not by law, and there is no indication that Penmark is contractually responsible for conforming the construction of the building to codes and regulations. The Offering Plan expressly states that this obligation lies with the Sponsor (see p. 93, section [d] ). Moreover, plaintiff fails to allege that the building codes are the types of statutes that establish a specific standard of care and that plaintiff falls within the class of people intended to be benefitted by such statutes (see Zupnick v. Certified Lumber Corp., 17 Misc.3d 1122(A) [Sup Ct, Kings County 2007] ). Accordingly, plaintiffs' cause of action for strict liability against Penmark is dismissed.
Defendant Penmark also asks the Court, for the first time in its reply brief, to dismiss any and all cross-claims for contribution, indemnification, and failure to obtain insurance coverage against Penmark as a matter of law. As the Court has found that Penmark is not liable to plaintiff, this necessarily defeats all cross-claims for indemnification and contribution asserted against Penmark (see Tapinekis v. Rivington House Health Care Facility, 17 AD3d 572, 574 [2d Dept 2005] ). Any and all cross-claims against Penmark are therefore dismissed.
Penmark's motion for attorneys' fees and costs associated with preparing the instant motion is denied because an award of attorneys' fees in this case is not supported by statute, court rule or any written agreement between the parties (see Flemming v. Barnwell Nursing Home, 15 NY3d 375, 379 [2010] ).
Motion Sequence 10
Sharon Defendants
The Sharon Defendants move pursuant to CPLR 3211(a)(1) and (a)(7) to dismiss the Sponsor's third party complaint. The Sponsor TPC asserts three causes of action against the Sharon Defendants: (1) contractual indemnification, (2) contribution, and (3) common law indemnification. The Sponsor asserts that it delegated exclusive responsibility to, among others, the Sharon Defendants, as one of the principal design and construction professionals engaged in the Project. Sharon initially provided structural engineering services for the Project pursuant to an agreement, dated March 18, 2004, between Sharon and Scarano, one of the architects for the Project (the “Sharon/Scarano Agreement”). According to the affidavit of Peter Rosenthal, an authorized representative of the Sponsor, Sharon provided these services pursuant to an agreement between Scarano and Sponsor's predecessor (Rosenthal Aff. ¶ 13). However, the written agreement provided by Sponsor to support this contention appears only to be between Scarano and Sharon and includes no mention of other parties. Ronen Sharon, the president of Sharon Engineering, attests that the only agreement that Sharon had with Sponsor third-party plaintiffs was with Savanna Partners (“Savanna”), dated April 19, 2010 (the “Savanna Agreement”), after construction was complete and the alleged defects were discovered.
Sponsor's claim for contractual indemnification must be dismissed because the only agreement entered into between Sharon and third-party plaintiffs is the Savanna Agreement, which does not contain an indemnification provision or impose any obligation on Sharon to indemnify any of the third-party plaintiffs. As Sponsor does not oppose this portion of Sharon's motion, Sponsor's contractual indemnification claim is dismissed.
Sponsor's claim for contribution must also be dismissed. CPLR § 1401 provides that “two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought.” However, the Court found in its Prior Decision that the harm of which plaintiff complains is economic loss, and “purely economic loss resulting from breach of contract does not constitute injury to property' within the meaning of New York's contribution statute” (Board of Ed. of the Hudson City School District v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21, 26 [1987] ). As the Court stated in its Prior Decision, there is no recovery in negligence for economic loss (see Key Intl. Mfg. v. Morse/Diesel, Inc., 142 A.D.2d 448, 450–52 [2d Dept 1988] ). “[I]n the absence of tort liability, contribution is unavailable” (Rockefeller University v. Tishman Construction Corp., 240 A.D.2d 341, 343 [1st Dept 1997] ).
The cases cited by Sponsor are distinguishable in that they involve tort liability (see Guzman v. Haven Plaza Housing Development Fund, 69 N.Y.2d 559 [1987] ) (involving contribution from property owner to lessee for plaintiff's fall on defective stairs); Garrett v. Holiday Inns, Inc., 58 N.Y.2d 253 [1983] ) (holding that municipality could be held proportionately liable to motel owners, developers, and operators for injuries sustained by plaintiff guests in a motel fire although there was no duty owed by municipality to the injured motel guests)). Sponsor also argues that the critical requirement of its contribution claim is that Sharon had a part in causing or augmenting the injury for which Sponsor seeks contribution. Although a contribution claim may be made even when the contributor had no direct duty to the injured plaintiff (see Trump Village Section 3 v. New York State Housing Finance Agency, 307 A.D.2d 891 [1st Dept 2003] ), this does not obviate the requirement of tort liability for contribution claims. The Court also rejects Sponsor's argument that Sharon's retention by Sponsor as a professional engineer created an independent legal duty for Sharon to perform its work without negligence. Sharon's only duty was based on the Sharon/Scarano Agreement, and as noted earlier, there is no tort liability created by claims based on negligent performance of a contract (City of New York v. 611 West 152nd St., Inc., 273 A.D.2d 125, 126 [1st Dept 2000] ). Although there have been some extreme situations where courts have imposed a legal duty independent of contractual obligations (see Sommer v. Federal Signal Corp., 79 N.Y.2d 540 [1992] (holding that alarm company's liability for negligently taking alarms out of service sounded in tort as well as contract where a fire went undetected because New York City regulations imposed penalties for failure to transmit alarms, because the service provided a significant public benefit, and because catastrophic consequences may result from the failure to perform the service with care); see also Reade v. SL Green Operating Partnership, 30 AD3d 189 [1st Dept 2006] (imposing tort liability on landlord who breached statutory requirement to protect water supply pipes from freezing temperatures and to install a flow alarm as part of regulatory scheme to promote fire safety, causing pipes to burst, in addition to landlord's contractual obligations to tenant)), Sponsor has not demonstrated that the defects in the Building rise to the disastrous level required to create such independent liability.
Sponsor also brings a claim for common law indemnification against the Sharon Defendants. “Indemnity ... involves an attempt to shift the entire loss from one who is compelled to pay for a loss, without regard to his own fault, to another person who should more properly bear responsibility for that loss because he was the actual wrongdoer” (County of Westchester v. Welton Becket Associates, 102 A.D.2d 34, 46–47 [2d Dept 1984] ). “Where one who has committed no actual wrong is held vicariously liable for the wrongdoing of another, he has a right to indemnification from the actual wrongdoer”, but “[i]f there is actual wrongdoing by the person seeking to assert an indemnification claim, that claim is not viable” (id. at 47 ). Sharon argues that the Sponsor does not have a valid indemnification claim because the plaintiff seeks recovery against the Sponsor for its own alleged breach of contractual obligations. Sponsor contends that its liability to plaintiff, if any, is vicarious only, inasmuch as the claims against Sponsor are based upon the performance of services by Sharon and others. Sponsor asserts that it delegated exclusive responsibility to Sharon, among others, as principal design professionals, for the design and construction of the Building, such that Sharon and the other contractors are the actual wrongdoers who caused the alleged harm to the plaintiff.
If, as alleged in the pleadings, Sponsor is the actual wrongdoer in that it breached its contract with plaintiff, Sponsor's claim for common law indemnification is not viable (see Board of Education v.. Mars Associates, Inc., 133 A.D.2d 800, 801 [2d Dept 1987] ). The Amended Complaint alleges that the Sponsor was aware of the various defects and problems prior to completion of construction and failed to remedy these defects, that Sponsor concealed these deficiencies, and that Sponsor breached its duties pursuant to the Offering Plan by using inferior materials and shoddy workmanship to increase its own profit margin (¶¶ 273–290). Plaintiff further alleges that Sponsor was negligent in hiring the engineers, architects, consultants, and general contractor involved with the Project, and that Sponsor allowed work to continue on the Project knowing that the work was inferior and not consistent with the plans and specifications (Amended Complaint ¶¶ 312–345). “[A] party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the [indemnification] doctrine” (SSDW Company v. Feldman–Misthopoulos Associates, 151 A.D.2d 293, 296 [1st Dept 1989] ).
Sponsor argues based on 17 Vista Fee Associates v. Teachers Insurance and Annuity Association of America, 259 A.D.2d 75 [1st Dept 1999] that because Sponsor delegated full responsibility to Sharon for certain design aspects of the Project, its liability would only be vicarious, and therefore indemnification from Sharon is warranted. In 17 Vista Fee, a seller of a building sought indemnification from a mechanical engineer for negligent design of a smoke purge system where it was undisputed that the seller delegated full responsibility for the design to the engineer (259 A.D.2d at 80–81 ). “[T]o be entitled to indemnification, the owner or contractor seeking indemnity must have delegated exclusive responsibility for the duties giving rise to the loss to the party from whom indemnification is sought” (id. at 80 ). 17 Vista Fee is distinguishable from the instant action in that there is no relationship between Sponsor and the Sharon Defendants that would suggest that Sponsor delegated exclusive responsibility to Sharon for design and construction of the Building. The only agreement that Sharon had relating to construction of the Building was with Scarano, and therefore any duties owed by Sharon run to Scarano and not the Sponsor.
Further, a party must have a contractual relationship, either express or implied, with the entity from which indemnification is sought in order to sustain a valid indemnification claim (see SSDW Company, 151 A.D.2d at 295 ). Sponsor argues that a direct relationship between Sponsor and Sharon is not necessary, and that Sharon's involvement with the Project creates a special relationship with Sponsor sufficient to support an indemnification claim. Sponsor relies on Mauro v. McCrindle, 70 A.D.2d 77 [2d Dept 1989], to argue that there is no requirement of a special relationship or independent duty owed between indemnitor and indemnitee. In Mauro, the court found that a property owner may bypass his contractor and seek indemnification directly from the contractor's negligent employee because it was undisputed that the property owner was only vicariously liable and could seek indemnification from the contractor pursuant to a contractual agreement, and the contractor could then seek indemnification from the employee based on the master-servant relationship (id. at 84 ). Although there was no duty or special relationship running from the employee to the property owner, the Mauro court stated that allowing the property owner to seek indemnification directly from the employee merely eliminated a step in the indemnity cycle (id. ). However, as articulated in Ramirez v. National Railroad Passenger Corp., “the Mauro decision does not disturb the well-settled precondition for an action over for indemnity-that there be a duty as between the indemnitor and indemnitee independent of the plaintiff's cause of action for injury” (576 F Supp 95, 101 [SDNY 1983] ). There is clearly no duty running from Sharon to Sponsor that could warrant a claim for indemnification. Accordingly, Sponsor's claim for common law indemnification is dismissed.
Motion Sequence 12
Cucich Defendants
Similarly, the Cucich Defendants move to dismiss the Sponsor TPC pursuant to CPLR § 3211(a)(1) and (7), which asserts the same three causes of action for contribution, contractual indemnification, and common law indemnification as were asserted against the Sharon Defendants. In the Prior Decision, this Court dismissed all of plaintiff's causes of action against Cucich, as well as Sponsor's cross-claims against Cucich without prejudice. Cucich also seeks to dismiss the third-party complaint as untimely, claiming that it is in violation of the Court's January 6, 2014 Order requiring the Sponsor to serve the third-party complaint within thirty days of the Order.
Cucich entered into an agreement dated July 12, 2006, with Savanna Partners, one of the Sponsor Defendants, to provide certain architectural services. It is undisputed that this agreement did not contain an indemnification provision. As such, Sponsor does not have a valid contractual indemnification claim against Cucich and so this cause of action is dismissed. Additionally, for the reasons stated above with respect to the Sharon motion, Sponsor's claims for contribution and common law indemnification are also dismissed. As previously ruled, there can be no claim for contribution where the underlying claim is purely for economic loss as a result of a breach of contract. Like Sponsor's allegation regarding Sharon, Sponsor claims that it delegated exclusive responsibility to Cucich such that Sponsor's liability would only be vicarious. However, the July 12, 2006 contract between Cucich and the Sponsor refutes this allegation. This contract provides that Cucich will make certain revisions to the architectural plans and will attend a meeting with the commissioner of buildings, but also provides that “[a]ll necessary amendments will be done by Scarano Architect. All the fees will be paid by [Sponsor] including any fees, violations, expediting and printing. They will all be [Sponsor's] responsibility.” This provision makes it clear that Sponsor did not delegate exclusive responsibility to Cucich, but rather maintained a degree of responsibility for the architectural plans and any resulting violations. Accordingly, Sponsor's liability is not solely vicarious, and therefore, a claim for common law indemnification is not viable. Cucich's motion to dismiss Sponsor's TPC is granted.
In light of the foregoing, the timeliness of Sponsor's service of its third-party complaint need not be discussed.
Motion Sequence 13
Seta Defendants
The Seta Defendants move pursuant to CPLR § 3211(a)(1) and (7) dismissing the Sponsor TPC and all cross-claims. Seta also moves to dismiss, pursuant to CPLR § 3211(a)(5), based on res judicata and, pursuant to CPLR § 3211(a)(8), for lack of personal jurisdiction, arguing that the Sponsor TPC was not timely filed and was not properly served on the Seta Defendants. Sponsor brings claims against Seta for contractual indemnification, common law indemnification, and contribution. Seta argues that the Sponsor TPC, filed on February 27, 2014, was not timely because it was in contravention of the January 6, 2014 Prior Decision directing filing of any third-party complaint within thirty days. In light of the fact that Sponsor was only served with the Order and the Notice of Entry by Scarano on January 27, 2014, the Court deems the Sponsor TPC timely filed.
The Seta Defendants were retained by the Sponsor to provide consulting services for the Project pertaining to the design of the exterior walls, roofing, and waterproofing. Seta's retainer agreement with Sponsor, dated August 8, 2007 (the “Retainer Agreement”), does not contain an indemnification clause, and so Sponsor's contractual indemnification claim must fail. Additionally, for the reasons stated above with respect to the Sharon motion, Sponsor's claim for contribution is dismissed because there can be no contribution where the underlying claim is for purely economic loss based upon a breach of contract.
In support of its common law indemnification claim, Sponsor has pled in its TPC that Sponsor delegated exclusive responsibility to Seta for its consulting services. However, the Retainer Agreement includes a section entitled “Client Responsibilities” which provides that Sponsor “shall be responsible to provide architectural drawings (including roof plans), specifications, reports, and other pertinent data.” It further provides that “[i]t is understood that [Seta] has the right to rely upon the accuracy and completeness of all data furnished to it.” These provisions clearly demonstrate that the Sponsor was involved with the work performed by Seta, Seta did not have exclusive responsibility over its work, and therefore, Sponsor could not have delegated full responsibility to Seta warranting a claim for common law indemnification. Accordingly, Sponsor's claim for common law indemnification is also dismissed.
Seta also argues that it was not properly served because Sponsor only mailed one copy of the Third–Party Summons and Complaint to Saeid S. Seta and there was no personal service, no nail and mail, and no service through the Department of State. Sponsor claims law firm error and that Sponsor should be afforded an opportunity to re-serve its TPC as there can be no prejudice demonstrated on the part of Seta. In light of the dismissal of all of Sponsor's claims against Seta, the issue of service need not be discussed.
Motion Sequence 11
Reich Defendants
The Reich Defendants move pursuant to CPLR § 3211(a)(1) and (7) to dismiss plaintiff's Amended Complaint, or alternatively, for summary judgment dismissing the Amended Complaint Pursuant to CPLR § 3212. By stipulation dated July 14, 2014, plaintiff discontinued its first-party action with prejudice as against the Reich Defendants (the “Stipulation”). Accordingly, this portion of Reich's motion is moot. The Sponsor Defendants, Ryder, and Penmark were also signatories to the Stipulation.
Reich also moves to dismiss cross-claims asserted by third-party defendants Castle, Doortec, and Rotavele in the Ryder third-party action, cross-claims asserted by the Sponsor Defendants, and any additional but not yet asserted cross-claims with prejudice. Pursuant to the Stipulation, the Sponsor Defendants also discontinued their cross-claims against Reich with prejudice. At the time Reich's instant motion was filed on May 12, 2014, only some third-party defendants had answered the Ryder TPC, including Doortec, Rotavele, and Castle. These parties asserted cross-claims against Reich for contribution, contractual indemnification, and common law indemnification but have not submitted any opposition to the instant motion. Subsequently, third-party defendants Brook, Maspeth, and Dynamic filed answers and asserted cross-claims against Reich for indemnification and contribution. Only Brook and Maspeth have filed opposition to the instant motion arguing that they have not had the opportunity to obtain any discovery relating to this matter or the potential role played by the Reich Defendants.
Reich was hired by the Sponsor to provide “Owner's Representation services” pursuant to an agreement dated November 20, 2006 (“Reich Agreement”). Reich did not contract with any other parties to this litigation. The Reich Agreement does not contain any mention of indemnification and so any contractual indemnification claim by any party must fail. Even were the cross-claiming parties not precluded by the nature of their claims as predicated on a contractual relationship, (see Board of Education v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21 [1987] ; see also United States v. Ryan, 2011 U.S. Dist LEXIS 51648 [EDNY 2011] ), any and all claims for contribution must also be dismissed pursuant to General Obligations Law 15–108(b) which provides that “[a] release given in good faith by the injured person to one tortfeasor ... relieves him from liability to any other person for contribution” (Gen Oblig § 15–108(b) ; see also County of Westchester v. Welton Becket Associates, 102 A.D.2d 34 [2d Dept 1984] ). Although section 15–108 of the General Obligations Law is phrased in terms of “tortfeasors”, it is applicable to “any litigation” in which a CPLR article 14 right of contribution arises, and, to the extent a claim for contribution could be viable here, such a claim is therefore precluded by GOL § 15–108(b) (see County of Westchester, 102 A.D.2d at 45 ). As Reich was released by plaintiff, Sponsor, and Ryder by the Stipulation, it is shielded from any contribution claims by other parties.
The third-party defendants in the Ryder third-party action also fail to present a valid claim for common law indemnification against Reich. As discussed above with respect to the Sharon Defendants, a common law indemnification claim is not viable where there are allegations of actual wrongdoing by the party seeking to assert such claim. The Ryder TPC alleges actual wrongdoing, constituting a breach of contract, by Doortec, Rotavele, Castle, Brook, Maspeth, and Dynamic. Therefore, these parties may not seek indemnification from Reich.
Brook and Maspeth argue that summary judgment in favor of Reich is premature because there has been no opportunity for discovery, but Reich's motion is essentially to dismiss for failure to state a cause of action. These cross-claimants have failed to state a valid claim for contribution or indemnification, which cannot be remedied by discovery. Moreover, neither Brook nor Maspeth has demonstrated that discovery would lead to any relevant evidence “or that the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the movant” (Williams v. Spencer–Hall, 113 AD3d 759, 760 (2d Dept 2014). “The mere hope or speculation that evidence sufficient to defeat a motion for summary judgment may be uncovered during the discovery process is an insufficient basis for denying a summary judgment motion” (Winzelberg v. 1319 50th Street Realty Corp., 114 AD3d 674, 674 (2d Dept 2014).
CONCLUSION
As all of plaintiff's claims are dismissed as to Penmark, the Amended Complaint against Penmark is dismissed.
As all of Sponsor's claims are dismissed as to the Sharon Defendants, the Sponsor's third-party complaint is dismissed as to the Sharon Defendants.
As plaintiff and Sponsor have discontinued their claims against the Reich Defendants, the Amended Complaint against Reich is dismissed. All cross-claims against the Reich Defendants are also dismissed.
As all of Sponsor's claims are dismissed as to the Cucich Defendants, the Sponsor's third-party complaint is dismissed as to the Cucich Defendants.
As all of Sponsor's claims are dismissed as to the Seta Defendants, the Sponsor's third-party complaint is dismissed as to the Seta Defendants.
This constitutes the decision and order of the Court.