In the Matter of McIver-Morgan, Inc., Respondent,v.Christopher Dal Piaz, et al., Appellants.

Brief

N.Y.Feb 12, 2014

NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 FELDMAN & ASSOCIATES, PLLC Attorneys at Law January 10, 2014 New York State Court of Appeals 20 Eagle Street Albany, New York 12207 Re: Matter of McIver-Morgan v. Dal Piaz APL-2013-00282 Dear Sir/Madam: This office represents McIver-Morgan, Inc. (hereinafter “McIver Morgan”), the Petitioner-Respondent in the above referenced matter and we respectfully submit the following comments and arguments in opposition to the appeal of Appellants Christopher Dal Piaz and Elizabeth Schoelkopf (hereinafter “Appellants”) from the unanimous Decision and Order of the Appellate Division, First Department, dated May 9, 2013, affirming the Order of the Supreme Court, New York County (Honorable Milton A. Tingling), entered March 26, 2012, which Order granted Petitioner-Respondent’s petition to confirm the arbitration award dated October 13, 2011. Pursuant to your letter dated October 31, 2013 and Section 500.11 of the Court’s Rules of Practice we hereby submit these comments and arguments in letter form, together with proof of service upon the opposing party. NATURE OF THE CASE AND RELEVANT FACTS The issue on this appeal is whether the unanimous decision of the Appellate Division affirming the decision of the Supreme Court to confirm the arbitration award, was proper. EDWARD S. FELDMAN · NY, NJ & DC SETH I. FELDMAN · NY, NJ & DC STEPHANIE R. FELDMAN · NY & CA OF COUNSEL SONG YOOK HONG – NY RICHARD A. HUBSCHMAN & JOHN J. ROMAN- NY & NJ EDWARD S. FELDMAN, ESQ. (212) 685-2277 ext. 15 efeldman@feldmanandassociates.com FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 2 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 The parties entered into a Contract (the “Contract”, R. 13-201) pursuant to which Appellants engaged McIver Morgan as a “turnkey” designer for the renovation of Appellants’ townhouse. McIver Morgan was to (a) design the project, and then (b) engage such consultants and professionals as was necessary to complete all plans and specifications for the project, and then (c) obtain the bids for the job, and then (d) supervise the work. The arbitration was held pursuant to the terms of the Contract between the parties, specifically the section entitled “Arbitration” found at R. 18. The relevant facts of this matter were set forth in the Arbitrator’s Award (R. 21-23) upon which the decision of the Supreme Court was based. The recitation by Appellants in their letter Brief to this Court (hereinafter “Appellants’ Brief”) is flawed in that Appellants omitted key relevant facts. Appellants “forgot” to set forth (or only mentioned in passing) that, while McIver Morgan, as an entity, is not an architectural firm, the architectural plans were prepared by McIver Morgan’s in-house licensed (albeit then unregistered) architect, George Queral, and then reviewed, revised, signed and sealed by a separate licensed and registered architect, the same Robert Schwartz whom Appellants mention. Appellants also “forgot” to set forth that the reason they gave in their letter terminating the Contract and not paying McGiver-Morgan the balance due (which action led to the institution of the arbitration) was that Appellants claimed McGiver Morgan was dilatory in completing the design. (R.249 - transcript pages 756 line 14 – page 757 line 18 – it should be noted that the termination letter marked R-68 was listed as being part of the record but was not included). The Arbitrator, himself a licensed architect, found inter alia, contrary to the assertions of Appellants (R. 21): 1. The Contract did not include a specific date for completion of the design 1 References to the Record on Appeal submitted to the Appellate division, First Department are herein indicated by “R.” Transcript pages and lines will be added where appropriate. FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 3 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 services; and 2. The allegation that McIver Morgan did not complete its services “as expeditiously as is consistent with the professional skill and care and the orderly progress of the project” was contradicted by the evidence and testimony presented at the hearings; and 3. The termination of McIver Morgan was not for due cause. McIver Morgan, as would any turnkey contractor, engaged a licensed and registered architect, Robert Schwartz (now deceased), to review the plans and specifications initially prepared by McIver Morgan’s in-house architect, George Queral. The uncontradicted testimony at the hearings (given in response to Appellants’ counsel’s questions) was that Mr. Schwartz reviewed the proposed plans seven times and each time made numerous comments and required numerous changes to the plans and specifications prior to signing and sealing them so they could be filed. (R.-103 line 19 of page124 of transcript – R.-104 line16 of page 126 of transcript). Mr. Schwartz was anything but a rubber stamp on this project.2 This is not only permitted, but in conformity with the decision of this Court in Charlebois v. J.M. Weller Associates, Inc., 72 N.Y.2d 587, 531 N.E.2d 1288, 535 N.Y.S.2d 356 (1988) – cited by (but mischaracterized and misinterpreted by) Appellants in their Brief. Further it is in conformity with numerous decisions based upon Charlebois, including, without limitation, the unanimous decision of the Appellate Division, First Department in Cherokee Owners Corp., v. DNA Contracting, LLC, et al, 96 A.D.3d 480, 947 N.Y.S.2d 59, 60 (1st Dept. June 12, 2012). What Appellants would have this Court rule is that the entire contract was illegal, 2 It should also be noted that, as a result of a complaint filed by Appellants, an administrative proceeding was commenced against McIver Morgan, Mr. Queral and Mr. Schwartz. The proceeding was completed after the Appeal was filed with the result being that no action was taken against either McIver Morgan or Mr. Queral. As to Mr. Schwartz, there was a finding that his records were not proper – but he died before any fine or other action was levied. FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 4 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 and, as a result, not only is no money due from Appellants, but all money paid to McIver Morgan by Appellants must be returned. There is no question that Appellants would have this Court permit them to use the alleged lack of a license “as a sword”, pursuant to which Appellants would be unjustifiably enriched at the expense of McIver Morgan. ARGUMENT The question before this Court is whether the decision of the Arbitrator, as confirmed by the Supreme Court and as unanimously affirmed by the Appellate Division, is contrary to law, specifically, this Court’s decision in Charlebois, supra. The answer must be in the negative. APPELLANTS’ ARGUMENT Appellants state on page 10 of Appellants’ Brief that the entire Contract is “to provide [services] to Appellants [that] are purely architectural in nature”.3 Appellants then take that one step further and state that, under the Contract, McIver Morgan “not only contracted itself to engage, but actually engaged, in the practice of architecture without a license.” (see page 12 of Appellants’ letter brief). Based upon that conclusion, Appellants have taken the position that this Court’s ruling in Charlebois makes the entire Contract illegal and against public policy and, therefore, all payments made to McIver Morgan under the Contract should not be allowed as the courts have “refus[ed] to permit recovery under a contract to perform work where the person performing the work is not licensed to do so…” (see page 13 of Appellants’ Brief). In other words, Appellants would have the Courts use the licensing requirement as a sword with which Appellants would prevent McIver Morgan from recovering any sums due it for the work performed pursuant to the Contract, as awarded by the Arbitrator. APPELLANTS’ ARGUMENT IS WITHOUT BASIS AND A MISINTERPRESTATION AND MISAPPLICATION OF THIS 3 Contrary to the assertions of Appellant, McIver Morgan does dispute that the services to be provided pursuant to the Contract may only be supplied by an architect, e.g. review of bids and construction management. FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 5 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 COURT’S RULING IN CHARLEBOIS If Appellants were correct, not only would it be against public policy to permit a contractor to engage a licensed and registered architect under the umbrella of its overall contract with its client, but numerous other common and permitted practices could and would be considered against public policy. For example, if one were to take Appellant’s argument to its logical conclusion, (a) an architect could not use a draftsman (an unlicensed individual) to do initial drawings; (b) an attorney could not use a first year associate who was yet to be admitted (an unlicensed individual) to do the initial drafting of a contract; and (c) the justices of this and every court could not have their law clerks (individuals who are were not elected or appointed and not sworn in as judges) to write the initial drafts of opinions. Appellants’ entire argument rests on their erroneous interpretation of this Court’s decision in Charlebois. However, as will be detailed below, this Court and the Appellate Divisions (all Departments) have uniformly explained and applied Charlebois in a manner completely consistent with the decisions of the Arbitrator, Supreme Court and First Department in the matter sub judice. In the Charlebois decision, this Court held at 72 N.Y.2d page 591 (emphasis added): The arbitration proceeding was adjourned after the Charleboises instituted this action seeking a declaration that their contract was invalid as against public policy because it violated Education Law §§ 7202 and 7209 (4) … We hold that the contract is not void because, under the contractual arrangements of the parties, acknowledged by the lower courts and verified independently in the record by plaintiffs themselves and by their separate lawsuit against James M. Weller, P.E., this does not constitute the unauthorized practice of engineering by the builder. Critically here, the engineer actually engaged to do the professional work is inescapably subject to the educational, regulatory and punishment mechanisms of the licensing entity, the State Education FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 6 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 Department, without any necessity for him to have been a formal, technical signatory to the contract. This Court continued at page 593 (emphasis added): On the other hand, these cases do not erect an absolute or per se rule … (see, Vereinigte Osterreichische Eisen und Stahlwerke v Modular Bldg. & Dev. Corp., 64 Misc2d 1050, mod. on other grounds 37 AD2d 525). In that case, the court said: "It cannot be * * * that an entire contract comprehending many services to be performed, including those calling for the services of licensed professionals, can be stricken because the party furnishing the services is not itself a licensed professional. "To hold otherwise would mean that * * * builders and general contractors would likewise be incapable of enforcing their contracts because architectural and engineering skills are incidentally involved. * * * "The rights sought to be protected by the statute are adequately covered when the contractor, manufacturer or builder engages a properly licensed person to perform those tasks which the law specifies call for certified skills." ( Id., at 1051.) And further went on to state at page 594 (emphasis added): Here, the contractual scheme survives the statutory and precedential prohibitions governing professional occupations for which a license is necessary, and specifically requires an independent licensee to perform the regulated services. … [t]he design functions were contracted for and actually performed by a FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 7 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 named licensed engineer, as the Charleboises agreed and expected under their contract. Pursuant to that arrangement, James M. Weller, P.E., was not acting in the capacity of an employee of the business corporation, but acted as a professional licensed engineer obligated by contract to exercise his professional judgment in the interests of the public health and welfare, and independent in that sense of unlicensed oversight. In fulfilling the independent professional role in this case, James M. Weller, P.E., was also subject to the plenary regulation of the State Education Department. Indeed, insofar as the professional obligation owed by Weller, P.E., is derived from the contract itself, at issue here, the professional services could not have been performed by Weller Assocs. and it was the independent professional judgment of James M. Weller, P.E., which flowed directly to the Charleboises. This is sufficiently consistent with the public policy sought to be served by the statute and the cases, without the ultimate sanction of voiding an otherwise valid and fulfilled contract. And finally at page 595 (emphasis added): [t]he record shows that the Charleboises have reaped the fruits of that contract by currently occupying the completed structures and operating their business from it; and they now seek to disaffirm that very contract and be forgiven $600,000 in payments for services and work completed and delivered to them. A further response to the dissent is that the absolutism of its approach to this case as to the public policy enforcement mechanism ignores the plain and concededly commercial realities of the arm's length transaction between the Charleboises and Weller Assocs., and would impose a disproportionate and unnecessary remedy and price. This overly broad interpretation would also unnecessarily have the effect of disenfranchising a fully regulated professional engineer from participating in a commercial transaction of this nature. In this case, the regulatory sanctions reinforced by the potential civil malpractice liability quite complementarily and proportionately protect the underlying public policy and certainly more than adequately protect FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 8 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 the plaintiffs-appellants Charleboises. Finally, forfeitures by operation of law are strongly disfavored as a matter of public policy and the Charleboises' efforts to use that concept as a sword for personal gain rather than a shield for the public good should not be countenanced in the name of the Education Law public policy, slavishly applied. The legislative objective, after all, is professional performance -- a matter of substance -- not the vehicle of professional performance -- a matter of form.” This Court has followed and applied Charlebois four times since the original decision was handed down: 1. Lloyd Capital Corporation v. Pat Henchar Inc., 80 N.Y.2d 124; 603 N.E.2d 246; 589 N.Y.S.2d 396 (1992); 2. Benjamin v. Koeppel, 85, N.Y.2d 549, 626 N.Y.S.2d 982, 650 N.E.2d 982 (1995); 3. Jaidan Industries, Inc. v. M.A. Angeliades, Inc., 97 N.Y.2d 659, 738 N.E.2d 1142, 738 N.Y.S.2d 1 (2001); and 4. Glassman v. ProHealth Ambulatory Surgery Center, Inc., 14 N.Y.3d 898; 904 N.Y.S.2d 342; 930 N.E.2d 263 (2010). In each instance, this Court has applied Charlebois in a manner consistent with the ruling of the First Department in the instant matter and antithetically to the interpretation now proffered by Appellants, to wit: Lloyd Capital Corporation v. Pat Henchar Inc., supra - this Court held it would be improper to void the entire contract, even if some of the work was not performed “legally”, to wit at page 128 (emphasis added): As a general rule also, forfeitures by operation of law are disfavored, particularly where a defaulting party seeks to raise illegality as "a sword for personal gain rather than a shield for the public good." (Charlebois v Weller Assocs., 72 NY2d 587, 595.) Allowing parties to avoid their contractual obligation is especially inappropriate where there are regulatory sanctions and statutory penalties in place to FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 9 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 redress violations of the law. Benjamin v. Koeppel, supra - this Court dealt with Charlebois at greater length (and also cited Lloyd Capital) when applying it to the case of whether an attorney fee sharing agreement was enforceable, holding at page 553 (emphasis added): “Illegal contracts are, as a general rule, unenforceable” (Lloyd Capital Corp. v. Pat Henchar, Inc., 80 N.Y.2d 124, 127, 589 N.Y.S.2d 396, 603 N.E.2d 246). However, the violation of a statute that is merely malum prohibitum will not necessarily render a contract illegal and unenforceable (id.). “If the statute does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy * * * the right to recover will not be denied” (Rosasco Creameries v. Cohen, 276 N.Y. 274, 278, 11 N.E.2d 908). … Two other important tenets that have emerged from the case law are that fee forfeitures are disfavored and that such forfeitures may be particularly inappropriate where there are other regulatory sanctions for noncompliance (Lloyd Capital Corp. v. Pat Henchar, Inc., supra, at 128, 589 N.Y.S.2d 396, 603 N.E.2d 246; Charlebois v. Weller Assocs., supra, at 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288; see also, Rosasco Creameries v. Cohen, supra, at 279–280, 11 N.E.2d 908). As this Court stated in Charlebois v. Weller Assocs. (supra, at 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288), the courts are especially skeptical of efforts by clients or customers to use public policy “as a sword for personal gain rather than a shield for the public good.” Jaidan Industries, Inc. v. M.A. Angeliades, Inc., supra. - this Court left no doubt as to the law on this issue. In the Appellate Division, Second Department decision from which the appeal to the Court of Appeals was taken, (Jaidan Industries, Inc. v. M.A. Angeliades, Inc., 277 A.D.2d 237, 716 N.Y.S.2d 683 (2000)), in overriding an arbitrator’s award previously confirmed by the Supreme Court, the Appellate Division, erroneously interpreting Charlebois, stated: It is undisputed that the petitioner was not licensed to perform FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 10 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 architectural and engineering services. Accordingly, on its face, the arbitrator’s award of $78,000 for the stated purpose of “[d]esign and engineering new aluminum windows” violated public policy (see, Charlebois v. Weller Assocs., 72 N.Y.2d 587, 535 N.Y.S.2d 356, 531 N.E.2d 1288; Matter of Hirsch Constr. Co. [Anderson], 180 A.D.2d 604, 580 N.Y.S.2d 314). This Court, in a memorandum decision, reversed, and reinstated the Supreme Court decision confirming the arbitration award, stating, at page 660 (emphasis added): Jaidan Industries, Inc. agreed to manufacture windows for M.A. Angeliades, Inc. Though Jaidan partially performed, Angeliades refused to pay and did not allow Jaidan to continue work. Jaidan demanded arbitration, seeking $250,000 in damages; Angeliades counterclaimed for $100,000. An arbitrator awarded Jaidan $166,673.09, including $78,000 for “design and engineering new aluminum windows.” Jaidan commenced this CPLR article 75 proceeding to confirm its award. Angeliades cross-moved to vacate the award, alleging that because Jaidan had not employed a licensed engineer or architect, the $78,000 awarded for the windows violated New York’s Education Law, which prohibits the unlicensed practice of engineering or architecture (see, Education Law §§ 7201–7202, 7301–7302). Supreme Court confirmed the award and denied Angeliades’ motion. The Appellate Division, however, modified by vacating $78,000 of the award, concluding that because it was undisputed Jaidan was not licensed to perform architectural and engineering services, “on its face, the arbitrator’s award * * * violated public policy” (277 A.D.2d 237, 238, 716 N.Y.S.2d 683). We now reverse. An arbitration award may be vacated on public policy grounds only where it is clear on its face that public policy precludes its enforcement (see, Matter of Sprinzen [Nomberg], 46 N.Y.2d 623, 631, 415 N.Y.S.2d 974, 389 N.E.2d 456). That is not the case here. FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 11 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 The award for “ design and engineering new aluminum windows” does not necessarily violate public policy (see, e.g., Charlebois v. Weller Assocs., 72 N.Y.2d 587, 591, 593–595, 535 N.Y.S.2d 356, 531 N.E.2d 1288 [contract with unlicensed corporation that included the rendition of professional services did not “ violate the pertinent Education Law licensing protections or the public policy which underlies them”]).” Glassman v. ProHealth Ambulatory Surgery Center, Inc., supra - in its memorandum decision, this Court stated the following at page 900 (emphasis added): Even assuming that the provision of the employment contract allowing defendant to collect fees emanating from plaintiff’s off-site anesthesiology services is inconsistent with 10 NYCRR 401.2(b), which provides that “[a]n operating certificate shall be used only by the established operator for the designated site of operation,” we conclude that the provision is merely malum prohibitum and, therefore, enforceable in this breach of contract action (see Lloyd Capital Corp. v. Pat Henchar, Inc., 80 N.Y.2d 124, 127–128, 589 N.Y.S.2d 396, 603 N.E.2d 246 [1992]; see also Charlebois v. Weller Assoc., 72 N.Y.2d 587, 535 N.Y.S.2d 356, 531 N.E.2d 1288 [1988] ). Forfeitures by operation of law are disfavored, and allowing parties to escape their contractual obligations, freely entered into, “is especially inappropriate where there are regulatory sanctions and statutory penalties in place to redress violations of the law” (Lloyd Capital Corp., 80 N.Y.2d at 128, 589 N.Y.S.2d 396, 603 N.E.2d 246). Here, Public Health Law § 2806(1)(a) authorizes the Department of Health to revoke, suspend, limit or annul an ambulatory surgery center’s operating certificate where it “has failed to comply with the provisions of this article or rules and regulations promulgated thereunder.” Additionally, the State Board for Professional Medical Conduct has the power to impose sanctions for fee-splitting arrangements that violate statutory prescriptions (see Education Law § 6530[19]; § 6531; see also Public Health Law §§ 230, 230–a). Neither FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 12 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 agency has been involved in this matter, nor has plaintiff identified an overarching public policy that mandates voiding the contract (citations omitted). All four Departments of the Appellate Division have also cited and applied Charlebois. As detailed below, the application by the Appellate Division was in conformance with the above Court of Appeals decisions and in conformance with the decision of the First Department now before this Court. Including the matter sub judice, the First Department has applied the Charlebois case seven (7) times since 1993, the earliest being Sutton v. Ohrbach, 198 A.D.2d 144, 603 N.Y.S.2d 857 (November 18, 1993), and the latest (other than the instant matter) Cherokee Owners Corp., v. DNA Contracting, LLC, et al, 96 A.D.3d 480, 947 N.Y.S.2d 59, 60 (June 12, 2012). In each case the First Department held in conformity with its decision in the matter sub judice. A. Sutton, supra. and SKR Design v. Yonehama, 230 A.D.2d 533; 660 N.Y.S.2d 119 (1997) and Voo Doo Contracting Corp. v. L & J Plumbing & Heating Co., Inc., 264 A.D.2d 361 693 N.Y.S.2d 151, 152 (1st Dept. 1999) and Chirra v. Bommareddy, 22 A.D.3d, 223; 802 N.Y.S.2d 118 (2005) – in all four(4) decisions the court stated: [p]laintiff may not use the [licensing] statute as a sword to recoup monies already paid in exchange for the purportedly unlicensed services (see, Charlebois v. Weller Assocs., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288; B. SKR Design v. Yonehama, 230 A.D.2d 533; 660 N.Y.S.2d 119 (1997), discussed Charlebois at length starting at page 122 (emphasis added): That a contractor engages the services of a licensed professional to perform a portion of the services covered by the contract does not convert that contract into one for the performance of those services (Charlebois v Weller Assocs., supra; Facilities Dev. Corp. v Miletta, 180 FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 13 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 AD2d 97, 103). Yonehama's claim that SKR Design represented that SKR Design itself would perform the architectural services is contradicted by both the language of the contract and the fact that the plans were signed and sealed by the licensed architect. Thus, no triable issue of fact exists as to any Education Law violations. … Yonehama's attempt to distinguish Charlebois is unavailing. It argues that pivotal to the Court of Appeals decision was that the licensed person was actually specified in the contract. While that certainly lent support to the Court's holding, we believe Yonehama overstates its significance. Since the purpose of the licensing requirements is to ensure that the regulated work is performed by those with the necessary skills and training, we see no reason why the contract must designate a specific person. Where a licensed architect performed all of the services despite not being named in the contract, as here, the effectiveness of the regulatory scheme is not weakened. This is true because the licensed professional selected remains "inescapably subject to the educational, regulatory and punishment mechanisms of the licensing entity" (Charlebois v Weller Assocs., supra, at 592). Ultimately, it is a specific license, not a specific name, which the law requires. In Charlebois, as here, all the work was performed by a licensed person, and was substantially completed at significant cost. It would be improper for the Education Law to be used "as a sword for personal gain rather than a shield for the public good" (supra, at 595; see also, Sutton v Ohrbach, 198 AD2d 144). C. Cherokee Owners Corp., v. DNA Contracting, LLC, et al, 96 A.D.3d 480, 947 N.Y.S.2d 59, 60 (June 12, 2012): FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 14 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 Education Law §7202 is not violated when an unlicensed entity uses a licensed entity to perform the engineering work for which the law requires a license (see Charlebois v. Weller Assoc., 72 N.Y.2d 587, 593, 535 N.Y.S.2d 356, 531 N.E.2d 1288 [1988]; SKR Design Group v. Yonehama, Inc., 230 A.D.2d 533, 660 N.Y.S.2d 119 [1997] ). Defendants established prima facie that it was disclosed to plaintiff that Canton and JMA Consultants and Engineers, P.C. would provide the engineering services for the project and that the engineering services rendered were controlled by Canton, with unlicensed individuals acting under his supervision (see prior appeal at 74 A.D.3d 411, 903 N.Y.S.2d 9 [2010]; Education Law § 7208[f]). The Second Department has applied and followed Charlebois five (5) times since the reversal of its initial ruling in Jaidan Industries, Inc. v. M.A. Angeliades, Inc. 277 A.D.2d 237, 716 N.Y.S.2d 683 (2000). Of those five decisions, three are relevant to the issues herein (the others dealt with post-government employment and the sale of taxi licenses). A. Simaee v. Levi, 22 A.D.3d 559, 802 N.Y.S.2d 493 (2005), wherein the Court stated at page 496: “forfeitures by operation of law are disfavored, particularly where a defaulting party seeks to raise illegality as ‘a sword for personal gain rather than a shield for the public good’ ... Allowing parties to avoid their contractual obligation is especially inappropriate where there are regulatory sanctions and statutory penalties in place to redress violations of the law” (Lloyd Capital Corp. v. Pat Henchar, Inc., supra at 128, 589 N.Y.S.2d 396, 603 N.E.2d 246, quoting Charlebois v. Weller Assocs., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288). B. Tom Winter Associates, Inc., 72 A.D.3d 803, 898 N.Y.S.2d 480 (2010), wherein the Court affirmed the denial of summary judgment to the Defendant stating at page 481: “Contrary to Appellant’s FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 15 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 contention, the complaint and the affidavits submitted by the plaintiff to remedy any defects in the complaint did not demonstrate that the plaintiff was engaged in the unlicensed practice of architecture.” C. Rothberg v. Kaufman, 106 A.D.3d 975, 965 N.Y.S.2d 353 (2013), wherein the court stated at page 354: “We reject the plaintiff’s contention that the agreement was void as against public policy because the respondents were not licensed in architecture at the time that they entered into the agreement with the plaintiff (see Charlebois v. Weller Assoc., 72 N.Y.2d 587, 591, 593–595, 535 N.Y.S.2d 356, 531 N.E.2d 1288; see also Matter of Jaidan Indus. v. M.A. Angeliades, Inc., 97 N.Y.2d 659, 661, 738 N.Y.S.2d 1, 763 N.E.2d 1142).” The Third Department has applied and followed Charlebois six (6) times (one being the second appeal of Charlebois against J.M. Weller in 1991 – this time to prevent the matter from going to arbitration). Of the other five decisions: Rubin v. New York State Educ. Dept., 210 A.D.2d 550, 620 N.Y.S.2d 143 (1994) was a dismissal of an Article 78 proceeding for lack of justiciability and Colemen v. Smith, 175 A.D.2d 476, 572 N.Y.S.2d 520 (1991) dealt with an unlicensed contractor who did the work himself and did not engage a licensed party. The remaining three decisions all support McIver Morgan’s position: A. Facilities Development Corp. v. Miletta, 180 A.D.2d 97, 584 N.Y.S.2d 491 (1992), at page 495: “Miletta contends that Detroit is a “design professional” subject to a malpractice claim outside the scope of its contractual obligations because it engaged in certain design and engineering work in connection with its fabrication of the coal stokers. The argument is meritless. The mere fact that a contractor must engage the services of a licensed engineer to perform a portion of the many services encompassed by the contract neither converts that contract into one for the performance of those professional services, nor constitutes the practice of engineering (see, Charlebois v. Weller Assocs., 72 N.Y.2d 587, 593–594, 535 N.Y.S.2d 356, 531 N.E.2d 1288).” FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 16 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 B. Joe O’Brien Investigations Inc. v. Zorn, 293 A.D.2d 812, 694 N.Y.S.2d 216 (1999), at page 218: “If a statute, or regulation (see, Lloyd Capital Corp. v. Pat Henchar Inc., supra ), “does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy or appropriate individual punishment, the right to recover will not be denied” (Rosasco Creameries v. Cohen, 276 N.Y. 274, at 278, 11 N.E.2d 908). Significantly, fee forfeitures are disfavored and may be particularly inappropriate when there are statutory or regulatory sanctions in place for noncompliance (see, Lloyd Capital Corp. v. Pat Henchar Inc., supra, at 128, 589 N.Y.S.2d 396, 603 N.E.2d 246). Moreover, as stated by the Court of Appeals in Charlebois v. Weller Assocs., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288, courts are especially skeptical of clients who use public policy “as a sword for personal gain rather than a shield for the public good”.” C. Specialty Restaurants Corp. v. Barry, 262 A.D.2d 926, 692 N.Y.2d 512 (1999), at page 514: “forfeitures by operation of law are disfavored, particularly where a defaulting party seeks to raise illegality as a ‘sword for personal gain rather than a shield for the public good.’ (Charlebois v. J.M. Weller Assocs., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288). Allowing parties to avoid their contractual obligation is especially inappropriate where there are regulatory sanctions and statutory penalties in place to redress violations of the law” (Lloyd Capital Corp. v. Pat Henchar Inc., supra, at 128, 589 N.Y.S.2d 396, 603 N.E.2d 246).” Finally, the Fourth Department has applied and followed Charlebois twice. One (Ralston Purina Co. v. Arthur G. McKee & Co., 158 A.D.2d 969, 551 N.Y.S.2d 720 (1990) dealt with whether a plaintiff could sue a subcontractor as third party beneficiary. The other, Agway, Inc. v. Williams, 185 A.D.2d 636, 585 N.Y.S.2d 643 (1992) stated at page 644, that “defendants cannot recover consequential damages if it is established that plaintiff failed to comply with Education Law article 145 because their remedy is limited to the contract price.” FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 17 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 Every relevant decision of this Court and the Appellate Division is in conformity with the First Department’s decision in the instant matter. There can be no question that the law of this State, as this Court set forth in Charlebois, is well settled, to wit: (a) it is not a violation of public policy for an unlicensed entity to provide services that require a license, if that entity engages the required licensed professionals to do the work; and (b) even assuming that the services were not provided by a licensed professional, so long as there are statutory or regulatory sanctions in place for noncompliance with the licensing statutes, payment under the contract will not be denied, and (c) it is not the purpose of the licensing statutes to allow individuals to use such statutes as a sword with which to avoid their contractual obligations. CONCLUSION Appellants would have this Court ignore the clear direction of its own decisions and the precedent cited by the lower Courts in numerous previous decisions. The law of this State is crystal clear. The Contract and the award based thereon are definitely not violative of the Education Law and most certainly not violative of public policy. Just as in Charlebois, SKR, Lloyd Capital, and Jaidan, all of the work requiring licensing was performed by a licensed architect and then reviewed by a licensed and registered architect engaged by McIver Morgan. Just as in Charlebois (72 N.Y.2d at page 596), Lloyd Capital (N.Y.2d at page 128), SKR (600 N.Y.S.2d at page 122) and Voo Doo Contracting (693 N.Y.S.2d at page 152), here Appellants, “the part[ies] who [are] alleged to have breached the contract, [are] attempting to improperly use public policy as a sword for personal gain rather than a shield for the public good.” In most respects, the Charlebois case is completely on point with the matter sub judice. The facts and issues are almost identical with the only discernible FELDMAN & ASSOCIATES, PLLC New York State Court of Appeals January 10, 2014 Page 18 of 18 NEW YORK OFFICE · 33 East 33rd Street, Suite 802 · New York, NY 10016-5364 · tel (212) 685-2277 · fax (212) 725-2798 NEW JERSEY OFFICE · 318 Bergen Boulevard · Palisades Park, NJ 07650 · tel (201) 906-7877 · fax (212) 725-2798 difference being that McIver Morgan, a design firm, engaged an architect as opposed to an engineer. Accordingly, the argument asserted by the opposition in Charlebois – that such a contract is against public policy – is identical to the arguments now asserted by Appellants. The result herein must be the same as in Charlebois, i.e. the Contract is not violative of public policy. This Court’s ruling in Charlebois is clearly inapposite to Appellants’ argument. In fact, had the Arbitrator decided the Contract was unenforceable (as Appellants contended) that decision would have been in violation of public policy, which disfavors forfeiture, as quoted above. Based upon the foregoing, it is respectfully submitted that the unanimous Decision and Order of the Appellate Division, First Department, dated May 9, 2013, affirming the Order of the Supreme Court, New York County (Honorable Milton A. Tingling), entered March 26, 2012, which Order granted Petitioner- Respondent’s petition to confirm the arbitration award dated October 13, 2011 of the Appellate Division, First Department should be affirmed in all respects. Respectfully submitted, FELDMAN & ASSOCIATES, PLLC By: s/ Edward S. Feldman cc: Ahmed A. Massoud, Esq. Edward S. Feldman Massaud & Pashkoff, LLP Attorneys for Respondent 1700 Broadway, 41st Floor McIver-Morgan, Inc. New York, New York 10019