50 MADISON AVE. LLCv.RCDOLNER LLC, 590141/09

Supreme Court of the State of New York, New York CountyDec 3, 2010
590141/09 (N.Y. Misc. 2010)
590141/092010 N.Y. Slip Op. 52237

590141/09.

Decided December 3, 2010.


In the present motion, third third-party defendant Platt Byard Dovell White Architects LLP (Platt) moves, pursuant to CPLR 3211 (a) (7) and (1), for summary judgment dismissing the third third-party complaint, and all cross claims alleged against it. In the third third-party complaint, Samson has asserted four claims against Platt: (1) breach of contract, (2) negligence to the extent that Samson's claims are not covered by its breach of contract claims, (3) common law indemnity, and (4) contribution. Platt asks that, should this motion be denied, the third third-party action should be stayed as subject to arbitration.

I. Background

These related actions arise from a property damage claim (the main action) brought by plaintiffs Simon and Ludmila Lorne (plaintiffs) against third-party defendants 50 Madison and Samson and others. Plaintiffs purchased a condominium apartment unit (unit) within 50 Madison Avenue, New York, New York, developed by 50 Madison, and managed by Samson. Plaintiffs maintain that they were entitled to rely on representations made in an Offering Plan that the unit would be built to the highest quality specifications, and be move-in ready at the time of the closing and that deficiencies in the unit's construction would be promptly remedied.

At the closing, plaintiffs gave Samson a punchlist of items to be corrected. Samson apparently told plaintiffs that the corrections were minor, and would be easily corrected. However, defects concerning leaks, the windows and floors and the heating system developed. The biggest defect were the floors, which were allegedly improperly installed on concrete substrate, and were not repaired for over a year, requiring plaintiffs to relocate for the duration. The costs of this relocation are part of plaintiffs' damages.

Apparently, plaintiffs demanded the right to effect the repairs themselves, but were rebuffed by 50 Madison, who claimed that the concrete substrate was common to the entire condominium building, and so, could only be repaired by 50 Madison.

Plaintiffs brought an action against 50 Madison and Samson for breach of contract, fraud, breach of warranty and violations of General Business Law (GBL) §§ 349 and 350, claiming that 50 Madison and Samson had fraudulently represented and advertized the condition of the unit. Other parties were brought in as defendants as well, such as the board of managers of the condominium and the condominium itself.

Plaintiffs' complaint was greeted with a series of counterclaims, cross claims and third-party actions. As relevant herein, Samson brought a third third-party complaint against Platt, alleging causes of action for breach of contract, negligence for breach of an independent duty to perform architectural services in accordance with the requisite standard of professional care, and indemnification and contribution, stemming from a contract between Platt and Samson to perform architectural services in the condominium (the Platt/Samson contract). The main action has been severed from the third-party actions by order of this court, and the order of severance was affirmed by the First Department, Appellate Division.

Platt argues that all four of these causes of action, premised on Platt's alleged failure to properly perform its duties under the Platt/Samson contract, are derivative of plaintiffs' claims in the main action, so that any damages sought herein are limited to the amount of any judgment rendered in the main action. Platt then contends that the indemnification claim should be dismissed because Samson is a party whose active wrongdoing contributed to plaintiffs' damages, and, as such, has no cause of action for indemnification. Platt further maintains that Samson's cause of action for breach of contract, seeking, as it does, only the amount of damages Samson might come to owe plaintiffs, is duplicative of the indemnification claim, and must also be dismissed. Platt next claims that Samson has no cause of action for contribution because plaintiffs allegedly seek only damages for economic loss not recoverable in contribution under CPLR 1401, and that, the negligence claim is likewise negated as duplicative of the contribution claim.

II. Discussion

On a motion to dismiss pursuant to CPLR 3211, we must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, accord plaintiffs the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory.

Sokoloff v Harriman Estates Development Corp., 96 NY2d 409, 414 (2001); see also Leon v Martinez, 84 NY2d 83 (1994). A motion brought pursuant to CPLR 3211 (a) (1) "may be granted where documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.'" Held v Kaufman, 91 NY2d 425, 430-431 (1998), quoting Leon v Martinez, 84 NY2d at 88; Foster v Kovner , 44 AD3d 23 , 28 (1st Dept 2007)("[t]he documentary evidence must resolve all factual issues and dispose of the plaintiff's claim as a matter of law").

Further, "[w]hen evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one. . . ." Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977); see also Jordan Panel Systems Corp. v Turner Construction Co. , 45 AD3d 165 (1st Dept 2007).

Samson charges that Platt failed to abide by the contract with respect to plaintiffs' unit. The contract allegedly required Platt to, among other things, "determine if the Work is being performed in accordance with the Contract Documents," and to "endeavor to guard the Owner against defects and deficiencies in the Work," giving Platt the authority to reject non-conforming work if required, things which Platt allegedly failed to do.

No copy of the Platt/Samson contract has been provided to the court. The language allegedly taken from that agreement is stated on page 8 of Defendants/Third Third Party Plaintiffs' Memorandum of Law.

It has been found that a third-party claim is not restricted to a theory of strict indemnification. In fact, "[w]hile it is true that the doctrine of impleader has its roots in strict indemnity, the history and development of impleader and the language of the current statute indicate that the device is no longer wedded to this single theory of recovery." George Cohen Agency, Inc. v Donald S. Perlman Agency, Inc., 51 NY2d 358, 365 (1980). In the present matter, Samson has alleged the existence of a contract between Platt and Samson, and a breach of that contract, for damages that are limited to the damages it may sustain should plaintiffs in the main action prevail.

The breach of contract claim is not duplicative of the indemnification claim, however, even if the measure of damages is the same. Therefore, breach of contract is valid cause of action at this juncture, and will not be dismissed.

Indemnification involves the shifting of loss from one party vicariously liable to another for injuries, to a third party who "should more properly bear responsibility for that loss because it was the actual wrongdoer [internal quotation marks and citation omitted]." Trump Village Section 3, Inc. v New York State Housing and Finance Agency, 307 AD2d 891, 895 (1st Dept 2003). Consequently, "it follows that a party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the doctrine." Id.; see also Broyhill Furniture Industries, Inc. v Hudson Furniture Galleries, LLC , 61 AD3d 554 (1st Dept 2009).

Platt argues that plaintiffs' claims against Samson alleged actual wrongdoing, negating any opportunity Samson might have to seek indemnification from Platt. While it is true that Platt may be found liable to Samson for failing to fulfill its contract with Samson, plaintiffs have claimed that Samson is directly liable for its failure to correct the defects in the unit, as it was required to do under its contract with plaintiffs, and for the failure to disclose the defects. Samson cannot be found vicariously liable to plaintiffs for the failure to repair defects in the unit, or for the failure to disclose the defects, because not even Samson argues that Platt had the responsibility to repair the defects in the unit, or, disclose them to plaintiffs. Therefore, indemnification is not available for those damages, although it would be available in connection with any damages related to the initial defects in the floor.

Samson also maintains that, should it be found liable to plaintiffs, it may seek contribution from Platt for Platt's alleged co-liability with it for those losses. Contribution is available under CPLR 1401 where "two or more persons . . . are subject to liability for damages for the same personal injury, injury to property or wrongful death. . . ." CPLR 1401; see American Home Assurance Company v Nausch, Hogan Murray, Inc. , 71 AD3d 550 , 552 (1st Dept 2010). However, the "purely economic loss resulting from a breach of contract does not constitute injury to property' within the meaning of" CPLR 1401. Board of Education of Hudson City School District v Sargent, Webster, Crenshaw Folley, 71 NY2d 21, 26 (1987); see also Richards Plumbing Heating Company, Inc. v Washington Group International, Inc. , 59 AD3d 311 (1st Dept 2009).

Plaintiffs seek recovery of economic damages for breach of contract and fraud. Plaintiffs' tort claims seek the same damages for the same breaches of the agreement between plaintiffs and Samson. An "assertion of a cause of action in fraud does not change the gravamen of the underlying claim or the damages which may be recovered." 15 East 11th Apartment Corp. v Elghanayan, 220 AD2d 295, 297 (1st Dept 1995). Thus, contribution is not available.

Contribution is also not available because Samson claims that it bears no responsibility for the damages. Samson states in its memorandum of law that if the Lornes are correct that their floor is defective, it is because, in addition to the wrongdoing of Dolner and the relevant subcontractors, Platt failed to perform in accordance with the Platt/Samson contract. Thus, it is not possible for Samson to state a cause of action for contribution, where it is not a joint tortfeasor (but is, as Samson maintains, only vicariously liable for plaintiffs' damages). As to plaintiffs' claims, other than breach of contract, it is also not possible for Samson to state a claim for contribution, where Platt had no obligation to repair the plaintiffs' floors or to disclose the defects to plaintiffs. Therefore, Samson cannot seek contribution from Platt for any damages Samson is required to cover for plaintiffs' losses.

It is settled that "[a]n action for professional malpractice may lie in the context of a contractual relationship if the professional negligently discharged the duties arising from that relationship." 17 Vista Fee Associates v Teachers Insurance and Annuity Association of America, 259 AD2d 75, 82 (1st Dept 1999). There is no bar to Samson bringing of a cause of action in negligence for damages it may have sustained as a result of Platt's negligence.

Platt asks that, should this court rule against it, and decline to dismiss the third third-party complaint, the third third party action should be stayed in favor of arbitration. No copy of the Platt/Samson contract has been provided, although no one disputes its existence or that of the arbitration clause.

Samson argues that the matter should be resolved in litigation, rather than arbitration, because nonarbitrable claims existing in the overall litigation are "inextricably intertwined" with the arbitrable issues between Platt and Samson. See e.g. Young v Jaffe, 282 AD2d 450, 450 (2d Dept 2001)(plaintiff's claims against its demolition contractor were "inextricably intertwined" with their claims against the other defendant architect, and should be litigated together, despite arbitration clause between plaintiff and its demolition contractor); see also Brennan v A.G. Becker, Inc., 127 AD2d 951 (3d Dept 1987).

The dispute between Samson and Platt should proceed in arbitration because the matters are not "inextricably" intertwined with the main action such that the arbitrable claims should not be arbitrated. Samson chose arbitration with Platt, even though it had to have anticipated that, if there were any problems with the building's construction, a purchaser, such as plaintiffs, might litigate the issues in court. Although Samson complains that the arbitrator might make a determination that is inconsistent with a determination made in the main action (i.e., regarding the existence of defects in the flooring), that risk is already inherent in the fact that this Court severed the third party actions against the general contractor and subcontractors from the main action and that order was affirmed. Further, there is no possibly of any inconsistency regarding the determination of Platt's obligations under the Platt/Samson contract, as the main action does not involve the Platt/Samson contract. Thus, although there is some overlap, the matters are not "inextricably" intertwined. Further, as arbitration is heavily favored, and Samson had to have anticipated this situation, yet still chose arbitration, there is nothing unjust about requiring that the claims against Platt proceed in arbitration.

Accordingly, it is

ORDERED that the motion by third third-party defendant Platt Byard Dovell White Architects LLP to dismiss the third third-party complaint is granted solely to the dismissal of the causes of action for contribution, and, for indemnification to the extent stated herein, and is otherwise denied; and it is further

ORDERED that the Third Third Party action is stayed in favor of arbitration.

This Constitutes the Decision and Order of the Court