Danica Plumbing & Heating LLC v AMOCO Constr. Corp.

[*1] Danica Plumbing & Heating LLC v AMOCO Constr. Corp. 2009 NY Slip Op 50415(U) [22 Misc 3d 1133(A)] Decided on March 9, 2009 Supreme Court, Kings County Partnow, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 9, 2009
Supreme Court, Kings County

Danica Plumbing & Heating LLC now known as Danica Group LLC, Plaintiff,

against

AMOCO Construction Corp., West 26th Corp., Skillman Tower LLC and Federal Home Loan Mortgage Corporation a/k/a Freddie Mac, Defendants.



8994/07



The plaintiff was represented by:

Allyn & Fortuna

200 Madison Ave., 5th fl

New York, NY 10016

Defendant Amoco Construction was represented by:

Mark Tulip, Esq.

26 Court Street

Brooklyn, NY 11242

Defendants W 26th St. Corp. and Skillman Tower LLC were represented by:

AJ Ludwig, Esq.

26 Court Street

Brooklyn, NY 11242

Mark I. Partnow, J.

Upon the foregoing papers, plaintiff Danica Plumbing & Heating LLC, now known as Danica Group LLC, moves for an order, pursuant to CPLR 2221 (d), granting it

leave to reargue the prior application of defendants West 26th Corp. and Skillman Tower, [*2]LLC (collectively, the "Owners") for an order, pursuant to CPLR 3211 (a) (3) & (7), dismissing, inter alia, plaintiff's cause of action that seeks damages for breach of contract and quantum meruit against the Owners.

Plaintiff commenced the instant action by filing a summons and verified complaint on March 15, 2007.[FN1] The complaint alleges that plaintiff, a plumbing subcontractor, performed plumbing improvements on the subject real property known as 80 Skillman Street pursuant to an agreement between it and defendant A.M.O. Co. Construction Corp., sued as AMOCO Construction Corp. ("AMO"). AMO is a general contractor hired in 2002 by West 26th Corp, the then-owner of the real property, to construct an apartment building on the subject premises.

Plaintiff asserts in the verified complaint that the plumbing improvements were substantially completed on July 31, 2004; however, AMO owes plaintiff the principal amount of $74,254.00 according to the subject agreement. Plaintiff alleges that AMO has refused to pay plaintiff the amount in dispute.

Thereafter, on March 22, 2005, plaintiff filed a notice of mechanic's lien with the office of the clerk of Kings County. This action subsequently ensued. Plaintiff seeks, inter alia, foreclosure of the mechanic's lien as well as damages for breach of contract and quantum meruit against AMO, West 26th Corp., and Skillman Tower, LLC (the current owner of the subject property).

Motion practice promptly ensued. The Owners moved to dismiss the first, third and fifth causes of action asserted by plaintiff. Plaintiff cross-moved for partial summary judgment on the issue of liability against AMO and the Owners. Lastly, AMO cross-moved for an order, pursuant to CPLR 3025, granting it leave to file and serve an amended answer.

The court now summarizes the arguments made that are relevant to the instant motion for leave to reargue. In support of their motion, the Owners argued, inter alia, that the third cause of action (seeking damages for breach of contract) should be dismissed as asserted against them. The Owners noted that there was an applicable agreement between plaintiff and AMO that covered the subject pluming improvements. The Owners asserted that this was the only agreement that covered the subject work, and plaintiff was never party to an agreement with either West 26th Corp. or Skillman Tower, LLC. For these reasons, argued the Owners, the breach of contract cause of action should be dismissed as against them.

Also, the Owners asserted that since plaintiff is claiming that AMO breached the subject agreement, plaintiff's causes of action against each of the Owners are duplicative and should be dismissed, insofar that these causes of action seek damages under a quantum meruit theory.

In opposition, plaintiff asserted that there is no merit to the motion to dismiss of the Owners, arguing that plaintiff is a third-party beneficiary of the general contractor agreement. In the alternative, argued plaintiff, this court should permit plaintiff to [*3]recover from the Owners , under a quantum meruit theory, the reasonable value of the plumbing work performed.

By order dated February 6, 2008, this court, inter alia, dismissed the third (damages for breach of contract) and fifth (recovery under a quantum meruit theory) as asserted against the Owners. This court noted that under controlling appellate authority, a subcontractor such as plaintiff cannot recover damages, as a third-party beneficiary, under an agreement between a property owner and a general contractor. This court also noted the rule that a subcontractor cannot recover damages from a property owner for the breach of a subcontract agreement to which the property owner was not a party. Lastly, this court cited authority for the proposition that a subcontractor is precluded from recovering damages under a theory of quantum meruit against a property owner for work done pursuant to a subcontract agreement.

Plaintiff now seeks leave to reargue, asserting that this court overlooked or misapprehended matters of fact and law when it decided the underlying motion. Plaintiff first asserts that the verified complaint should be liberally construed in plaintiff's favor. Plaintiff also asserts that this court may consider affidavits to amplify the allegations contained in the verified complaint, and notes the submitted affidavits of Helen and Thomas Andreadakis, both employed by plaintiff.

The affidavits aver, inter alia, that West 26th Corp. acknowledged the balance of $74,254.00 owed by AMO to plaintiff and suggest that West 26th Corp. is thus liable for the same. Specifically, the affidavits assert that Susan Ostreicher is an agent of both AMO and West 26th Corp., and that she represented to plaintiff's principals that West 26th would deposit the sum representing the balance in an escrow account. The affidavits further state that Susan Ostreicher agreed to do so as an incentive for plaintiff to continue work on the subject project in good faith, despite the dispute between AMO and plaintiff over whether AMO still owed plaintiff the sum of $74,254.00. The affidavits aver that plaintiff continued to perform the subject work; however, West 26th Corp. never "followed through on their offer to hold the money in escrow".[FN2] The affidavits assert that AMO and West 26th Corp., in concert, were now proceeding in bad faith.

The memorandum of law in support of the instant motion argues that an owner, such as West 26th Corp., that is not party to an agreement between a subcontractor, such as plaintiff, and a general contractor, such as AMO, is directly liable where the owner expressly assents to such an obligation. Plaintiff further argues that the affidavits demonstrate credible evidence that principals of West 26th Corp. did in fact assent to guarantee the debt owed by AMO to plaintiff but failed to fulfill the promise.

Plaintiff also asserts that AMO and West 26th Corp. are alter egos of each other. The memorandum of law asserts that "the credible indisputable evidence establishes that the activities of both entities are directed solely by Mr. Aron Ostreicher".[FN3] Plaintiff claims that it should be permitted to pierce the corporate veil, and therefore recover [*4]damages from either West 26th Corp. or AMO.

The court denies leave to reargue.[FN4] CPLR 2221 states, in applicable part:

"(d) A motion for leave to reargue:

1. shall be identified specifically as such;

2. shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion . . . ."

A motion for leave to reargue pursuant to CPLR 2221 is addressed to the sound discretion of the court (see e.g. Mansueto v Worster, 1 AD3d 412, 413 [2003]; Matter of Hoey-Kennedy v Kennedy, 294 AD2d 573, 573 [2002]; South Liberty Realty Corp. v Mercury, 292 AD2d 516, 517 [2002]) and may be granted only upon a showing that the

court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision (William P. Pahl Equip. Corp. v Kassis, 182 AD2d 22, 26 [1992], lv denied in part and dismissed in part 80 NY2d 1005 [1992], rearg denied 81 NY2d 782 [1993]). Reargument is not designed to allow an unsuccessful party "successive opportunities to reargue issues previously decided" (Id. at 27 [internal citations omitted]).

The court denies leave to reargue because it did not mistakenly arrive at its earlier decision. Although this court, in considering a motion to dismiss, is required to view every allegation of the complaint as true and resolve all inferences in favor of the plaintiff regardless of whether the plaintiff will ultimately prevail on the merits (Figueroa v Market Training Institute, Inc., 167 AD2d 503, 506, [1990]; Grand Realty Co. v City of White Plains, 125 AD2d 639 [1986]), the rule concerning liability of an owner for the alleged breach of a general contractor was correctly noted by this court.

Only an entity that is a party to a contract may be liable for a breach of contract (A & V 425 LLC Contracting Co. v RFD 55th Street LLC, 15 Misc 3d 196, 204-208 [2007]; see also Smith v Fitzsimmons, 180 AD2d 177, 180 [1992] ["privity or its equivalent remains the predicate for imposing liability for nonperformance of contractual obligations"]; Perma Pave Contr. Corp. v Paerdegat Boat & Racquet Club, 156 AD2d [*5]550, 551 [1989] ["a subcontractor may not assert a cause of action to recover damages for breach of contract against a party with whom it is not in privity"]; HDR, Inc. v International Aircraft Parts, 257 AD2d 603, 604 [1999] ["Neither of these defendants was a party to the contract alleged to have been breached. As such, they cannot be bound by the contract"]). Here, privity of contract does not exist between plaintiff and West 26th Corp.

Moreover, plaintiff, a subcontractor, is not considered a third-party beneficiary of a contract between West 26th Corp. and AMO (the general contractor) and is precluded from bringing suit against the owner (Barry, Bette & Led Duke v State of New York, 240 AD2d 54, 56 [1998], lv denied 92 NY2d 804 [1998], citing Alvord & Swift v Muller Constr. Co., 46 NY2d 276, 282 [1978]). For these reasons, the third cause of action (damages for breach of contract) was properly dismissed as asserted against West 26th Corp.

Additionally, the fifth cause of action (damages under a theory of quantum meruit) was also properly dismissed as asserted against West 26th Corp. If, as plaintiff asserts, it has fully performed under the subject plumbing agreement between AMO and plaintiff, plaintiff is precluded from seeking quasi-contractual remedies such as damages under a theory of quantum meruit. In Clark-Fitzpatrick, Inc. v Long Is. R.R. Co. (70 NY2d 382 [1987]), the Court of Appeals stated as follows:

"The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for

events arising out of the same subject matter. A quasi contract' only applies in the absence of an express agreement, and is not really a contract at all, but rather a legal obligation imposed in order to prevent a party's unjust enrichment. . . . It is impermissible . . . to seek damages in an action sounding in quasi contract where the suing party has fully performed on a valid written agreement, the existence of which is undisputed, and the scope of which clearly covers the dispute between the parties" (Id. at 388-389 [citations omitted]; see also Goldstein v CIBC World Mkts. Corp., 6 AD3d 295, 296 [2004] ["A claim for unjust enrichment, or quasi contract, may not be maintained where a contract exists between the parties covering the same subject matter"]; Scavenger, Inc. v GT Interactive Software Corp., 289 AD2d 58, 59 [2001] ["since the matters here in dispute are governed by an express contract, defendant's counterclaim for unjust enrichment was properly found untenable"]; Sheiffer v Shenkman Capital Mgt., 291 AD2d 295, 295 [2002] ["the existence of a valid and enforceable written contract governing the disputed subject matter precludes plaintiffs from recovering in quantum meruit"]).

This prohibition against quasi-contractual claims where a written contract exists applies not only to the parties that are in privity of contract, but also to noncontracting parties as well (Feigen v Advance Capital Mgt. Corp., 150 AD2d 281, 283 [1989], appeal dismissed in part and denied in part 74 NY2d 874 [1989] ["a nonsignatory to a contract cannot be held

liable where there is an express contract covering the same subject matter"]; see also Bellino Schwartz Padob Adv. v Solaris Mktg. Group, 222 AD2d 313, 313 [1995] [existence of an express contract between defendant and plaintiff governing the subject matter of the plaintiff's claims also bars any quasi-contractual claims against defendant

third-party nonsignatory to ostensibly valid and enforceable contract]). The prohibition applies where, as here, a subcontractor has attempted to sue an owner when privity of contract does not exist:

"Where there is an express contract, as here, between the general contractor and the subcontractor, the owner of the subject premises may not be held directly liable to the subcontractor on a theory of implied or quasi-contract, unless he has in fact [expressly] assented to such an obligation; the mere fact that he has consented to the improvements provided by the subcontractor and accepted their benefit does not render him liable to the subcontractor, whose sole remedy lies against the general contractor" (Contelmo's Sand & Gravel v J & J Milano, 96 AD2d 1090, 1090 [1983]; see also Metropolitan Elec. Mfg. Co. v Herbert Constr. Co., 183 AD2d 758, 759 [1992] ["the existence of an express contract between (a supplier) and (a subcontractor) governing the particular subject matter of its claim for unjust enrichment precludes (the supplier) from maintaining a cause of action sounding in quasi contract against (the general contractor) or the owners"]).

Moreover, "a property owner who contracts with a general contractor does not become liable to a subcontractor on a quasi-contract theory unless it expressly consents to pay for the subcontractor's performance" (Perma Pave Contr. Corp., 156 AD2d at 551). The requisite express consent of West 26th Corp. to pay for plaintiff's pluming work is lacking. "The owner's mere consent to and acceptance of improvements placed on his [*6]property by the subcontractor, without more, does not render it liable to the

subcontractor" (Id., citing Contelmo's Sand & Gravel v J & J Milano, 96 AD2d 1090 [1983]).

Plaintiff now argues that the actions of Susan Ostreicher, as agent of both AMO and West 26th Corp., demonstrate that West 26th Corp., as owner, did in fact expressly consent to pay for the performance of plaintiff, the subcontractor. This argument lacks merit. Assuming arguendo that a promise by the owner's agent to place, in escrow, funds equal to the amount in dispute demonstrates "express[] consent[] to pay for the subcontractor's performance" (Perma Pave Contr. Corp., 156 AD2d at 551), this argument does not suffice to support either the breach of contract or quantum meruit claim against West 26th Corp.

To the extent that plaintiff is asserting that the oral representation of Susan Ostreicher qualifies as express consent to pay plaintiff for the plumbing work, it is a void and unenforceable promise according to the statute of frauds. The General Obligations Law provides that a "promise to answer for the debt, default or miscarriage of another person" must be "in writing, and subscribed by the party to be charged therewith" (General Obligations Law § 5-701 [a] [2]). Also, in Concordia Gen. Contr. v Peltz, (11 AD3d 502, 504 [2004]), the Appellate Division noted that a property owner must intend to become primarily liable for the debt of a general contractor in order for an oral promise to satisfy that debt to be enforceable. A property owner that "act[s] merely as a surety for the general contractor's benefit" is not bound by an oral promise to guarantee that debt (Id., citing Witschard v Brody & Sons, 257 NY 97 [1931]; Bonded Forms v Morgan,42 AD2d 651, 652 [1973]). Here, plaintiff does not assert that an agent of West 26th Corp. orally promised to be primarily liable (or even liable) for the debt of AMO; plaintiff instead claims that an agent of West 26th Corp. orally promised to place a sum of money, representing the amount in dispute, in an escrow account. Such a promise is a surety agreement, which must be in writing to be enforceable (General Obligations Law § 5-701 [a] [2]). Since the verified complaint does not allege the existence of such a written agreement, plaintiff's causes of action that seek damages under a quantum meruit or any other quasi-contractual theory against West 26th Corp. were properly dismissed.

Lastly, there is no merit to plaintiff's allegation that this court must disregard the corporate identities of West 26th Corp. and AMO. It appears undisputed that both entities are represented by Aron and Susan Ostreicher. However, this fact alone does not permit this court to pierce the corporate veil. "The mere fact that . . . two corporations were owned and operated by the same . . . individuals, without more, is not sufficient to justify a disregard of corporate identities" (Custer Bldrs. v Quaker Heritage, 41 AD2d 448, 451 [1973], citing Crowell Corp. v Merrie Paper Co., 35 A D 2d 803, 804 [1970] [the fact that there was a close working relationship between two corporations is insufficient to allow a disregard of their legally separate and distinct entities]; see also Berkey v Third Ave. Ry. Co., 244 NY 84 [1926]). In order for a corporate form to be disregarded, plaintiff must allege and demonstrate that "(1) the owners exercised complete domination [*7]of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury" (Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141 [1993]). Here plaintiff has made no allegation that AMO was, for example, insolvent or created to defraud it. To the contrary, the undisputed facts indicate that plaintiff and AMO were in an unremarkable professional relationship until a dispute arose about one portion of the plumbing work performed. Contrary to plaintiff's suggestion, the existence of a contract dispute between it and AMO does not allow this court to permit claims against West 26th Corp., irrespective of whether AMO and West 26th Corp. are owned and controlled by the same members.

In sum, for the above reasons, the motion by plaintiff seeking leave to reargue the prior application of defendants West 26th Corp. and Skillman Tower, LLC for an order pursuant to CPLR 3211 (a) (3) & (7), dismissing, inter alia, plaintiff's causes of action that seek damages for breach of contract and quantum meruit against West 26th Corp. and Skillman Tower, LLC, is denied in its entirety.

The foregoing constitutes the decision and order of this court.

E N T E R,

J. S . C.

March 9, 2009 Footnotes

Footnote 1: Plaintiff also filed a notice of pendency encumbering the subject property on that date.

Footnote 2: Affidavit of Helen Andreadakis, ¶ 9.

Footnote 3: Memorandum of Law in Support of Motion for Leave to Reargue, p. 7.

Footnote 4: Since plaintiff did not demonstrate prima facie entitlement to the relief sought, this court need not consider the opposition submitted by West 26th Corp. (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).