RNC Indus., LLC v 267 Sixth St. LLC

[*1] RNC Indus., LLC v 267 Sixth St. LLC 2010 NY Slip Op 51229(U) [28 Misc 3d 1209(A)] Decided on July 12, 2010 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 12, 2010
Supreme Court, Kings County

RNC Industries, LLC, Plaintiff

against

267 Sixth Street LLC, CHOICE CONSTRUCTION ASSOCIATES LLC, BUILDERS ASSISTANCE CORP., AWR HOLDINGS, LLC and JOHN AND JANE DOE NOS. 1-10, said names being fictitious and representing persons and entities unknown at this time, but who are made parties hereto to bar them from any right, title or interest that they may have in the Premises, or some part thereof, by reason of the fact that they have or may have claims which may be liens theron, jointly and severally, Defendants.



29/09



Attorney for Plaintiff:

Christopher Smith, Esq.

Trivella & Forte, LLP

1311 Mamaroneck Avenue, Suite 170

White Plains, NY 10605

Attorney for Defendant 267 Sixth Street LLC (defaulting defendant):

Damian Pietanza, Esq.

16 Court Street, 26th Fl.

Attorney for Defendant Choice Construction Associates LLC:

Richard Bonfiglio, Esq.

238 92nd Street

Brooklyn, NY 11209

Attorney for Defendant AWR Holdings, LLC:

Cole, Schotz, Meisel, Forman & Leonard, P.A. Court Plaza North, 25 Main Street

P.O. Box 800

Hackensack, New Jersey 07602

Builders Assistance Corp.(defaulting defendant):

47 Lee Ave.

Brooklyn, NY 11211

Carolyn E. Demarest, J.

Plaintiff RNC Industries, LLC, (RNC) moves pursuant to CPLR § 3212 for an Order granting summary judgment against defendants Choice Construction Associates LLC (Choice) in the amount of $312,582.65 pursuant to a written agreement (Trade Agreement) dated April 15, 2008. RNC also moves for an order granting them default judgment against Builders Assistance Corp., (Builders) for the same amount.[FN1] If RNC's motion for summary judgment against Choice is denied, RNC requests consolidation of the instant action with Choice Construction Associates, L.L.C., v 267 Sixth Street, LLC, et al., Index Number 25597/09 pursuant to CPLR § 602(a).

BACKGROUND

Choice hired RNC as a subcontractor to perform excavation and construction work at 363 4th Avenue, Brooklyn, New York a/k/a 267 6th Street, Brooklyn, New York (Premises), owned by 267 Sixth Street LLC (Sixth Street), pursuant to the Trade Agreement. The Trade Agreement states that RNC shall be paid $1,187,000.00 "for satisfactory completion of . . . work under the Trade Contract . . . ." (Bonfiglio May 2010 Aff., Exhibit 3, p. 2). RNC alleges that it was compelled to cease work at the Premises on June 27, 2008, because the defendants failed to pay RNC $312,582.65 for labor and materials provided by RNC to the defendants. On September 2, 2008, Builders filed a Notice of Mechanic's Lien with the Office of the County Clerk, King's County, against Sixth Street in the amount of $57,425.00, and a separate Notice of Mechanic's Lien against non-party Isaac Katan in the same amount. On September 25, 2008, RNC filed a Notice of Mechanic's Lien against Sixth Street with the Office of the County Clerk, King's County, in the amount of $312,582.65.[FN2]

Choice opposes summary judgment on two grounds. First, Choice claims that Section 7.11.1 of the Trade Agreement contains "an express condition precedent" clause — that Choice will pay RNC upon payment from Sixth Street — and that this condition has not occurred. Specifically, Section 7.11.1 provides:

Construction Manager [Choice] is acting as an agent of Owner [Sixth Street], and therefore, to the extent permitted by applicable law, a condition precedent to payment by Construction [*2]Manager to Trade Contractor [RNC] is the receipt of funds by Construction Manager from Owner designated for payment to Trade Contractor. Trade Contractor acknowledges it is relying solely on the credit of Owner and not the credit of Construction Manager for payment for work performed by Trade Contractor.

Choice argues that Section 7.11.1 of the Trade Agreement does not constitute a "pay-if-paid" clause but merely fixes a period of payment for RNC.

Additionally, Choice argues summary judgment should not be granted in favor of RNC because Choice has not received its requested discovery from RNC. Choice seeks from RNC, among other documents, invoices, change orders, mechanic's liens and modifications, essentially, those documents from which the value of RNC's purported labor and materials expenses may be calculated. RNC counters that Choice has never previously challenged any billed amounts for work performed.

Finally, while Choice concedes there are some common questions of law and fact, Choice opposes consolidation of this action with Choice's action against Sixth Street and various defendants because Choice posits that should this court grant default judgment for Choice in Choice Construction Associates, L.L.C., v 267 Sixth Street, LLC, et al., Index Number 25597/09, consolidation would be moot because no trial would be required.[FN3]

Builders has neither appeared nor answered in this action. RNC seeks no action against AWR in the present motions before the court. RNC has named AWR as a party defendant because it has filed a UCC-1 security interest in the fee title interest and fixtures, equipment, and supply for the Premises.

DISCUSSION

In order to obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant a court's directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; see also § CPLR 3212 [b]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action (Vermette v Kenworth Truck Co., 68 NY2d 714, 717 [1986]). The parties' competing contentions are viewed in the light most favorable to the party opposing the motion (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610, 563 NYS2d 449 [2d Dept 1990]). Since summary judgment is a drastic remedy, it should not be granted where there is any doubt as to the existence of a triable issue (see Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [1978]). Thus, when the existence of an issue of fact is even arguable, summary judgment should be denied (see Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 404 [1957]).

Plaintiff moves pursuant to CPLR § 3212 for summary judgment granting their claims as a matter of law because RNC argues that Section 7.11.1 is a "pay-if-paid" clause and is contrary to the public policy of New York. Choice counters that Section 7.11.1 is not a "pay-if-paid" clause, but [*3]rather, a "pay-when-paid" clause, which merely fixes a time of payment.[FN4] The Court of Appeals has clearly stated that a "pay-if-paid" clause in a subcontract violates the public policy of New York as set forth in Lien Law § 34 (see West-Fair Elec. Contrs. v Aetna Cas. & Sur. Co., 87 NY2d 148, 158 [1995]; Welsbach Elec. Corp. v. MasTec North America, Inc., 7 NY3d 624 [2006]). Section 7.11.1 of the Trade Agreement explicitly states that "a condition precedent to payment" from Choice to RNC is payment from Sixth Street to Choice. Thus, Section 7.11.1 of the Trade Contract is, on its face, a "pay-if-paid" clause and is void and unenforceable as contrary to public policy (see West-Fair Elec. Contrs., 87 NY2d at 158).

RNC argues Choice raises no issues of material fact, taking issue with Choice's failure to provide the affidavit of a principal of the party. Specifically, RNC claims that prior to Choice's present opposition, Choice had never challenged RNC's invoices or amounts billed. Choice argues discovery must be completed with respect to its requested information for Choice to properly assess whether it can rebut some, if not all, of RNC's alleged damages.

The "affidavit or affirmation of an attorney, even if he has no personal knowledge of the facts, may, of course, serve as the vehicle for the submission of acceptable attachments which do provide evidentiary proof in admissible form, e.g., documents, transcripts. Such an affidavit or affirmation could also be accepted with respect to admissions of a party made in the attorney's presence" (Zuckerman, 49 NY2d at 563). In this case, Choice has raised issues regarding the basis for RNC's claims and the calculation of the value of work allegedly performed, and argues that, without disclosure of such documents, Choice cannot properly defend against RNC's claims. Specifically, Choice's attorney filed an affirmation with personal knowledge claiming that RNC has not provided Choice with discovery with respect to the amount of labor, materials, and other expenses incurred as part of RNC's alleged damages. While RNC has put forth an affidavit from a member of RNC attesting to damages of $312,582.65 arising from services rendered in connection with the Trade Agreement, RNC has submitted no documentation to the court of labor, materials, liens, or other incidental expenses incurred in the performance of the Trade Agreement at the Premises. Thus, RNC fails to meet its burden of coming forward with admissible evidence to support its motion, so as to warrant this court directing judgment in RNC's favor (Zuckerman, 49 NY2d at 562).

Additionally, pursuant to CPLR 3212(f), summary judgment must be denied as premature where facts essential to justify opposition may exist, but cannot then be stated, particularly where the moving party has failed to comply with pending discovery requests (see Colicchio v Port Auth. of N.Y & N.J., 246 AD2d 464, 468 [1st Dept 1998]; Campbell v City of New York, 220 AD2d 476, 477 [2d Dept 1995]; Soto v City of Long Beach, 197 AD2d 615, 616 [2d Dept 1993]). Summary judgment cannot be granted where the party opposing the motion has not had an adequate opportunity to conduct discovery into issues within the knowledge and possession of the moving [*4]party (see Colombini v Westchester County Healthcare Corp., 24 AD3d 712, 715 [2d Dept 2005]; OK Petroleum Distrib. Corp. v Nassau/Suffolk Fuel Oil Corp., 17 AD3d 551, 552 [2d Dept 2005]; Mazzola v Kelly, 291 AD2d 535, 535 [2d Dept 2002]; Firesearch Corp. v Micro Computer Controls Corp., 240 AD2d 365, 366 [2d Dept 1997]).

Here, Choice has not yet been afforded an adequate opportunity to conduct discovery into the relevant issues, some of which are exclusively within plaintiff's knowledge (see Firesearch Corp., 240 AD2d at 366). Therefore, Choice should be given an opportunity to complete discovery and further develop the facts upon which its defense rests (see Soto, 197 AD2d at 616). Consequently, plaintiff's motion is denied (see CPLR 3212[f]).

RNC has named Builders as a defendant in this action because Builders has filed a Notice of Mechanic's Lien against Sixth Street and the Premises. Lien Law § 44 provides:

In an action in a court of record to enforce a lien against real property or a public improvement, the following are necessary parties defendant:

1. All lienors having liens notices of which have been filed against the same real property or public improvement, or any part thereof, prior to the filing of the notice of lis pendens in such action, where by law the filing of a notice of lis pendens is proper or required . . .

5. Every defendant who is a lienor shall, by answer in the action, set forth his lien, or he will be deemed to have waived the same, unless the lien is admitted in the complaint, and not contested by another defendant.

Here, RNC has properly added Builders as a necessary party defendant pursuant to Lien Law § 44(1). Even though Builders has not answered and has not set forth its purported lien before this court, because RNC alleges in its complaint that Builders' Lien was filed on September 2, 2008, and this has not been contested by Choice or Sixth Street, Builders has not waived any lien it may have filed against the Premises (see Lien Law § 44 (5)).[FN5] Furthermore, Lien Law § 17 provides:

No lien specified in this article shall be a lien for a longer period than one year after the notice of lien has been filed, unless within that time an action is commenced to foreclose the lien, and a notice of the pendency of such action, whether in a court of record or in a court not of record, is filed with the county clerk of the county in which the notice of lien is filed, containing the names of the parties to the action, the object of the action, a brief description of the real property affected thereby, and the time of filing the notice of lien . . . In the event an action is not commenced to foreclose the lien within such extended period, such lien shall be extinguished . . . . If a lienor is made a party defendant in an action to enforce another lien, and the plaintiff or such defendant has filed a notice of the pendency of the action within the time prescribed in this section, the lien of such defendant is thereby continued. Such action shall be deemed an action to enforce the lien of such defendant lienor.

[*5]

By filing a timely notice of pendency and bringing this action to foreclose upon its own mechanic's lien, and naming Builders as a defendant lienor, RNC has continued the duration of Builders' purported lien (see Lien Law § 17; Lindt & Sprungli USA, Inc. v PR Painting Corp., 292 AD2d 610, 611 [2d Dept 2002]; see also Ahava Med. & Rehab. Ctr. v Berkovitch, 20 Misc 3d 1138A [Sup Ct, King's County 2008]). While Builders' purported lien continues against the Premises, this court is without basis for granting judgment against Builders in the amount of $312,582.65. Absent proof of a contractual relationship or privity between the parties, there can be no liability for breach of contract (see CDJ Builders Corp. v Hudson Group Const. Corp. 67 AD3d 720, 722 [2d Dept 2009]). Here, there is a written contract between RNC and Choice. Builders was not a signatory to the contract. Morever, RNC has not alleged an oral contract between itself and Builders with respect to construction at the Premises. Therefore, RNC has not established that Builders was in privity with either RNC or Choice with respect to construction at the Premises. Thus, RNC's motion for default judgment against Builders is denied.

If the instant action is consolidated with Choice Construction Associates, L.L.C., v 267 Sixth Street, LLC, et al., Index Number 25597/09, Choice would appear as both defendant and plaintiff in the consolidated action, which would be inappropriate (see M & K Computer Corp. v MBS Indus., 271 AD2d 660 [2d Dept 2000]). However, as both Choice and RNC have brought actions against Sixth Street concerning the alleged improvement of the same property, plaintiff's motion to consolidate is granted to the extent of ordering a joint trial of these related cases (see Perini Corp. v WDF, Inc., 33 AD3d 605, 606—07 [2d Dept 2006]).

CONCLUSION

According ly, Plaintiff's motion for summary judgment against Choice is denied. Plaintiff's motion for default judgment against Sixth Street is granted on consent. Plaintiff's motion for default judgment against Builders is denied. Plaintiff's motion for consolidation is granted only to the extent of ordering a joint trial of cases with Index Numbers 29/09 and 25597/09. Counsel is directed to appear for a conference on July 28, 2010.

The foregoing constitutes the Decision and Order of the Court.

ENTER,

Carolyn E. Demarest

J. S. C. Footnotes

Footnote 1: This motion originally sought default judgments against 267 Sixth Street LLC and Builders. The default motion against Sixth Street was resolved on the date of argument where RNC and Sixth Street settled for judgment against Sixth Street in the amount of $312,582.65 with interest from June 27, 2008. Therefore, this court will not address RNC's motion for summary judgment against Sixth Street.

Footnote 2: None of the liens discussed herein have been attached to the motion papers or otherwise provide to the court in this action.

Footnote 3: This court denied Choice's motion for default judgment in the related action at oral argument on May 12, 2010.

Footnote 4: "Pay-when-paid" and "pay-if-paid"clauses are distinct terms. The Court of Appeals found a "pay-when-paid" clause, as distinguished from a "pay-if-paid" provision, where, absent express language to the contrary, "payment is stipulated to occur on an event, the occurrence of the event fixes only the time for payment; it is not to be imported as a substantive condition of the legal responsibility to pay" (see Schuler-Haas Elec.Co. v Aetna Cas. & Sur. Co., 40 NY2d 883, 885 [1976]).

Footnote 5: This court has not received proof of Builders' purported lien and makes no judgment as to whether Builders has a valid and existing lien.