Westbury Hotel, LLC v D.B.E. Electric Corp.

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Westbury Hotel, LLC v D.B.E. Electric Corp. 2012 NY Slip Op 31377(U) May 9, 2012 Sup Ct, Nassau County Docket Number: 018359/10 Judge: Stephen A. Bucaria Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER SUPREME COURT - STATE OF NEW YORK Present: HON. STEPHEN A. BUCARIA Justice TRIAL/lAS , PART NASSAU COUNTY WESTBURY HOTEL , LLC , individually, and as assignee and subrogee , on behalf of MACCARONE PLUMBING , INC. and all other lienors , claimants and creditors similarly situated entitled to share in funds received by E. ELECTRIC CORP. from Westbury Hotel LLC , in connection with the improvement of real propert owned by Westbury Hotel , LLC in the County of Nassau , under Aricle 3-A of the New York State Lien Law Plaintiff -against- E. ELECTRIC CORP. , JANAK N. SHA and SHAILESH PARKH and " JOHN DOE # 1" through JOHN DOE #10" Defendants. E. ELECTRIC CORP. and JANAK N. SHA and other similarly situated trust fund beneficiaries Third- Part Plaintiffs -against- HMB MANAGEMENT INC. , ATUL PATEL and MAHENDRA PATEL Third- Part Defendants. INDEX No. 018359/10 MOTION DATE: April 10, 2012 Motion Sequence # 001 , 002 [* 2] WESTBURY HOTEL , LLC v D. E. ELECTRIC CORP., et al Index no. 018359/10 The following papers read on this motion: Notice of Motion... ....... ............................. X Cross- Motion............................................. X Affirmation! Affidavit in Opposition......... XXXXXX Affirmation in Support.............................. X Memorandum of Law................................ XX Motion by plaintiff Westbury Hotel , LLC for summary judgment declarng that the settlement agreement dated January 15 denied . Motion by plaintiff to dismiss all counterclaims and third part claims asserted by defendants D. Electric Corp. and Janak Shah and all counterclaims asserted by defendant Shailesh Parikh denied . Plaintiffs alternative eranted to the extent indicated below. Cross-motion by defendants D. E. Electric Corp. and Janak , 2010 is in full force and effect is is motion for leave to serve an amended complaint is Shah to sever the case against them from the case against defendant Shailesh Parikh is denied. Plaintiff Westbury Hotel LLC is the owner of the Westbury Hampton Inn Hotel in Jericho. On February 1 , 2008 , Westbury entered into a constrction contract with defendant B.E. Electric Corp to construct a hotel for $4 229 600. The project was to be completed by August 31 , 2008. During the course of construction , Westbury requested certain extra work which DBE performed. Westbury claims that the agreed upon price for the extra work was $321 298. At some point in the project , Westbury began paying subcontractors directly. Westbury claims that it paid $2 501,400 to subcontractors. Eventually, a dispute arose between Westbury and DBE concerning the quality of the work and the amount Westbury was required to pay to subcontractors. On January 15 , 2010 , Westbury and its affiliate , third part defendant HMB Management Inc , entered into a settlement agreement with DBE. Pursuant to the settlement agreement , Westbury agreed to deposit up to $350 000 into escrow for the payment of subcontractors , vendors , and suppliers. DBE provided a one year warranty for all work performed and on all equipment, except for the boiler. DBE provided a five year warranty on the roof and a one year warranty on the elevator. The parties released each other from all claims arising from the construction contract , and DBE assigned to Westbury all of its rights under the contract. [* 3] WESTBURY HOTEL , LLC v D. E. ELECTRIC CORP. , et al Index no. 018359/10 DBE claims that it signed the settlement agreement under duress because of financial distress and Westbury s refusal to continue paying the subcontractors. Additionally, DBE claims that defendant Janak Shah , DBE' s president, received a physical threat from one of the subcontractors. This action was commenced November 10 2010. Westbury alleges that DBE failed to complete the work, performed certain work inadequately, and failed to pay subcontractors as required by the contract. Westbury fuher alleges that it incurred costs to payoff mechanic s liens and was required to hire another contractor to complete the project. Westbury requests a declaratory judgment that the settlement agreement was not the product offraud , duress , undue influence , or ilegality. Plaintiff also asserts claims for breach of the settlement agreement and the construction contract and for conversion of trust funds in violation of Article 3-A of the Lien Law. In their answer , defendants DBE Electric and Janak Shah counterclaim against Westbury and assert a third part claim against HM Management Inc for a declaratory judgment that the settlement agreement was procured by economic duress. Defendants also assert counterclaims and third part claims for breach ofthe construction contract by failng to pay for work performed , diversion oftrust funds , unjust enrichment , and misrepresentation as to Westbury s intention to pay for extra work. In his answer, defendant Shailesh Parikh asserts counterclaims against Westbury for work performed as a hotel project consultant , lighting fixture materials supplied to the project , and diversion of trust funds. Although defendant Parikh filed a separate answer, he is represented by the same attorney as represents defendants DBE and Shah. Plaintiff Westbury moves for summar judgment declaring that the settlement agreement dated January 15 2010 is in full force and effect. Additionally, plaintiff moves to dismiss all counterclaims and third part claims asserted by defendants D. E. Electric Corp. and Janak Shah and all counterclaims asserted by defendant Shailesh Parikh. Alternatively, plaintiff moves for leave to serve an amended complaint asserting claims against all defendants for fraudulent inducement of the construction contract , as well as claims against Parikh for breach of contract , negligence , and common law indemnity. Defendants D. E. Electric Corp. and Janak Shah cross move to sever the case against them from the case against defendant Shailesh Parikh. On a motion for summary judgment , it is the proponent' s burden to make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence ~~~ [* 4] WESTBURY HOTEL, LLC v D. E. ELECTRIC CORP., et al Index no. 018359/10 JMD Holding Corp. v. Congress 4 NY3d 373 , 384 (2005)). Failure to make such a prima facie showing requires denial of the motion , regardless of the sufficiency of the opposing papers(Id). to demonstrate the absence of any material issues of fact Financial Corp. A contract may be voided on the ground of economic duress where the complaining par was compelled to agree to its terms by means of a wrongful threat which precluded the exercise of free Sitar v Sitar 61 AD3d 739 , 742 (2d Dept 2009)). There is no duress however Madev v Carman , 51 AD3d 985 (2d Dept. 2008)). A failure to repudiate an agreement in prompt fashion, or acceptance of benefits under the agreement (Philips South wil , where the alleged coercion was to exercise a legal right , belies an economic duress claim Beach v ZC Specialty Ins. 55 AD3d 493 (1 Dept. 2008)). On this motion for summar judgment , it is plaintiff s burden to establish prima facie that DBE was not compelled to enter into the January 2010 settlement agreement by Westbury s wrongful refusal to pay for work performed pursuant to the change orders. In his affidavit , Westbury s officer , third part defendant Mahendra Patel , states that "the negotiations culminated" in the settlement agreement. Patel' s affidavit gives no substance as to the tenor of the negotiations , including discussions as to Westbury s obligation to continue paying subcontractors , DBE' s financial condition , and other circumstances surrounding the negotiation of the settlement agreement. The court concludes that plaintiff Westbury failed to its prima facie burden. Plaintiffs motion for summar judgment declaring the settlement agreement is in full force and effect is denied as premature and not properly supported by affidavit. Plaintiff s motion to dismiss all counterclaims and third part claims asserted by defendants D. E. Electric Corp. and Janak Shah and all counterclaims asserted by defendant Shailesh Parikh is similarly denied with leave to renew upon proper papers at the conclusion of discovery. car eranted to the extent that the amended complaint is deemed served in the form annexed as exhibit F to plaintiff s motion. Defendants have failed to show the need for a severance for either convenience or 603). Accordingly, defendants D. E. Electric Corp and Janak Shah' s cross-motion to sever the case against them from the case against defendant Shailesh Plaintiff s motion for leave to serve an amended complaint is to avoid prejudice (CPLR Parikh is denied. So ordered. Dated MAY 0 9 2012 J.S. ENTERED MAY 1 f2012 NASSAU COUNTY COUNTY CLERK'S OFFICE

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