Oppenheim v Mojo-Stumer Assoc. Architects, P.C.

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Oppenheim v Mojo-Stumer Assoc. Architects, P.C. 2012 NY Slip Op 31975(U) July 23, 2012 Supreme Court, New York County Docket Number: 602408/2006 Judge: Charles E. Ramos 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] SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PRESENT: CHARLES E, W MOS PART $3 Justlce INDEX NO. MOTION DATE -V- MOTION SEQ. NO. MOTION CAL.NO. The followlng papers, numbered I to Notice of Motlonl Order to Show Cause Answerlng Affidavits " 3 2 , were read on this motion tolfor - Affidavits - Exhibits .., Exhibits I PAPERS NUMBERED I Replying Affidavits Cross-Motion: 0 Yes 0 No Motion is decided in accordanco with accompanying Memorandum DnciskL NEW YORK COUNN CLERK'S OFFICE 0 FINAL DISPOSITION NON-FINAL DISPOSITION Check If appropriate: 0 DO NOT POST 0 REFERENCE n SUBMIT ORDEW JUDG. 0 SETTLE ORDEW JUDG. Check one: [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW Y0RK:COMMERCIAL DIVISION X _____----------l_______________l_______l AVIVITH OPPENHEIM and WILLIAM OPPENHEIM, Plaintiffs, Index No. 602408/2006 -against- FILED MOJO-STUMER ASSOCIATES ARCHITECTS, P . C . d/b/a MOJO-STUMER ASSOCIATES, P . C . , MARK STUMER, and JOSEPH VISCUSO, -_ NEW YORK COUNTYCLERKIS0mjcE Defendants. _ _ _ _ _ _ _ _ _ l l - - - - - - - - - - - - - - - - - - - X Charles Edward Ramos, J . S . C . In motion sequence 022, defendants M a r k Stumer ( Stumer ) and Mojo-Stumer Associates Architects, P . C . ( MSA ) (together, the Defendants ) move this Court for an order pursuant to CPLR 3212 granting summary judgment and dismissing the plaintiffs Avivith and William Oppenheim s (the Oppenheims ) first, fourth, fifth, and sixth causes of action, and granting D e f e n d a n t s partial summary judgment on their third and forth counterclaims. The Oppenheims cross-move for an o r d e r 3211(a) (2) and 3212(e) granting them partial pursuant to CPLR summary judgment dismissing the third and forth counterclaims. Baakground This case arises o u t of the failed renovation (the Project ) of a cooperative apartment (the Apartment ) located at 860 Fifth Avenue, New York, N e w Y o r k . Avivith Oppenheim is the tenant-shareholder and leases the Apartment from 860 Fifth Avenue Corporation (the Co-Op ). [* 3] On May 1, 2003, the Oppenheims entered into an agreement (the Agreement ) with MSA to design the Project. Defendant M a r k Stumer is an architect duly licenced by the State of New York and serves as the president and chief executive of MSA. The Agreement provides that in addition to preparing plans and designs for the Project, MSA would coordinate the necessary plumbing, electrical and HVAC layouts[,] . . . prepare contract documents (working drawings a n d specifications) for competitive bidding and construction and assist [the Oppenheims] in [their] bidding packages, negotiations and final securing of the general contractor, and periodically visit the site to inspect the quality of the construction only to see that it meets our design aesthetic and quality standards (Sturner Aff. Ex. A). The Agreement also contains an exculpatory clause that states [MSA is] not responsible for the means, methods and/or schedules of construction (id. . ) In exchange for these services, the Oppenheims agreed to pay an architect fee totaling 15% of the Project construction costs and an interior services fee equal to the combined total of 20% of the cost of all built-ins and 25% of the cost of all items purchased through MSA. Payments to MSA were to be made on a periodic basis tied to the percentage of the Project completed. The Agreement a l s o contains a section titled Ownership and Use of Documents that addresses copyright and use of all documents 2 [* 4] produced by MSA under the Agreement, but these provisions were stricken and denoted NA by Stumer (Id.). Subsequent to execution of the Agreement, various contractors submitted bids for t h e Project. Though they were not the lowest bidder, the Oppenheims selected V.I.S.T.A. of N e w York Inc. ( Vista ) on MSA s recommendation to complete the Project (A. Oppenheim Aff. ¶ 10-11). Defendant Joseph Viscus0 ( Viscuso ) was Vista s principal. On February 11, 2004, the Oppenheims entered into an agreement with Vista (the Vista Agreement ) which provided that the Project would be substantially complete by J u l y 16, 2004 and f i x e d the total cost at $760,110. Pursuant to the Vista Agreement, the Oppenheims would make periodic payments to Vista based on the percentage of work completed. Work on the Apartment began around May 2004. As part of the scope of services provided for in the Agreement, MSA reviewed Vista s applications for payment during the course of the Project and certified the percentage of work completed for the purposes of payment under the Vista Agreement (Stumer Aff. ¶ 7). Despite construction delays and issues with change orders, the Oppenheims submitted payments to Vista between May 2004 and October 14, 2004 totaling approximately $302,299.06 (A. Oppenheim Aff. YI 14-17). In fall 2004, the Oppenheims grew concerned about delays with the Project and retained Edward T. Braverman, E s q . ( Braverman ) as legal counsel to communicate with MSA and 3 [* 5] a d d r e s s their concerns with the Project (A. Oppenheim Aff. ¶ 7; Stumer Aff. ¶ 11). At o r around the same time, the Oppenheims retained F S I Architecture ( " F S I " ) to inspect and report on the progress of the Project. In December 2004, F S I reviewed the Project plans and specifications, examined the Apartment, and issued a report finding that the applications for payment sought payment for work that had not yet been completed. F o r example, F S I reported that the fifth application for payment from Vista and approved by MSA stated that the Project was 57% complete, but F S I observed that only about 25 to 30% of the work had actually been performed (Cicalo Aff.). F S I also reported that there were numerous problems with the work that had been completed. In January 2005, the Oppenheims were informed that liens had been filed against the Apartment by subcontractors alleging that Vista had failed to pay them. On February 9, 2005, the Oppenheims, Braverman, and F S I met with Stumer to discuss their concerns w i t h the P r o j e c t . At the meeting, Stumer refused to participate without counsel present and the parties were unable to resolve their differences. MSA and VISTA did not return to the Project after this meeting. Following their departure, the Oppenheims retained a new contractor and later a third contractor to complete the Project. Vista later declared b a n k r u p t c y . The Defendants have submitted affidavit testimony from 4 [* 6] Ronnette Riley ( Riley), a architect registered in New York that indicates the Oppenheims made a number of changes to the design of the Apartment after MSA and Viscuso s departure from the Project including changes to the plans for the study and maid s room, additions to the lighting and electrical work, and the addition of soffit and other work. The Oppenheims contend that these changes were within the scope of the Agreement. Riley also indicates that there were several construction delays arising from the respective tenures of the second and third contractors. On July 7, 2006, the Oppenheims initiated this case by filing a summons and verified complaint. During the course of the litigation, Stumer provided deposition testimony that between July 2003 and December 2004, Vista made several payments to MSA as thank you for introductions to p r o j e c t s (A. Oppenheim Aff. Ex. C at 43, 59-61.). Payments wexe made on account of ten projects, including approximately $8,000 to $10,000 on account of the Project (A. Oppenheim A f f . Ex. C at 133-134). In August 2007, Viscus0 pled guilty to misdemeanor commercial bribery in the second degree for a crime related to payments made to MSA between May 1, 2003 and January 10, 2005. On October 27, 2007, this Court granted the Oppenheims leave to amend their complaint to plead a bribery-based RICO cause of action. In September 2008, the Defendants made a motion for spoliation sanctions to preclude the Oppenheims from submitting 5 [* 7] expert testimony and to strike the complaint on the grounds that the Oppenheims had destroyed evidence by completing the renovation without notice to the D'efendants or affording their expert access to the Apartment. On April 20, 2009, this Court issued an order that granted the Defendants's motion to preclude the expert testimony, allowing the Oppenheims expert to testify only as a fact witness, but denied the motion to strike the complaint (2009 NY Slip Op 30939[U] [Sup Ct, NY County 20091 ["The defendants' motion to exclude testimony is granted, in part to the extent that the . plaintiffs . . shall be precluded from presenting expert testimony on the amount of work completed, the alleged deficiencies in t h e work performed, and the costs of completing the renovation"], a f f d 69 AD3d 407 [lst Dept 20101). The Oppenheims appealed and the First Department affirmed this Court's decision, holding that the "[pllaintiffs spoliated evidence central to their claim that renovations on their apartment . . . were not complete when they invited a new contractor to perform substantial additional work without first permitting defendants to verify the need f o r such additions, warranting a sanction" (Oppenheim v Mojo-Stumer Assoc. Architects, P.C., 69 A D 3 d 407 (1st Dept 2010). On September 10, 2010, this Court issued an order granting the Oppenheims leave to file the Fourth Amended Verified 6 [* 8] Complaint (the Complaint ) for the purpose of adding details to the existing claim of bribery under the RICO statute. In their amended Complaint, the Oppenheims seek to recover costs expended to complete the Project, to repair alleged deficiencies, and for loss of use of the property. Discussion A grant of summary judgment is appropriate where the Court determines that there are no material triable issues of fact (NY C P L R 3212[b]). The proponent of the motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the c a s e ( W i n e g r a d v. N Y U Med C e n t e r , 64 NY2d 851, 053 [1985]). To defeat a motion for summary judgment, the party opposing the motion must come forward with proof establishing the existence of triable issues of fact (Zuckerman v C i t y of N e w Y o r k , 49 N Y 2 d 5 5 7 , 562 [1980]). If the party opposing the motion cannot present evidentiary proof in admissible form, he or she must come forward with an acceptable excuse f o r his or her failure to present evidence in an admissible form. ( I d . ) A party does not carry its burden in moving for summary judgment by pointing to gaps in its opponent s proof, but must affirmatively demonstrate the merit of its claim or defense. ( V e l a s q u e z v . Gomez, 44 AD3d 669, 650-51 [2d Dept 20071). A motion for summary judgment should be denied if the court has any doubt as to the 7 [* 9] existence of a triable issue of fact (Freese v S c h w a r t z , 203 AD2d513 (2nd Dept 1994). The Defendants s e e k summary judgment dismissing the Oppenheims claims under the RICO Act ( RICO ), breach of contract, professional malpractice, misrepresentation, and on Defendants counterclaims for copyright infringement. The Oppenheims cross-move for summary judgment seeking dismissal of t h e counterclaims for copyright infringement. A. First Ca.use of Action To sustain a RICO claim, a plaintiff must allege: (1) that the defendant (2) through the commission of two or more acts (3) constituting a pattern (4) of racketeering activity (5) d i r e c t l y or indirectly invests in, or maintains an interest in, or participates in (6) an enterprise (7) the activities of which affect interstate or foreign commerce (Moss v Morgan Stanley, Inc., 719 E2d 5, 17 [2d Cir 19831, c e r t denied 465 US 1025 [1984]). The RICO statute defines a pattern of racketeering as requiring at least t w o predicate acts of racketeering activity that occurred within 10 years of each other (18 USC 5 1961[5]). In addition, a plaintiff must show both that the alleged predicate acts are related and that they are continuous ( E a s t 3 2 S t . Assoc. v J o n e s L a n g Wooten USA, 191 AD2d 68, 73 [lst Dept 19931). In seeking to satisfy the element of continuity, a plaintiff must show that the defendant s activities are neither isolated or s p o r a d i c (FICC Capital Corp. v Technology Finance Group, I n c . , 6 7 F3d 4 6 3 , 469 [2d C i r 19951). Nonetheless, the a c t s may be closed8 [* 10] ended, posing a threat of related predicate acts extending over a substantial period of time in the past, or open-ended, posing a threat of continuing criminal conduct beyond the period during which the predicate acts were performed (H.J. Inc. v Northwestern Bell T e l . Co., 4 9 2 US 229, 239-243 [1989]). This Court previously determined that Vista s bankruptcy eliminated the possibility of an open-ended pattern of racketeering activity (See September 15, 2009 Order at 10). This issue will n o t be revisited. To determine whether a sufficient closed-ended pattern exists, courts rely on a number of factors, including: (1) the length of time o v e r which the alleged predicate acts took place; (2) the number of predicate a c t s ; (3) the nature and variety of acts; (4) the number of participants; (4) the number of victims; and (5) the presence of separate schemes (GICC Capital, 67 F3d at 467). The Oppenheims allege that, over a period of eighteen months, they and nine other victims were defrauded in a scheme whereby Stumer made oral representations to them that he would oversee the Project without disclosing that he was receiving kickbacks from Vista if it was chosen as the contractor (Fourth Amend. Compl. ¶ 149). According to the Oppenheims, these kickbacks were financed by MSA and Vista through the practice of improperly and fraudulently inflating the price of contracts, 9 [* 11] subcontracts and change orders, and then by MSA improperly certifying that payment was due for more construction w o r k than was actually performed (Complaint ¶ 157). They further allege that they and the nine other construction project owners were injured, damaged, and deprived of competitive pricing on project work and were overcharged for work actually performed by MSA and Vista (Complaint ¶ 158). With respect to closed-ended continuity, the Second Circuit \ has never found a closed-ended pattern where the predicate acts spanned fewer than two years ( F i r s t C a p i t a l Asset M a n a g e m e n t , Inc. v Satinwood, Inc., 385 F3d 159 [2d Cir 20041). Drinkwine, cited by the Plaintiffs in support of their contention that eighteen months is sufficient to establish closed-ended continuity, is not dispositive. In D r i n k w i n e , t h e District Court held that seventeen months was sufficient to satisfy the temporal requirement for closed-ended continuity only where the a c t s involving the named plaintiff combined with allegations of essentially the same scheme perpetrated on unnamed parties exceeded the requisite two-year threshold ( i d . ) . In a previous decision, this Court examined t h e s e factors in and concluded the following: [Tlhe Complaint alleges only the single, noncomplex scheme in which, MSA induced homeowners to retain Vista in o r d e r to receive k i c k b a c k payments and then failed to a l e r t the homeowners t h a t Vista was overcharging them or performing substandard w o r k . The Oppenheims have failed to m a k e any allegations t h a t 10 [* 12] could reasonably be interpreted as establishing a multi-faceted scheme to defraud. Where a RICO claim is based on acts narrowly directed toward a single fraudulent end with a limited goal, the claim will usually fail * . . Courts in the Second Circuit have generally held that w h e r e the conduct at issue involves a limited number of perpetrators and victims and a limited goal, the conduct is lacking in closed-ended continuity. . . Thus, the limited duration of the alleged pattern of racketeering, coup1e.d with the Oppenheims' failure to allege the other non-temporal aspects of a RICO pattern of racketeering, demonstrates that the allegations contained in the Complaint are insufficient to establish closed-ended continuity" (Oppenheim v Mojo-Stumer Assoc. Architects, P.C., 25 Misc 3d 1222[Al [Sup Ct, New York County 2009, Ramos, C.][internal citations omitted]). These factors remain unchanged. The continuity element of the R I C O test remains unsatisfied. Therefore, this claim fails as a matter of law. B. Breach o f CQntraCt The Defendants argue that the Oppenheims breach of contract claim should be dismissed because it is duplicative of the malpractice claim. Under New Y o r k law, "[aln allegation that a party failed in the p r o p e r performance of services related primarily to its profession is a claim for professional malpractice" (Travelers Indem. C o . V Zeff D e s i g n , 60 AD3d 453, 455 [2009]) regardless of whether the underlying theory is based in contract or tort ( I n re R . M . Klirnent Architects [McKinsey & & Frances H a l s b a n d , Co. , I n c . ] , 3 NY3d 538, 541 [2004]). Nonetheless, "claims for professional malpractice and breach of contract may co-exist, even though both arise out of the 11 [* 13] professional s contractual obligations (Children s Corner L e a r n i n g C t r . v A . M i r a n d a C o n t r . C o r p . , 64 AD3d 318, 324 [lst Dept 20091) where the plaintiff alleges a failure to provide a particular bargained-for result ( K l i m e n t 3 N Y 3 d at 542-3). The bargained-for result must be above and beyond that which [the architect] might be expected to accomplish using due care ( I d . ) . Furthermore, courts have typically dismissed as duplicative claims that arise from the same factual allegations and seek the same measure of damages (Zeff, 60 AD3d at 455). The Oppenheims contend that MSA failed to achieve a particular promised result by failing to properly supervise and inspect Vista s work (Oppenheim Mem. At 10). Although the Agreement provides t h a t MSA would inspect Vista s work only to see that it meets our design aesthetic and quality standards, the record indicates that Stumer or MSA inspected Vista s w o r k product and certified Vista s payment applications. Nevertheless, the r e c o r d does not indicate that MSA or Stumer agreed to provide service above and beyond the due care arising from its professional obligation. Furthermore, the two causes of action are based on the same allegations and the Oppenheims failed to demonstrate any difference between the two sets of damages. Therefore, the breach of contract claim and malpractice claims cannot co-exist. 12 [* 14] C. Malpractice A claim of professional malpractice requires proof that there was a departure from accepted standards of practice and that the departure was a proximate cause of the injury T a l o n A i r Services LLC v . CMA D e s i g n Studio, P.C., 86 AD3d 511, 515 [lst Dept 20111). The Defendants argue that the Oppenheims cannot prove professional malpractice as a matter of law absent expert testimony., It is incumbent upon the plaintiff to present expert testimony to support allegations of malpractice . . . except where the alleged act of malpractice f a l l s within the competence of a l a y jury to evaluate 530 E . 89 Corp. v Unger, 43 N.Y.2d 776 (1977). While the Defendants correctly note that some of the alleged acts of malpractice are beyond the competence of the lay j u r o r , many of the myriad allegations are not. For example, MSA approved pay applications that stated 50% of wood flooring was installed, but the Oppenheims claim that there was no wood flooring installed. Whether there was any wood flooring installed is a fact easily discernable by a lay jury. Therefore, there are issues of fact that preclude summary judgment on the issue of professional malpractice. Furthermore, despite the Defendants insistence to the contrary, it is not the l a w in New York that proximate cause in a professional malpractice case must be proven by expert 13 [* 15] testimony. To the extent that the Oppenheims have not presented proof of proximate cause, these are questions of fact to be determined at trial. D. MisrepresentaLAon The Defendants allege that the Oppenheims claim for misrepresentation was dismissed at a previous hearing and never reinstated. The Oppenheims have presented no evidence to refute this claim. Therefore, this claim remains dismissed. E. Coiznterclaims The Defendants allege that the Oppenheims infringed on their intellectual property rights by utilizing and altering, without consent, the architectural designs and plans f o r the Apartment after MSA and Stumer s exit from the Project. This Court l a c k s subject matter jurisdiction over the Defendants counterclaims f o r copyright infringement as they f a l l under the exclusive jurisdiction of the federal courts (17 USC § 301 [a]). The Defendants attempt, made in a footnote on the second page of their opposition brief, to withdraw their claims arising from federal law and assert only breach of contract and unjust enrichment, does not alter this result. If the Defendants withdraw the portion of their counterclaims limited to copyright infringement, they fail to To prove this point, the D e f e n d a n t s cite a string o f inapposite cases including several that fail to mention the word expert at all. 14 [* 16] state a claim for either breach of contract or unjust enrichment. Aside from language that was clearly stricken b y Stumer, the Agreement contains no licensing or copyright provisions. Therefore, the counterclaims cannot survive as a claim for breach of contract as there is no applicable contract provision. Furthermore, the unjust enrichment claim h i n g e s on the existence of a valid copyright, a determination that this Court does not have the jurisdiction to make. Accordingly, it is ORDERED that the Defendants Mojo-Stumer Associates Architects, P . C . and M a r k Stumer's motion for summary judgment is granted in part, thereby dismissing the plaintiffs Avivith and William Oppenheirns' first, fourth, and sixth causes of action and denied in part with respect to the third and fourth counterclaims; and it is further ORDERED that the plaintiffs Avivith and William Oppenheim's CKOSS claim for summary judgment is granted, thereby dismissing t h e third and fourth counterclaims; and it is further ORDERED that counsel for a l l parties shall attend a status conference on August 7, 2010 at 1O:OO a.m. at 60 Centre Street, New York, NY 10007, Courtroom 238. Dated: July 23, 2012 FILED p c . JUL 26 15 NEW YORK COUNTY CLERK'S OFFICE

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