Blumenfeld Dev. Group, L.T.D. v Roux Assoc., Inc.
Annotate this CaseDecided on September 28, 2004
Supreme Court, Nassau County
BLUMENFELD DEVELOPMENT GROUP, LTD. and TIOGA HOLDINGS, LLC, Plaintiff(s),
against
ROUX ASSOCIATES, INC., Defendant(s).
1880/02
Ute Wolff Lally, J.
Upon the foregoing papers, it is ordered that this motion by
Roux Associates, Inc. (Roux) for an order pursuant to CPLR 3212 granting summary judgment dismissing the complaint is granted.
Pursuant to a retainer agreement between defendant and the non-party law firm known as McMillan, Rather, Bennett & Rigano, P.C. (Rigano), defendant Roux was retained on behalf of plaintiff Blumenfeld Development Group, Ltd. (BDG) to perform a Phase I and limited Phase II environmental assessment with respect to a parcel of real property formerly known as the Washburn Wire Facility containing six abandoned and dilapidated buildings, located at the East River Plaza between 116th and 119th Streets, adjacent to the FDR Drive, New York.
On or about March 21, 1996, the parcel was purchased by non-party Tiago Holdings Corp., not plaintiff BDG, at a foreclosure sale for the sum of $3,100,000. and thereafter assigned to plaintiff Tiago Holdings, LLC. Subsequent to the assignment of the property, five petroleum storage tanks were discovered in underground concrete vaults on the 118th Street side of the laboratory [*2]building located between 118th and 119th Streets. According to the complaint, defendant Roux, in breach of its contract obligations, conducted a negligent site inspection by failing to discover the five underground storage tanks and the potential for petroleum contamination. Because a detailed site inspection was not performed, plaintiffs allege they purchased a property containing underground petroleum storage tanks and have paid in excess of $180,000., to remove the tanks and clean up the contamination, with unknown future costs to be incurred to monitor the ground water, as required by the Department of Environmental Conservation, and for any additional remedial actions.
Plaintiffs seek judgment declaring that defendant Roux is contractually obligated to indemnify them for all clean up costs incurred to date at the Washburn Wire Facility i.e., removal of tanks, cleanup of contamination, monitoring of site and future remedial costs, and is liable for damages predicated on breach of contract and plaintiffs' detrimental reliance on the faulty report prepared by defendant Roux. Plaintiffs contend that had defendant Roux conducted its investigation in a reasonable manner, the five underground storage tanks would have been discovered and the environmental liability vis a vis the property would have been revealed as a result of which the price they bid at auction would have been reduced.
Defendant Roux seeks summary judgment dismissing the complaint on the grounds that the owner of the property, Tiago Holdings, LLC was not a party to the agreement which is the basis of plaintiffs' claims; was not even in existence at the time the environmental assessment was performed, or when the retainer agreement between the Rigano law firm, on behalf of BDG, and defendant Roux was executed; is not a third-party beneficiary of the contract and, in any event, defendant Roux performed the requisite consulting services including: project management, records search; questionnaires and interviews; site inspection; sampling; date evaluation and report preparation consulting services under the limitations expressly set forth in the contract in the time specified.
A claim for negligent misrepresentation can only stand where there is a special relationship of trust or confidence, which creates a duty for one party to impart correct information to another, the information given was false and there was reasonable reliance upon the information given (Hudson River Club v Consolidated Edison Co. of New York, 275 AD2d 218, 220 [1st Dept. 2000]. Under the facts at bar, neither privity of contract, nor the functional equivalent of contractual privity, exists between plaintiff Tiago Holdings, LLC and defendant Roux (Ossining Union Free School Dist. v Anderson La Rocca Anderson, 73 NY2d 417, 424 [1989]), such that plaintiff Tiago Holdings, LLC would have standing to maintain this action against defendant Roux for breach of contract to provide an accurate environmental assessment. Nor are the fundamental requirements for a finding of intended third-party beneficiary status present. In order to claim third-party benefits, the putative third-party beneficiary will be deemed an intended beneficiary if "recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary [not relevant here]; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.... An incidental beneficiary ... is not an intended beneficiary." LaSalle [*3]Nat. Bank v Ernst & Young LLP., 285 AD2d 101, 108 [1st Dept. 2001] quoting Restatement (second) of Contracts §302.
Clearly, plaintiff Tiago Holdings, LLC, the assignee of the property herein, was not contemplated in the contractual arrangement (retainer agreement) between the Rigano law firm, on behalf of BDG, and defendant Roux, and the agreement was not intended to benefit, nor was performance to be made directly to, plaintiff Tiago Holdings, LLC. The complaint does not set forth any basis upon which to construe the existence of third-party rights vis a vis Tiago Holdings, LLC or that said plaintiff was an intended third-party beneficiary of the agreement herein.
A non-party may sue for breach of contract only if it is an intended, and not a mere incidental, beneficiary. A. Alicea v City of New York, 145 AD2d 315, 317
[1st Dept. 1988]. Where an entity is not mentioned as a party to the contract, the parties' intent to benefit the third party must be apparent from the face of the contract. This is not the situation here.
For the same reason - namely that Tiago Holdings, LLC is not an intended third party beneficiary that can sue on the agreement between the Rigano law firm, on behalf of BDG, and defendant Roux its claim for indemnification cannot be sustained.
Under the circumstances extent, and accepting the factual averments of the complaint as true, and according plaintiffs the benefit of every favorable inference therefrom, Tiago Holdings, LLC has no standing to pursue the claims asserted in the complaint against defendant Roux. Tiago Holdings, LLC was not a signatory to, nor specifically mentioned in the agreement - and was not in existence at the time of the agreement. Moreover, it has failed to raise an issue of fact as to whether it was an intended, as opposed to merely an incidental, beneficiary of the agreement. While defendant Roux acknowledges plaintiff BDG's status as a third- party beneficiary of the agreement herein, it contends, and the record establishes, that it did not purchase the property, never owned the property and did not suffer any damages as a result of the Tiago Holdings Corp.'s purchase of the property. Moreover, according to the deposition testimony of David Blumenfeld, the vice president of plaintiff BDG, BDG has been fully compensated by plaintiff Tiago Holdings, LLC for any monies it laid out in connection with remediation services performed at the site. The entity retained to remove the five storage tanks in question was paid with checks by Tiago Holdings, LLC and BDG was reimbursed by Tiago Holdings, LLC for costs in connection with services performed at the site.
In the absence of any allegations of fact showing damage, mere allegations of breach of contract are not sufficient to sustain a complaint. Where a party has failed to come forward with evidence sufficient to demonstrate damages flowing from the breach alleged and relies instead, on wholly speculative theories of damages, dismissal of the breach of contract claim is in order. Lexington 360 Associates v First Union National Bank of North Carolina, 234 AD2d 187, 189-90 [1st Dept. 1996] (citations and internal quotation marks omitted). Plaintiff BDG has failed to [*4]establish a causal relationship between defendant Roux's alleged breach of contract and the damages claimed, which is essential given that proximate cause is an element of breach of contract. Jorgensen v Century 21 Real Estate Corp., 217 AD2d 533, 534 [2nd Dept. 1995].
Under the circumstances extant, where plaintiff BDG has sustained no damages stemming from the purported breach of agreement herein, and the Environment Assessment Report prepared by defendant Roux specifically states that it was prepared for the exclusive use of plaintiff BDG - and any third-party use of the report was the sole responsibility of BDG and given that plaintiff BDG was not the purchaser of the property at issue, plaintiff BDG's claims against defendant Roux for breach of contract, detrimental reliance and indemnification cannot be sustained.
Accordingly, summary judgment in favor of defendant is granted and the complaint is dismissed.
Dated: __________________ _______________________________
J.S.C.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
