Mercy Ctr., Inc. v JLC Envtl. Consultants

[*1] Mercy Ctr., Inc. v JLC Envtl. Consultants 2005 NY Slip Op 52313(U) [12 Misc 3d 1187(A)] Decided on December 12, 2005 Supreme Court, New York County Cahn, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 12, 2005
Supreme Court, New York County

Mercy Center, Inc., Plaintiff,

against

JLC Environmental Consultants, Inc., and Advanced Cleanup Technologies, Inc., Defendants.



600476/03

Herman Cahn, J.

This is an action for breach of contract, negligence, and negligent misrepresentation in connection with defendants' environmental assessment work concerning a vacant lot in Bronx, New York, purchased by plaintiff from the City of New York in reliance thereon.

Defendant Advanced Cleanup Technologies, Inc., moves (seq. no. 002) for summary judgment dismissing the complaint, as well as the cross-claims by co-defendant JLC Environmental Consultants, Inc., for contribution and/or common law indemnification, CPLR 3212. JLC cross-moves to amend its answer to add a cross-claim for breach of contract and to replead its present cross-claims for contribution and indemnification, id., 3025.

Facts:

Plaintiff is a not-for-profit organization located in South Bronx. It provides guidance and assistance to mothers of schoolchildren, and other services such as domestic violence counseling, English language education, and employment preparation and placement (Complaint ¶ 8). JLC is an environmental consulting company which plaintiff retained, to perform an environmental site assessment of a vacant lot which plaintiff was considering purchasing. It intended to construct a building on the lot.

On November 8, 1999, plaintiff and JLC executed a price proposal for a Phase I Environmental Site Assessment (Notice of Motion Ex. F). On March 21, 2000, said parties executed JLC's price proposal for a related radar survey of the lot (id., Ex. G). Those documents make clear that one of the purposes of the assessment and survey was to identify chemical storage tanks at the site.

JLC, in turn, retained co-defendant Advanced Cleanup Technologies, Inc., to conduct the radar survey (Notice of Motion Ex. H). By letter report dated April 15, 2000, addressed to JLC, Advanced advised that radar uncovered "no reflections indicative of underground storage tanks or subsurface piping . . . ." (Id., Ex. I.) Advanced billed JLC for its radar survey services (id., Ex. J).

JLC prepared a Phase I Environmental Site Assessment for plaintiff, dated June 1, [*2]2000 (Notice of Motion Ex. K). It reports that "no petroleum storage tanks were observed . . . ." (Id., ¶ 4.2.) It explicitly advises that a radar survey was undertaken, revealing no underground tanks" (id., ¶ 5.4).

The complaint alleges that plaintiff purchased the lot in reliance on the foregoing findings, and hired a contractor to construct a building. It is alleged that the contractor discovered three underground petroleum tanks on the property, and that plaintiff discovered that petroleum from the tanks had leaked into the soil. Plaintiff commenced this action to recover the costs of remediating the soil, and related costs.

As against JLC, the complaint asserts causes of action for breach of contract (first and second), gross negligence (third), and negligent misrepresentation (fifth). By decision and order dated July 21, 2005, the court sustained the first cause of action against JLC, dismissing the remaining causes against it.[FN1]

As against Advanced, the complaint asserts causes of action for gross negligence (fourth) and negligent misrepresentation (sixth).

Discussion:

On a motion for summary judgment, the movant is required to establish, by competent evidence, a prima facie entitlement to judgment as a matter of law, and the absence of any material issues of fact (e.g., Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]).

Plaintiff's Claims Against Advanced:

The cause of action for gross negligence alleges that Advanced negligently failed to locate and identify the existence of underground toxic tanks at the lot (Complaint ¶¶ 41-44). The cause of action for negligent misrepresentation similarly alleges that Advanced breached its duty of care to report accurate information concerning the presence of toxic tanks at the lot, when it affirmatively stated that there were none (id., ¶¶ 51-55).

Advanced asserts that the claims against it must be dismissed because it did not have any privity of contract with plaintiff and, thus, had no "special relationship" with it upon which to base a claim for negligent misrepresentation (Ferrara Affirm. ¶ 37). As for the cause of action for gross negligence, plaintiff similarly asserts that Advanced owed plaintiff no duty to locate and identify underground toxic tanks (id., ¶ 39). These assertions distort the true legal standard to be applied herein.

The Court of Appeals stated the applicable rule thus: The long-standing rule is that recovery may be had for pecuniary loss arising from negligent representations where there is actual privity of contract between the parties or a relationship so close as to approach that of privity.[*3]

(Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 424 [1989] [emphasis added].) The Court enumerated the following factors in determining whether the requisite relationship, short of actual privity, exists to sustain a cause of action for negligent misrepresentation: (1) awareness that the reports were to be used for a particular purpose or purposes; (2) reliance by a known party or parties in furtherance of that purpose; and (3) some conduct by the defendants linking them to the party or parties and evincing defendant's understanding of their reliance.

(Id., at 425.) All these factors are present here.

This is not a case where the defendant is being sued by a member of the public at large, who happened to rely on figures, statistics, or facts which the defendant prepared while oblivious to the existence of the relying party. Advanced was retained by JLC to conduct a radar survey of a specific parcel of real property. It cannot be denied as a matter of law that Advanced possessed a clear understanding that such a survey (as, presumably, many others like it performed nationwide by members of a growing environmental consulting industry) was being performed preparatory to reliance by some party having an ownership or prospective ownership interest, or responsibility, vis-a-vis the surveyed property. To deny that would be to deny the very reason for the enterprises which both Advanced and JLC are engaged in. The complaint, reasonably and liberally read, alleges just that; i.e., that Advanced was aware that its report was to be used by a party with an interest in the property that was the subject of its report (see, Ossining Union Free School Dist., supra). The law does not require that Advanced knows the precise name of the individual just that it knows there exists such an individual, whose use of the report is, as the Court of Appeals pragmatically put it, "the end and aim of the transaction" (id., at 425).

Consequently, Advanced's motion for summary judgment dismissing the cause of action for negligent misrepresentation, on the ground that it has no "privity of contract" with plaintiff, is denied.

As for the cause of action for negligence, cast as "gross" negligence in the complaint, Advanced's motion is, likewise, denied. Advanced is misguided in baldly asserting that it bore no common law duty to plaintiff "to identify underground storage tanks . . . ." (Ferrara Aff. ¶ 39.) Advanced cites no authority for that premise; nor can it. Within the context of a claim for negligence, issues relating to the nature and extent of a defendant's duty to a plaintiff are generally issues of fact, for the trier of fact, and not appropriate for summary disposition (Luna v Port Auth. of New York & New Jersey, 21 AD3d 324 [1st Dept 2005]; Hemmings v St. Mark's Hous. Assn., Phase II L.P., 272 AD2d 442 [2d Dept 2000]). As noted above, the notion that Advanced might not have realized that a client of JLC was directly interested in the survey, and its accuracy, strains credulity.

Consequently, Advanced's motion for summary judgment dismissing the cause of action for negligence, is denied.

JLC's Cross-Claim Against Advanced:

JLC's cross-claim for contribution must be dismissed, as "the existence of some form of tort liability is a prerequisite to application of the [contribution] statute," i.e., CPLR 1401 (Board of Educ. v Sargent, Webster, Crenshaw & Folley, 71 NY2d 21, 28 [1987]). As [*4]stated above, plaintiff's tort claims against JLC were dismissed in the decision dated July 21, 2005, leaving only the breach of contract claim intact, as against JLC. Accordingly, a claim for contribution by JLC against Advanced cannot lie.[FN2]

However, JLC's cross-claim for common law indemnification is not dismissed. Indemnity theory affords relief to a party who is compelled to pay for a loss caused by another party (Trump Village Section 3, Inc. v New York State Hous. Fin. Agency, 307 AD2d 891 [1st Dept], lv denied 1 NY3d 504 [2003]).[FN3] JLC properly pleads a cause of action for indemnification by alleging that it duly performed all its obligations under its contract with plaintiff, but that Advanced may have been negligent in its conduct of the radar survey, which JLC commissioned (JLC's Verified Answer & Cross-Claim [Notice of Motion Ex. B] ¶¶ 21-26). Advanced, of course, factually denies that it performed the survey negligently (Advanced's Answer [Notice of Motion Ex. C], passim).

As discussed above, whether Advanced performed the survey negligently is a material issue of fact which cannot be resolved on this motion, and is reserved for trial. Advanced has not presented sufficient basis on which to dismiss JLC's common law indemnification claim at this time. Accordingly, its motion for summary judgment dismissing JLC's common law indemnification cross-claim is denied.

JLC's Cross-Motion to Amend its Cross-Claims:

JLC has submitted a proposed verified amended answer and cross-claims (cf., Haller v Lopane, 305 AD2d 370 [2d Dept 2003]). The proposed amended pleading (Notice of Cross-Motion Ex. 1) attempts two things: (1) to separate JLC's indemnification and contribution claims into two, distinctly pleaded, causes of action (second and third proposed amended cross-claims); and (2) to add a claim for breach by Advanced of the JLC/Advanced subcontract (first proposed amended cross-claim).

Leave to assert the proposed amended cross-claim for contribution is denied, as JLC's claim for that relief has been dismissed, herein above.

As for the remaining proposed amended cross-claims, Advanced encounters no undue surprise (Wattson v TMC Holdings Corp., 135 AD2d 375 [1st Dept 1987]). The indemnification claim is already found in JLC's first verified answer and cross-claim, and the claim for breach of contract does not add new factual allegations; it simply attaches an additional legal theory to the already pleaded allegation that Advanced did not perform the radar survey properly (e.g., Beverage Mktg. USA, Inc. v South Beach Beverage Co., Inc., 20 AD3d 439 [2d Dept 2005]).

Leave to amend a pleading is to be freely granted under the present circumstances [*5](CPLR 3025 [b]). Accordingly, JLC's cross-motion for leave to serve and file an amended verified answer and cross-claims, is granted; however, such pleading shall not contain a cross-claim for contribution, consistent with the within disposition.

Accordingly, it is

ORDERED that the motion by defendant Advanced Cleanup Technologies, Inc., for summary judgment dismissing plaintiff's claims against it, is denied; and it is further

ORDERED that said defendant's motion for summary judgment dismissing the cross-claims of defendant JLC Environmental Consultants, Inc., is granted only as to the cross-claim for contribution, and is otherwise denied; and it is further

ORDERED that said cross-claim for contribution is dismissed; and it is further

ORDERED that the cross-motion of defendant JLC Environmental Consultants, Inc., for leave to serve and file an amended verified answer and cross-claims, is granted, except that such pleading shall not contain a cross-claim for contribution; and it is further

ORDERED that said amended verified answer and cross-claims shall be served no later than ten days from the date of service of a copy of this decision and order, together with notice of entry, upon counsel for defendant JLC Environmental Consultants, Inc.; and it is further

ORDERED that the clerk shall enter judgment accordingly.

Dated:December 12, 2005

E N T E R :

/s/

J. S. C. Footnotes

Footnote 1:The court held that the second cause of action for breach of contract was redundant of the first, which was sustained as a viable claim against JLC. The third and fifth causes of action for gross negligence and negligent misrepresentation were dismissed because the court held that JLC's duties to plaintiff were enforceable as direct contractual obligations. That analysis is inapplicable to Advanced, which entered into no contract with plaintiff, and as to which no cause of action for breach of contract has been asserted; hence, the present motion.

Footnote 2:JLC's counsel admits as much in his memorandum (at 3), submitted on this motion prior to the court's July 21, 2005, decision and order: "Should the Court grant JLC summary judgment dismissing plaintiff's tort claims against JLC, then ACT [i.e., Advanced] would in turn be entitled to dismissal of JLC's cross claim for contribution . . . ."

Footnote 3:Unlike contribution theory, which is designed to apportion liability as between two or more tortfeasors responsible for a single harm (Trump Village Section 3, Inc., 307 AD2d at 896-97).