Nova Star Elec. Corp. v Granite Halmar Constr. Co., Inc.
Annotate this CaseDecided on October 17, 2007
Supreme Court, Queens County
Nova Star Electric Corp., Plaintiff,
against
Granite Halmar Construction Company, Inc., St. Paul Fire and Marine Insurance, Federal Insurance Company and Travelers Casualty and Surety Company, Defendants.
24978/05
Allan B. Weiss, J.
The defendants have moved for an order permitting them to reargue and to renew their prior motion for summary judgment dismissing the complaint against them and for an order disqualifying the law firm of Georgoulis & Associates from representing the plaintiff.
In or about December 2002, defendant Granite Construction Northeast, Inc. f/k/a Granite Halmar Construction Co., Inc. (Granite) entered into a contract with the National Railroad Passenger Corporation (Amtrak) whereby the former obligated itself to perform work on the First Avenue and Long Island City East River Tunnel ventilation shafts and facilities. Defendant Granite and plaintiff Nova Star Electric Corp. (Nova Star) signed a letter of intent expressing their intention of entering into a subcontract whereby plaintiff Nova Star would perform electrical work on the project at a price of $29,369,383. Plaintiff Nova Star began to work pursuant to the letter of intent, but the parties could not reach an agreement on the terms of a subcontract and/or Nova Star could not supply requisite bonds, and, on or about July 14, 2003, defendant Granite directed Nova Star to terminate its work. When defendant Granite refused to make certain payments to plaintiff Nova Star until Amtrak first paid Granite, Nova Star sought financial assistance from M.A. Angeliades, Inc. (Angeliades), a general contractor. Granite, Nova Star, and Angeliades eventually agreed that Nova Star would cease work on the project and that Angeliades would do "phase two" electrical work on the project as a substitute subcontractor. The parties also agreed that defendant Granite would pay Angeliades $2,300,000 for work previously done by plaintiff Nova Star on the project. Plaintiff Nova Star alleges that Granite would make this payment for the purpose of compensating the plaintiff for work it had previously done under phase two, but after Granite itself received payment from Amtrak. On or about March 5, 2004, the parties signed a [*2]settlement agreement whereby plaintiff Nova Star (1) agreed to release defendant Granite from any and all claims arising from the former's work on the project; and (2) acknowledged that defendant Granite's previous payment of $324,340.58 would be the only payment made directly to Nova Star for its work on the project. On the same day, defendant Granite entered into a subcontract with Angeliades whereby the subcontractor promised to perform electrical work on the project at a price of $12,250,000. However, in or about April 2004 and again upon reconsideration in or about August 2004, Amtrak refused to consent to defendant Granite's choice of Angeliades as an electrical subcontractor. Granite and Angeliades never entered into a subcontract, and, as a result, the former never made payment of the $2,300,000 previously owed to Nova Star.
On or about November 18, 2005, the plaintiff began this action by the filing of a summons and a complaint asserting six causes of action sounding in breach of contract, quantum meruit, and suretyship. The defendants submitted a motion for summary judgment on February 14, 2007 which this court denied by decision and order dated April 25, 2007. This court stated: "Because releases are contracts, they are interpreted in accordance with principles of contract law. (See, Shklovskiy v Khan, 273 AD2d 371; Zilinskas v Westinghouse Elec. Corp., 248 AD2d 777; Stone v National Bank and Trust Co., 188 AD2d 865.)***A release may be avoided on the ground of a mutual mistake of fact." (See, Mangini v McClurg, 24 NY2d 556; O'Neal v Life Science Laboratories, Inc., 23 AD3d 1024; Paige v City of Buffalo, 300 AD2d 1001; Gibli v Kadosh, 279 AD2d 35.) "The term mistake' may be used to cover all kinds of mental error, however induced...." (Rosenblum v Manufacturers Trust Co., 270 NY 79, 84.) "A mistake' that can support reformation is a belief that is not in accord with the facts." (Atlas Corp. v U.S., 895 F2d 745, 750; see, Allen v WestPoint-Pepperell, Inc., 945 F2d 40.)***The parties clearly shared the mistaken expectation that Angeliades would complete the electrical work on the project pursuant to a subcontract from Granite, and the parties clearly were under a mutual mistake of fact when they took the approval of the subcontract by Amtrak as a mere formality."
That branch of the motion by the defendants which is for an order permitting reargument of their prior motion for summary judgment is granted. Upon reargument, the defendants' prior motion for summary judgment is again denied. The defendants have attempted to show that "the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision." (Schneider v Solowey, 141 AD2d 813; see, CPLR 2221[d]; Grassel v Albany Med. Ctr. Hosp., 223 AD2d 803; William P. Pahl Equipment Corp. v Kassis, 182 AD2d 22.) The attempt is misguided. First, Angelo Gatzonis, the plaintiff's president, plainly alleged in his affidavit dated February 12, 2007 that "[i]t was further agreed that payment for the work previously performed by Nova Star on the project, in the approximate sum of $2,300,000.00, would be paid by Halmar to Angeliades***." Thus, there is evidence in the record which supported the court's statement that: "The parties also agreed that defendant Granite [Halmar] would pay Angeliades $2,300,000 for work previously done by plaintiff Nova Star on the project." While Granite asserts that there is no evidence in the record that it ever admitted owing $2,300,000 to the plaintiff, Granite cannot deny that there is evidence in the record that the parties compromised plaintiff's claim for a substantial sum. In any event, the import of the previous decision was not to fix the precise amount, if any, owed to the subcontractor, and this court's previous decision has no res judicata effect concerning what exact amount, if any, Granite owes to Nova Star. "A denial of a motion for summary judgment is res judicata of nothing except that summary judgment is not warranted." (Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 3212:21, p 30; see, [*3]Artessa v City of Utica, 23 AD3d 1148; Clearwater Realty Co. v Hernandez, 256 AD2d 100.) Second, there is no merit in the defendants' argument that "there is absolutely no evidence" that the parties conditioned the settlement agreement upon Amtrak's approval of Granite's award of the permanent electrical work to Angeliades. The affidavit of Angelo Gatzonis dated February 12, 2007 supports avoidance of the release on the theory of mutual mistake of fact (see, Mangini v McClurg, supra; O'Neal v Life Science Laboratories, Inc., supra; Paige v City of Buffalo, supra; Gibli v Kadosh, supra), the basis of the court's previous decision, and on the theory of a failure of an implied condition. (See, Oppenheimer & Co., Inc. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685; Savino v DeLeyer, 160 AD2d 989; 22 NY Jur 2d, "Contracts" § 264.)
That branch of the defendants' motion which is for an order permitting renewal of their prior motion for summary judgment is granted. Upon renewal, the court again denies the defendants' motion for summary judgment. The defendants have submitted the affidavit of Rick Carlyle, Granite's general administrative manager, who alleges that the parties understood that Amtrak's approval of Angeliades was not a mere formality. The conflicting affidavits of the parties have created issues of fact and credibility which cannot be resolved on a motion for summary judgment. (See, Dayan v Yurkowski, 238 AD2d 541; T&L Redemption Center Corp. v Phoenix Beverages, Inc., 238 AD2d 504; First New York Realty Co., Inc. v DeSetto, 237 AD2d 219.)
That branch of the defendants' motion which is for an order disqualifying the law firm of Georgoulis & Associates from representing the plaintiff is denied. Attorney Georgoulis represented the plaintiff in the negotiation of the settlement agreement. Generally, an attorney may not accept employment in a matter where he knows or it is obvious that he or a member of his firm ought to be called as a witness. (See, Code of Professional Responsibility DR 5-102 [22 NYCRR 1200.21]; Kattas v Sherman, 32 AD3d 496; Fernandes v Jamron, 9 AD3d 379; North Shore Neurosurgical Group, P.C. v Leivy, 72 AD2d 598.) A party moving to disqualify an attorney pursuant to DR 5-102 must demonstrate that (1) the testimony of the opposing party's counsel is necessary to his case and (2) such testimony is or may be prejudicial to the client. (See, Goldberger v Eisner, 21 AD3d 401; Daniel Gale Associates, Inc. v George, 8 AD3d 608.) In the case at bar, although the defendants showed that the plaintiff's attorney played a role in negotiating the settlement agreement between the parties, the defendants did not adequately show that his testimony is necessary or would be prejudicial to the plaintiff. (See, Goldberger v Eisner, supra; Daniel Gale Associates, Inc. v George, supra; Rich v Hackel, 205 AD2d 316; Luk Lamellen u. Kupplungsbau GmbH v Lerner, 167 AD2d 451.)
Short form order signed herewith.
J.S.C.
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