Franklin Home Improvements Corp. v 687 6th Ave. Corp.

[*1] Franklin Home Improvements Corp. v 687 6th Ave. Corp. 2008 NY Slip Op 50593(U) [19 Misc 3d 1107(A)] Decided on March 24, 2008 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 24, 2008
Supreme Court, Kings County

Franklin Home Improvements Corp., Plaintiff

against

687 6th Avenue Corp., Defendant.



15964/07



Attorney for Plaintiff:

Peter S. Gordon, Esq.

Gordon & Gordon

108-18 Queens Blvd.

Forest Hills, NY 11375

Attorney for Defendant:

Jeffrey I. Klein, Esq.

O'Kelley & Faller, PC

445 Hamilton Avenue - Suite 405

White Plains, NY 10601

Carolyn E. Demarest, J.

Defendant 687 6th Avenue Corporation moves pursuant to CPLR 3211(a) (7) to dismiss the action for failure to state a claim on the ground that plaintiff has not complied with the requirements of CPLR 3015(e) requiring plaintiff to plead in detail that plaintiff possessed a home improvement license at the time of the contracting work alleged in the complaint.

BACKGROUND

This action arises out of the alleged breach of an oral contract for the plaintiff's renovation and construction work on property owned by the defendant and subsequent construction work on two properties owned by Christine Iu ("Iu"), president of the defendant corporation. The complaint alleges that the plaintiff entered an agreement with Iu on behalf of the defendant, on or about February 24, 2005, wherein the plaintiff was to perform renovation and construction services on the premises located at 687 6th Avenue, Brooklyn, New York ("687 Property"). The 687 Property is a "primarily two-family with one store or office" structure [*2]according to the New York City property assessment and it is owned by the defendant. Plaintiff alleges the construction and renovation work at the 687 Property initially entailed the renovation of a commercial restaurant. Plaintiff claims that after commencing the renovation work on the restaurant, defendant requested that the plaintiff renovate the apartments above the restaurant so that restaurant personnel had a place to reside. Defendant contends that this property is not a "commercial" premises. Plaintiff alleges that defendant is the landlord of the two apartments in the 687 Property and rents the property to either the personnel at the restaurant or to the general public. Plaintiff further alleges that the rent from these apartments has been assigned to Flushing Savings Bank. Plaintiff seeks $125,000 for the balance of the renovation services on the 687 Property and restaurant equipment allegedly paid for by the plaintiff including refrigeration units, stoves, sinks, faucets, lighting fixtures, toilets, tubs, tile, wood, paint and accessories.

The complaint also alleges breach of contract and unjust enrichment with regard to renovation work performed on the premises located at 52 Reeve Place, Brooklyn, New York ("52 Property"). Plaintiff alleges the defendant requested that plaintiff perform renovation services on the 52 Property and is owed $6000 for the renovation services performed. According to the deed submitted by the defendant, this property is a "1-3 family with store/ office" property and is owned by Iu. The defendant does not have any ownership interest in the 52 Property.

Finally, the complaint alleges an outstanding balance of $14,300 for completed renovation work on a "vacation home in Montauk, New York." Plaintiff alleges the defendant requested that plaintiff perform renovation services on the property. Defendant claims that the property in question, 56 Edison Drive, Montauk, NY ("56 Property"), is a one-family residence, owned by Iu and the plaintiff was paid in full for the renovations. The defendant does not have any ownership interest in the 56 Property.

Plaintiff is not a licensed home improvement contractor in the City of New York or Suffolk County and was not so licensed at the time the work commenced.

DISCUSSION

Defendant moves for dismissal pursuant to CPLR 3211(a) (7) on the grounds that the plaintiff did not allege in the complaint that the plaintiff was licensed as a home improvement contractor as is required by the laws of New York City and Suffolk County. Under CPLR 3015(e), "[w]here the plaintiff's cause of action against a consumer arises from the plaintiff's conduct of a business which is required by state or local law to be licensed by the department of consumer affairs of the city of New York, [or] the Suffolk county department of consumer affairs, . . . the complaint shall allege, as part of the cause of action, that plaintiff is duly licensed and shall contain the name and number, if any, of such license and the governmental agency which issued such license; . . . The failure of the plaintiff to comply with this subdivision will permit the defendant to move for dismissal pursuant to paragraph seven of subdivision (a) of rule thirty two hundred eleven of this chapter" (emphasis added).

Both New York City and Suffolk County laws require home improvement contractors to be licensed as such. Pursuant to Administrative Code of the City of New York § 20-387(a), "[n]o person shall solicit, canvass, sell, perform or obtain a home improvement contract as a contractor or salesperson from an owner without a license therefor" (emphasis added). Suffolk County, the county in which the 56 Property is located, also requires home improvement contractors to be licensed. Pursuant to Suffolk County Code § 345-3(A), "[i]t is unlawful for any person . . . to engage in any business in the county regulated by this chapter without [*3]obtaining a license therefor from the Office in accordance with and subject to the provisions of this chapter." According to Suffolk County Code § 345-3(B), "[a] license issued pursuant to this chapter may not be construed to authorize the licensee to perform any work or engage in any business which is reserved to qualified licensees under separate provisions of state or local law or subsequent articles of this chapter" (emphasis added). Pursuant to § 156-10 of the Town of East Hampton's Local Law No. 42 of 2005, "[n]o person shall conduct, undertake or engage in any home improvement, as the same is defined herein, without first obtaining and thereafter maintaining in effect at all times an East Hampton Town home improvement contractor's license from the Building Inspector as herein provided."

The plaintiff did not allege that it was licensed as a home improvement contractor in the complaint and it is uncontested that the plaintiff did not have a home improvement contractor's license in either New York City or Suffolk County at the time of the renovation work at issue in this matter. However, "[t]he legislative purpose in enacting [CPLR 3015(e)] was not to strengthen contractor's rights, but to benefit consumers by shifting the burden from the homeowner to the contractor to establish that the contractor was licensed" (B & F Bldg. Corp. v Liebig, 76 NY2d 689 [1990], emphasis added). Therefore, as the defendant is a commercial business and not a homeowner, the court must first address whether the defense raised in CPLR 3015(e) applies to the defendant in this matter.

It is uncontested that the work on the 687 Property included home improvement work in the two residential apartments as well as commercial renovation on the ground level restaurant. The Administrative Code of the City of New York § 20-386(2) defines "home improvement" as "the construction, repair, replacement, remodeling, alteration, conversion, rehabilitation, renovation, modernization, improvement, or addition to any land or building, or that portion thereof which is used or designed to be used as a residence or dwelling place . . . ." (emphasis added). This provision clearly indicates that a license under Administrative Code § 20-387(a) is required for renovation work in a residential space "even where that space is only part of a building which is also used for non-residential purposes" (Smith v Waner, NYLJ, Oct. 23, 2003, at 18, col 1 [Sup Ct, NY County, Cahn, J.]). Where the contract is for both residential and commercial work, the contract is non-severable and the plaintiff's failure to obtain a home improvement license bars plaintiff from recovery pursuant to CPLR 3015(e) (Young's L & M Constr., Inc. v Kelley, 13 Misc 3d 307, 310 [Sup Ct, New York County 2006]; Smith v Waner, NYLJ, Oct. 23, 2003, at 18, col 1; Metrobuild Assoc., Inc. v Nahoum,Sup Ct, Index No. 602211/06, NY County, Sept. 12, 2006, Edmead, J.).

However, the defendant's motion to dismiss must be denied because CPLR 3015(e) is not applicable where the defendant is a commercial entity. It is well settled that CPLR 3015(e) does not bar an action where "the work performed by plaintiff was for a commercial enterprise as opposed to a consumer" as commercial enterprises cannot be considered among the protected class of consumers sought to be protected by CPLR 3015(e)(Veltri v Platzner Int'l Group, Ltd., 7 Misc 3d 131A [App Term, 2d Dept 2005]; Migdal Plumbing & Heating Corp. v Dakar Developers, 232 AD2d 62, 66 [1st Dept 1997], lv denied 91 NY2d 808 [1998]; Toulouse v Chandler, 5 Misc 3d 1005A [Sup Ct, West Cty 2004] (holding, "as a result of the legislative purpose, courts have denied motions to dismiss where the consumers involved do not fall within the intended class of [*4]persons sought to be protected from fraudulent practices by home improvement contractors (e.g., real estate developers, commercial property owners and general contractors)"). "The term consumer' is undefined in the [CPLR], but may reasonably be construed to apply to a person, family or household"(Migdal Plumbing, 232 AD2d at 65, citing CPLR 105). In the present matter, the defendant corporation is a commercial enterprise and thus cannot be considered either a person, family or household. Therefore, the defense in CPLR 3015(e) does not apply to the defendant.

In addition, the bar on contract enforcement under CPLR 3015(e) does not apply where the defendant does not reside in the property in which the work was completed(Kuchar v Baker, 261 AD2d 402, 403 [2d Dept 1999] (finding that the non-licensed home improvement contractor "would not necessarily have been barred from recovery in [the] case, since he alleged that the [party entering the contract] was neither an owner of the premises at the time the agreement was entered into (see, Administrative Code of City of NY §20-387 [a]) nor a resident of the premises at the time that the work was performed"); Ayres v Dunhill Interiors, Ltd., 138 AD2d 303 [1st Dept 1988] (finding that a contract between a non-licensed home improvement contractor and owner of multiple properties would be enforceable where the subject matter property is not where the owner was actually residing and remanded the matter to determine whether defendant resided in the subject matter property); Jack A. Corcoran Marble Co. v Clark Constr. Corp., 155 Misc 2d 49 [1st Dept 1993] (finding that "the person seeking to invoke the license requirements of the ordinance must actually reside in the dwelling unit in which the work is to be performed")). As the defendant is a corporation, the defendant cannot "reside" in any of the properties at issue and thus the bar on enforcement of a home improvement contract under CPLR 3015(e) is not applicable. This inability of a corporation to reside in the premises is consistent with the legislature's intent to protect home owning consumers and not commercial enterprises (see B & F Bldg. Corp. v Liebig, 76 NY2d at 693; Veltri v Platzner Int'l Group, Ltd., 7 Misc 3d at 131A; Toulouse v Chandler, 5 Misc 3d at 1005A). Therefore, as the defendant is a commercial enterprise that is not encompassed among the protected class of consumers intended to be protected under CPLR 3015(e) and is not a resident of any of the properties at issue, the plaintiff has sufficiently alleged breach of contract causes of action (see Furia v Furia, 116 AD2d 694 [2d Dept 1986]), and the motion to dismiss must be denied.

Independent of the defense raised under CPLR 3015(e), as the defendant has disputed owning the properties at issue in the second and third causes of action and has submitted documentary proof of ownership in Christine Iu who is not a party, the court will address whether these causes of action should survive a motion to dismiss pursuant to CPLR 3211(a)(1) as well as 3211(a)(7). "It is well settled that, as a general rule, on a motion to dismiss the complaint for failure to state a cause of action under CPLR 3211 [a] [7], the complaint must be construed in the light most favorable to the plaintiff" (Gruen v County of Suffolk, 187 AD2d 560, 562 [1992]). The court must also accept the facts as alleged in the complaint and submissions in opposition to the motion as true and "accord [*5]plaintiffs the benefit of every possible favorable inference" (Sokoloff v Harriman Estates Development Corp., 96 NY2d 409, 414 [2001]). "[I]f from the four corners [of the pleading] factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Dismissal of the complaint pursuant to CPLR 3211 [a] [7], "will be warranted only in those situations in which it is conclusively established that there is no cause of action" (Town of North Hempstead v Sea Crest Construction Corp., 119 AD2d 744, 746 [1986]).

The complaint alleges in the second cause of action that "Defendant requested of Plaintiff to perform renovation services" on the 52 Property, the "Plaintiff performed work satisfactory to the Defendant," the plaintiff "is currently owed the sum of Six Thousand Dollars," and "Plaintiff has been damaged in the amount of Six Thousand Dollars." As for the third cause of action, the complaint states that the "Defendant requested of Plaintiff . . . labor and renovation services to be performed on a vacation home in Montauk, New York," "Plaintiff completed all the work on the home as requested," the plaintiff "is currently owed the sum of Fourteen Thousand Three Hundred Dollars," and the defendant still has "an outstanding balance of Fourteen Thousand Three Hundred Dollars." Furthermore, the plaintiff's Affirmation in Opposition alleges, "Defendant Corporation at all times retained the Plaintiff to renovate on its three (3) investments, i.e. properties. Christine Iu is not a consumer but rather a savy [sic] entrepreneur running a Restaurant and other rental properties. Her Corporation's profits are substantial due to its refusal to pay for the renovations which included Restaurant equipment etc."

Despite the fact that documentary evidence provided by the defendant demonstrates that the defendant does not actually own the 52 Property or the 56 Property, the motion to dismiss the second and third causes of action must be denied as the facts alleged in the complaint fit within a cognizable legal theory. While a plaintiff may not maintain a cause of action for breach of contract where there is no contractual relationship with the defendant and the plaintiff was not in privity with the defendant (M. Paladino, Inc. v J. Lucchese & Son Contr. Corp., 247 AD2d 515 [2d Dept 1998]; Albstein v Elany Contr. Corp., 30 AD3d 210 [1st Dept 2006]), and the documentary evidence in this matter appears to demonstrate that the defendant does not have an ownership interest in the 52 Property or the 56 Property, the court must accept the plaintiff's allegation that it was the defendant which contracted (perhaps as agent for the owner) for the services rendered (Sokoloff, 96 NY2d at 414). Defendant has not disputed the claim that it retained the plaintiff for the work on all three properties at issue and admitted that the plaintiff did perform some renovation services on the properties. Accepting the facts as alleged in the complaint as true, the plaintiff has set forth claims sufficient to withstand a preanswer motion to dismiss (see Furia, 116 AD2d at 694; La Barte v. Seneca Res. Corp., 285 AD2d 974, 975 [4th Dept 2001]; Cherry v Resource America, 285 AD2d 989, 990 [4th Dept 2001]). The plaintiff is granted leave to amend the complaint to set forth facts [*6]clarifying the circumstances of the making of the contracts. However, should Iu be named as an individual defendant, the defense sought in this motion pursuant to CPLR 3015(e) may be applicable to Iu as a homeowner.

CONCLUSION

Accordingly, the defendant's motion pursuant to CPLR 3211(a) (7) to dismiss the complaint for failure to state a claim is denied. Plaintiff is granted leave to amend the complaint within 20 days of service of a copy of this Order.

The parties shall appear for a preliminary conference on June 25, 2008. It is expected that issue will have been joined by service of defendant's answer by that date.

The foregoing constitutes the decision and order of the court.

E N T E R :

J.S.C.