Solid Waste Servs., Inc. v Sferrazza & Keenan, PLLC
Annotate this CaseDecided on March 28, 2008
Supreme Court, New York County
Solid Waste Services, Inc., d/b/a J.P. Mascaro and Sons, Plaintiff,
against
Sferrazza & Keenan, PLLC, Defendant.
601724/07
Carol R. Edmead, J.
Defendant Sferrazza & Keenan, PLLC (the Law Firm) moves, pursuant to CPLR 3211 (a)(1) and (a)(7), for an order dismissing the complaint. Plaintiff cross-moves, pursuant to CPLR 3212, for an order granting partial summary judgment.
In January 1998, plaintiff, a sewage sludge/biosolids hauler organized under the laws of the State of Pennsylvania, entered into a 15 year contract with the New York City Department of Environmental Protection (DEP) to transport biowaste from DEP's water pollution control plants and process it into a product that could be marketed for beneficial use (the Contract). Performance under the Contract began in April 1999. Following the closure of a Brooke County Compost Facility in November 2000, that had been operated by plaintiff, plaintiff notified DEP of such closure (The Law Firm's Exhibit C, correspondence from plaintiff to DEP dated 11/29/00). Subsequently, numerous communications were exchanged between these parties as to plaintiff's ability to provide the required processing capacity for the biosolids and the required back-up facility (see The Law Firm's Exhibits D - O, correspondence between plaintiff and DEP dated 6/29/01 through 10/14/02). On October 29, 2002, DEP terminated the Contract for default, effective November 1, 2002.
Plaintiff challenged the termination by filing a Notice of Dispute to the DEP Agency Head dated November 5, 2002, and asking that he convene an informal conference with all of the parties (The Law Firm's Exhibit Q, plaintiff's correspondence to DEP's First Deputy Commissioner dated 11/5/02). DEP's Agency Head declined plaintiff's request (Plaintiff's Exhibit D within Exhibit B, DEP's correspondence to plaintiff dated 11/25/02). Plaintiff then filed a Notice of Claim with the City Comptroller (Plaintiff's Exhibit F within Exhibit B, Notice of Claim dated December 4, 2002). In his decision, the City Comptroller determined, after reviewing the record, that DEP's decision to terminate the Contract for default was in accordance with the Contract and reasonable (Plaintiff's Exhibit H within Exhibit B, Decision dated 3/24/03). On April 22, 2003, plaintiff filed a Petition for Review of the Comptroller's decision with the Contract Dispute Resolution Board (CDRB) (Plaintiff's Exhibit I within Exhibit B, Petition for Review dated 4/22/03). On February 2, 2004, the CDRB affirmed the Comptroller's decision, and the DEP's October 29, 2002 termination of the Contract, finding, inter alia, that the [*2]DEP's termination of the Contract for cause was rational (Plaintiff's Exhibit J with Exhibit B, Memorandum Decision dated 2/2/04).
In May 2004, plaintiff retained the Law Firm to commence an Article 78 proceeding to challenge the Memorandum Decision. An Article 78 petition was filed on June 1, 2004 against DEP. In response to the Petition, the DEP moved, pursuant to CPLR 7804 and Rule 1001 (a), to dismiss the proceeding for the non-joinder of CDRB, an alleged necessary party. Plaintiff then terminated the Law Firm's services. Plaintiff's incoming counsel cross-moved, under CPLR 1001 (b), to allow the proceeding to continue against the DEP, without the CDRB being named as a party respondent. By Order dated February 3, 2005, the Supreme Court granted DEP's motion to dismiss the petition, and denied plaintiff's cross motion (Matter of Solid Waste Services, Inc. v New York City Department of Environmental Protection, Sup Ct, NY County, February 3, 2005, Index No. 0108235/04). The decision was affirmed by the Appellate Division in May 2006 (Matter of Solid Waste Services, Inc. v New York City Department of Environmental Protection, 29 AD3d 318 [1st Dept 2006]).
Plaintiff then commenced the instant action for legal malpractice against the Law Firm. The Law Firm now moves, pursuant to CPLR 3211 (a)(1) and (a)(7), for an order dismissing the complaint.
On a motion pursuant to CPLR 3211 (a) (7), the court is limited to ascertaining whether the pleading states any cause of action and not whether there is evidentiary support for the complaint (Guggenheimer v Ginzburg, 43 NY2d 268 [1977]). The complaint must be liberally construed in the light most favorable to the plaintiff, and all factual allegations must be accepted as true (id.; Morone v Morone, 50 NY2d 481 [1980]). Affidavits and other evidence submitted by plaintiff may be considered for the limited purpose of remedying any defects in the complaint and thus preserving inartfully pleaded, but potentially meritorious claims (Rovello v Orofino Realty Co., Inc., 40 NY2d 633 [1976]).Under CPLR 3211 (a)(1), a motion to dismiss based on the existence of a defense founded upon documentary evidence, defendant has the burden of demonstrating that the documentary evidence conclusively resolves all factual issues and that plaintiff's claims fail as a matter of law (Fortis Fin. Servs., LLC v Fimat Futures USA, Inc., 290 AD2d 383 [1st Dept 2002]).
"[T]o state a cause of action for legal malpractice, the complaint must set forth three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and actual damages" (Leder v Spiegel, 31 AD3d 266, 267 [1st Dept 2006]). "In order to establish proximate cause, plaintiff must demonstrate that but for' the attorney's negligence, plaintiff would either have prevailed in the matter at issue, or would not have sustained any ascertainable damages'" (id. at 267-268, citing Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005]). "The failure to demonstrate proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent" (id. at 268; see also Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2005]).
The Law Firm initially argues that the complaint is deficient on its face in that it identifies the malpractice as "failure to commence suit within the four (4) month period of an Article 78 proceeding" (The Law Firm's Exhibit A, Complaint, ¶ 25), and asserts that the Law Firm "commenced the underlying Article 78 proceeding one day prior to the four (4) month statutory period after the issuance of the CDRB decision" (id., ¶ 23). Thus, plaintiff concedes, in its complaint, that the underlying Article 78 proceeding was timely commenced. However, in its [*3]opposition papers, plaintiff sufficiently remedies its inartfully pleaded cause of action by stating that the Law Firm's malpractice consisted of its failure to commence suit against CDRB in the Article 78 proceeding.
In its complaint, plaintiff also asserts that, but for the Law Firm's alleged malpractice, "plaintiff would have been successful in re-attaining the 15 year contract that was terminated 11 years prematurely," and that it was damaged in the amount of loss of profits of at least $1,500,000.00 (Complaint, ¶¶ 26 & 27). Therefore, in liberally construing the complaint and plaintiff's opposing papers, it sufficiently states a claim for legal malpractice (Leder v Spiegel, 31 AD3d 266, supra).
The Law Firm also submits documentary evidence in an attempt to demonstrate that plaintiff cannot establish the proximate cause required in a legal malpractice claim, arguing that plaintiff would not have been successful in the underlying Article 78 proceeding regardless of any negligence on its part. It relies on documentary evidence, consisting of the Contract, correspondence between DEP and plaintiff, and the various determinations in connection with the DEP's termination of the Contract (see, The Law Firm's Exhibits B - S).
In opposition, plaintiff also relies on the same documentation to demonstrate its entitlement to partial summary judgment on the issue of liability, arguing, conversely, that, but for the Law Firm's failure to name CDRB as a party to the Article 78 proceeding, that proceeding would have been successful.
Plaintiff acknowledges that its application is made prior to joinder of issue. However, it argues that, in the absence of any factual issues contested by the parties, as in the instant matter, and by virtue of the parties having charted a summary judgment course by relying on the same documentary evidence, this application should be permitted and considered by this court.
CPLR 3211 (c) provides, in pertinent part, that:
[u]pon the hearing of a motion made under subdivision (a) or (b), either party may submit
any evidence that could properly be considered on a motion for summary judgment. Whether or
not issue has been joined, the court, after adequate notice to the parties, may treat the motion as a
motion for summary judgment.
Thus, it is the making of a motion pursuant to CPLR 3211 (a), as present herein, that
opens the door to summary judgment treatment prior to joinder of issue (see Four Seasons
Hotels Limited v Vinnik, 127 AD2d 310 [1st Dept 1987]. While notice is required to convert
a 3211 motion to a summary judgment motion, "[t]here are three exceptions to the notice
requirement: 1) where the action in question involves no issues of fact but only issues of law
which are fully appreciated and argued by both sides; 2) where a request for summary judgment
pursuant to CPLR 3211 (c) is specifically made by both sides; and 3) where both sides
deliberately lay bare their proof and make it clear that they are charting a summary judgment
course (Shah v Shah, 215 AD2d 287 [1st Dept 1995]).
This court notes that, in response to plaintiff's cross motion for partial summary judgment, the Law Firm addressed plaintiff's motion strictly on the merits, and never opposed plaintiff's application as being premature pursuant to CPLR 3212. Further, as argued by plaintiff, in support of their respective applications, the parties rely on similar documentary evidence, acknowledge that there are no issues of fact in this action, and argue only issues of law. Thus, the parties have clearly charted a course for summary judgment, thereby eliminating [*4]the notice requirement. Thus, this court shall convert the Law Firm's motion to dismiss into one for summary judgment (id.).
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]).
The parties' dispute is based on whether the underlying Article 78 proceeding would have been successful. Judicial review in an Article 78 proceeding is limited to a determination of whether the administrative agency's determination had a rational basis, or was arbitrary and capricious (see Matter of HLV Associates v Aponte, 223 AD2d 362 [1st Dept 1996]). "Courts are not permitted to substitute their judgment for that of the administrative agency where said decision is rationally based on the record" (Matter of Royal Realty Co. v New York State Div. of Hous. and Community Renewal, 161 AD2d 404, 405 [1st Dept 1990]).
Plaintiff claims that DEP's termination of the Contract was arbitrary and capricious when "it irrationally changed its position by failing to allow Waste Services the minimal amount of time to complete the Wetzel Indoor County Facility" (Plaintiff's Memorandum of Law in support of its cross motion and in opposition to the Law Firm's dismissal motion, at 10). It further maintains that DEP's action in acting on the Notice to Cure, although plaintiff cured the default, was unfair (id. at 11).
A review of the Memorandum Decision discloses that CDRB heard testimony from the parties and reviewed, inter alia, the Contract and the correspondence between the parties. The CDRB set forth in great detail the history between the parties regarding the Contract, including DEP's numerous correspondence to plaintiff regarding plaintiff's failure to provide processing capacity, as well as sufficient back-up. It found, inter alia, that:
DEP's denial of plaintiff's request [for a further extension to cure its breach] was reasonable
"under circumstances that included reports from its engineers indicating that the promised indoor
composting facility at Wetzel was nowhere near completion, West Virginia's DEP's failure to
extend [plaintiff's] construction deadline and failure to award a composting permit, and
[plaintiff's] ongoing failure to comply with the capacity requirements of the contract for most of
the prior two years"
(The Law Firm's Supporting Papers, Exhibit S, Memorandum Decision dated
3/24/03, at 11-12). Thus, the CDRB's decision's holding that DEP's determination to deny
plaintiff's request for additional time to complete the Wetzel Indoor County Facility was
rationally based on the record. Additionally, the CDRB's finding, based on the record, that DEP
extended the cure period to October 15, 2002 from September 1, 2002, and absent a cure,
respondent was free to terminate the Contract anytime after that date was reasonable. Thus,
contrary to plaintiff's argument, DEP's action in acting on the Notice of Cure was not arbitrary
and capricious.
Additionally, plaintiff argues that the CDRB improperly rejected its argument that there was no material breach of the Contract that would warrant termination, citing Cablevision Systems Corp. v Town of East Hampton, 862 F Supp 875 [ED NY 1994], affd 57 F3d 1062 [1995]) (the Cablevision case). The CDRB found that in the Cablevision case, Cablevision's breach in raising rates without approval, two days before it was legally entitled to do so, was negligible given the whole of the nine-year Contract (id.). However, it rationally held, based on [*5]the record, that plaintiff's prolonged failure to meet the Active Commitment Quantity and to maintain adequate back-up capacity was a material breach of the Contract (Plaintiff's Exhibit J in Exhibit B, Memorandum Decision dated 2/2/04, at 9). According to the Contract, the " Active Commitment Quantity' shall mean the maximum quantity of Biosolids based on wet tons that the Contract is required to accept, transport, and process into a Biosolids product ... as more particularly set forth in Exhibit A" [Article 1.1, at 2]). Exhibit A, entitled Long Term Biosolids Management Program, Special Conditions, requires the contractor "to accept a maximum average daily quantity of 510 Wet Tons per day (WT/D), averaged over a monthly period" (Exhibit A, Article 1.0, at 2).
Plaintiff contends that CDRB's rejection of its argument that the 510 WT/D stated in the Contract was not intended by the parties was mistaken. In support of its argument, plaintiff attempted to proffer a letter by DEP's former Deputy General's Counsel made weeks prior to the execution of the Contract, that stated, in pertinent part, that DEP "anticipates limiting [plaintiff's] allocation under normal conditions to 162 WT/D in view of the pricing structure" (The Law Firm's Supporting Papers, Exhibit S, Memorandum Decision dated 3/24/03, at 10). As noted by the CDRB, Article 17 of the Contract, entitled "Entire Agreement" contains a merger clause which provides as follows:
This written agreement contains all the terms and conditions agreed upon by the parties,
hereto, and no other agreement, oral or otherwise, regarding this agreement shall be deemed to
exist or to bind any of the parties thereto, or to vary of the terms therein
(The Law Firm's Exhibit B, the Contract, at 58). The law is well-settled that the
parties' intention should be determined from the language employed within the four corners of
the agreement, and that where the language is clear and unequivocal, interpretation is a matter of
law to be determined by the court (Hartford Acc. & Indem. Co. v Wesolowski, 33 NY2d
169 [1973]; see also American Express Bank Ltd. v Uniroyal, Inc., 164 AD2d 275 [1st
Dept 1990], appeal denied 77 NY2d 807 [1991]). "[W]hen parties set down their
agreement in a clear, complete document, their writing should as a rule be enforced according to
its terms" (W.W.W. Assocs. v Giancontieri, 77 NY2d 157, 162 [1990]). As noted by
CDRB, the purpose of a general merger provision, as contained in the Contract, "is to require full
application of the parol evidence rule in order to bar the introduction of extrinsic evidence to
vary or contradict the terms of the writing" (Primex International Corp. v Wal-Mart Stores,
Inc., 89 NY2d 594, 599 [1997], citing Citibank v Plapinger, 66 NY2d 90, 94-95
[1985]). Thus, the plaintiff's proffer of the aforementioned letter to vary the terms of the Contract
was reasonably rejected by CDRB.
Plaintiff additionally argues that the Memorandum Decision should have been vacated, pursuant to CPLR 7803(1) and 7803(2). Under CPLR 7803(1), the petitioner "must have a clear legal right to the relief demanded and there must exist a corresponding nondiscretionary duty on the part of the administrative agency to grant that relief" (Matter of Scherbyn v Wayne-Finger Lakes Board of Coop. Educ. Servs., 77 NY2d 753, 757 [1991]). When a petitioner seeks relief in the nature of prohibition, pursuant to CPLR 7803(2), the court must make a two-tiered analysis. "It must first determine whether the issue presented is the type for which the remedy may be granted and, if it is, whether prohibition is warranted by the merits of the claim" (Matter of Holtzman v Goldman, 71 NY2d 564, 568 [1988]).
Plaintiff initially argues that DEP's Agency Head's refusal to grant its request for an [*6]informal conference violated Section 4-09(d)(2) of New York City Procurement Policy Board Rules (PPBR). Pursuant to this rule, however, the Agency Head "may, in his or her discretion, convene an informal conference" (PPBR § 4-09 [d] [2]); thus, plaintiff fails to demonstrate a clear legal right to an informal conference.
Further, petitioner claims that DEP's Agency Head did not render a reasoned decision as required by the PPBR and the Contract. The Contract requires that the Agency Head render his decision in writing (the Contract, 16.6 [4] [D]), while PPBR Section 4-09(d)(2) merely requires that the Agency Head make a determination. In his determination, the DEP Agency Head sets forth his findings regarding, inter alia, plaintiff's "failure, refusal and/or inability to perform its duties and obligations as required under the Contract, notwithstanding the City's providing repeated opportunities to [plaintiff] to correct defaults in performance," and the continuation of those defaults up to the time of the termination of the Contract (Plaintiff's Exhibit D in Exhibit B, Letter from Agency Head to plaintiff dated 11/25/02). He further held that "in terminating the Contract, the City has acted in a manner consistent with its rights under the Contract and at law and vehemently reject[ed] [plaintiff's] allegations of any wrongdoing on the part of the City" (id.). Thus, the Agency Head complied with his duties under the PPRB and Contract.
Additionally, plaintiff argues that the City Comptroller and the CDRB should not have reviewed the DEP Agency Head's determination, since the DEP Agency Head did not convene an informal hearing or render a substantive decision, in violation of the Contract and PPRB. In light of the foregoing discussion, however, the City Comptroller and the CDRB properly considered the DEP Agency Head's determination. Thus, the plaintiff failed to demonstrate its entitlement to relief under CPLR 7803 (1) or (2) (Matter of Scherbyn v Wayne-Finger Lakes Board of Coop. Educ. Servs., 77 NY2d 753, supra; Matter of Holtzman v Goldman, 71 NY2d 564, supra).
Thus, the record demonstrates that plaintiff cannot establish the proximate cause element required for a legal malpractice action, i.e., that but for the Law Firm's negligence, it would have been successful in the underlying Article 78 proceeding.
Accordingly, it is
ORDERED that the Law Firm's motion to dismiss the complaint is converted to one for summary judgment; and it is further
ORDERED that the Law Firm's motion for summary judgment is granted and the complaint is dismissed with costs and disbursements to defendant Sferrazza & Keenan, PLLC as taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's motion for partial summary judgment on the issue of liability is denied; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly; and it is further
ORDERED that counsel for defendant shall serve a copy of this order with notice of entry
within twenty days of entry on counsel for plaintiff.
Dated: March 28, 2008
ENTER:
____________________________ [*7]
Carol Robinson Edmead, J.S.C.
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