Travelers Indem. Co. v Zeff Design

[*1] Travelers Indem. Co. v Zeff Design 2009 NY Slip Op 50878(U) [23 Misc 3d 1121(A)] Decided on April 23, 2009 Supreme Court, New York County Feinman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 23, 2009
Supreme Court, New York County

Travelers Indemnity Company as Successor in Interest by Merger to Gulf Insurance Company as Subrogee of Leibovitz Studo Inc., Annie Leibovitz as Managing Member of 305-7 West 11th Street, LLC and 305-7 West 11th Street, LLC, And Annie Leibovitz, Individually, Plaintiffs,

against

Zeff Design, Z One Design, LLC, Mark Zeff Consulting Group d/b/a Zeff Design- Interior Design and Architectural, Alan Barr, Mark Zeff, Hage Engineering, Mark Hage, P.E., D'augustine Contracting Co., Inc., D'augustine Contractors, Inc., Construction Design Consultants, John Rowland, C.E. Boss Co., Inc., Jack W. Mendelson, P.E. and John Sims, Defendants.



114169/2005



For the Plaintiffs:

Katz & Rychik, Esq.

By: Abe M. Rychik, Esq.

Andrew N. Fluger, Esq.

116 John Street, 7th Floor

New York NY 10038

(212) 766-4700

For Z One Design:

McElroy, Deutsch, Mulvaney & Carpenter, LLP

By: Brian W. Keats, Esq.

88 Pine Street, 24th Floor

New York NY 10005

(212) 483-9490

For Jack W Mendelson:

Gogick, Byrne & O'Neill, LLP

By: Mark R. McCauley, Esq.

11 Broadway, Suite 1560

New York NY 10004

(212) 422-9424

Paul G. Feinman, J.

The motions bearing sequence numbers 004 and 005 are consolidated for purposes of decision.

This is a subrogation action. According to the verified complaint (Pl. Mot. Ex. A), plaintiff Annie Leibovitz, and 305-7 West 11th Street, LLC, of which she is a managing member (together "Leibovitz"), owned the premises known as 755-757 Greenwich Street, at which Leibovitz and Leibovitz Studio, Inc., possessed certain property. This Greenwich Street property shared a common wall with the adjacent property known as 311 West 11th Street. In October 2002 during construction and renovation work on the Greenwich Street property, the shared wall shifted and settled, causing damage to both the Greenwich Street and the West 11th Street premises. The Leibovitz property was insured under a commercial lines policy by the predecessor-in-interest to plaintiff, Travelers Indemnity Company. The insurer compensated Leibovitz in the amount of $960,000.00.

Travelers commenced this litigation against the defendants to recover the insurance monies paid out. Its complaint alleges in sum that because of the joint failure of the defendants to realize and take precautions concerning certain structural realities of the soil and the buildings, the shared wall was caused to crack, settle, and move during the course of the renovation work, and although the defendants had constructive notice of the cracking, they failed to take necessary steps to prevent further damage (Pl. Mot. Ex. A, Ver. Compl. ¶¶ 120, et seq.). The insurer's claims brought against entities involved in the construction work sound in breach of contract, professional malpractice, and misrepresentation, and seeks punitive damages.[FN1]

In motion sequence 004, plaintiff moves to dismiss the counterclaim of defendant Z One Design, LLC, a company allegedly hired to perform construction management services in connection with the renovations (Mendelson Mot. Ex. A, Ver. Compl. ¶ 107). In motion sequence 005, defendant Jack W. Mendelson, P.E., a licensed professional engineer employed by C.E. Boss Co., Inc., who allegedly performed soil sampling, bearing capacity analysis, and [*2]foundation recommendations for the work (Mendelson Mot. Ex. A., Ver. Compl. ¶ 107), moves pursuant to CPLR 3212 for summary judgment and dismissal of all claims against him. For the reasons which follow, the motion to dismiss the counterclaim of Z One Design, LLC, is denied, and the motion for summary judgment and dismissal of the claims against Mendelson is also denied.

Motion Seq. 004

In motion sequence 004, plaintiff moves to dismiss the counterclaim of defendant Z One Design, LLC that now alleges that any injuries were caused in whole or in part as a result of the culpable conduct or lack of care of plaintiff's subrogor, and not through the negligence or culpable conduct on the part of Z One (Pl. Mot. Ex. E). Plaintiff first argues that defendant's answer was untimely served pursuant to the preliminary conference order of January 16, 2005, as it should have been served no later than February 15, 2006, but was served on or after March 24, 2006 (Pl. Mot. Ex. D). Plaintiff has not alleged any prejudice by the late service, in particular as it appears that any discovery in this action was previously undertaken when the matter was in federal court. Defendant does not dispute that its answer was untimely, but argues that it had served an answer while the matter was in federal court and has now served an answer in the instant action, and that there is no discovery outstanding and no prejudice. The totality of the facts is sufficient to find that the answer, although untimely, should not be stricken.

Plaintiff secondly argues that because this is a subrogation action in which Leibovitz is not a party plaintiff, the counterclaim cannot pertain to actions solely against Leibovitz in an individual capacity and therefore must be dismissed.

A counterclaim may be any cause of action in favor of one or more defendants against one or more plaintiffs, a person whom a plaintiff represents, or a plaintiff and others alleged to be liable (CPLR 3019 [a]). Here, plaintiff cites case law, including DePinto v Ashley Scott, Inc., 222 AD2d 288 (1st Dept. 1995) and Corcoran v National Union Fire Ins. Co., 143 AD2d 309 (1st Dept. 1988), to argue that a claim and counterclaim must be by and against the same party in the same capacity, and that therefore, because the complaint is Travelers' in its capacity as the subrogee, any counterclaims must only be asserted as against Travelers as subrogee to Leibovitz.

However, contrary to plaintiff's argument, New York's policy of comparative negligence for all actions to recover damages for property damage, allows defendant to counterclaim against a plaintiff subrogee for any claims it may have against the subrogor (Allstate Ins. Co. v Trans Hudson Express, Inc., 2004 NY Slip Op 51124U at *2 [Sup. Ct., Richmond County 2004], citing Cosmopolitan Ins. Co. v Feil, 91 Misc 2d 59 [Civ. Ct., New York County 1977]). This is because an insurance carrier, upon payment of a loss, becomes equitably subrogated to the rights and remedies of its assured to proceed as against a party primarily liable (see, Hartford Accident & Indem. Co. v CNA Ins. Cos., 99 AD2d 310, 312 [1st Dept. 1984]). The policy is based on the equitable principle that an insurer, compelled under its policy to pay a loss, ought to be reimbursed by the party which caused the loss (Federal Ins. Co. v Arthur Andersen & Co., 75 NY2d 366, 372 [1990], citations omitted). A subrogee "is subject to whatever defenses the third party might have asserted against [the subrogee's] insured " (Federal Ins. Co., at 372, citing American Sur. Co. v Town of Islip, 268 App Div 92, 94 [2d Dept. 1944]; 11A Appleman, Insurance Law & Practice § 6551, at 3-9; 16 Couch, Insurance 2d § 61:285, at 326). Therefore, Z One must be allowed to proffer its defenses as against Leibovitz individually, even in this [*3]subrogation action. Plaintiff's motion to dismiss the counterclaim asserted by defendant Z One Design, LLC, is thus denied.

Motion Seq. 005

Jack Mendelson, P.E. seeks summary judgment in its favor. Summary judgment is appropriate when there is no genuine issue as to any material fact and the disposition of the causes of action may be decided as a matter of law (Security Pacific Bus. Credit, Inc. v Peat Marwick Main & Co., 79 NY2d 695, rearg denied 80 NY2d 918 [1992]). Issue finding rather than issue determination is its function (Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395 [1957]). The evidence will be construed in the light most favorable to the one moved against (Corvino v Mount Pleasant Centr. Sch. Dist., 305 AD2d 364, 364 [2d Dept 2003]; Bielat v Montrose, 272 AD2d 251, 251 [1st Dept. 2000]). To prevail on a summary judgment motion, the moving party must produce evidentiary proof in admissible form sufficient to warrant the direction of summary judgment in his or her favor (GTF Mtkg, Inc. v Colonial Aluminum Sales, Inc., 66 NY2d 965, 967 [1985]). Once this burden is met, the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial (Kosson v Algaze, 84 NY2d 1019 [1995]).

The verified complaint alleges that Mendelson was a licensed professional engineer who performed soil sampling, bearing capacity analysis, and foundation recommendations for the renovation project, and in particular that he analyzed the lateral soil pressures of the party wall and recommended two-foot wide pits for underpinning at the lowering of the elevation of the sub-cellar (Mendelson Mot. Ex. A, Ver. Compl. ¶¶ 89-93). The complaint alleges he acted negligently, breached his contract, engaged in professional malpractice, misrepresentation, and should pay punitive damages (Compl. ¶ 123, 132 et seq.).

Mendelson moves for summary judgment, arguing that there is no showing that he designed the sub-cellar work, including the design of the underpinning, nor that he misrepresented the condition of the soil in the geotechnical soil report. He contends that his drawings were only recommendations for installing the underpinning, and that although he inspected the digging of test pits, he did not perform any controlled inspections of the construction work. He further argues that there is no expert testimony indicating that he engaged in professional malpractice, or that his report departed from locally accepted engineering practice or did not properly report on the soil.

Mendelson testified that in 2002, he was employed by C.E. Boss as a supervising professional engineer (Mendelson Mot. Ex. H, EBT of Jack W. Mendelson [hereinafter Mendelson EBT] 7). His job functions in general includedreviewing drawings and reports, and signing off on all reports that were sent out on behalf of the company (Mendelson EBT 8). Drawings were prepared under his supervision (Mendelson EBT 11). When a report was issued, it was signed and sealed by him, "attesting to the information in the report," in other words that the contents of the report were accurate (Mendelson EBT 12-14).

As concerns the Greenwich Street project, Mendelson testified that he did not participate in drafting the proposal issued by C.E. Boss (Mendelson EBT 11-12). His understanding of the project was that the proposal was to lower the basement floor several feet, and to do that, the walls needed to be properly supported (Mendelson EBT 16). He himself did not perform any [*4]physical inspection of the Greenwich Street premises and was unaware if anyone from C.E. Boss performed a physical inspection (Mendelson EBT 11). The role of C.E. Boss was "to take the test borings, to do the test pits, they then prepared the report, which I then reviewed, modified as required and then finalized" (Mendelson EBT 14). The report was issued to Zeff Design (Mendelson EBT 28). The test pit inspections were done under Mendelson's supervision and he "take[s] responsibility for them" (Mendelson EBT 21). He did not know if C.E. Boss personnel were told where to perform the test pits or the boring samples, and he did not instruct anyone himself (Mendelson EBT 33). His recommendations were developed based on his review of the test pits that were made on the site (Mendelson EBT 17). It was his understanding that the controlled inspections were performed under the supervision of a professional engineer (Mendelson EBT 23). The standard he used to test the soil from the test pits was "visual" (Mendelson EBT 33). He also reviewed the report (Mendelson EBT 34). He determined that the test pits and boring tests were done accurately based on his review of the reports and drawings (Mendelson EBT 37). He did not himself inspect the soil samples, but relied on the expertise of the crew chief who provided the work (Mendelson EBT 39). He had no concerns with the manner of the testing (Mendelson EBT 50).

Mendelson's job was to review the reports and he accepted them, "knowing the quality of the work that was done," and based on his knowledge of the workers and his experience with test pits (Mendelson EBT 23, 24). Based on the reports of the soil type, the working conditions, and the condition of the existing wall, his report, dated May 20, 2002, recommended a procedure to support the walls that involved underpinning with 2-foot segments; the 2-foot segments were narrower than the normal 4-foot segments and would be safer in the granular soil (Mendelson EBT 16, 26-27, 28; Mendelson Mot. Ex. I).

Mark Hage, a licensed engineer, and president of Hage Engineering, testified that for this project, Hage Engineering determined that a geotechnical investigation was needed to understand the conditions of the walls, in particular how deep they were and the soil's bearing capacity (Mendelson Mot. Ex. J, EBT of Mark Hage of June 4, 2004 and June 11, 2004 [hereinafter Hage EBT] 7-8, 35-36). He knew that C.E. Boss is a geotechnical consulting firm and testing lab (Hage EBT 12). Hage determined where the borings and the test pits were made, based on his judgment of where he needed information (Hage EBT 39-40). The geotechnical report issued by C.E. Boss was relied upon by Hage in making his determination that the project of lowering the slab in the sub-cellar was feasible (Hage EBT 28-29). Hage relied in part on the test pits and the geotechnical report to create the design for the curbs on two walls and the underpinning of another wall (Hage EBT 31-32). He also used "what made the most sense" to determine which walls called for underpinning and which did not (Hage EBT 60-61). From the C.E. Boss recommendation, Hage gathered that underpinning was feasible, and Hage Engineering designed an underpinning scheme following C.E. Boss's recommendations (Hage EBT 94-95, 99). The C.E. Boss documents on which Hage relied were the "Subsurface Investigation Project Leibovitz Residence," which was a "recommendation," a May 20, 2002 document which included a "revised" drawing, and a drawing labeled SK-2, which set forth the geotechnical soil properties (Hage EBT 264, 265, 267, 271). He did not know if the recommendations and reports by C.E. Boss were ultimately followed (Hage EBT 148).

John D'Augustine testified on behalf of his company (Mendelson Mot. Ex. K, EBT of [*5]John D'Augustine EBT, May 6, 2004 [hereinafter D'Augustine EBT]). D'Augustine is president of his company which does concrete and masonry work (D'Augustine EBT 14, 15). He reviewed the C.E. Boss reports in order to determine they type of concrete to be used, as well as regarding the excavation (D'Augustine EBT 44-45).

John Rowland testified on behalf of himself as d/b/a Construction Design Consultants (Pl. Aff. in Opp. Ex. I, EBT of John Rowland, July 14, 2004 [hereinafter Rowland July 14 EBT] 6). He was contacted by John D'Augustine in about August 2002 and asked to present a bid concerning roof removal (Rowland July 14 EBT 9, 10, 17). He had no need for the results of testing of the soil or the test pit in the sub-cellar (Pl. Aff. in Opp. Ex. I, EBT of John Rowland, July 15, 2004 [hereinafter Rowland July 15 EBT]19, 128). He was never informed that there was a shared wall or that the adjacent building did not have a basement (Rowland July 15 EBT 123).

Plaintiff argues that Mendelson's motion must be denied on several grounds. Its arguments as to the untimeliness of Mendelson's motion and that Mendelson previously moved to dismiss and therefore should not be allowed to a "second bite" by now moving for summary judgment although no new discovery was undertaken, are unavailing. However, based on the totality of the submissions, the court finds that summary judgment is not proper as there is testimony that the C.E.Boss report and recommendations, approved by Mendelson, were relied upon by other contractors and subcontractors working on the Greenwich Street project. There is a question of fact as to whether there was negligence in creating the report and whether Mendelson's approval of the report and recommendations was negligent, and also whether Mendelson and C.E. Boss knew or should have known the extent to which the "recommendations" would be used by other contractors. Mendelson did not submit any expert evidence, other than his own deposition testimony, to establish that his work was without negligence. For example, it is unclear whether Mendelson and C.E. Boss should have investigated the area on the other side of the common wall, which apparently would have resulted in the discovery that there was no basement in the adjacent building, and provided that information to the other contractors. It is not clear whether the recommendations were appropriate given the physical conditions. There remain questions of the cause of why the common wall cracked and settled, and what Mendelson should have known and recommended so as to have avoided this result (Daliendo v Johnson, 147 AD2d 312 [2d Dept 1989] [holding that where the court entertains any doubt as to whether a triable issue of fact exists, summary judgment should be denied]). Summary judgment is not appropriate, and Mendelson's motion is denied. It is

ORDERED that the motion in sequence 004 to dismiss the counterclaim of Z One Design, LLC, is denied; and it is further

ORDERED that the motion in sequence 005 by Jack W. Mendelson, P.E. seeking summary judgment and dismissal of the complaint as against him, is denied; and it is further

ORDERED that the plaintiff shall promptly serve a copy of this order on the Clerk of Trial Support (60 Centre St., Room 158), who shall set this matter down for trial in Part 40 on the first available date on or after June 10, 2009.

This constitutes the decision and order of the court. [*6]

Dated: April 23, 2009____________________________________

New York, New YorkJ.S.C. Footnotes

Footnote 1:By decision and order dated November 21, 2007, the justice previously assigned to this litigation granted the pre-answer motions to dismiss the complaint as against Zeff Design, Mark Zeff Consulting Group d/b/a Zeff Design-Interior Design and Architectural, Alan Barr, Mark Zeff, Hage Engineering, and Mark Hage, P.E. In addition, the plaintiff's fourth cause of action sounding in professional malpractice was dismissed as against the "non-Zeff defendants" with prejudice (Pl. Aff. in Opp. Ex. E, Dec./Order 11/21/2007, Travelers Indem. Co., etc. v Zeff Design, et al., Sup. Ct. NY County, Index No. 114169/2005). Motions were otherwise denied as to Z One Design LLC, D'Augustine Contracting Co., Inc., D'Augustine Contractors, Inc., Construction Design Consultants, John Rowland, C.E. Boss Co., Inc., Jack W. Mendelson, P.E., and John Sims.

The Appellate Division of the Supreme Court, First Department, recently affirmed the dismissal of the complaint as against the Hage defendants, and the dismissal of the claim of professional misconduct as against Z One (Travelers Indem. Co. v Zeff Design, 2009 NY Slip Op. 01703 [App. Div. 1st Dept., March 10, 2009]).