Owssom Bldrs., LLC v J & F Refrig. A.C. & Heating, Inc.

[*1] Owssom Bldrs., LLC v J & F Refrig. A.C. & Heating, Inc. 2010 NY Slip Op 51386(U) [28 Misc 3d 1218(A)] Decided on August 5, 2010 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 5, 2010
Supreme Court, Kings County

Owssom Builders, LLC and Fulton Classon Condo, LLC, Plaintiffs,

against

J & F Refrigeration Air Conditioning and Heating, Inc., Defendant.



22146/08



Attorney for Plaintiffs:

Kevin Rockitter, Esq.

180 Froehlich Farm Blvd.

Woodbury, NY 11797

Attorney for Defendant:

Brian Oberman, Esq.

160 E. 56th St., 7th Fl.

New York, NY 10022

Carolyn E. Demarest, J.

Owssom Builders, LLC (Owssom) and Fulton Classon Condo, LLC (Fulton) bring claims against J & F Refrigeration Air Conditioning and Heating, Inc (J & F) for breach of contract, failure to complete work, and providing defective work. These claims were dismissed in a prior action, and J & F requests that Owssom and Fulton be sanctioned pursuant to 22 NYCRR § 130-1.1.

Background

In a prior action tried before this court, J & F Refrigeration Air Conditioning and Heating, Inc., v Owssom Builders, LLC, Index No. 38327/06, J & F, the subcontractor, brought claims against Owssom, the general contractor, for breach of their contract where J & F was to provide HVAC services at Fulton Classon Condo located at 1067-1079 Fulton Street in Brooklyn. Owssom's counterclaims in response to J & F's action against them were that J & F breached their contract, did not complete their work, and failed to return to complete their job. The court rejected Owssom's counterclaims and decided that Owssom had wrongfully terminated the contract with J & F, that there was no justification for the termination, and that Owssom failed to allow J & F to return to complete its work (Trial Transcript at 108, 4/28/2008). Owssom then appealed the judgment but failed to perfect that appeal. [*2]

In the current action, Owssom and Fulton, the owner of the premises at issue, are the plaintiffs. They allege the same claims as set forth in Owssom's counterclaims in the prior action, adding only that J & F provided defective work in violation of New York City building codes. Accordingly, in the present action, the claims by Owssom were dismissed on the grounds of collateral estoppel and res judicata, but the court granted Fulton an opportunity to show that it had independent standing to sue J & F and that its claims were distinguishable from those previously litigated by Owssom (Transcript of 6/9/2010 at 4).

Discussion

After review of the memoranda submitted by the parties, it is clear that the claims against J & F in the current action should also be dismissed as to Fulton. "As a general rule, a subcontractor is in privity with the general contractor on a construction project, but is not in privity with the owner even if the owner has benefitted from the contractor's work" (CDJ Builders Corp. v Hudson Group Const. Corp., 67 AD3d 720, 722 [2d Dept 2009]). Fulton and J & F have no contract between themselves. Therefore, Fulton, the owner of the premises at issue, may not bring the current claims against J & F, the subcontractor, due to lack of privity.

Moreover, since Fulton is in privity with Owssom because of their Owner-General Contractor relationship, Fulton may not raise the current claims because collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity"(Beuchel v Bain, 97 NY2d 295, 303 [2001], emphasis added; see also Pouncy v Dudley, 27 AD3d 633, 634 [2d Dept 2006]). Although Plaintiffs' lawyers assert that Fulton "had no interest in that [prior] litigation", and should not be barred from bringing these claims in the current action, (Plaintiff's Surreply Affirmation at 6-7, 5/25/2010), such assertions do not change the fact that Owssom litigated the same issues and had a full and fair opportunity to contest the prior decision (see Beuchel at 303-304, discussing two requirements that must be met before collateral estoppel may be invoked: identity of issues that have already been decided, and a full and fair opportunity to contest that decision). The doctrine of res judicata also precludes subsequent litigation of claims that could or should have been litigated in the prior action (see Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304 [1929]; Breslin Realty Development Corp. v Shaw, 72 AD3d 258, 263 [2d Dept 2010]). Thus the additional contention that J & F's work did not comply with NY building codes is precluded based upon the prior action. As Fulton is in privity with Owssum, Fulton is also collaterally estopped from bringing the claims against J & F.

Plaintiffs cite several cases in the Surreply Affirmation of Paul Golden in support of the claim that a property owner would have standing to sue a subcontractor as a third-party beneficiary, notwithstanding the lack of privity (see Ikea North American Services, Inc. v Northeast Graphics, Inc., 66 FSupp2d 547 [SDNY 1999]; Gap, Inc. v Fisher Dev., Inc., 27 AD3d 209 [1st Dept 2006]); Finch, Pruyn & Co. v Wilson Control Servs., 239 AD2d 814 [3d Dept 1997]; Nepco Forged Prods. v Consolidated Edison Co. of NY, 99 AD2d 508 [2d Dept 1984]; Gobos v Fuller Co., 5 AD2d 773 [2d Dept 1958]).While these cases do support Fulton's right to seek relief against a subcontractor for that party's own negligence in performance constituting a breach of the subcontractor's obligations under a contract with the general contractor, none of these cases implicated the doctrine of collateral estoppel and do nothing to overcome the primary defect in Plaintiff's claims: that relitigation of those same issues previously [*3]adjudicated against the general contractor, whether sounding in negligence or breach of contract, is precluded under the doctrine of res judicata.

Because Plaintiffs have continued to bring claims that have already been decided, sanctions may be imposed against them for frivolous conduct. Under 22 NYCRR § 130-1.1(c): [C]onduct is frivolous if:(1) it is completely without merit in law or fact and cannot be supported by a

reasonable argument for an extension, modification, or reversal of existing law; [or](2) it is undertaken primarily to delay or prolong the resolution of the litigation, or toharass or maliciously injure another . . .

"Courts have found frivolous conduct within the meaning of 22 NYCRR 130- 1.1(c) where a party litigated the same issue over an extended period of time" (Murray v National Broadcasting Co., Inc., 217 AD2d 651, 653 [2d Dept 1995]). "Motion practice several years after judgment, lacking legal support and intended only to delay enforcement of judgment, is a valid basis for sanctions. Where motions are redundant to matters already decided on the merits, constituting a lengthy barrage of litigation to relitigate those already-decided matters, but that protracted litigation continues, with rulings ignored, despite the court's warnings to cease delaying tactics, sanctions are appropriate to punish frivolous litigation" (Levy v Carol Mgmt. Corp., 260 AD2d 27, 34 [1st Dept 1999], internal citations omitted). In Matter of Sud v. Sud, (227 AD2d 319 [1st Dept 1996]), a similar case to the present action, the plaintiff's breach of contract claims were also dismissed in a prior action and, as here, subsequently dismissed again on the grounds of collateral estoppel and res judicata. The First Department then affirmed sanctions imposed on the plaintiff for continued litigation of frivolous claims. In Int'l 800 Telecom Corp. v Kramer, Levin, Nessen, Kamin & Frankel, (155 Misc 2d 975 [Sup Ct, New York County 1992]), the corporation, which was previously the defendant in a breach of contract action, sued the prior plaintiffs for overcharging and conspiracy to charge excessive fees. The court in that case held that the corporation's claims were precluded by res judicata and collateral estoppel. The corporation and its counsel were also sanctioned for harassing the plaintiffs from the previous action, delaying final resolution of matters, and instituting the second action without basis in law or fact (see id. at 981). Therefore, it is clear that continued relitigation of previously decided claims are grounds for sanctions.

In the present case, the issues raised by Plaintiffs are essentially identical to issues already decided and dismissed. The main difference between the present action and the previous one is that Fulton was added as a plaintiff, despite its lack of privity with J & F and in disregard of the law by which it is collaterally estopped from bringing such claims. These claims are redundant and Plaintiffs' efforts to relitigate matters when they have no basis in law or fact only serves to prolong litigation. Therefore, sanctions of attorney's fees are awarded against the Plaintiffs for their continued efforts to relitigate issues from a prior action when they were notified by counsel for Defendant that their claims had already been decided.

Conclusion

Defendant's motion for summary judgment dismissing the complaint and its request for sanctions is granted. Defendant is directed to submit a proposed order with an affidavit documenting the attorney's fees and costs incurred in responding to this action. The foregoing constitutes the decision and order of the Court. [*4]

ENTER:

J.S.C.