Board of Mgrs. of Marke Garden Condominium v 240/242 Franklin Ave. LLC
Annotate this CaseDecided on December 21, 2017
Supreme Court, Kings County
Board of Managers of Marke Garden Condominium, on its own and on behalf of the Individual unit owners, Plaintiffs,
against
240/242 Franklin Avenue LLC, Scarano Architect PLLC, Scarano Architect PLLC, F/K/A Scarano & Associates, Corcoran Group-Brooklyn, Royal Roofing and Construction, Inc., and Namik Marke a/k/a Mike Marke, Defendants.
029255/2007
Genine D. Edwards, J.
On December 2, 2002, owner Namik Marke a/k/a Mike Marke (Marke) of Royal Roofing and Construction Inc. (Royal) entered into an agreement with Scarano and Associates Architects (Scarano) for architectural services in the construction of a condominium of two four-family buildings, located at 238A and 240 Franklin Avenue, in Brooklyn ("the premises"). Marke was also the principal and sole owner of 240/242 Franklin Avenue LLC ("240/242"), the sponsor of the condominium, which was an LLC formed solely to develop the condominium and sell the units. Royal was the general contractor for the project.[FN1] Defendant Scarano submitted a certification of the offering plan in October 2003. Corcoran Group-Brooklyn ("Corcoran"), the designated sales agent, assisted in selling the condominiums to the plaintiffs in 2003-2004.
The condominiums were advertised as luxury residences; an eight-unit building with an elevator. The elevator was never installed, and plaintiffs allege this occurred without due notice. Moreover, shortly after taking possession of the premises in 2004, plaintiffs began experiencing leaking, heating and drainage malfunctions among other issues. This lawsuit ensued.
Now, defendants Scarano, 240/242 and Marke, and Corcoran make separate motions for summary judgment. The Board of Managers of Marke Gardens Condominium, on its own and on behalf of the individual unit owners ("plaintiffs") cross-move for the same relief.
Law
Summary Judgment is a drastic remedy that deprives a litigant of his or her day in court and should, therefore, only be employed when there is no doubt as to the absence of triable issues of material fact. Kolivas v. Kirchoff, 14 AD3d 493, 787 N.Y.S.2d 392 (2d Dept. 2005); Andre v. Pomeroy, 35 NY2d 361, 362 N.Y.S.2d 131 (1974). The proponent of the motion has [*2]the initial burden of laying bare its claim demonstrating by admissible evidence that there are no issues of fact for a jury to determine. Alvarez v. Prospect Hosp., 68 NY2d 320, 508 N.Y.S.2d 923 (1986); In re Cassini, 120 AD3d 799, 992 N.Y.S.2d 93 (2d Dept. 2014). "If the moving party fails to make such a showing, the motion must be denied, irrespective of the sufficiency of the opposing papers." Edwards v. Great Atlantic & Pacific Tea Company, Inc., 71 AD3d 721, 895 N.Y.S.2d 723 (2d Dept. 2010); Flynn v. Fedcap Rehabilitation Services, Inc., 31 AD3d 602, 819 N.Y.S.2d 290 (2d Dept. 2006). "Once the movant provides sufficient proof, the burden of production rests on the adverse party to demonstrate the existence of a triable issue of fact." Zapata v. Buitriago, 107 AD3d 977, 969 N.Y.S.2d 79 (2d Dept. 2013). Applying these principles to the five motions, this Court will consider each in turn.
Scarano's Motion
Defendant Scarano contends that the theory of functional equivalent of privity does not apply and plaintiffs are not third-parties or intended beneficiaries nor were they known parties at the time it entered into the agreement with defendant Marke, thus plaintiffs' claims for breach of contract and negligence/malpractice are not viable.
Plaintiffs counter that they satisfy the elements of a functional equivalent of privity with Scarano, to wit, 1) an awareness by the maker of a statement that it is to be used for a particular purpose; 2) reliance by a known party on the statement, in furtherance of that purpose; and 3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance. In support of the calculus in defeating a summary judgment motion, plaintiffs make it clear that a finder of fact may determine that defendant Scarano was aware that its services were in furtherance of the sale of eight condominium apartments to a determinant, small group of eight purchasers. Indeed, defendant Scarano signed a statement indicating that a prospective purchaser may rely on its report. Plaintiffs claim they relied upon all information received including the offering plan, which was certified by defendant Scarano. More to the point, defendant Scarano's owner specifically testified that he had a conversation with defendant Marke regarding the desires of the purchasers of the two top floor condominiums with respect to private elevator service.
These fact queries, regarding all three elements in accordance with the rule of law handed down by the Court of Appeals in Parrot v. Coopers and Lybrand, LLP, 95 NY2d 479, 718 N.Y.S.2d 709 (2000) and Newswallk Condominium v. Shaya B. Pacific, LLC,102 AD3d 932, 961 N.Y.S.2d 203 (2d Dept. 2013) (defendant failed to establish that he was not privity with the condominium purchasers), must be submitted to the triers of fact. Hence, defendant Scarano has failed to shoulder its burden.
It should be noted that a contractual duty may be found where there is an intended third-party beneficiary, even if not named or known. Board of Managers of 100 Congress Condominium v. SDS Congress, LLC, 152 AD3d 478, 59 N.Y.S.3d 381 (2d Dept. 2017). And a duty in tort may be imposed to avoid causing injury to others. Landon v. Knoll Laboratory specialist, Inc., 91 AD3d 79, 934 N.Y.S.2d 183 (2d Dept. 2011) (a duty does not rest upon reciprocal obligation, but the moral duty not to injure others). Whether it be tortious liability or contractual privity, the law is deeply concerned that the legal consequences of wrongs be limited to a controllable degree - - in other words - - ensuring that defendants are not liable to an unlimited, undetermined group of plaintiffs, particularly for economic loss. Id. at 86-87.
In the matter at bar, plaintiffs are not limitless, the matter involves eight purchasers of eight condominiums - - quite a finite group. Furthermore, society as a whole benefits from being [*3]able to hold architects, sponsors and all those significantly involved in the housing stock in our communities, liable for failing to properly plan, advertise, and inspect the housing stock they assist in constructing and selling.
By the same token, the Second Department's recent holding in Board of Managers of 100 Congress Condominium, 152 AD3d at 478, is instructive regarding third-party beneficiaries. To establish the existence of a third-party beneficiary the evidence must show 1) the existence of a valid and binding contract between other parties; 2) the contract was intended for a third-party's benefit; and 3) the benefit to it is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate it if the benefit is lost. Certainly, a jury may find that defendants Scarano and Marke had an architectural contract, the contract was intended to ensure that the premises were properly built for the benefit of eight purchasers and a properly built premises was immediately beneficial to the eight purchasers, who purchased their units for living purposes, one year after defendants Scarano and Marke entered into the agreement. Encore Lake Grove Homeowners Association, Inc. v. Cashen Associates, P.C. 111 AD3d 881, 976 N.Y.S.2d 143 (2d Dept. 2013).
With respect to defendant Scarano's contention of preemption by the Martin Act, that argument also fails. Newswalk, 102 AD3d at 934; Meadowbrook Farms Homeowners Association, Inc. JZG Resources, Inc., 105 AD3d 820, 963 N.Y.S.2d 300 (2d Dept. 2013) (defendant fails to demonstrate that plaintiff's action rests solely upon omissions from filings required by the Martin Act).
However, plaintiffs' claims of negligence against defendant Scarano do not withhold muster. Encore, 111 AD3d at 883; Board of Managers, 152 AD3d at 481 (mere allegations of failure to act does not transpose a breach of contract claim into a negligence claim). Similarly, since plaintiffs are only seeking repair costs same cannot be recovered in a negligence action. Key Int'l. Mfg. v. Morse/Diesel, Inc., 142 AD2d 448, 536 N.Y.S.2d 792 (2d Dept. 1988).
As to the cross-claims against Scarano interposed by defendants Marke and 240/242, based upon contractual indemnity, those claims must fail since the subject agreement does not include an indemnity clause. Kiss Construction, Inc. v. Edison Electrical Contractors, Corp., 152 AD3d 575, 58 N.Y.S.3d 524 (2d Dept. 2017). Likewise, all cross-claims against defendant Scarano for contribution fall since the damages are purely economic. Id.; Eisman v. Village of East Hills, 149 AD3d 575, 58 N.Y.S.3d 115 (2d Dept. 2017). Common-law indemnity remains a question of fact for the jury.
240/242 and Marke's Motion
This Court agrees with the sponsor, this is a matter of narrowing the issues for trial. As the sponsor and signatory to the purchase agreement, which incorporates in its entirety, the Offering Plan, defendant 240/242 has a contractual obligation to the plaintiffs and fact issues remain for determination by the triers of fact. Defendant 240/242 asserts that the Martin Act preempts private causes of action, including plaintiffs' claims. As [*4]previously indicated plaintiffs' claims are valid. Newswalk, 102 AD3d at 934. However, plaintiffs' negligence claim must fall. Encore, 111 AD3d at 883; Key Int'l. Mfg., 141 AD2d at 448. It is pellucidly clear to this Court that the foundation of plaintiff's claims stem from the purchase agreement. Hence, plaintiffs' claims of implied and statutory warranties, negligence and fraud/fraudulent inducement are duplicative and must fall. Board of Managers of the 125 North 10th Condominium v. 125 North 10, LLC, 50 Misc 3d 1208(A), 31 N.Y.S.3d 920 (Sup. Court, Kings County 2016).
Nevertheless, plaintiffs' causes of action pursuant to General Business Law §§ 349 and 350 are probative. Contrary to defendant 240/242's contentions, this Court is not persuaded that it is entitled to summary dismissal of these statutory claims. Indeed, a jury may find that defendant 240/242 acted deceptively in the course of its transactions with plaintiffs, who were members of the public at large. Board of Managers of Beacon Tower Condominium v. 85 Adams Street, LLC, 136 AD3d 680, 25 N.Y.S.3d 233 (2d Dept. 2016); Board of Managers of 550 Grand Street Condominium v. Schlegel LLC, 43 Misc 3d 1211(A), 990 N.Y.S.2d 436 (Sup. Court, Kings County 2014); Polonetsky v. Better Homes Depot, Inc., 185 Misc 2d 282, 712 N.Y.S.2d 801 (Sup. Court, New York County 2000).
As to defendant Marke, a party only has one opportunity to make a motion for summary judgment. Jones ex rel. Cline v. 636 Holding Corp., 73 AD3d 409, 899 N.Y.S.2d 605 (1st Dept. 2010) (successive summary judgment motions will not be entertained without sufficient justification); Hoffeld v. Lindholm, 85 AD3d 35, 925 N.Y.S.2d 819 (1st Dept. 2011); 11 Essex Street Corp. v. Tower Ins. Co. of New York, 81 AD3d 516, 917 N.Y.S.2d 164 (1st Dept. 2011). Marke has exhausted his opportunity for summary judgment relief.
Corcoran's Motion
As an agent of disclosed principle defendant 240/242, Corcoran has no liability for the alleged breach by its principle. Safety Environmental, Inc. v. Barberry Rose Management Co., Inc., 94 AD3d 969, 942 N.Y.S.2d 200 (2d Dept. 2012); Anderson v. Pods, Inc., 70 AD3d 820, 896 N.Y.S.2d 88 (2d Dept. 2010). Moreover, plaintiffs cannot substantiate their claims of fraud/fraudulent inducement outside of their allegation of breach of the purchase agreement. Hence, Corcoran cannot be deemed responsible. Furthermore, with respect to plaintiffs claim pursuant to General Business Law §§ 349 and 350, Corcoran has persuaded this Court that its actions were not deceptive. Plaintiffs have failed to provide a scintilla of evidence to refute same. Board of Managers, 50 Misc 3d 1208.
Plaintiffs' Cross-Motion
Considering the foregoing, this Court finds there are issues of fact regarding plaintiffs' breach of contract and deceptive business practice causes of action precluding summary judgment in their favor.
Accordingly, this Court finds as follows:
Scarano's motion for summary judgment is granted only with respect to plaintiffs' [*5]negligence claims and the cross-claims for contractual indemnity and contribution;
240/242's motion for summary judgment is granted only with respect to plaintiffs' negligence, warranty and fraud claims and Marke's application is denied in its entirety;
Corcoran's motion for summary judgment is granted in its entirety: and
Plaintiffs' cross-motion for summary judgment is denied; it is further ordered that the caption in this matter shall now be as follows:
x
Index No. 029255/2007
BOARD OF MANAGERS OF MARKE GARDEN CONDOMINIUM, on its own and on behalf of the Individual unit owners,
Plaintiffs,
against-
240/242 FRANKLIN AVENUE LLC, SCARANO ARCHITECT PLLC, SCARANO ARCHITECT PLLC, F/K/A SCARANO & ASSOCIATES, and NAMIK MARKE a/k/a MIKE MARKE,
Defendants.
x
This constitutes the decision and order of this Court.
Genine D. Edwards
J. S. C. Footnotes
Footnote 1: The causes of action against Royal Roofing and Construction, Inc. were previously dismissed.
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