Yawand-Wossen v M Square Bldrs. LLC

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Yawand-Wossen v M Square Bldrs. LLC 2021 NY Slip Op 32849(U) December 23, 2021 Supreme Court, New York County Docket Number: Index No. 154127/2020 Judge: Lucy Billings Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 41 -------------------------------------x Index No. 154127/2020 YADEY YAWAND-WOSSEN, Plaintiff DECISION AND ORDER. - against M SQUARE BUILDERS LLC, Defendant --------------------------------------x LUCY BILLINGS, J.S.C.: ( Defendant moves to di•smiss the amended verified complaint's second and third claims, both fdr fraud, and-claim for punitive . damages, based on documentary evidence, failure to state~ cause ~faction, apd failure to plead frau&with the required specificity. C.P.L.R, §§ 3016(b), 3211(a) (1) ·and (7). Upon .such a motion, the court considers the facts alleged in the complaint, and presumes them to be true. Donoghue & _Himmelstein, McConnell, Gribben, Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169; 175 (2021); Connaughton v. Chipotle Mexican Grill, N.Y.3d 137, 141 (2017); Seaman v. Schulte Roth A.D.3d 538, 538 I. & Inc., 29 Zabel LLP, 176 (1st Dep't 2019). THE ALLEGED FACTS According to·the amended verified co~plaint,-.plaintiff owns premises at 160 Ea~t _95th Street, _New York· County .. Aff .. of Lawrence M. Segan Ex; A (Am. V. Compl.), NYSCEF Doc. 12, yawandl221 1 2 of 13 ~ 6. [*FILED: 2] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM INDEX NO. 154127/2020 NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 01/03/2022 1 ) She retained an architect and a project manager to renovate the premises. Id. On November 28, 2017, plaintiff and defendant entered a contract for renovation of the premises, plaintiff was to pay defendant $1,973,491.20. for which Id. '31 10. Defendant represented that it possessed "the experience, skill, and financial wherewithal to complete the Project correctly, competently, a:od in a timely manner." Id. '31 9. .· The contract provided that .the project was to be substantially completed before March 1, 2019. Id. '31 11. The parties stipulate that $1,§73,491.20 was the ori~inal amount under their 6ontract and that they amended the amount to $2,196,530.55 though subsequent \ change orders. On or about ~arch 1, 2019, defendant represented ~hat it had paid for "materials, equipment, and sub~contractors;_" and completed so much of the project as to entitle defendant to $95,485.09 that plaintiff had withheld pursuant to the contract as retainage, funds payable to defendant to be withheld by plaintiff until defendant completed 80% of the project. 16. Once plaintiff paid the retainage to defenda~t, suffered. Id. '31 its ~ork Its supervisor was absent from the premises. Defendant fired the project foreperson because it could not pay him and p~ovided insufficient workers to perform th~ work. Defendant ~lso cut back on materials for the project because of a lack of funds, yawand1221 failed to pay contractors,; failed to compl_ete 2 3 of 13 [*FILED: 3] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM INDEX NO. 154127/2020 NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 01/03/2022 work, falsely claimed how much work defendant had completed, and falsified requests for payment. Id. ~ 19. Plaintiff alleges that, by February 2019, defendant no longer intended to complete the project, but intended to elicit as much money from her as possible. Id. ~ 20. On May 6, 2019, defendant informed plaintiff it could not complete the project. Plaintiff eventually hired another contractor to complete the project, which caused her damages of $443,367.88. Plaintiff also claims contractual late completion fees of $52,750.00 day for 211 work days). ($250 per Plaintiff subsequently informed defendant that completion of the project actually would cost an additional $131,479.50, due to the need to repair defendant's poorly performed work. The amended complaint alleges a claim for breach of the parties' contract and two claims for fraud in the inducement. The second claim alleges fraud in inducing plaintiff to enter the original contract. The third claim alleges fraud in inducing her to pay the retainage. As set forth above, defendant moves to dismiss the fraud claims and plaintiff's claim for punitive damages applicable to all three substantive claims. II. DEFENDANT'S MOTION TO DISMISS CLAIMS A. Grounds for the Motion In moving to dismiss the fraud claims pursuant to C.P.L.R. § 32ll(a) (1), based on documentary evidence, and C.P.L.R. § yawand1221 3 4 of 13 [*FILED: 4] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM INDEX NO. 154127/2020 NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 01/03/2022 3211(a).(7), fail~re to state a cause of action, defendant maintains that the contract between the parties shows the fraud claims duplicate the breach of contract claim. Defendant also maintains that pla~ntiff, by alleging, at most, defendant's misrepresentation of its intention to perform under the contract, fails to all~ge an a~tionable misrepresentation. Regarding the second claim~ defendant takes the further position that plaintiff alleges no facts to support defendant's inability to perform under the contract as _0f November 28, 2017, and that her bare, conclusory allegation without such facts does not support a fraud claim pursuant to C.P.L.R. § 301~(b). Regarding the third claim, in additio~ to maintaining th_,at the claim duplicates the·contract claim, defendant contends that, pursuant to the contract, defendant owed no obligation to pay the subcontractors ~nd suppliers before receiving plaintiff's payments.· Defendant also contend~ that plaintiff alleg~~ no injury from defendant'$ alleged failufe to pay the subcontractors apd suppliers. / Plaintiff contends that the contract does not definitively refute the amended complaint's allegations, that the fraud claims ate based on a duty outside the contract, and that plaintiff has alleged all required elements of the second and third claims. Plaintiff points to the-injury she suffered when she paid the retainage, which she would not have paid had defendant not misrepresented its completion of the required 80% of the project. y~wand1221 4 5 of 13 [*FILED: 5] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 -,; Finally, plaintiff claims punitive damages are available because,~ while defe:r;i.dant's actions are not aimed at the public, punitive damages may be awarded if defendant's conduct exhibits a high degree of moral culpability demonstrating reckless or conscious disregard of other persons' rights. B. Applicable Standards As set . forth a.bove, defendant seeks dismissal of plaintiff's fraud claims pursuant to C.P.L.R. § 3211(a) (1), based·on · documentary evidence; C.P.L.R. 3211(a) (7), .based on failure to § state a cause of action; and C.P.L.R. § 3016(b), based on failure · to plead fraud with the requisite detail. To succeed on a motion to dismiss pursuant to C.P.L.R. § 3211(a) (1), the documentary evidence submitted that forms the basis of a defense must "utterly refute[ ] the plaintiff's factual allegations, conclusively establishing a defense as a matter of law." Himrnelstein, McConnell, Gribben. Donoghue Matthew Bender & Co., Inc., & Joseph. LLP v. 37 N.Y.3d at 175 (quoting Goshen v. Mutual Life Ins. Co. of N.Y., ' 98 N.Y.2d 314, 326 (20'02)). See A~~co Footwear Holdings, LLC v. KBG, LLC, 193 A.D.3d 493, 494 (1st Dep't 2021). The court considers the facts alleged in the complaint as true and affords plaintiff the benefit of every favorable inference. Himrnelstein, McConnell, Gribben, Donoghue Joseph, LLP v. Matthew Bender & Co., Inc., .37 N.Y.3d at 175. Factual allegations flatly contradicted by documentary evidence, yawand1221 5 6 of 13 & [*FILED: 6] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 however, as well as cla.;Lms consisting of bare legal conclusions, are not entitled to any such considerati6n. Myers v. Schneiderman, 30 N·.Y.3d 1, 11 (2017); Array BioPharma, °Inc. v. AstraZeneca AB, 184 A.D.3d 463, 464 _(1st Dep't 2020). C.f:'.L.R. § 32ll(a) (1) does not explicitly define documentary evidence, but the documents must be unambiguous, of undisputed authority, with contents that are essentially und~niable, to establish a conclusive defense. VXI Lux Holdco S.A.R.L~ Holdings,· LLC, 171 A.D.3d 189, 193 (1st Dep't 2019). Vr SIC The documentary evidence defendant presents is the parties' contract and its subsequent amendments. Upon defendant's motion to dismiss the amended complaint pursuant to C.P.L.R. § 32ll(a) (7), defendant bears the burden to establ,ish that the amended complaint "fails to state a viable cause of action." 719, 728 (2018) Connolly v. Long Island Power Auth., 30 N.Y.3d In evaluating defendant's motion, as under§ ~ 3211(a) (1), the court must accept plaintiff's allegations as true, liberally construe the amended complaint, and draw all reasonable inferences in her favor. N.Y.3d 450, 454 Doe v. Bloomberg L.P., 36 (2021); Connolly v. Long Island Power Auth., 30 N.Y.3d at 728; JF Capital Advisors, LLC v. Lightstone Group,_LLC, 25·N.Y.3d 75~, 764 A. D. 3d~ 1., 5 1( (2015); M & E 73-75 LLC ~- 57 Fusion LLC. 189 1st Dep' t 2020) .. Again, however, the court will not give such consideration to allegations that consist 6f only bare \ yawand1221 6 7 of 13 [*FILED: 7] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 legal conclusions. Myers v. Schneiderman, 30 N.Y.3d at 11; Simkin v. Blank, 19 N.Y.3d 46, 52 (2012); M E 73-75 LLC v. 57 & Instead, the court accepts as·true Fusion LLC, 189 A.D.3d at 5. only plaintiff:s f~ctual allegations that ~et forth the elements of a legally. cognizable claim and from them draws all reasonable infer~nces in hei favor. Dismissal is warranted if the amended complaint fails to allege facts that fit within any cognizable legal theory. v. Mobile Life Support Servs. 1 Inc., 37 N.Y.3d 236, 239 Faison v. Lewis, 25 N.Y.3d 220, 224 (2015). Sassi (2621); Although_ defendant may not rel~ on evidence outside the pleaded claims, plaintiff may rely on admissible evidence to supplement and remedy any defects in her complaint, Nonnon v. City of New York, 82~, 827 (2007}; Cron v. Hargro Fabrics, 9 N.Y.3d 91 N.Y.2d 362, 366 (1998); US Suite LLC v. Barata, Baratta & Aidala LLP, 171 A.D.3d 551, 551 (1st Dep't 2019); Ray v. Ray, 108 A.D.3d 449, 452 (1st . . Dep't 2013), because the question is whether plaintiff maintains a claim, not whether plaintiff has artfully articulited or correctly labeled it or defendant dispute~ it. American Broadcasting Cos., 27 N.Y.3d 46, 52 Chanko v. (2016). Therefore the court disregards the affidavits by defendant's President except to the extent that they authenticate the documentary . evidence on which defendant relies. yawand1221 7 ( 8 of 13 C.P.L.R. § 32ll(a) (1) [*FILED: 8] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM INDEX NO. 154127/2020 NYSCEF DOC. NO. 43 C. RECEIVED NYSCEF: 01/03/2022 The Fraud Claims Claims based on fraud "must allege misrepresentation or concealment of a material fact, the wrongdoer, scienter on the part of justifiable reliance and resulting inj.ury." Cool Invs. Ltd. v. 2016). falsity, Forkosh, 142 A.D.3d 286, 290-91 MP (1st Dep't Plaintiff must set forth the circumstances constituting fraud in detail. C.P.L.R. § 3016(b); Epiphany Community Nursery Sch. v. Levey, 171 A.D.3d 1, 9 (1st Dep't 2019); MP Cool Invs. Ltd. v. Forkosh, 142 A.D.3d at 291. Both fraud claims duplicate the breach of contract claim. Besides pun~tive damages, litigation costs, and interest, the contract claim seeks damages of $496,117.88, representing the costs to complete the work under the contract and contractual late completion fees. Am. V. Compl. ~~ 23, 57. The second claim, for fraud in the inducement of the contract, seeks the return of all funds paid by plaintiff, totaling $1,944,005.64, plus punitive damages. This requested relief amounts to rescission of the contract, returning the parties to the status guo before entering the contract, which is impossible here. If defendant were to return to plaintiff all her payments to it, she could not return its work and materials, to restore both parties to their positions before entering the contract. El Toro Group. LLC v. Bareburger Group, LLC, 190 A.D.3d 536, 537-38 2021). yawand1221 (1st Dep't Damages for fraud, moreover, are the actual losses from 8 9 of 13 [*FILED: 9] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM INDEX NO. 154127/2020 NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 01/03/2022 the fraud: the additional amount plaintiff spent as a result of the fraud. Lama Holding Co. v. Smith Barney Inc., 421 88 N.Y.2d 413, (1996); Empire Outlet Bldrs. LLC v. Construction Resources Corp .. of N.Y.,- 170 A.D.3d 582, 583 (1st Dep't. 2019). first claim, for breach of the contract, seeks that amount, the second claim, for fraud, must fail because it seeks damages that duplicate the damages that the contract claim seeks. I • Corp. v. Credit Suisse Sec. MBIA Ins. (USA) LLC, 165 A.D.3d 108, 114 (1st Dep't 2018). The third claim, for fraud ba~ed on misrepresentations that defendant was entitled to the retainage, seeks the return of the retainage. Pursuant to the parties' contract, if defendant failed to supply workers or materials, failed to pay subcontractors, substantially breached any contract provision, or abandoned the project, plaintiff was entitled to terminate the· contract, stop payments to defendant, and comple.te the work using other vendors as she did. If plaintiff's costs to complete the work exceed the amount owed to defendant under the contract, defendant is required to pay the difference to plaintiff. of Patrick Fitzpatrick Ex. A, NYSCEF Doc. 19, §§ Aff. 14.2·.1 - 14.2.4. Therefore the retainage, had plaintiff withheld it, would be applied to th~ a~ount·needed to complete the work, which th~ first claim; for breach of the contract, ·seeks. 'plaintiff s~~ks the same damages twice; yaw:and122~ 9 10 of 13 In sum,· The third claim, the [*FILED: 10] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 alternative fraud claim, thus also must fail because it duplicates the contract claim. The fraud claims also fail to state a cause of action for which relief may be granted. The heart of the first fraud claim is that defendant misrepresented to plaintiff it was "able, competent, and skilled to provide professional quality construction and contracting services to complete the Project." Am. V. Compl. i 39. This vague allegation lacks any specification as to who made that representation, to whom, or when. I.M.P. Plumbing & Heating Corp. v. Munzer & Saunders, LLP, No. 14688, 2021). A.O. 3d , 2021 WL 54561 72, at *2 ( 1st Dep' t The allegation further lacks any specific facts that indicate the alleged misrepresentation was intentional. v. CohnReznick, LLP, 194 A.D.3d 637, 637 Bullen (1st Dep't 2021). Plaintiff thus fails to plead the claim with the specificity sufficient to satisfy C.P.L.R. § 3016(b). Nor has plaintiff alleged justifiable reliance on defendant's misrepresentation. Plaintiff alleges that she contracted for over $2,000,000.00 worth of renovations and previously retained the assistance of both an architect and a project manager, but omits that she or her agents perform~d any due diligence in selecting defendant as her contractor or confirming its alieged represe~tations. Friedman, .174 A.D.3d 443, 444 yawandl221 OmniVere, LLC v. (1st Dep't 2019); Rubin v. 10 11 of 13 ·~=================================~--------INDEX NO. 154127/2020 [* NEW YORK COUNTY CLERK 01/03/2022 11:03 AM ! FILED: '11] NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 01/03/2022 - ',· Sabharwal, 171 A.D.3d 580, 580 (1st Dep't 20i9); New York City Educ. Constr. Fund v. Verizon N.Y. Dep' t Therefore the second claim, 2014) . Inc., 114 A.D.3d 529, for fraud, 530 (1st fails due both to lack of ·specificity, as required by C.P.L.R. § 3016(b), and to failure to plead justifiable reliance. 3211 (a) C.P.L.R. § (7). The third claim, also for fraud, alleges that defendant falsely represented it had paid for mate·rials, equipment; and subs:;ontractors and completed 80% of the work, to entitle defendant to an a'ddi t·ional payment. from plaintiff. fails for the same reasons discussed above. This claim Plaintiff.does not describe the alleged false statements with ·specificity, nor does she allege facts showing her reliance on those representations was justifiable. D. Punitive Damages Finally, defendant moves to dismiss the amended complaint to the extent that it seeks punitive damages. Punitive damages may be allowed for fraud claims based on private conduct, if "gross, wanton, or willful fra~d or other more culpable conduct" merits the.award, Borkow~ki v. Borkowski 39 N.Y.2d 982, the fraud claims fail. 983 To obtsin punitive damages based on a breach of contract claim, plaintiff must establish independent tort (2) (1976), but of an egregious nature (3) (1) an directed at.her and (4) also part of a pattern of conduct directed at the public. yawandl221 11 12 of 13 [*FILED: 12] NEW YORK COUNTY CLERK 01/03/2022 11:03 AM NYSCEF DOC. NO. 43 INDEX NO. 154127/2020 RECEIVED NYSCEF: 01/03/2022 . "· Matter of· Part 60 Put-Back Litig., 36 N. Y. 3d 342,· 360 Because the -fraud claims fail, for awarding punitive damages. (2020). no tort claim survives as a basis Therefore the court also dismisses the amended· complaint's claim for punitive damages. III. CONCLUSION In sum, the court grants defendan~'s motion to dismiss the amended complaint's second ·and third claims, for fraud, and so much of· the first claim, for breach .of a contract, that seeks punitive damages. C.P.L.R. §§ 3016(b), 32ll(a) (1) and (7). Defendant shall file its answer to the remainder of the amended complaint within 20 days after the date this Decision and Order is· filed. DATED: December 23, 2021 LUCY BILLINGS, J.S.C. LUCY EH.LUNGS J.S.C yawand1221 12 13 of 13

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