Cutone & Co. Consultants, LLC v. Riverbay Corp.

• Decision Date: 11 May 2022
• Docket Number: Index No. 656732/2021
• Citation: 76 Misc.3d 781,174 N.Y.S.3d 187
• Parties: CUTONE & COMPANY CONSULTANTS, LLC d/b/a LC Associates, Plaintiff, v. RIVERBAY CORPORATION, Defendant.
• Court: New York Supreme Court

76 Misc.3d 781
174 N.Y.S.3d 187

CUTONE & COMPANY CONSULTANTS, LLC d/b/a LC Associates, Plaintiff,
v.
RIVERBAY CORPORATION, Defendant.

Index No. 656732/2021

Supreme Court, New York County, New York.

Decided on May 11, 2022

174 N.Y.S.3d 189

For Plaintiff, Matthew Press Esq., Press Koral, LLP, 641 Lexington Avenue, New York, NY 10022

For Defendant, Jeffrey Buss Esq., Smith Buss & Jacobs, LLP, 733 Yonkers Avenue, Yonkers, NY 10704

Lucy Billings, J.

76 Misc.3d 782

Defendant moves to dismiss the verified complaint's first claim for breach of a contract and second claim for retaliation, based on plaintiff's failure to state a cause of action and to state plaintiff's claims with sufficient particularity. C.P.L.R. §§ 3013, 3211(a)(7). Defendant also moves to dismiss a claim for violation of the New York False Claims Act (NYFCA), NY State Fin. Law § 191, but the verified complaint does not plead such a claim, which plaintiff confirmed at oral argument. Finally, defendant seeks attorneys’ fees and expenses. For the reasons explained below, the court grants defendant's motion to dismiss plaintiff's retaliation claim, but otherwise denies defendant's motion, including its request for attorneys’ fees and expenses.

76 Misc.3d 783

I. THE ALLEGED FACTS

Upon a motion to dismiss a complaint pursuant to C.P.L.R. § 3211(a)(7), the court considers the facts alleged in the complaint and presumes them to be true. Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc. , 37 N.Y.3d 169, 175, 150 N.Y.S.3d 79, 171 N.E.3d 1192 (2021) ; Connaughton v. Chipotle Mexican Grill, Inc. , 29 N.Y.3d 137, 141, 53 N.Y.S.3d 598, 75 N.E.3d 1159 (2017) ; Seaman v. Schulte Roth & Zabel LLP , 176 A.D.3d 538, 538, 111 N.Y.S.3d 266 (1st Dep't 2019). According to the verified complaint, defendant owns Co-op City, a cooperative housing development publicly subsidized under the Mitchell-Lama Program, in Bronx County. NY Priv. Hous. Law §§ 10-37. Defendant and plaintiff entered a contract dated November 5, 2013, for plaintiff to perform both an American Society of Heating, Refrigerating, and Air-Conditioning Engineers Level II energy audit and a retro-commissioning audit of Co-op City's common areas. During

174 N.Y.S.3d 190

plaintiff's work, plaintiff uncovered structural deficiencies throughout Co-op City, which plaintiff believed would violate both New York Private Housing Finance Law § 32-a(7) and New York City Administrative Code §§ 28-308.2, 308.3.1, and 308.4.1, if not ameliorated by the end of 2021. After plaintiff reported its preliminary findings to defendant, it terminated the contract and refused to pay plaintiff for its further services.

Defendant continued to ignore the deficiencies after it terminated the contract. Plaintiff contends that defendant purposely concealed the deficiencies and, by doing so, falsely certified defendant's compliance with Private Housing Finance Law § 32-a(7) and Administrative Code §§ 28-308.2, 308.3.1, and 308.4.1 to its supervising agency, New York State Homes and Community Renewal (HCR), so that defendant would continue to receive tax benefits and subsidies under the Mitchell-Lama Program. Plaintiff now sues for breach of the contract, to recover payment for its work, and for retaliation under the NYFCA.

II. DEFENDANT'S MOTION TO DISMISS THE VERIFIED COMPLAINT

Defendant bears the burden to establish that plaintiff's verified complaint "fails to state a viable cause of action." Connolly v. Long Island Power Auth. , 30 N.Y.3d 719, 728, 70 N.Y.S.3d 909, 94 N.E.3d 471 (2018). In evaluating defendant's motion, the court must accept plaintiff's allegations as true, liberally construe the verified complaint, and draw all reasonable inferences in plaintiff's favor. Doe v. Bloomberg L.P. , 36 N.Y.3d 450, 454, 143 N.Y.S.3d 286, 167 N.E.3d 454 (2021) ; Connolly v. Long Island Power Auth. , 30 N.Y.3d at 728, 70 N.Y.S.3d 909, 94 N.E.3d 471 ;

76 Misc.3d 784

JF Capital Advisors, LLC v. Lightstone Group, LLC , 25 N.Y.3d 759, 764, 16 N.Y.S.3d 222, 37 N.E.3d 725 (2015) ; M & E 73-75 LLC v. 57 Fusion LLC , 189 A.D.3d 1, 5, 128 N.Y.S.3d 200 (1st Dep't 2020).

The court will not give such consideration, however, to allegations that consist of only bare legal conclusions. Myers v. Schneiderman , 30 N.Y.3d 1, 14, 62 N.Y.S.3d 838, 85 N.E.3d 57 (2017) ; Simkin v. Blank , 19 N.Y.3d 46, 52, 945 N.Y.S.2d 222, 968 N.E.2d 459 (2012) ; M & E 73-75 LLC v. 57 Fusion LLC , 189 A.D.3d at 5, 128 N.Y.S.3d 200. Instead, the court accepts as true only plaintiff's factual allegations that set forth the elements of a legally cognizable claim and from them draws all reasonable inferences in plaintiff's favor. Dismissal is warranted if the verified complaint fails to allege facts that fit within any cognizable legal theory against defendant. Sassi v. Mobile Life Support Servs., Inc. , 37 N.Y.3d 236, 239, 154 N.Y.S.3d 290, 175 N.E.3d 1246 (2021) ; Faison v. Lewis , 25 N.Y.3d 220, 224, 10 N.Y.S.3d 185, 32 N.E.3d 400 (2015).

A. Plaintiff's First Claim for Breach of the Contract

Defendant insists that plaintiff fails to plead breach of a contract, but plaintiff alleges a binding contract that plaintiff performed and defendant breached when it failed to pay plaintiff the balance due. Magliocco v. MKB Family, LLC , 199 A.D.3d 576, 576, 159 N.Y.S.3d 7 (1st Dep't 2021) ; Pavich v. Pavich , 189 A.D.3d 548, 549, 133 N.Y.S.3d 814 (1st Dep't 2020) ; Meer Enters., LLC v. Kocak , 173 A.D.3d 629, 630-31, 105 N.Y.S.3d 415 (1st Dep't 2019) ; Second Source Funding, LLC v. Yellowstone Capital, LLC , 144 A.D.3d 445, 445-46, 40 N.Y.S.3d 410 (1st Dep't 2016). These allegations provide defendant "sufficient notice of the transactions" and claims that plaintiff intends to prove at trial. C.P.L.R. § 3013 ;

174 N.Y.S.3d 191

Second Source Funding, LLC v. Yellowstone Capital, LLC , 144 A.D.3d at 446, 40 N.Y.S.3d 410. Therefore the court denies defendant's motion to dismiss plaintiff's breach of contract claim.

B. Plaintiff's Second Claim for Retaliation

The NYFCA authorizes two private rights of action. Under State Finance Law § 190, "any person may bring a qui tam civil action for a violation of [ State Finance Law § 189 ] on behalf of the person and the people of the state of New York or a local government." A plaintiff that brings a qui tam claim must follow procedural requirements delineated under the statute, including filing under seal for at least 60 days and not serving the complaint on the defendant until so ordered. NY State Fin. Law § 190. State Finance Law § 191 provides an aggrieved employee a separate cause of action for retaliation. This section prevents employers from engaging in retaliatory conduct against an employee for the employee's efforts to stop a violation of the NYFCA.

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