Assouline Ritz LLC v. Edward I. Mills & Assocs.

• Decision Date: 12 January 2012
• Citation: 937 N.Y.S.2d 11,91 A.D.3d 473,2012 N.Y. Slip Op. 00111
• Parties: ASSOULINE RITZ LLC, et al., Plaintiffs–Respondents, v. EDWARD I. MILLS & ASSOCIATES, ARCHITECTS, PC, et al., Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

2012 N.Y. Slip Op. 00111

91 A.D.3d 473

937 N.Y.S.2d 11

ASSOULINE RITZ LLC, et al., Plaintiffs–Respondents,

v.EDWARD I. MILLS & ASSOCIATES, ARCHITECTS, PC, et al., Defendants–Appellants.

Supreme Court, Appellate Division, First Department, New York.

Jan. 12, 2012.

Ingram Yuzek Gainen Carroll & Bertolotti, LLP, New York (Larry F. Gainen of counsel), for appellants.

Marin Goodman, LLP, New York (Fredric B. Goodman of counsel), for respondents.

ANDRIAS, J.P., FRIEDMAN, RENWICK, DeGRASSE, ABDUS–SALAAM, JJ.

Order, Supreme Court, New York County (Debra A. James, J.), entered February 22, 2011, which, to the extent appealed from, denied defendants' motion for summary judgment dismissing the cause of action for professional malpractice, unanimously affirmed, with costs.

Plaintiffs retained defendant Edward I. Mills & Associates, Architects, PC (collectively with the two individual defendants, EIM), an architectural firm, as a zoning consultant in connection with their contemplated purchase and improvement of property in Tribeca. In August 2004, plaintiffs entered into an agreement to purchase the five-story building that was then located at 16 Warren Street (16 Warren) for $5 million. Plaintiffs agreed to acquire this property with the intention of conducting a gut renovation, constructing six additional floors, and converting the resulting 11–story building to luxury condominiums for resale. Plaintiffs formulated this plan in reliance on EIM's advice that the applicable zoning laws permitted the addition of six new floors to 16 Warren. According to the principal of one of the two plaintiffs, “[b]ut for [EIM's] assurances that we could add six stories to this building as of right, we would not have entered into a contract to purchase this property.”

After plaintiffs' purchase of 16 Warren closed in December 2004, the New York City Department of Buildings objected to the planned renovation on the ground that (as EIM concedes) the City's Zoning Resolution in fact did not permit the addition of six floors to the existing building. After learning of the zoning problem in or about March 2005, plaintiffs sought to purchase the air rights of adjoining properties, which would have enabled them to proceed with the plan. By June 2005, however, it became clear that it would not be possible to purchase the necessary air rights, and plaintiffs decided to go forward with a new plan, consistent with the Zoning Resolution, to demolish the existing five-story building completely and replace it with a new 11–story building.

In 2006, plaintiffs commenced this action against EIM. After discovery, EIM moved for summary judgment dismissing the complaint. For purposes of the motion, EIM did not dispute that an issue existed as to whether it had committed professional malpractice, but argued, inter alia, that the malpractice, if any, had not proximately caused plaintiffs recoverable damages. EIM further argued that, even if there were evidence of damages, plaintiffs' failure to attempt to sell the property after learning of the zoning problem established as a matter of law that they had not taken reasonable steps to mitigate the loss. The court denied the motion as to the cause of action for professional malpractice, the only claim at issue on this appeal by EIM. We affirm.

Plaintiffs will be entitled to recover expenses they prove that they actually incurred as a proximate result of their reliance on EIM's mistaken advice in purchasing 16 Warren ( see Barnett v. Schwartz, 47 A.D.3d 197, 207–208, 848 N.Y.S.2d 663 [2007] [clients who proved the negligence of their attorneys in negotiating and closing a lease and purchase option agreement were entitled to recover from the attorneys “rent payments on property completely unsuitable for its intended use” that the clients would not have incurred “but for the (attorneys') negligence”] ).¹ Plaintiffs' right of recovery is subject to reduction, however, insofar as EIM proves (1) that plaintiffs failed to make reasonably diligent efforts to mitigate their damages and (2) the extent to which such efforts would have diminished the loss ( see Wilmot v. State of New York, 32 N.Y.2d 164, 168–169, 344 N.Y.S.2d 350, 297 N.E.2d 90 [1973]; Eskenazi v. Mackoul, 72 A.D.3d 1012, 1014, 905 N.Y.S.2d 169 [2010]; LaSalle Bank N.A. v. Nomura Asset Capital Corp., 47 A.D.3d 103, 107, 846 N.Y.S.2d 95 [2007]; Prudential Ins. Co. of Am. v. Dewey, Ballantine, Bushby, Palmer & Wood, 170 A.D.2d 108, 115, 573 N.Y.S.2d 981 [1991], affd. on other grounds 80 N.Y.2d 377, 590 N.Y.S.2d 831, 605 N.E.2d 318 [1992], quoting Den Norske Ameriekalinje Actiesselskabet v. Sun Print. & Publ. Assn., ...