Brownell Steel, Inc. v. Great American Insurance Company

• Decision Date: 06 April 2006
• Docket Number: 98811.
• Citation: 28 A.D.3d 842,813 N.Y.S.2d 550,2006 NY Slip Op 02600
• Parties: BROWNELL STEEL, INC., Respondent, v. GREAT AMERICAN INSURANCE COMPANY, Appellant. (And a Third-Party Action.)
• Court: New York Supreme Court — Appellate Division

28 A.D.3d 842

813 N.Y.S.2d 550

2006 NY Slip Op 02600

BROWNELL STEEL, INC., Respondent, v. GREAT AMERICAN INSURANCE COMPANY, Appellant. (And a Third-Party Action.)

98811.

Appellate Division of the Supreme Court of the State of New York, Third Department.

April 6, 2006.

Appeal from that part of an order of the Supreme Court (O'Brien, III, J.), entered May 26, 2005 in Otsego County, which granted plaintiff's motion for summary judgment.

Rose, J.

Andrew R. Mancini Associates, Inc. (hereinafter ARM), acting as general contractor, subcontracted with third-party defendant R&S Steel, LLC to perform all steel work on a construction project. R&S, in turn, subcontracted with plaintiff to perform the steel erection work. After completion of its work, plaintiff sought to secure payment by filing a mechanic's lien and commencing this action against defendant, the surety on ARM's payment bond. The bond provided for payment to any supplier or subcontractor who had a lien on the project. In response to the action, defendant asserted various claims and defenses that ARM had against plaintiff for unauthorized and deficient work. Defendant also brought a third-party action against R&S and another. When plaintiff moved for summary judgment on its claim under the bond, defendant cross-moved for summary judgment on its claims against plaintiff and against R&S in the third-party action. Finding that a lack of privity deprived defendant of standing to assert ARM's claims against plaintiff and that questions of fact precluded summary judgment on ARM's claims against R&S, Supreme Court denied defendant's cross motion and granted plaintiff's motion. Defendant appeals.

We find merit in defendant's argument that the chain of subcontracts between ARM and R&S and between R&S and plaintiff provides sufficient privity to permit defendant, as surety, to assert ARM's claims and defenses against plaintiff. Plaintiff's subcontract with R&S identified ARM as the intended beneficiary for whom the steel erection was to be done, it incorporated the terms of the separate subcontract between R&S and ARM, and it provided that plaintiff was to assume all of the responsibilities of R&S under its separate subcontract with ARM. Thus, plaintiff's subcontract was clearly intended to be performed for ARM's benefit, with plaintiff standing in the shoes of R&S. Given plaintiff's role in fulfilling R&S's obligations to ARM, the relationship between ARM and plaintiff was so close as to be the...