City of Buffalo City Sch. Dist. v. Lpciminelli, Inc., 1287

• Decision Date: 16 March 2018
• Docket Number: CA 17–00176,1287
• Citation: 73 N.Y.S.3d 836,159 A.D.3d 1468
• Parties: CITY OF BUFFALO CITY SCHOOL DISTRICT, Plaintiff–Appellant, v. LPCIMINELLI, INC., Defendant–Respondent. (Action No. 1.) LPCiminelli, Inc., Petitioner–Plaintiff–Respondent, v. City of Buffalo Joint Schools Construction Board and City of Buffalo City School District, Respondents–Defendants–Appellants. (Action No. 2.) (Appeal No. 2.)
• Court: New York Supreme Court — Appellate Division

159 A.D.3d 1468

73 N.Y.S.3d 836

CITY OF BUFFALO CITY SCHOOL DISTRICT, Plaintiff–Appellant,

v.LPCIMINELLI, INC., Defendant–Respondent. (Action No. 1.)

LPCiminelli, Inc., Petitioner–Plaintiff–Respondent,

v.City of Buffalo Joint Schools Construction Board and City of Buffalo City School District, Respondents–Defendants–Appellants. (Action No. 2.) (Appeal No. 2.)

1287

CA 17–00176

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

Entered: March 16, 2018

HARTER SECREST & EMERY, LLP, BUFFALO (JOHN G. HORN OF COUNSEL), FOR PLAINTIFF–APPELLANT AND RESPONDENTS–DEFENDANTS–APPELLANTS.

HODGSON RUSS LLP, BUFFALO (BENJAMIN M. ZUFFRANIERI, JR., OF COUNSEL), FOR DEFENDANT–RESPONDENT AND PETITIONER–PLAINTIFF–RESPONDENT.

PRESENT: WHALEN, P.J., SMITH, LINDLEY, NEMOYER, AND CURRAN, JJ.

MEMORANDUM AND ORDERMemorandum:

Pursuant to the City of Buffalo and the Board of Education of the City School District of the City of Buffalo Cooperative School Construction Act (L 2000, ch 605), plaintiff-respondent-defendant, City of Buffalo City School District (District), and the City of Buffalo (City) were authorized to construct and renovate numerous schools throughout the City, and respondent-defendant, City of Buffalo Joint Schools Construction Board (Board), was authorized to "enter into contracts on behalf of the [C]ity or the [District], or both, for the design, construction, financing, and management of the new educational facilities" (L 2000, ch 605, § 4[b] ). In furtherance of the Buffalo Schools Development Program (Program), defendant-petitioner-plaintiff, LPCiminelli, Inc., formerly known as Louis P. Ciminelli Management Co., Inc. (LPC), was selected to be the "Program manager" (L 2000, ch 605, § 3 [k] ). LPC thereafter entered into a Comprehensive Program Packaging and Development Services Provider Agreement (PPDS) with the Board, which acted "for itself and as agent and on behalf of the [City] and the [District]." The terms of the PPDS incorporated yet-to-be-written "addenda."

The addenda, which would also incorporate by reference the provisions of the PPDS, were known as the Master Design and Construction Agreements (MDCAs), and there was one for each of the five phases of the Program. The MDCAs relevant to these appeals concern only phases three and five, and the relevant portions of those MDCAs are identical. It is undisputed that the PPDS and incorporated MDCAs resulted in a stipulated-sum construction contract, i.e., a contract with one total price for all of the construction work, regardless of the actual costs of construction.

In 2014 and 2015, after operating under the PPDS and MDCAs for over 12 years, the Board and the District refused to process or pay the last four payment requisitions until LPC provided them with documentation concerning LPC's actual construction and administrative costs, information that LPC contended was confidential, proprietary and not subject to disclosure under the PPDS and MDCAs. Following negotiations and an attempt at mediation, the District commenced action No. 1, asserting causes of action for, inter alia, breach of fiduciary duty and breach of contract and seeking, inter alia, declaratory and injunctive relief as well as punitive damages.

LPC thereafter commenced a hybrid CPLR article 78 proceeding and declaratory judgment action (action No. 2), alleging that the District and the Board (collectively, appellants) had breached the contract and seeking, pursuant to CPLR 7803, either "an order compelling the District and/or [the

Board] to process and approve the requisitions" (emphasis added) or an order "compelling the District and, if required, [the Board], to process the requisitions." In the declaratory judgment causes of action, LPC sought, inter alia, a declaration that "the District and/or [the Board] [were] required under law to process and approve the requisitions" (emphasis added), as well as declarations that the District and/or the Board were not entitled to the information they sought, had no right to refuse to process the requisitions and owed LPC payments for the work approved by the architects.

LPC filed a pre-answer motion to dismiss the complaint in action No. 1 and, shortly thereafter, appellants moved to dismiss the petition/complaint in action No. 2. The District also cross-moved in action No. 1 to order LPC to preserve all of its documentation, and LPC moved in action No. 1 to permit it to file Exhibit I under seal on the ground that the exhibit contained confidential and proprietary company information.

By the order in appeal No. 1, Supreme Court, inter alia, granted in part LPC's motion to dismiss in action No. 1 and dismissed the first cause of action and the request for punitive damages, and granted LPC's motion in action No. 1 to seal Exhibit I. The court otherwise reserved decision on LPC's remaining requests for relief. By the judgment and order (denominated order) in appeal No. 2, the court, inter alia, further granted those parts of LPC's motion in action No. 1 that sought dismissal of the second, third, sixth and seventh causes of action; denied those parts of appellants' motion in action No. 2 that sought dismissal of the petition/complaint as time-barred, dismissal of the petition/complaint against the Board, and dismissal of the CPLR article 78 cause of action; and granted LPC judgment on the CPLR article 78 cause of action in action No. 2, directing the District to "act on the Disputed Payment Requisitions by either definitively approving or rejecting them."

We conclude in appeal No. 1 that the court erred in directing that a portion of the record in action No. 1 be sealed without first making a determination of good cause. We further conclude in appeal No. 2 that the court erred in granting those parts of LPC's motion seeking dismissal of the third, sixth and seventh causes of action in action No. 1, in granting LPC judgment on the CPLR article 78 cause of action, and in denying that part of appellants' motion seeking dismissal of that cause of action in action No. 2.

Addressing first the issues raised in appeal No. 1, we reject appellants' contention that the court did not apply the appropriate standards when ruling on LPC's CPLR 3211 pre-answer motion to dismiss. Where, as here, a court is considering a pre-answer motion to dismiss made pursuant to CPLR 3211(a)(1) and (7), the court may look to the contract documents (see EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19–20, 799 N.Y.S.2d 170, 832 N.E.2d 26 [2005] ), and "affidavits may ... be used under certain circumstances, even without converting the motion to one for summary judgment under CPLR 3212" ( Albert v. Solimon, 252 A.D.2d 139, 140, 684 N.Y.S.2d 375 [4th Dept. 1998], affd 94 N.Y.2d 771, 699 N.Y.S.2d 1, 721 N.E.2d 17 [1999] ).

Contrary to appellants' further contention, we conclude that the court properly granted that part of LPC's motion seeking to dismiss the District's first cause of action, for breach of fiduciary duty, in action No. 1. Although that cause of action was pleaded with sufficient particularity under CPLR 3016(b) (see Faith Assembly v. Titledge of N.Y. Abstract, LLC, 106 A.D.3d 47, 62, 961 N.Y.S.2d 542 [2d Dept. 2013] ), we agree with LPC that it "fails to allege conduct by [LPC] in breach of a duty other than, and independent of, that contractually established between the parties and is thus duplicative" of the District's breach of contract causes of action ( Kaminsky v. FSP Inc., 5 A.D.3d 251, 252, 773 N.Y.S.2d 292 [1st Dept. 2004] ; see NYAHSA Servs., Inc., Self–Ins. Trust v. Recco Home Care Servs., Inc., 141 A.D.3d 792, 795, 36 N.Y.S.3d 270 [3d Dept. 2016] ; cf. EBC I, Inc., 5 N.Y.3d at 20, 799 N.Y.S.2d 170, 832 N.E.2d 26). As a result, we further conclude that the court properly dismissed the request for punitive damages related to the first cause of action.

Contrary to appellants' contention, the court also properly dismissed the request for punitive damages in action No. 1 insofar as it related to the breach of contract causes of action, thereby dismissing the request for punitive damages in its entirety. As a general rule, "[p]unitive damages are not recoverable in a breach of contract action in which no public rights are alleged to be involved" ( 2470 Cadillac Resources, Inc. v. DHL Express [USA], Inc., 84 A.D.3d 697, 699, 923 N.Y.S.2d 530 [1st Dept. 2011], lv dismissed 18 N.Y.3d 921, 941 N.Y.S.2d 555, 964 N.E.2d 1022 [2012] ), because the purpose of punitive damages "is not to remedy private wrongs but to vindicate public rights" ( Rocanova v. Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 613, 612 N.Y.S.2d 339, 634 N.E.2d 940 [1994] ). Here, the breach of contract causes of action do not seek to vindicate public rights but, rather, they involve allegations of an ordinary breach of contract between a private contractor and municipal entities.

With respect to appellants' final contention concerning appeal No. 1, we agree with appellants that the court erred in granting LPC's motion to file Exhibit I under seal in the absence of "a written finding of good cause, ... specify[ing] the grounds thereof," as required by 22 NYCRR 216.1(a) (see Gryphon Dom. VI, LLC v. APP Intl. Fin. Co., B.V., 28 A.D.3d 322, 324, 814 N.Y.S.2d 110 [1st Dept. 2006] ; see also Maxim Inc. v. Feifer, 145 A.D.3d 516, 517, 43 N.Y.S.3d 313 [1st Dept. 2016] ). We therefore modify the order in appeal No. 1 accordingly, and we remit the matter to Supreme Court to determine whether good cause exists to seal the record with respect to Exhibit I.

Addressing next the issues raised in appeal No. 2, we reject appellants' contention that the court erred in dismissing the second cause of action in action No. 1. That cause of action is based on allegations that LPC breached PPDS section 11.05(k), which required LPC to "[p]rovide regular comparisons of the approved construction cost estimates with actual costs and submit monthly reports to the [Board] that identify variances between actual and estimated...