Cref 546 W. 44th St., LLC v. Hudson Meridian Constr. Grp., LLC
| Decision Date | 17 July 2020 |
| Docket Number | 655672/2019 |
| Citation | 128 N.Y.S.3d 829,69 Misc.3d 747 |
| Parties | CREF 546 WEST 44TH STREET, LLC, and Patrinely Group, LLC, Plaintiffs, v. HUDSON MERIDIAN CONSTRUCTION GROUP, LLC and Code Consultants Professional Engineers, PC, Defendants. |
| Court | New York Supreme Court |
Clifton Budd & DeMaria, LLP, New York, NY (Arthur J. Robb and Stephen P. Pischl of counsel), for plaintiffs.
Rich, Intelisano & Katz, LLP, New York, NY (Daniel E. Katz of counsel), for defendant Hudson Meridian Construction Group, LLC.
Rawle & Henderson, LLP, New York, NY (Robert A. Fitch of counsel), for defendant Code Consultants Professional Engineers, PC.
Gerald Lebovits, J. Plaintiff Patrinely Group is a developer. Patrinely Group owns plaintiff CREF 546 West 44th Street, LLC (CREF 546). CREF 546 in turn owns property on the far West Side of Manhattan that it intended to develop into two residential apartment buildings. CREF 546 hired defendants, Hudson Meridian Construction Group, LLC, and Code Consultants Professional Engineers, PC, to build the two apartment buildings and to ensure that the buildings complied with the governing building codes and other federal, state, and local laws.
After the project was completed, a wheelchair-using resident of one of the new apartment buildings sued CREF 546, Patrinely Group, and other defendants in federal court. The resident alleged that his building violated federal and state law by being not properly accessible for him given his disabilities. He sought injunctive relief and compensatory and punitive damages.
CREF 546 and Patrinely Group then brought this action, alleging that in light of the federal lawsuit (and discovery developed in that lawsuit), Hudson Meridian and Code Consultants had each (i) breached contractual obligations to ensure that the buildings complied with state and federal accessibility requirements; (ii) in so doing also committed professional negligence; and (iii) breached further contractual obligations to indemnify CREF 546 for expenses (and potential damages recovery) from the federal lawsuit.
Hudson Meridian and Code Consultants move separately under CPLR 3211 to dismiss all claims brought by plaintiffs (motion sequences 001 and 002, respectively). These motions—which raise issues of first impression under New York law—are consolidated here for disposition.
The motions are granted as to plaintiff Patrinely Group's claims for breach of contract and negligence against both defendants; granted as to Patrinely Group's claim for contractual indemnification against Code Consultants; and granted in part and denied in part as to Patrinely Group's claim for contractual indemnification against Hudson Meridian. The motions are granted in part and denied in part as to plaintiff CREF 546's claims for breach of contract; granted as to CREF 546's claims for professional negligence; and granted in part and denied in part as to CREF 546's claims for contractual indemnification.
According to the allegations of the complaint, CREF 546 owns property located at 546 West 44th Street in Manhattan. This property was to be developed into residential apartment buildings. Patrinely Group, which owns CREF 546, was to serve as the project's development manager. As part of the development process, CREF 546 entered into separate contracts with Code Consultants and Hudson Meridian. (See NYSCEF Nos. 31 [Code Consultants contract], 26 [Hudson Meridian contract].)
Code Consultants is an engineering consulting firm. CREF 546 hired Code Consultants to review its design and construction documents and as-built drawings to ensure that the project would comply with applicable legal requirements, including the Fair Housing Act and local law. (See Compl., NYSCEF No. 1, at 7.1 ) The contract provided that absent written authorization from CREF 546, Code Consultants' compensation on the contract would not exceed $14,000 plus reimbursable expenses. (NYSCEF No. 31 at 2.)
Code Consultants represented that it would perform its contractual obligations "in accordance with the professional standards and degree of care exercised by other consultants providing similar accessibility consulting services in the construction industry in New York City." (NYSCEF No. 31 at 1.) And Code Consultants agreed, "to the fullest extent permitted by law," to "indemnify and hold harmless owner and its officers, directors, employees and affiliates from and against all liabilities, damages, costs and expenses" to the "extent arising out of or resulting from any errors or omissions, whether negligent or willful, relating to the performance of the services" under the contract." (NYSCEF No. 31 at 3-4 [capitalization omitted].)
Hudson Meridian was the project's general contractor. In its contract with CREF 546, Hudson Meridian represented that it had "sufficient knowledge and expertise to construct the Work in accordance with the Drawings and Specifications" and with "all applicable laws, codes, regulations, and professional standards customarily adhered to by contractors working on comparable projects in the New York City metropolitan area." (NYSCEF No. 26 at 14, Construction Contract § 10.4.3.) Hudson Meridian represented that it had "reviewed, analyzed, and found generally sufficient for completion of the Work the Contract Documents" identified in the agreement, including the architectural plans for the two apartment buildings. (Id. ) And Hudson Meridian expressly "acknowledge[d] ... that the Drawings, the Specifications and all Addenda are sufficient to enable the Contractor to construct the Work as outlined therein in accordance with applicable laws." (Id. at 114, General Conditions § 3.2.4.)
Additionally, Hudson Meridian agreed, to the "fullest extent permitted by law," to "defend, indemnify and hold harmless the Owner ... [and] the Development Manager ... from and against claims, damages, losses, suits, judgments, and expenses, including but not limited to attorneys' fees and expert witness fees, arising out of or resulting from performance of the Work." (Id. at 125, General Conditions § 3.18.1.) Hudson Meridian's "indemnity, defense and hold harmless obligations" under § 3.18.1 "also specifically include[d], to the extent not prohibited by law, without limitation, all fines, claims penalties, damages, liability, costs, expenses, settlements ... and punitive damages (if any) arising out of, or in connection with," any "violation of or failure to comply with any requirement of a governmental authority that is consistent with the Contract Documents and which bears upon the performance of the Work." (Id. at 126, General Conditions § 3.18.3.)
The buildings opened for leasing to residents in 2016. In 2018, a resident in one of the buildings brought an action in the U.S. District Court for the Southern District of New York against CREF 546, Patrinely Group, and other defendants. The resident, who has disabilities and uses a wheelchair, alleged that the building is not fully accessible to people with disabilities, in violation of the federal Fair Housing Act, the New York State Human Rights Law, and the New York City Human Rights Law. His complaint sought declaratory relief, injunctive relief requiring defendants to cure the lack of accessibility in the buildings, and compensatory and punitive damages.2 (See generally NYSCEF No. 9 [federal complaint].)
CREF 546 and Patrinely Group then brought this action against Hudson Meridian and Code Consultants, asserting three claims against each defendant.
The first claim (the complaint's first and second causes of action) sounds in breach of contract. It alleges that defendants breached contractual representations that they would (a) construct the buildings in accordance with the contract documents and plans and take care to ensure the buildings comply with applicable accessibility requirements; and (b) indemnify plaintiffs for losses and damages arising from defendants' performance of contractual services.
The second claim (the complaint's third and fourth causes of action) sounds in professional negligence, alleging that defendants did not perform their contractual services with due care and in accordance with applicable professional standards.
The third claim (the complaint's fifth and sixth causes of action) sounds in contractual indemnification under the contracts' indemnity provisions.
On the complaint's first through fourth causes of action, plaintiffs seek damages from each defendant, in an amount they estimate to exceed $500,000. (See NYSCEF No. 2 at 17-18.) On the fifth and sixth causes of action, plaintiffs seek a judgment finding that each defendant is obligated under their respective contracts "to indemnify Plaintiffs for the amount of any recovery obtained by the Accessibility Litigants and/or such third parties against Plaintiffs, including attorneys' fees, costs, and expenses incurred in connection with such defense." (Id. at 18.)
Defendants now move separately to dismiss under CPLR 3211 (a) (7) to dismiss the claims against them.
When ruling on a CPLR 3211 (a) (7) motion to dismiss, this court must accept as true the facts as alleged in the pleadings and submissions in opposition to the motion, accord the non-moving party the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory. (See Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Servs., Inc. , 20 N.Y.3d 59, 63, 956 N.Y.S.2d 439, 980 N.E.2d 487 [2012].)
Hudson Meridian moves to dismiss all claims against it brought by both plaintiffs (the complaint's first, third, and fifth causes of action). As to each plaintiff, Hudson Meridian's motion is granted in part and denied in part.
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