Gizzi v. Hall
| Decision Date | 19 December 2002 |
| Citation | 300 A.D.2d 879,754 N.Y.S.2d 373 |
| Parties | JOSEPH GIZZI et al., Appellants-Respondents,<BR>v.<BR>DAVID E. HALL et al., Individually and Doing Business as HALL DESIGN BUILDERS, Respondents-Appellants. |
| Court | New York Supreme Court — Appellate Division |
In July 1999, plaintiffs entered into a contract with defendants to purchase a residence constructed by defendants at 4960 Jockey Street in the Village of Ballston Spa, Saratoga County. Shortly thereafter, the parties executed a note and purchase money mortgage in the amount of $130,000 in connection with the purchase of the property. Prior to the sale, plaintiffs had the opportunity to and did have the home inspected.
Less than one month after the closing on the property, plaintiffs discovered that the house's cedar exterior was cracking and the stain was beginning to peel and fall off, allegedly stemming from its improper installation and stain treatment. In addition, mildew developed on the house's exterior and the caulking material used to seal the siding to the joints was softening and peeling. Upon plaintiffs' investigation, they learned that, prior to installation and for a significant time after it was installed, the cedar siding had been left exposed to the elements without being treated with protective stain or primer. Plaintiffs further discovered, in the course of having a front porch installed on the residence, that the house had not been built with an insulation barrier and the builder had used silicone to fill large gaps where the siding had been improperly affixed to the residence. Plaintiffs also learned that the house had been built on an area that had a considerable drainage problem, but that defendants rectified the problem by installing a drainage culvert.[1] In April 2000, plaintiffs experienced a strong septic odor in and around their property and allege that defendants had improperly installed their septic system.
Plaintiffs commenced this action alleging fraud, negligence, breach of contract, failure to disclose defects/withholding information, breach of warranty and malpractice. They also sought, as a seventh cause of action, a declaratory judgment rescinding the contract and compensatory and punitive damages. Defendants answered and asserted counterclaims, including one to foreclose plaintiffs' purchase money mortgage, which plaintiffs admitted has been in default since May 2000. Defendants moved for partial summary judgment, seeking dismissal of all but the breach of contract and breach of warranty claims, as well as seeking dismissal of the claim for punitive damages. Defendants also sought summary judgment on their counterclaims seeking monetary damages. Supreme Court partially granted defendants' motion by dismissing the causes of action for fraud, negligence, failure to disclose defects/withholding information and malpractice, finding that same were subsumed in the breach of contract cause of action, and it also dismissed the claim for punitive damages. Supreme Court denied that portion of defendants' motion seeking summary judgment on the counterclaims, stating that "[a] determination of damages due to the defendants based upon their rights under the bond and mortgage must await any setoff which may be due the plaintiffs." Plaintiffs appeal and defendants cross-appeal from the order.
As a starting point, we agree that Supreme Court erred in dismissing the causes of action for fraudulent misrepresentation and fraudulent concealment of defects. A separate cause of action seeking damages for fraud cannot stand when the only fraud alleged relates to a breach of contract (see Egan v New York Care Plus Ins. Co., 277 AD2d 652, 653; see also Rothberg v Reichelt, 270 AD2d 760, 762). But where, as here, plaintiffs' allegations of intentional fraud, though "parallel in many respects to the breach of contract claim" (RKB Enters. v Ernst & Young, 182 AD2d 971, 972), include claims of fraudulent misrepresentations made by defendants which induced them to enter into the contract and close on the property, they are not "merely redundant" of the breach of contract claim (id. at 972; see Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 390). Hence, we conclude that plaintiffs' fraud cause of action is sustainable.
"`[T]o make out a [cause of action for] fraud, a party must establish that a material misrepresentation, known to be false, has been made with the intention of inducing its reliance on the misstatement, which caused it to reasonably rely on the misrepresentation, as a result of which it sustained damages'" (Cohen v Colistra, 233 AD2d 542, 542-543, quoting First Nationwide Bank v 965 Amsterdam, 212 AD2d 469, 470-471). Specifically, plaintiffs allege that defendants falsely stated that the house had a proper infiltration barrier, that the cedar siding had been properly installed and treated, and that not only was the drainage culvert both free from flooding problems and on property belonging to plaintiffs, but that it was a naturally created stream which had existed for "100 years." To prove that defendants had knowledge, plaintiffs proffer statements from several individuals, including painters, the builder who assisted in the construction of the house and an engineering firm. While defendants are correct that the statements are unauthenticated hearsay, such statements are nevertheless sufficient to defeat a claim for summary judgment because plaintiffs properly "`identif[ied] the witnesses, the substance of their testimony, how it is known what that testimony would be and how the witnesses acquired their knowledge * * * [,] provided [that] an acceptable excuse for the failure to tender evidence in admissible form is supplied'" (Siegel v Wank, 183 AD2d 158, 161, quoting Landisi v Beacon Community Dev. Agency, 180 AD2d 1000, 1002; see Egleston v Kalamarides, 58 NY2d 682, 684; Phillips v Kantor & Co., 31 NY2d 307, 312; accord Baker v City of Elmira, 271 AD2d 906, 909). Plaintiffs adequately satisfied this requirement by providing the necessary details with respect to their witnesses and, in one instance, indicated the reluctance of a witness to come forward for fear of legal reprisal from defendants. Plaint...
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