Invesco Advisers, Inc. v. Marsh & Mclennan Co. 

• Decision Date: 02 February 2012
• Citation: 2012 N.Y. Slip Op. 00718,92 A.D.3d 414,938 N.Y.S.2d 15
• Parties: INVESCO ADVISERS, INC., Plaintiff–Appellant, v. MARSH & McLENNAN CO., INC., Defendant–Respondent.
• Court: New York Supreme Court — Appellate Division

2012 N.Y. Slip Op. 00718

92 A.D.3d 414

938 N.Y.S.2d 15

INVESCO ADVISERS, INC., Plaintiff–Appellant,

v.MARSH & McLENNAN CO., INC., Defendant–Respondent.

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

Feb. 2, 2012.

Sutherland Asbill & Brennan LLP, New York (Lawrence A. Dany III of counsel), for appellant.

Anderson & Ochs, LLP, New York (Mitchel H. Ochs of counsel), for respondent.

FRIEDMAN, J.P., SWEENY, ACOSTA, RENWICK, ABDUS–SALAAM, JJ.

Order, Supreme Court, New York County (Eileen Bransten, J.), entered April 19, 2011, which granted defendant's motion to dismiss the complaint for failure to state a cause of action, and denied as moot plaintiff's cross motion, unanimously reversed, on the law, with costs, defendant's motion denied, plaintiff's cross motion for partial summary judgment on its first cause of action seeking declarations that defendant landlord is required to maintain and repair the fire-resistant material applied to structural columns and beams in accordance with the applicable sections of the Administrative Code of the City of New York, that the failure to do so constitutes a default under the lease, and that plaintiff tenant is entitled to indemnification for the costs it incurred in making the necessary repairs, is granted, and it is so declared.

The parties entered into a lease for the rental of commercial space which provided that plaintiff tenant had inspected the premises, was taking it “as is,” and would be undertaking construction work to prepare for its initial occupancy. The lease further provided that defendant landlord was not required to perform any work to prepare the premises for tenant and would furnish plaintiff with a “construction allowance” to reimburse it for a portion of costs incurred in “constructing long-term real property for use in [plaintiff's] trade or business.” Plaintiff was responsible for obtaining all necessary permits, as well as compliance with all federal, state and city regulations with respect to its alterations and renovations. Defendant was responsible for repairs to the building, including the common elements “and structural Repairs of any kind or nature other than those Repairs required by [plaintiff]” as set forth in the lease. Defendant was also responsible for compliance with all federal, state and city regulations that did not arise from plaintiff's use, occupancy or alterations to the building.

Plaintiff commenced its construction work on the demised premises, part of which required removal of the existing, nonstructural walls in the premises. This, in turn, exposed the underlying structural columns and beams. Defendant notified plaintiff that “the existing steel in areas undergoing alteration is subject to special inspections” for fireproofing under Administrative Code of the City of New York § 28–1704.11.6, and “will likely fail.” True to defendant's prediction, an inspection revealed that the bond strength of the fireproofing material on the columns was less than that required by Administrative Code § 28–1704.11.5. Plaintiff sent defendant a cure notice and, when defendant did not remediate the fireproofing defect, plaintiff sent defendant a letter stating that its failure to cure this violation constituted a default under the lease and plaintiff would seek reimbursement for the costs of remediation.

Plaintiff commenced this action against defendant alleging three causes of action. The first cause of action seeks the following declarations: (1) that defendant bears responsibility for maintaining and repairing the premises' structure and structural materials under Administrative Code § 28–301.1; (2) that the lease requires defendant to maintain and repair at its own expense the fire-resistant material applied to structural columns and beams in a condition that satisfies Administrative Code § 1704.11.5; (3) that defendant's failure to satisfy Administrative Code § 1704.11.5 constitutes a default under the lease; and (4) that plaintiff is entitled to indemnification for the cost of compliance.

The second cause of action alleges that defendant breached the lease by refusing to repair at its own expense the allegedly defective fireproofing and seeks to recover the costs plaintiff incurred to cure the breach. The third cause of action sought recovery of plaintiff's costs in...