Nassau Cnty. v. N.Y. State Urban Dev. Corp.

• Decision Date: 30 March 2015
• Docket Number: 002750-04
• Citation: 2015 N.Y. Slip Op. 25093,4 N.Y.S.3d 874,48 Misc.3d 248
• Parties: NASSAU COUNTY, Plaintiff, v. NEW YORK STATE URBAN DEVELOPMENT CORPORATION d/b/a/ Empire State Development Corporation, Dormitory Authority of the State of New York, Richard Dattner Architect P.C., Tishman Construction Corporation of New York, CSA Group N.Y. Architecture, Engineering & Consulting, P.C. f/k/a Marino D. Molina, P.C., and Counsilman Hunsaker & Associates, Defendants. New York State Urban Development Corporation d/b/a Empire State Development Corporation and Dormitory Authority of the State of New York, Third–Party Plaintiffs, Roy Kay, Inc., Anron Heating and Air Conditioning, Inc., Dectron International Inc., Stonewall Contracting Corp. and Norberto & Sons, Inc. Third–Party Defendants. Tishman Construction Corporation of New York, Second Third–Party Plaintiff, Dectron International Inc., Second Third–Party Defendant. Counsilman Hunsaker & Associates, Third Third–Party Plaintiff, Norberto & Sons, Inc., Third Third–Party Defendant.
• Court: New York Supreme Court

48 Misc.3d 248

4 N.Y.S.3d 874

2015 N.Y. Slip Op. 25093

NASSAU COUNTY, Plaintiff

v.NEW YORK STATE URBAN DEVELOPMENT CORPORATION d/b/a/ Empire State Development Corporation, Dormitory Authority of the State of New York, Richard Dattner Architect P.C., Tishman Construction Corporation of New York, CSA Group N.Y. Architecture, Engineering & Consulting, P.C. f/k/a Marino D. Molina, P.C., and Counsilman Hunsaker & Associates, Defendants.

New York State Urban Development Corporation d/b/a Empire State Development Corporation and Dormitory Authority of the State of New York, Third–Party Plaintiffs, Roy Kay, Inc., Anron Heating and Air Conditioning, Inc., Dectron International Inc., Stonewall Contracting Corp. and Norberto & Sons, Inc. Third–Party Defendants.

Tishman Construction Corporation of New York, Second Third–Party Plaintiff, Dectron International Inc., Second Third–Party Defendant.

Counsilman Hunsaker & Associates, Third Third–Party Plaintiff

Norberto & Sons, Inc., Third Third–Party Defendant.

002750-04

Supreme Court, Nassau County, New York.

March 30, 2015.

Sinnreich & Kosakoff, LLP, Jarrett Behar, Esq., Central Islip, for plaintiff.

Milber, Makris Plousadis & Seiden, LLP, Marisa L. Lanza, Esq., White Plains, NYS Dept of Law, Office of the Attorney General, Cornilia Mogor, Esq., Albany, Cullen & Dykman, LLP, Douglas J. Bohn, Esq., Steven G. Rubin & Assoc., P.C., Garden City, Goetz, Fitzpatrick, LLP, Molod, Spitz & DeSantis, P.C., Alice K. Spitz, Esq., New York, McElroy Deutscht & Mulvaney, Morristown, NJ, for defendants.

Opinion

VITO M. DESTEFANO, J.

In an action, inter alia, to recover damages for breach of contract, the Defendants/Third-partyPlaintiffs, New York State Urban Development Corporation d/b/a Empire State Development Corporation(“UDC”) and Dormitory Authority of the State of New York(“DASNY”) move for an order pursuant to CPLR 3212 granting them summary judgment dismissing the amended complaint of the plaintiff, Nassau County(“County”)[MotionSeq. No. 23].

The County cross-moves for an order pursuant to CPLR 3212 granting them “summary judgment dismissing the first, second and third affirmative defenses” asserted in the answer of UDC and DASNY [MotionSeq. No. 24].

Factual Background

The instant action was commenced by the County to recover damages relating to the construction of the Nassau County Aquatic Center in Eisenhower Park, East Meadow, New York (the “Aquatic Center” or “the Project”).The Aquatic Center Project came about due to a New York State legislative appropriation of State funds to the UDC in the amount of $24 million for the development of the Aquatic Center.The Aquatic Center was built to “attract” the Goodwill Games; it began as a UDC economic development project and was authorized by statute and funded by grant monies in 1994.The UDC was charged with administering the State funds; DASNY was to provide technical support for the Project.¹

As early as 1994, DASNY was involved with assisting the UDC in the selection of design professionals and construction managers, namely, DefendantsRichard Dattner Architect P.C.(“Dattner”) and Tishman Construction Corporation of New York (“Tishman”).²DASNY's representatives attended design meetings and worked with the UDC, the County, and the Goodwill Games representatives to ensure that the Project and its appropriation would be implemented.

Ultimately, a plan was developed whereby separate construction contracts for various trades would be issued by DASNY, beginning in 1996, with construction expected to be complete at the end of 1997.³

At some point, the participants in the Project determined that the Aquatic Center could not be built within the budget of $24 million that had been specifically appropriated by the Legislature.As a result, the County proposed to pay for all costs of completion of the Project in excess of the $24 million funding provided by the State.After the revised cost estimate of the Project increased to approximately $30 million, it was agreed that the County would deposit $6 million with the UDC, which would transfer this money, as needed, to DASNY to pay for Project costs and expenses in excess of the $24 million.This solution for the funding shortfall was memorialized in a written agreement between the County and the UDC dated February 1, 1996(the “UDC/County Agreement”).⁴

DASNY was not a signatory to the UDC/County Agreement.

On February 2, 1996, the UDC and DASNY entered into an agreement whereby the UDC and DASNY outlined their roles in connection with the Project (the “UDC/DASNY Agreement”).The UDC/DASNY Agreement detailed the mutual understandings governing the UDC/DASNY relationship with respect to managing the planning, design and construction management of the Project.It sets forth the oversight and contract administration functions to be exercised by DASNY, including handling payment for design and construction costs out of the appropriated funding.In addition, the UDC/DASNY Agreement confirmed that DASNY's construction management fee, to be paid from the state appropriated monies, would be fixed at $500,000.

Construction on the Project began in 1996 and was completed in 1998.The Aquatic Center opened for special use on March 23, 1998, hosted the Goodwill Games in the summer of 1998, and opened to the general public in the fall of 1998.

Subsequently, ductwork at the Project became corroded.The County alleges, inter alia, that a poor, defective or negligent design resulted in the hardware sections of the ductwork, and the ductwork system, to fail without warning.It further alleges that the design also caused: the stainless steel support wire, which held the light fixtures over the pool in place, to fail; the eyebolts to corrode and fail; and excessive condensation between the metal roof deck and the ceiling tiles, damaging the insulation and all other related roof/ceiling materials.

Procedural History

The County commenced this action on February 27, 2004.On September 20, 2010, the County amended its complaint.In its amended complaint, the County asserted claims against the UDC for breach of contract, negligent misrepresentation and specific performance and as against DASNY, Dattner, Tishman, Molina and Counsilman, claims for breach of contract and negligent misrepresentation (Ex. “E” to Motion).

In their answer, the UDC and DASNY denied most of the allegations in the amended complaint and asserted various affirmative defenses (Ex. “F” to Motionat ¶¶ 170–172).

On August 27, 2012, the County and the UDC entered into a stipulation whereby the County “withdrew” the third and fourth causes of action asserted against the UDC (Ex. “M” to Motion).⁵In addition, the County “agreed to voluntarily discontinue its negligent misrepresentation claims against the State[which it identifies in its motion papers as both the UDC and DASNY] and is negotiating a proposed Stipulation with counsel for the State”(Memorandum of Law in Opposition to Motionat p. 2, fn. 3).⁶

Thus, the instant motion for summary judgment made by the UDC and DASNY concerns dismissal of only the first and fifth causes of action for breach of contract against the UDC and DASNY, respectively.In the first cause of action, the County alleges that the “[UDC] has failed to perform all of its obligations under the [UDC]/Nassau County Agreement by failing to provide the County with a world class' Aquatics Center that was adequately and properly designed, and built in a good and workmanlike manner, free of design or construction defects, errors or omissions....”In the fifth cause of action, the County alleges that “DASNY is in breach of its contractual obligations to the County as a third-party beneficiary of the [UDC]/DASNY Agreement by, among other things, failing to ensure that a world class' Aquatics Center was adequately and properly designed, and was built for the County in a good and workmanlike manner, free of design or construction defects, errors or omissions....”(Ex. “E” to Motionat ¶¶ 100, 121).

The County cross-moves for partial summary judgment dismissing the first, second and third affirmative defenses asserted in the UDC/DASNY answer.Those affirmative defenses are: failure to state a cause of action, failure to commence this action within the applicable statute of limitations, and that the UDC/County Agreement is void and unenforceable for lack of consideration (Ex. “F” to Motionat ¶¶ 170–172).

The Court's Determination

The UDC and DASNY argue that the breach of contract causes of action asserted against them should be dismissed on three independent grounds.It is the UDC's position that the County has failed to state a cause of action against it and that the Agreement between it and the County lacks consideration.It is DASNY's position that the County has failed to state a cause of action against it as the County is not an intended third party beneficiary of the Agreement between UDC and DASNY.Both the UDC and DASNY maintain that the breach of contract actions are untimely as substantial completion of the Project occurred more than six years prior to the commencement of the action.⁷

UDC's Motion—Lack of Consideration

In order for a contract to be binding and enforceable, there must be valid consideration (Umscheid v. Simnacher,106 A.D.2d 380, 482 N.Y.S.2d 295[2d Dept.1984] ).“Consideration can take the form of either a promise or performance, and has been said to consist of what is actually given or suffered and accepted for a promise.It is, in effect, the price bargained and paid for a promise”(22 N.Y. Jur. 2d, Contracts§ 75 ).“Since a promise is a good consideration for a promise, mutual promises are generally held to be sufficient consideration for each other.

Mutual promises on the part of both parties to a contract constitute sufficient consideration for the agreement, where each party undertakes some act or forbearance that will be, or apparently may be, detrimental to the promisor or beneficial to the promisee” (22 N.Y. Jur....