Neptune Estates, LLC v. Big Poll & Son Constr., LLC

• Decision Date: 14 March 2013
• Citation: 2013 N.Y. Slip Op. 23075,961 N.Y.S.2d 896,39 Misc.3d 649
• Court: New York Supreme Court
• Parties: NEPTUNE ESTATES, LLC, Plaintiff, v. BIG POLL & SON CONSTRUCTION, LLC, IVM General Construction, Inc., Vadim Gorshkov and Pavel Lutso, Defendants.

39 Misc.3d 649

961 N.Y.S.2d 896

2013 N.Y. Slip Op. 23075

NEPTUNE ESTATES, LLC, Plaintiff,

v.BIG POLL & SON CONSTRUCTION, LLC, IVM General Construction, Inc., Vadim Gorshkov and Pavel Lutso, Defendants.

Supreme Court, Kings County, New York.

March 14, 2013.

Mary T. Dempsey, Esq., New York, for plaintiff.

Howard R. Birnbach, Esq., Great Neck, for defendants IVM and Gorshkov.

Elaine Kaplansky Fridlin, Esq., Brooklyn, for defendants Big Poll and Lutso.

CAROLYN E. DEMAREST, J.

A bench trial in this action seeking damages under alternative theories of breach of contract, negligence, indemnification, restitution, a “wrongfully filed mechanic's lien” and counterclaims of breach of contract, conversion, and unjust enrichment was commenced on July 30, 2012 and concluded on September 20, 2012. This action was joined for trial with the related action, IVM General Construction v. Neptune Estates, LLC, et al. (Index No. 19311/10) in which IVM sought to foreclose a mechanic's lien at issue in both matters.

At the conclusion of the joint trial, this court ruled from the bench that the mechanic's lien was void as it was filed untimely pursuant to the New York Lien Law. As a result, Neptune's counter-claim for wilful exaggeration in that action could not be adjudicated and the IVM action was dismissed.

In the present action, the first and second causes of action for breach of contract and negligence, respectively, were withdrawn. At the conclusion of the bench trial, the third, fourth, and fifth causes of action for indemnification and restitution were dismissed as was the seventh cause of action for a “wrongfully filed mechanic's lien” as to defendant Pavel Lutso (“Lutso”) only. Defendants Big Poll & Son Construction, LLC (“Big Poll”) and Lutso's second counterclaim for conversion was similarly dismissed.

The court reserved decision on the sixth and seventh causes of action for a “wrongfully filed mechanic's lien” as well as Big Poll's first and third counterclaims for breach of contract and unjust enrichment, respectively.

BACKGROUND

This action involves a dispute between plaintiff Neptune Estates, LLC (“Neptune”), owner of 380 Neptune Avenue, Brooklyn, N.Y. (“Property”),¹ and defendant Big Poll, Lutso, the principal of Big Poll, defendant IVM General Construction Inc. (“IVM”) and its principal Vadim Gorshkov (“Gorshkov”). The allegations of the dispute are discussed in IVM Gen. Constr. v. Neptune Estates, LLC, 29 Misc.3d 1238(A), 2010 WL 5141736 [Sup. Ct., Kings County 2010].²

On August 21, 2008, Neptune entered an agreement with defendant Big Poll whereby Big Poll would act as the general contractor on a construction project on the Property. By contracts dated February 2009, IVM entered two subcontractor agreements with Big Poll whereby IVM agreed to perform the structural steel work, masonry, and concrete slabs on the project.³ In the complaint, Neptune alleged that on or about February 22, 2009, Neptune removed Big Poll for cause and hired non-party Future City Plus, Inc. (“Future City”) to act as the new general contractor on the Project. Although a construction contract between Neptune and Future City was not executed until April 4, 2009, on March 15, 2009, IVM entered two subcontractor agreements with Future City whereby IVM was to be paid $181,000 and $191,000, respectively, for the structural steel and masonry and concrete slabs on the Project. Neptune alleges that Future City subsequently terminated these subcontracts with IVM for cause on December 15, 2009. The project remained incomplete at the time of trial.

On January 5, 2010, IVM filed a mechanic's lien (“January Lien”) against the Property and, pursuant to Lien Law § 9(3), IVM improperly identified the person with whom the contract was made as both “Big Poll & Son Construction, LLC and Future City Plus, Inc.”. On March 10, 2010, after Neptune moved to discharge the January Lien, Justice Bunyan vacated the January Lien without prejudice in a short form order with the consent of the parties. The order indicated that “a new Mechanic's Lien may be filed in a timely manner. This is without costs to any party.” On April 1, 2010, IVM filed a second mechanic's lien (“Lien”) ⁴ identifying the person with whom the contract was made as Big Poll & Son Construction, LLC, noting, “There may be a claim against the successor on the project, Future City Plus, Inc., if this company agreed to assume the obligation of its predecessor.” This is the only substantive change from the January Lien other than the identity of IVM's attorney and the signature on the Lien.

At the conclusion of the joint trial, Neptune moved to vacate the Lien and dismiss the lien foreclosure action based upon IVM's failure to establish substantial performance of the steel or concrete masonry contracts and upon Lien Law § 10(1) for failure to file the Lien within eight months after the final performance of work. The court held that, based on the testimony and evidence introduced at trial, Big Poll was off the construction site no later than April 21, 2009. Accordingly, the filing of the Lien in January of 2010 ⁵ occurred more than eight months after IVM stopped performing work for Big Poll. The court vacated the Lien pursuant to Lien Law § 10(1) and dismissed IVM's foreclosure action. As a result of the vacature of the Lien, the court also dismissed Neptune's counterclaim for wilful exaggeration pursuant to Atlas Refrigeration–Air Conditioning, Inc. v. Lo Pinto, 33 A.D.3d 639, 821 N.Y.S.2d 900 [2d Dept. 2006] as a claim for wilful exaggeration is precluded if a lien is found to be invalid based upon any reason other than the wilful exaggeration. Accordingly, the IVM action was dismissed in its entirety.

With respect to the Neptune action, this court dismissed Neptune's fourth and fifth causes of action for restitution of allegedly diverted trust assets holding that Neptune was not a beneficiary pursuant to New York Lien Law Article 3–A and no proof of any actual diversion of assets by Big Poll, Gorshkov, or IVM was presented at trial. The court dismissed Neptune's seventh cause of action for wrongful filing of a mechanic's lien as to Lutso as it was established that Gorshkov, on behalf of IVM, had filed the Lien, not Lutso. The court also dismissed Big Poll's second counterclaim for conversion holding that if Big Poll were entitled to recover against Neptune at all, as a matter of law, any recovery by Big Poll could only be based upon breach of contract and there was no evidentiary basis for a claim of conversion against Neptune. At the conclusion of the trial, counsel were given the opportunity to submit post-trial briefs. The court specifically noted that the briefs should include a dollar amount with respect to each of the parties' respective claims. During oral arguments, the court noted that the signed release by Lutso on behalf of Big Poll (Exhibit 12), acknowledging payment in full by Neptune, appeared to preclude recovery by Big Poll upon its breach of contract counter claim and the existence of the contract would preclude recovery upon the equitable unjust enrichment claim. However, the court permitted Big Poll the opportunity to brief these issues. Plaintiff submitted a post-trial memorandum seeking $328,278 in damages. IVM submitted a post-trial reply letter arguing that the “counterclaims must fail.” ⁶ Plaintiff submitted a reply to IVM's post-trial reply letter. Big Poll did not make any post-trial submissions and is deemed to have abandoned its counter claims.

DISCUSSION

Big Poll's Claims

Plaintiff argues that Big Poll's counter-claims for breach of contract and unjust enrichment must be dismissed as Big Poll was paid for its work through its last payment application, number 4, which was signed by Lutso on March 28, 2009 (Exhibit 8).⁷ Payment application number 4 indicates that the total value of the work completed was $2,205,100.00 and that $368,010 was owed. This corresponds to the February 27, 2009 lien waiver signed by Lutso indicating an amount due of $368,010.00 (Exhibit 8). Neptune's bank statement from Brooklyn Federal Savings Bank indicates that on April 1, 2009, four days after Lutso signed payment application number 4, Neptune received a credit in its account for $394,135 (Exhibit 4). On April 2, 2009, Neptune then wired $368,000.00 to Big Poll ⁸ (Exhibit 4). The “Final Release: Final Waiver of Claims and Liens and Release of Rights” (“Final Release”), signed by Lutso on April 23, 2009, indicates $0 balance due and the amount previously paid as $2,205,100.00 (Exhibit 12).

At the conclusion of the trial, Big Poll claimed that the evidence at trial established that Big Poll was only paid approximately $1,500,000 ⁹ by Neptune, thus leaving an approximate balance of $700,000.¹⁰ At oral argument, and in its post-trial brief, plaintiff explained that the $700,000 discrepancy is due to the $625,000 paid to Future City by Neptune for the demolition, excavation and foundation work performed prior to August 21, 2008, ¹¹ that was included in payment application one, and $79,260 in retainage. Although payment application one was not introduced into evidence, proof of payments of $625,000 by plaintiff to Future City, between March 1, 2006 and December 19, 2007, was introduced into evidence (Exhibit 4). Neither Big Poll nor IVM have contested this explanation or submitted its own calculations of damages.

Big Poll's first and third counterclaims are dismissed as Big Poll failed to meet its burden to prove its damages for breach of contract and unjust enrichment. The Final Release, signed by Big Poll's principal, clearly states a balance due of $0 and Big Poll has not demonstrated that it was owed the claimed approximately $700,000 (Exhibit 12). Big Poll did not contest Neptune's calculations in a post-trial brief as directed by the court. At the conclusion of the trial, Big Poll argued that it anticipated receiving the proceeds from payment application number five, signed and...