Sokoloff v. Harriman Estates

• Decision Date: 10 July 2001
• Parties: ADAM D. SOKOLOFF et al., Appellants, v. HARRIMAN ESTATES DEVELOPMENT CORP., Respondent, et al., Defendant.
• Court: New York Court of Appeals Court of Appeals

96 N.Y.2d 409

754 N.E.2d 184

729 N.Y.S.2d 425

ADAM D. SOKOLOFF et al., Appellants, v. HARRIMAN ESTATES DEVELOPMENT CORP., Respondent, et al., Defendant.

Court of Appeals of the State of New York.

Argued June 6, 2001.

Decided July 10, 2001.

Sidney A. Weisberg, Great Neck, R. Bertil Peterson and Daniel J. Weisberg for appellants.

Conforti, Waller & Kaplowitz, L. L. P., Hauppauge (Jack A. Kaplowitz of counsel), for respondent.

Chief Judge KAYE and Judges SMITH, CIPARICK, WESLEY, ROSENBLATT and GRAFFEO concur.

OPINION OF THE COURT

LEVINE, J.

On this appeal, we review the dismissal on the pleadings, pursuant to CPLR 3211 (a) (7), of plaintiffs' cause of action seeking specific performance of an alleged contract. The facts as alleged in the complaint and other averments submitted in opposition to the motion to dismiss are as follows. In March 1998, plaintiffs purchased land in the Village of Sands Point, Nassau County, in contemplation of building a new home on the property. For a total of $65,000, defendant Harriman Estates Development Corp., a residential contractor, offered to provide plaintiffs with certain pre-construction services, including furnishing an "architectural and site plan/landscape design" and assisting them in obtaining a building permit. The offer was set forth by Harriman in a March 12, 1998 letter, which established a payment schedule and requested payment of a $10,000 retainer fee. Plaintiffs accepted the offer by paying Harriman the retainer fee. Thereafter, following several meetings between plaintiffs, Harriman and defendant Frederick Ercolino, an architect, the architectural plans were finalized, filed with the Village and approved.

Although plaintiffs paid Harriman a total of $55,000 for the architectural plans and other services, and tendered the remaining balance due under the terms of their agreement with Harriman, Harriman and Ercolino refused to allow plaintiffs to use these plans to build their home. After plaintiffs rejected Harriman's offer to build the home for an estimated cost of $1,895,000 (a sum significantly greater than Harriman's earlier estimates), Harriman for the first time informed plaintiffs that the architectural plans could not be used to construct the house unless it was hired as the builder. Harriman predicated its claim to the exclusive use of the plans on the terms of a contract it had entered into with Ercolino in May 1998 for the "Sokoloff Residence."

Plaintiffs then brought this action against Harriman and Ercolino for specific performance of the "contract dated March 12, 1998" (the first cause of action) and for replevin of the architectural plans (the second cause of action). With respect to the first cause of action, seeking specific performance, plaintiffs alleged that Harriman was acting as their agent in procuring architectural drawings and plans from Ercolino, that the plans were unique and based upon a design conceived by them and that they had no adequate remedy at law. Plaintiffs requested an order directing Harriman and Ercolino to permit them to use the architectural plans. In their second cause of action, for replevin, plaintiffs alleged that they owned the architectural plans "by reason of being a third-party beneficiary" of the contract between Harriman and Ercolino.

Harriman moved to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action. Supreme Court granted the motion in part by dismissing the cause of action for replevin, leaving intact plaintiffs' cause of action for specific performance. On Harriman's appeal from Supreme Court's failure to grant the motion to dismiss in its entirety, the Appellate Division reversed, dismissed the specific performance claim and severed the action against Ercolino. The court reasoned that even plaintiffs' first cause of action was barred by a provision in the Harriman-Ercolino contract stating that "[n]othing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either the Client [Harriman] or Architect." We granted leave to appeal and now reverse.¹

On a motion to dismiss pursuant to CPLR 3211, we must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, accord plaintiffs the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory (see, Tenuto v Lederle Labs., 90 NY2d 606, 609-610; Leon v Martinez, 84 NY2d 83, 87-88). Applying these principles, we conclude that plaintiffs adequately alleged a cause of action against Harriman for specific performance.

Plaintiffs' first cause of action was not predicated on a third-party beneficiary theory and therefore was not barred by the contractual provision cited by the Appellate Division. To be sure, the complaint alleged that plaintiffs owned the architectural "plans by reason of being a third-party beneficiary of a contract between [Harriman and Ercolino]." However, that third-party beneficiary theory was interposed only in support of plaintiffs' second cause of action, which was not before the Appellate Division and is not before us now. By contrast, in the first cause of action—the only cause of action at issue at the Appellate Division and before this Court—plaintiffs seek specific performance of their contract with Harriman and allege that Harriman was acting as their agent in procuring architectural drawings and plans from Ercolino. The contractual provision barring third-party actions is irrelevant with respect to plaintiffs' cause of action for specific performance of their contract with Harriman because plaintiffs are themselves parties to that contract.

Harriman argues that plaintiffs nonetheless are not entitled to specific performance because their claim is improperly predicated on an "invoice" that does not have the "status of a contract." This contention lacks merit. Plaintiffs alleged in their complaint that Harriman offered to provide them with an architectural design and other services for $65,000 and that they accepted that offer. They attached to their complaint a copy of the March 12, 1998 letter from Harriman, which sets forth a payment schedule for the proposed work and states that Harriman "started the architectural and site plan/landscape design process" and that plaintiffs' "retainer for these services is required at this time." Plaintiffs further alleged that the architectural and other services were completed and that they paid $55,000 and tendered the remaining $10,000 balance to Harriman. At this pleading stage of the litigation, we cannot conclude as a matter of law that the March 12, 1998 letter does not represent and memorialize a...