Town of Oyster Bay v. Lizza Indus., Inc.

• Decision Date: 17 December 2013
• Citation: 981 N.Y.S.2d 643,4 N.E.3d 944,2013 N.Y. Slip Op. 08370,22 N.Y.3d 1024
• Parties: TOWN OF OYSTER BAY, Appellant, v. LIZZA INDUSTRIES, INC., Respondent. Town of Oyster Bay, Appellant, v. J.D. Posillico, Inc., et al., Respondents. Town of Oyster Bay, Appellant, v. Hendrickson Bros., Inc., Respondent. Village of Babylon, Appellant, v. Hendrickson Bros., Inc., Respondent. Village of Lindenhurst, Appellant, v. Hendrickson Bros., Inc., Respondent. Village of Lindenhurst, Appellant, v. Lizza Industries, Inc., Respondent. Town of Oyster Bay, Appellant, v. J.D. Posillico, Inc., Respondent. Town of Oyster Bay, Appellant, v. S. Zara and Sons Contracting Corporation, Respondent. Town of Oyster Bay, Appellant, v. Marvec Allstate, Inc., Respondent. Village of Lindenhurst, Appellant, v. J.D. Posillico, Inc., Respondent.
• Court: New York Court of Appeals Court of Appeals

22 N.Y.3d 1024
4 N.E.3d 944
981 N.Y.S.2d 643
2013 N.Y. Slip Op. 08370

TOWN OF OYSTER BAY, Appellant,
v.
LIZZA INDUSTRIES, INC., Respondent.
Town of Oyster Bay, Appellant,
v.
J.D. Posillico, Inc., et al., Respondents.
Town of Oyster Bay, Appellant,
v.
Hendrickson Bros., Inc., Respondent.
Village of Babylon, Appellant,
v.
Hendrickson Bros., Inc., Respondent.
Village of Lindenhurst, Appellant,
v.
Hendrickson Bros., Inc., Respondent.
Village of Lindenhurst, Appellant,
v.
Lizza Industries, Inc., Respondent.
Town of Oyster Bay, Appellant,
v.
J.D. Posillico, Inc., Respondent.
Town of Oyster Bay, Appellant,
v.
S. Zara and Sons Contracting Corporation, Respondent.
Town of Oyster Bay, Appellant,
v.
Marvec Allstate, Inc., Respondent.
Village of Lindenhurst, Appellant,
v.
J.D. Posillico, Inc., Respondent.

Court of Appeals of New York.

Dec. 17, 2013.

Carman, Callahan & Ingham, LLP, Farmingdale (Michael F. Ingham of counsel), for appellants in the first through tenth above-entitled actions.

Devitt Spellman Barrett, LLP, Smithtown (John M. Denby and William J. Barrett of counsel), for Lizza Industries, Inc. and another, respondents in the first, third, fourth, fifth and sixth above-entitled actions.

White Fleischner & Fino, LLP, New York City (Jared T. Greisman and Renee S. Schwartz of counsel), for Marvec Allstate, Inc., Agovino & Asselta, LLP, Mineola (Joseph P. Asselta and David A. Loglisci of counsel), for J.D. Posillico, Inc., and Wade Clark Mulcahy, New York City (Robert J. Cosgrove and Cheryl D. Fuchs of counsel), for S. Zara and Sons Contracting Corporation, respondents in the second, seventh, eighth, ninth and tenth above-entitled actions.

Dennis M. Brown, County Attorney, Hauppauge (Christopher A. Jeffreys of counsel), for County of Suffolk, amicus curiae in the first through tenth above-entitled actions.

Couch White LLP, Albany (Jeremy M. Smith of counsel), for Associated General Contractors of New York State, LLC and another, amici curiae in the first through tenth above-entitled actions.

Plunkett Cooney, Bloomfield Hills, Michigan (Mary Massaron Ross and Karen E. Beach of counsel), and Goldberg Segalla, Albany, for DRI—The Voice of the Defense Bar, amicus curiae in the first through tenth above-entitled actions.

OPINION OF THE COURT
MEMORANDUM.

[4 N.E.3d 946]

The orders of the Appellate Division should be affirmed, with costs.

This litigation arises out of defendants' construction of a sewer system throughout Nassau and Suffolk Counties (the

[4 N.E.3d 947]

Counties), including areas under plaintiffs' jurisdiction. In the 1970s, the Counties entered into public works contracts with defendants to perform the sewer construction work. The Counties included “protection clauses” in the contracts, which incorporated statutory language from County Law § 263 requiring defendants to restore plaintiffs' roadways to their “usual condition” after the sewer construction was complete.

Defendants completed their sewer construction work at various points in the 1970s and 1980s. Sometime thereafter, the areas surrounding the sewer lines settled, causing damage to plaintiffs' adjacent roadways, sidewalks, and curbs.

Plaintiffs commenced these 10 related actions in July 2009 alleging a single cause of action in continuing public nuisance. Plaintiffs claimed that defendants “committed faulty workman-ship under [the] contracts” by, among other things, “failing to properly excavate and backfill the sewer trenches” and “failing to provide adequate subjacent support to plaintiffs['] roadways, curbs, gutters and other facilities both during and after actual construction operations.” This “faulty workmanship,” plaintiffs alleged, “created a continuing public nuisance.”

Supreme Court dismissed the complaint in each action, and the Appellate Division affirmed in 10 separate decisions. In its lead decision, Village of Lindenhurst v. J.D. Posillico, Inc., 94 A.D.3d 1101, 943 N.Y.S.2d 553 (2d Dept.2012), the court held that, viewing the complaint as asserting the Village's rights as a third-party beneficiary to the sewer construction contract, “the action is barred by the six-year statute of limitations for a cause of action alleging breach of contract” (94 A.D.3d at 1102, 943 N.Y.S.2d 553). Noting the rule from City School Dist. of City of Newburgh v. Stubbins & Assoc., 85 N.Y.2d 535, 626 N.Y.S.2d 741, 650 N.E.2d 399 (1995)( Newburgh ) that a cause of action arising out of defective construction accrues upon completion of the contractual work, the court stated that this rule applies to actions commenced by a third-party beneficiary to the contract ( see id.). The court also rejected the Village's argument that “the conduct giving rise to the alleged nuisance is ongoing, thereby giving rise to successive causes of action” ( id.).

The Appellate Division held that the other nine actions were “time-barred for the reasons stated” in Village of Lindenhurst (see Town of Oyster Bay v. Lizza Indus., Inc., 94 A.D.3d 1094, 1094, 942 N.Y.S.2d 808 [2d Dept.2012]; Town of Oyster Bay v. J.D. Posillico, Inc., 94 A.D.3d 1093, 1093, 942 N.Y.S.2d 806 [2d Dept.2012]; Town of Oyster Bay v. Hendrickson Bros., Inc., 94 A.D.3d 1092, 1092, 945 N.Y.S.2d 563 [2d Dept.2012]; Village of Babylon v. Hendrickson Bros., Inc., 94 A.D.3d 1100, 1100, 942 N.Y.S.2d 809 [2d Dept.2012]; Village of Lindenhurst v. Hendrickson Bros., Inc., 94 A.D.3d 1100, 1101, 942 N.Y.S.2d 808 [2d Dept.2012];Village of Lindenhurst v. Lizza Indus., Inc., 94 A.D.3d 1102, 1102, 942 N.Y.S.2d 809 [2d Dept.2012]; Town of Oyster Bay v. J.D. Posillico, Inc., 94 A.D.3d 1093, 1093, 942 N.Y.S.2d 807 [2d Dept.2012]; Town of Oyster Bay v. S. Zara & Sons Contr. Corp., 94 A.D.3d 1094, 1094, 942 N.Y.S.2d 806 [2d Dept.2012]; Town of Oyster Bay v. Marvec Allstate, Inc., 94 A.D.3d 1094, 1094, 942 N.Y.S.2d 805 [2d Dept.2012] ). The Court granted plaintiffs leave to appeal (20 N.Y.3d 854, 958 N.Y.S.2d 330, 982 N.E.2d 93 [2012] ) and we now affirm.

A breach of contract action must be commenced within six years from the accrual of the cause of action ( seeCPLR 203[a]; 213[2] ). “In cases against architects or contractors, the accrual date for Statute of Limitations purposes is completion

[4 N.E.3d 948]

of performance” ( Newburgh, 85 N.Y.2d at 538, 626 N.Y.S.2d 741, 650 N.E.2d 399, citing Sosnow v. Paul, 36 N.Y.2d 780, 369 N.Y.S.2d 693, 330 N.E.2d 643 [1975] ). This rule applies “no matter how a claim is characterized in the complaint” because “all liability” for defective construction “has its genesis in the contractual relationship of the parties” ( Newburgh, 85 N.Y.2d at 538, 626 N.Y.S.2d 741, 650 N.E.2d 399, citing Sears, Roebuck & Co. v. Enco Assoc., 43 N.Y.2d 389, 396, 401 N.Y.S.2d 767, 372 N.E.2d 555 [1977] ). Even if the plaintiff is not a party to the underlying construction contract, the claim may accrue upon completion of the construction where the plaintiff is not a “ stranger to the contract,” and the relationship between the plaintiff and the defendant is the “functional equivalent of privity” ( Newburgh, 85 N.Y.2d at 538–539, 626 N.Y.S.2d 741, 650 N.E.2d 399 [internal quotation marks omitted] ).

Here, the gravamen of the complaints is that defendants, through their alleged faulty construction, breached their duty to plaintiffs under the protection clauses in the public works contracts. In fact, plaintiffs specifically allege that defendants “committed faulty workmanship under said contracts.” Although characterized as “continuing public nuisance” causes of action, plaintiffs'...