United Airconditioning Corp. v. Axis Piping, Inc.

• Decision Date: 19 May 2021
• Docket Number: Index No. 603326/13,2017–06489
• Citation: 194 A.D.3d 981,149 N.Y.S.3d 163
• Parties: UNITED AIRCONDITIONING CORP., plaintiff third-party defendant-respondent-appellant, v. AXIS PIPING, INC., defendant third-party plaintiff-appellant-respondent.
• Court: New York Supreme Court — Appellate Division

194 A.D.3d 981

149 N.Y.S.3d 163

UNITED AIRCONDITIONING CORP., plaintiff third-party defendant-respondent-appellant,

v.AXIS PIPING, INC., defendant third-party plaintiff-appellant-respondent.

2017–06489

Index No. 603326/13

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

Argued—February 18, 2021

May 19, 2021

Polsinelli, P.C., New York, N.Y. (Jason S. Samuels and Aaron E. Zerykier of counsel), for defendant third-party plaintiff-appellant-respondent.

Gordon Rees Scully Mansukhani, LLP, New York, N.Y. (Peter E. Strniste, Jr., and Todd Regan of counsel), for plaintiff third-party defendant-respondent-appellant.

WILLIAM F. MASTRO, A.P.J., ROBERT J. MILLER, COLLEEN D. DUFFY, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In an action to recover damages for breach of contract and on an account stated, the defendant third-party plaintiff appeals, and the plaintiff third-party defendant cross-appeals, from an order of the Supreme Court, Nassau County (Stephen A. Bucaria, J.), entered June 14, 2017. The order, insofar as appealed from, granted the defendant third-party plaintiff's cross motion for summary judgment on its counterclaim and the third-party complaint awarding it damages in the principal sum of $389,853.17 only to the extent of awarding it damages in the principal sum of $46,000, and, sua sponte, vacated a prior order of the same court dated December 14, 2016, upon reargument, granting the defendant third-party plaintiff's motion, in effect, for summary judgment dismissing the complaint. The order, insofar as cross-appealed from, denied the plaintiff third-party defendant's motion for summary judgment dismissing the defendant third-party plaintiff's counterclaim and the third-party complaint and granted the defendant third-party plaintiff's cross motion for summary judgment on its counterclaim and the third-party complaint to the extent of awarding it damages in the principal sum of $46,000.

ORDERED that on the Court's own motion, the defendant third-party plaintiff's notice of appeal from so much of the order entered June 14, 2017, as, sua sponte, vacated the prior order dated December 14, 2016, is deemed to be an application for leave to appeal from that portion of the order, and leave to appeal is granted (see CPLR 5701[c] ); and it is further,

ORDERED that the order entered June 14, 2017, is modified, on the law and in the exercise of discretion, (1) by deleting the provision thereof granting the defendant third-party plaintiff's cross motion for summary judgment on its counterclaim and the third-party complaint to the extent of awarding it damages in the principal sum of $46,000, and substituting therefor a provision denying the defendant third-party plaintiff's cross motion, and (2) by deleting the provision thereof, sua sponte, vacating the order dated December 14, 2016; as so modified, the order is affirmed, without costs or disbursements, and the order dated December 14, 2016, is reinstated.

On May 10, 2011, the defendant, Axis Piping, Inc. (hereinafter Axis), entered into a subcontract with the plaintiff, United Airconditioning Corp. (hereinafter United), to perform piping work for a construction project at Delta Airlines Terminal 4 at John F. Kennedy International Airport (hereinafter the Delta project) for $4,850,000. Approximately one year later, on May 22, 2012, Axis entered into a separate subcontract with United to perform piping work for the BioBAT Science and Technology Center (hereinafter the BioBAT project) in Brooklyn for $2,100,000. On January 22, 2013, United wrote to Axis, terminating it from the BioBAT project "for cause" based on Axis's "failure to supply sufficient materials to prosecute the work" as required by the subcontract.

In November 2013, United commenced this action against Axis to recover damages for breach of contract and on an account stated, alleging that Axis's failure to perform under the BioBAT project subcontract caused United to expend $656,046.22 to complete the piping work. Axis answered the complaint and asserted a counterclaim against United to recover damages for breach of the Delta project subcontract, alleging that United owed Axis $1,218,814 for work performed on that project. Axis subsequently commenced a third-party action against United, inter alia, to recover damages for breach of the Delta project subcontract.

Axis moved, in effect, for summary judgment dismissing the complaint. By order dated October 4, 2016, the Supreme Court denied Axis's motion. Thereafter, Axis moved for leave to reargue its motion. By order dated December 14, 2016 (hereinafter the December 2016 order), the court granted Axis's motion for leave to reargue and, upon reargument, granted Axis's motion, in effect, for summary judgment dismissing the complaint.

United thereafter moved for summary judgment dismissing Axis's counterclaim and third-party complaint. United argued that Axis's claims under the Delta project were barred by a "Final Waiver of Lien" executed November 30, 2012. Axis opposed the motion and cross-moved for summary judgment awarding it damages in the principal sum of $389,853.17 on its counterclaim and the third-party complaint, both of which related to the Delta project. By order entered June 14, 2017 (hereinafter the June 2017 order), the Supreme Court denied United's motion and granted Axis's cross motion only to the extent of awarding it $46,000. While the court found that United failed to assert the affirmative defense of release in its reply to Axis's counterclaim, the court deemed the reply "amended to assert the defense of release." Nonetheless, it determined that the record contained triable issues of fact regarding whether the final waiver of lien was intended to release United from all claims by Axis. In addition, the court found that a purchase order Axis submitted for $46,000, on the same date the waiver was executed, was not covered by the waiver.

Furthermore, the Supreme Court found that "the parties’ course of dealing suggests that amounts owed on the BioBAT job may be offset against sums due on the Delta project." Based on that finding, the court, sua sponte, vacated the December 14, 2016 order, upon reargument, awarding Axis summary judgment dismissing the complaint, which related to the BioBAT project. The court granted Axis's cross motion for summary judgment on its counterclaim and the third-party complaint under the Delta project to the extent of awarding it $46,000 "net of all claims due on both projects." Axis appeals, and United cross-appeals, from the June 2017 order.

Contrary to Axis's contention, the Supreme Court providently exercised its discretion in deeming United's reply to Axis's counterclaim amended to assert the affirmative defense of release, as United asserted the defense in its motion for summary judgment dismissing Axis's counterclaim and Axis failed to demonstrate that it would be prejudiced by the amendment (see GMAC Mtge., LLC v. Coombs, 191 A.D.3d 37, 136 N.Y.S.3d 439 ; Ficorp, Ltd. v. Gourian, 263 A.D.2d 392, 693 N.Y.S.2d 37 ).

However, upon considering United's affirmative defense of release, the Supreme Court correctly determined that United's submissions in support of its motion failed to demonstrate its prima facie entitlement to judgment as a matter of law on the ground that the final waiver of lien barred Axis's counterclaim. "Generally, ‘a valid release that is clear and unambiguous on its face constitutes a complete bar to an action on a claim which is the subject of the release absent fraudulent inducement, fraudulent concealment, misrepresentation, mutual mistake or duress’ " ( Orangetown Home Improvements, LLC v. Kiernan, 84 A.D.3d 902, 903, 923 N.Y.S.2d 161, quoting Global Precast, Inc. v. Stonewall Contr. Corp., 78 A.D.3d 432, 432, 911 N.Y.S.2d 292 ). "However, when the evidence in the record including, inter alia, the circumstances surrounding the release, as well as the parties’ course of dealings, evinces that the parties’ intentions were not reflected in the general terms of the release, the release does not conclusively establish a defense as a matter of law" ( Orangetown Home Improvements, LLC v. Kiernan, 84 A.D.3d at 903–904, 923 N.Y.S.2d 161 ; see Patti Constr. Corp. v. 111–16 Atl. Ave. Realty Corp., 119 A.D.3d 756, 757, 989 N.Y.S.2d 337 ).

Here, the final waiver of lien on the Delta project, executed November 30, 2012, stated that Axis "do(es) hereby waive and release any and all lien or claim or right of lien on the above premises ... and on the monies or other consideration due or to become due from the owner, and on account of labor or materials, or both." As Axis argues, when read in conjunction with...