Waterscape Resort LLC v. Pavarini McGovern, LLC
| Decision Date | 08 November 2019 |
| Docket Number | INDEX NO. 651360/2015 |
| Citation | 2019 NY Slip Op 33362 (U) |
| Parties | WATERSCAPE RESORT LLC Plaintiff, v. PAVARINI MCGOVERN, LLC, Defendant. |
| Court | New York Supreme Court |
MOTION DATE 08/08/2019
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 004) 125, 126, 127, 128, 129, 130, 131, 132, 133, 134 were read on this motion to/for FRAMED ISSUE HEARING.
This action has an extensive litigation history and arises out of a construction project wherein plaintiff Waterscape Resort LLC (hereinafter "Waterscape"), the project owner for the construction of a 45-story hotel and condominium building at 66-70 West 45th Street, New York, New York, (hereinafter the "Project") and defendant Pavarini McGovern, LLC (hereinafter "Pavarini") entered into a contract under which Pavarini agreed to provide construction management services for the Project.
In motion sequence number 004, Pavarini moves pursuant to CPLR §2218, for a framed issue hearing and limited discovery to resolve an ambiguity in the parties' contract. Waterscape opposes the motion contending that CPLR §2218 is unavailable as no motion is currently pending before the court; that the contractual ambiguity issue is but one of the central issues in this action, and as such is inappropriate for disposition by way of a reference; and that engaging in limited discovery to resolve the contractual ambiguity will subject the parties to duplicative discovery and depositions, causing unnecessary delay and waste.
BACKGROUND
On June 28, 2007, Waterscape, as owner, entered into a contract with Pavarini to build a forty-five (45) story, mixed-use hotel and condominium and serve as the construction manager for the project. The Construction Management Agreement (hereinafter "CMA") provided that Pavarini would perform the "Work" including all labor, materials, tools, equipment, supervision, and management for the proper execution and completion of the Project. (NYSCEF Doc. No. 127). Pavarini hired several subcontractors to carry out the construction work.
Amendment No. 1 to the CMA provided the Project Schedule and set forth milestone dates to complete various components of the work which dates ranged from October 2008 to June 2009. Waterscape alleges that Pavarini missed each date for work completion and that Pavarini materially breached and defaulted on its CMA obligations, including but not limited to, failure to follow the Contract documents; failure to follow instructions in construction of the Work; failure to carry out the Work as required by the CMA and utilize good construction practice; construction of Work which was defective and incomplete; failure to pay costs and mitigate delays caused by subcontractors; and failure to construct and complete the Work in accordance with the agreed upon Project Schedule. (NYSCEF Doc. No. 128). According to Waterscape, by September 2010, it had incurred millions of dollars in excess construction costs as a result of Pavarini's material breaches and default, ultimately resulting in Pavarini's termination as the CMA Project Manager on September 27, 2010. (Id).
The CMA established a dispute resolution board (the "DRB") to resolve claims and disputes between the parties. The DRB resolutions were binding for the duration of the Project through completion and final payment from Waterscape to Pavarini, and precluded the parties from suing each other; only after final payment and the expiration of a "60-day cooling offperiod" could either party challenge DRB resolutions through de novo litigation pursuant to CMA Sections 18.4.3 and 18.7.2. (NYSCEF Doc. No. 127). According to Pavarini, between 2009 and 2013, Pavarini and Waterscape submitted approximately 250 claims to the DRB, resulting in 50 hearings from which the DRB issued resolutions for the claims, including claims Waterscape now seeks to litigate in this action. DRB's "Final Accounting" resolution, awarded Pavarini over $8 million as final payment. (NYSCEF Doc. No. 126, ¶12). Waterscape made final payment to Pavarini on April 24, 2014 and this litigation was commenced approximately one year later. (NYSCEF Doc. No. 128). In the complaint, Waterscape disputes the amounts the DRB determined were owed to Pavarini.
As noted, this action has a protracted litigation history including proceedings commenced in the United States Bankruptcy Court.1 On August 22, 2016, this Court (Justice Braun) denied Defendant's first motion for summary judgment. On November 22, 2016, Defendant again moved for summary judgment which stayed discovery. Justice Braun granted summary judgment in favor of Defendant and by Judgment dated October 20, 2017 dismissed the action. Plaintiff appealed the October 2, 2017 Order and the October 20, 2017 Judgment. On January 22, 2019, the Appellate Division unanimously affirmed the August 24, 2016 Order of the Court and unanimously reversed the October 2, 2017 Order, thereby resulting in the action being remitted to this Court. (NYSCEF Doc. No. 119).
Waterscape contends that no Court has ever decided the validity of the DBR's Final Resolution, and argues that re-litigation at trial is its contractual right. Waterscape relies on theprior court decisions which found that the CMA is hardly a model of clarity, noting that the provisions relating to the binding nature of the DRB resolutions have been found to be ambiguous upon judicial review. Indeed, the Appellate Division ruled that the "dispute resolution provisions in the parties' agreement are ambiguous as a matter of law". Waterscape Resort LLC v Pavarini McGovern, LLC, 168 AD3d 561, 562 (1st Dept 2019). As such, Waterscape maintains that Pavarini's request for a framed issue hearing to resolve the contractual ambiguity is improper as there is currently no dispositive motion pending where a single fact is in issue that requires a hearing under CPLR §2218. Waterscape argues that the motion must be denied because CPLR §2218 does not entitle a party to a trial preference or an accelerated trial; rather, it is a mechanism used to resolve a motion that has the potential of disposing the action in its entirety, and that none of these factors are present here.
Additionally, Waterscape avers that Justice Braun expected discovery to go forward when he held a preliminary conference after having determined that the provisions of the CMA were ambiguous, and concluded that "there has to be a trial to determine what those ambiguous provisions mean." (NYSCEF Doc. No. 130). Waterscape contends that while the contractual ambiguity is a central issue in this action, it is but one of many issues to be resolved by the...
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