HO v. STAR CONTRACTORS INC (2026)

Order, Supreme Court, New York County (Melissa A. Crane, J.), entered on or about April 11, 2025, which, insofar as appealed from, denied plaintiffs' motion for summary judgment unanimously reversed, on the law, without costs, and plaintiffs motion for partial summary judgment granted.  Order, same court and Justice, entered on or about January 14, 2025, which granted the motion by defendant Star Contractors, Inc., Leonard Fusha, and Suela Leka for discovery sanctions under CPLR 3126 to the extent of precluding plaintiffs from testifying at trial, unanimously reversed, on the law and in the exercise of discretion, without costs, and the motion denied.

In August 2020, plaintiffs hired defendant Star as the general contractor for a gut renovation of their residential brownstone property in accordance with plaintiffs' architect's design drawings and specifications.  The agreed-upon contract price was subject to adjustments pursuant to change orders approved by plaintiffs.  On January 14, 2022, Star sent plaintiffs a proposed “Change Order 11,” which sought payment of $117,200 for overhead allegedly incurred between September and December 2021 and additional monthly payments of $29,300 starting in January 2022 through the project's conclusion.  Plaintiffs refused to approve Change Order 11 and, by January 24, 2022, Star substantially ceased performing on the project.

The parties continued to discuss matters and Star submitted a proposed revised Change Order 11, which provided an additional accounting of the request for costs and fees.  However, the parties did not agree to revised proposed Change Order 11, and, in February 2022, plaintiffs sent Star a “Notice of Default.”  The notice asserted that defendants had breached and repudiated the contract and that the repudiation/breach would be regarded as final, unless defendants promptly resumed work and cured the breaches.  Ultimately, plaintiffs terminated Star as general contractor for cause, under Article 16 of the contract, and commenced this action.

Plaintiffs are entitled to summary judgment on their breach of contract claim because they proved as a matter of law that defendants repudiated the contract.  “[W]hen a party repudiates contractual duties prior to the time designated for performance and before all of the consideration has been fulfilled, the repudiation entitles the nonrepudiating party to claim damages for total breach” (Norcon Power Partners v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 462–463, 682 N.Y.S.2d 664, 705 N.E.2d 656 [1998] [internal quotation marks omitted];  see also Restatement [Second] of Contracts § 253 [Effect of a Repudiation as a Breach and on Other Party's Duties] ).  Here, the record establishes that defendants repudiated the contract by issuing a change order requesting additional payments followed by a threat to not return to the job unless plaintiffs agreed to pay the initial amount demanded, which threat was fulfilled when they abandoned the project (see IBM Credit Fin. Corp. v Mazda Motor Mfg. [USA] Corp., 92 N.Y.2d 989, 993, 684 N.Y.S.2d 162, 706 N.E.2d 1186 [1998] ).

Defendants' largely conclusory allegations of delays caused/contributed by plaintiffs fail to raise material issues of fact sufficient to preclude a grant of summary judgment.  Moreover, evidence that defendants submitted a revised proposed Change Order 11 does not transform their conduct into a mere temporary work stoppage while the parties negotiated.  First, defendants never recanted their threat to wholly abandon the project unless plaintiffs paid the additional money demanded.  Second, defendants did not recommence work on the project during negotiations, despite the fact that their initial Change Order 11 demand did not identify any delays by plaintiff that may have justified the request for additional payment under Article 11.3 (cf.  Hartree Partners, LP v. Esmark Steel Group–Midwest, LLC, 210 A.D.3d 549, 550, 179 N.Y.S.3d 193 [1st Dept. 2022] [issue of fact existed as to whether defendant's attempt to negotiate a lower price based on changed market conditions constituted a “take-it-or-leave-it demand”] ).

Further, the court's decision to preclude plaintiffs from testifying at trial was an improvident exercise of discretion.  The extreme sanction was inappropriate given the absence of evidence that plaintiffs had engaged in the type of willful, contumacious, bad faith conduct, such as a pattern of willful noncompliance with discovery obligations, that would justify precluding plaintiffs from testifying at trial (see Castor Petroleum, Ltd. v. Petroterminal de Panama, S.A., 90 A.D.3d 424, 424, 933 N.Y.S.2d 662 [1st Dept. 2011];  Ripka Rotter & King, LLP v. Kahn Gordon Timko & Rodriguez, P.C., 83 A.D.3d 613, 614, 921 N.Y.S.2d 848 [1st Dept. 2011];  Anagnostaros v. 81st St. Residence Corp., 269 A.D.2d 150, 150, 702 N.Y.S.2d 72 [1st Dept. 2000] ).  Any prejudice to defendants can be addressed by ordering plaintiffs to appear for depositions prior to offering testimony at the trial on damages.