BOARD OF MANAGERS OF 141 FIFTH AVENUE CONDOMINIUM v. 141 ACQUISITION ASSOCIATES LLC 141 LLC 141 LLC 141 LLC CIF 141 LLC LLC LLC (2021)

The following e-filed documents, listed by NYSCEF document number (Motion 018) 981, 982, 983, 984, 985, 986, 987, 988, 989, 990, 991, 992, 993, 994, 995, 996, 997, 998, 999, 1000, 1001, 1002, 1003, 1004, 1005, 1006, 1007, 1008, 1009, 1010, 1011, 1012, 1013, 1014, 1015, 1016, 1017, 1018, 1019, 1020, 1021, 1022, 1023, 1024, 1025, 1026, 1027, 1028, 1103, 1105, 1131, 1132, 1133, 1134, 1135, 1136, 1137, 1138, 1139, 1140, 1141, 1142, 1143, 1144, 1145, 1146, 1147, 1148, 1149, 1150, 1151, 1152, 1153, 1154, 1155, 1156, 1157, 1158, 1159, 1160, 1161, 1162, 1163, 1164, 1165, 1166, 1167, 1168, 1169, 1170, 1171, 1172, 1173 were read on this motion to/for JUDGMENT - SUMMARY.

The following e-filed documents, listed by NYSCEF document number (Motion 019) 1029, 1030, 1031, 1032, 1033, 1034, 1035, 1036, 1037, 1038, 1039, 1040, 1041, 1042, 1043, 1044, 1045, 1046, 1047, 1048, 1049, 1050, 1051, 1052, 1053, 1054, 1055, 1056, 1106, 1263, 1264, 1265, 1266, 1267, 1268, 1269, 1270, 1271, 1272, 1273, 1274, 1275, 1276, 1277, 1278, 1279, 1356, 1357, 1358, 1359, 1360, 1361, 1362, 1468 were read on this motion to/for PARTIAL SUMMARY JUDGMENT.

The following e-filed documents, listed by NYSCEF document number (Motion 020) 1057, 1058, 1059, 1060, 1061, 1062, 1063, 1064, 1065, 1066, 1067, 1068, 1069, 1070, 1071, 1072, 1073, 1074, 1075, 1076, 1077, 1174, 1175, 1176, 1177, 1178, 1179, 1180, 1181, 1182, 1183, 1184, 1185, 1301, 1302, 1303, 1304, 1305, 1306, 1307, 1308, 1309, 1310 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER).

The following e-filed documents, listed by NYSCEF document number (Motion 021) 1078, 1079, 1080, 1081, 1082, 1083, 1084, 1085, 1086, 1087, 1088, 1089, 1090, 1091, 1092, 1093, 1094, 1095, 1096, 1097, 1098, 1099, 1100, 1101, 1102, 1104, 1186, 1187, 1188, 1189, 1190, 1191, 1192, 1193, 1194, 1195, 1196, 1197, 1198, 1199, 1200, 1201, 1202, 1203, 1204, 1311, 1312, 1313, 1314, 1315, 1316, 1317, 1318, 1319, 1320 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER).

The following e-filed documents, listed by NYSCEF document number (Motion 022) 1108, 1109, 1110, 1111, 1112, 1113, 1114, 1115, 1116, 1117, 1118, 1119, 1120, 1121, 1122, 1123, 1281, 1282, 1283, 1284, 1285, 1286, 1287, 1288, 1289, 1290, 1291, 1292, 1293, 1294, 1295, 1296, 1297, 1298, 1299, 1300, 1321, 1322, 1323, 1324, 1325, 1326, 1327, 1328, 1329, 1330 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER).

The following e-filed documents, listed by NYSCEF document number (Motion 023) 1205, 1206, 1207, 1208, 1209, 1210, 1211, 1212, 1213, 1214, 1215, 1216, 1217, 1218, 1219, 1220, 1221, 1222, 1223, 1224, 1225, 1226, 1227, 1228, 1229, 1230, 1231, 1232, 1233, 1234, 1235, 1236, 1237, 1238, 1239, 1240, 1241, 1242, 1243, 1244, 1245, 1246, 1247, 1248, 1249, 1250, 1251, 1252, 1253, 1254, 1255, 1256, 1257, 1258, 1259, 1260, 1261, 1262, 1280, 1355, 1364, 1365, 1366, 1367, 1368, 1369, 1370, 1371, 1372, 1373, 1374, 1375, 1376, 1377, 1378, 1379, 1380, 1381, 1382, 1383, 1384, 1385, 1386, 1387, 1388, 1389, 1390, 1391, 1392, 1393, 1394, 1395, 1396, 1397, 1398, 1399, 1400, 1401, 1402, 1403, 1404, 1405, 1406, 1407, 1408, 1409, 1410, 1411, 1412, 1413, 1414, 1415, 1416, 1417, 1418, 1419, 1420, 1421, 1424, 1425, 1426, 1427, 1428 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER).

The following e-filed documents, listed by NYSCEF document number (Motion 024) 1331, 1332, 1333, 1334, 1335, 1336, 1337, 1338, 1339, 1340, 1341, 1342, 1343, 1344, 1345, 1346, 1347, 1348, 1349, 1350, 1351, 1352, 1353, 1354, 1363, 1422, 1423, 1429, 1430, 1434, 1435, 1436, 1437, 1438, 1439, 1440, 1441, 1442, 1443, 1444, 1445, 1446, 1447, 1466, 1467 were read on this motion to/for JUDGMENT - SUMMARY.

Upon the foregoing documents, Alfred Karman's motion (seq. no. 018) for summary judgment with respect to the claims asserted by the Board (hereinafter defined) is granted solely to the extent of dismissing the claims for negligence and common law indemnification, and all the cross-claims asserted by J Construction Company LLC (J Construction) other than the common law indemnification cross-claim, and any other cross-claims asserted against Mr. Karman that were not opposed by the other defendants/third party defendants. Because this is a case alleging economic losses only, as has been discussed at length in prior decisions and as set forth therein, dismissal of the causes of action sounding in tort and negligence is appropriate. Dismissal of the common law indemnification claim that was assigned to the Board by the Sponsor (hereinafter defined) is also appropriate as there was no predicate finding of liability before the Sponsor settled its claims with the Board. The same cannot be said with respect to J Construction's claim for common law indemnification, dismissal of which would be premature.

J Construction's motions (seq. nos. 019-022) for summary judgment are granted solely to the extent of (i) KNS's (hereinafter defined) obligation to assume J Construction's defense going forward, (ii) dismissal of the Board's assigned common law indemnification claim, and (iii) dismissal of any cross-claims as unopposed. It is uncontroverted that KNS agreed in writing to assume J Construction's defense and therefore summary judgment on this claim is appropriate. Dismissal of the Board's assigned claim for common law indemnification is likewise warranted for the same reason set forth above, i.e., there was no finding of liability prior to the Sponsor's settlement with the Board.

The Cetra Defendants' (hereinafter defined) motion (seq. no. 023) for summary judgment is granted solely to the extent of dismissing the Board's assigned claims for common law indemnification and negligence for the same reasons that these claims are dismissed against Mr. Karman and J Construction. Inasmuch as no other party (aside from the Board) opposes dismissal of any cross-claims asserted against the Cetra Defendants, these cross-claims are also dismissed.

New Royal Restoration Group's (New Royal) motion (seq. no. 024) is denied only with respect to Garden State's (hereinafter defined) contractual indemnification claim and is otherwise granted and all of Garden State's other claims and any other cross-claims against New Royal are dismissed without opposition.

 The Relevant Facts and Circumstances

This action relates to a gut renovation and residential condominium conversion (the Project) of a landmark building located at 141 Fifth Avenue, New York, New York (the Building). The Board of Managers of 141 Fifth Avenue Condominium (the Board), an unincorporated association of unit owners formed in September 2010 pursuant to a declaration of condominium in the Offering Plan, as filed and recorded in the Office of the City Register, New York County on or about April 24, 2007 (the Offering Plan), seeks to recover damages for alleged design and construction defects in connection with the Project.

141 Acquisition Associates LLC (the Sponsor) was the Project's sponsor. In 2006, pursuant to an agreement (the Façade Agreement) dated January 30, 2006, as amended on February 8, 2008, the Sponsor hired an architect, Mr. Karman, to provide design and consulting services in connection with the façade of the Building, including the submission of a Local Law 11 report (NYSCEF Doc. No. 1019). Mr. Karman advised that the Building façade was unsafe and required significant remedial corrective work to make the Building safe and to comply with Local Law 11.

The Sponsor also hired J Construction Company LLC (J Construction) as the construction manager and general contractor of the Project pursuant to a Construction Management Agreement (the CMA) dated as of July _ 2007 (NYSCEF Doc. No. 1077). Per the CMA, J Construction was to “provide, perform and supervise all of the labor, equipment, and materials necessary for the construction, renovation and completion of the Work” including the Local Law 11 work and “represent[ed] and warrant[ed]” that it “possesse[d] experience and expertise in the business administration, construction, construction management and superintendence of projects of the size, complexity and nature of this particular Project, and [would] perform the Work with the care, skill and diligence of such a Construction Manager” (id., Art. 19). J Construction entered into various substantially identical subcontracts (the Trade Contracts) with several trade contractors, including KNS Building Restoration, Inc. (KNS). On or around May 24, 2010, Mr. Karman certified that the façade complied with Local Law 11 (NYSCEF Doc. No. 1022).

The parties agreed that the CMA would inure to the benefit of and be binding on the Sponsor's successors and assigns:

This Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Owner [i.e., Sponsor] and shall inure to the benefit of and shall be binding upon the successors and assigns of Construction Manager. Construction Manager shall not assign this Agreement without Owners prior written consent which Owner may withhold in its sole discretion.

(NYSCEF Doc. No. 1077, § 22.5).

Ttabhe Offering Plan also provides:

Following the recording of the Declaration, Sponsor will deliver, assign or otherwise grant to the Condominium Board, on behalf of all Unit Owners the right to proceed under any assignable warranties and other undertakings received by Sponsor from contractors, materialmen or others in connection with the construction and equipping of the Building.

(NYSCEF Doc. No. 1180, at 117, ¶[f])

Closing on the condominium units began taking place in November 2009. Months later, in 2010, the new owners began to discover certain design and construction defects, including extensive water infiltration and damage, electrical wiring, and heating and plumbing defects in design and construction. In 2011, the Board retained certain professionals to address these issues. FSI Architecture PC (FSI) prepared a report dated June 22, 2011 that documented alleged discrepancies between the Building as represented in the Offering Plan and as it was actually built. The Board alleges that these discrepancies include defective conditions to the electrical wiring, mechanical, heating, plumbing, sprinkler and fireproofing systems, and that there are also defects with the terraces, dormers, cupola, common areas and interior residential units.

In 2012, the Board asked FSI to inspect the Building's façade. In a report dated September 16, 2013 (NYSCEF Doc. No. 1025), FSI concluded that contrary to Mr. Karman's certification, the purported remedial work done by J Construction did not remedy the life safety issues with respect to the façade and that the then-current issues were not simply the result of two years of “wear and tear but literally decades of wear and tear,” and should have been notice by Mr. Karman and remedied by J Construction before Mr. Karman certified the safety of the Building in 2010.

An expert report dated October 2, 2019, prepared by the Board's experts, Frank A. Manzo and Charles F. Boland of Greyhawk, also details the alleged defects and extensive damage to the Building, along with the costs needed to remediate these conditions (the Greyhawk Report; NYSCEF Doc. No. 1161). The Greyhawk Report allocates the responsibility and liability for the defective conditions among the various parties (id., Ex. II). With respect to Mr. Karman, the Greyhawk Report finds, inter alia, that:

KARMAN performed only four (4) inspections of the Facades by pipe scaffold during the period that Facade restoration work was in progress from June 2006 through 2009, a period in excess of 36 months. Four (4) inspections are not sufficient to ensure compliance with the Contract Documents.

(NYSCEF Doc. No. 1161 at 22).

The Greyhawk Report also notes that, “KARMAN failed to notify the OWNER that upon the removal of the scaffolding, significant omissions and deficiencies remained resulting in an ‘UNSAFE’ condition that is a public safety hazard” (id.).

The Greyhawk Report explains that notwithstanding the fact that Mr. Karman certified the Building façade “SAFE” in 2012, less than two years later, on February 24, 2012, during an inspection, FSI identified 21 unsafe conditions (id. at 23), which Greyhawk concludes means that:

KARMAN failed to perform an adequate number of Facade inspections to ensure [J Construction]'s repairs and restoration work complied with the Contract Documents. By approving [J Construction]'s applications for payment, or as recommending the payment to the architect of record, KARMAN approved deficient work and failed to protect the OWNER.

[and that]

a) KARMAN failed to prepare a comprehensive plan to restore to restore limestone masonry as recommended in the H & Q Survey was not developed and a failure to identify deficiencies at the Street facades (North and West) to outline general work areas.

b) KARMAN failed to prepare a comprehensive plan to restore the terracotta masonry as recommended in the H & Q Survey to ensure that all deficiencies were repaired, e.g., “Remove non-matching, failing patches,” “Remove all metal embeds from the brick masonry.”

(id.).

Greyhawk further posits that Mr. Karman failed to adequately comply with his contractual obligations with respect to the Building's cupola (id. at 42), and allocates a total of $1,053,708 in damages to Mr. Karman as a result of his allegedly defective design and inspection services (id. at Ex. II).

With respect to J Construction, the Greyhawk Report states that, “[i]t is our opinion that [J Construction] did not fulfill its contractual obligations and performed deficient and defective work” (id.). For example, the Greyhawk Report finds that J Construction “failed to properly perform the work required to restore the Facades or did not attempt to perform the work” with respect to a number of items and “failed to repair and restore the Facade as required in the CMA” (id. at 11-16 [listing specifics]).

The Greyhawk Report also concludes that the Cetra Defendants, who were engaged on the project pursuant to a CRI Proposal for 141 Fifth Avenue dated August 16, 2005 for Architectural Services, which became the CRI Architect's Contract for the project (the CRI Contract), also “failed to properly inspect the work [completed by J Construction] and identify deficient and omitted work prior to approval of payment applications” (id. at 16). In addition, the Cetra Defendants allegedly failed to carry out the work with respect to the Building's cupola as set forth in the contract documents:

There is little evidence that CRI ensured that the Construction Manager complied with the Contract Documents Facade requirements and the H & Q recommendations; and other evidence regarding the scope of work for the Cupola dome where CRI sought to substitute a reduced scope of work, notwithstanding the fact that CRI prepared the plans and specifications for the work in question by 7/30/07. CRI was negotiating with the LPC for changes that required an equitable adjustment to the contract sum, in this case a credit. CRI failed to protect the OWNER's interest and agreed to the change order request, COR 07230 that did not include a credit for the reduced scope and increase the contract amount for work clearly required by the Contract Documents, an invalid change order.

(id. at 19-20).

The Greyhawk Report attributes $2,437,073 in damages to the Cetra Defendants, and $4,851,742 in damages to the faulty work of J Construction. J Construction also submits an expert report, which primarily takes issue with the conclusions reached by Greyhawk and which blames any issues with the Project on subcontractors, including KNS (NYSCEF Doc. No. 1145).

Prior to the Board's commencement of this action, the Sponsor sued J Construction and others (141 Acquisition Assoc. LLC v The J Constr. Co., LLC, Index No. 652364/2011) for breach of contract, breach of implied warranty, professional negligence and indemnity (NYSCEF Doc. No. 1194) for damage stemming from, among other things, the allegedly defective design and installation of windows in the Building. Notably, at no time in that action did J Construction raise any defense based on Paragraph 22.13 of the CMA (as discussed below) with respect to any claim alleged by the Sponsor in that action.

The Board's amended verified complaint (NYSCEF Doc. No. 984), filed on January 17, 2014, alleged (i) a number of contract and implied warranty claims against the Sponsor and its affiliates and principals (defendants 141 Fifth Avenue Partners LLC, 141 Fifth Avenue Manager LLC, Savanna 141 Principals LLC, CIF 141 Fifth Avenue LLC, Christopher Shlank and Nicholas Bienstock [together, the Sponsor Defendants]), as well as (ii) claims for breach of contract and negligence against the project's architect, Cetra/Ruddy Incorporated (CRI) and John A. Cetra Architecture P.C. (JAC, together with CRI, the Cetra Defendants), (iii) Mr. Karman, the architect who studied and supervised the restoration work on the Building's façade construction, and (iv) against J Construction as the construction manager on the Project and (v) Frank Seta & Associates, LLC (Seta), which provided, among other things, exterior wall consulting services. Pursuant to the Amended Verified Complaint, the Board also alleged violations of GBL §§ 349 ad 350 against the Sponsor Defendants and J Construction. The GBL causes of action and the claim for negligence were subsequently voluntarily withdrawn by the Board.

In a decision dated July 16, 2015 (the July 16, 2015 Decision; NYSCEF Doc. No. 174), the court (Scarpulla, J.) dismissed the amended complaint against the Cetra Defendants because it held that the Board was not a third party beneficiary of the CRI Contract and denied J Construction motion to dismiss the claims against it because it held that the Board may be a third party beneficiary of the CMA (see mtn. seq. nos. 003 and 004). J Construction moved for leave to reargue. This motion was denied by decision and order dated July 11, 2016 (NYSCEF Doc. No 1292). On appeal of the July 16, 2015 Decision, the First Department affirmed the decision in its entirety (NYSCEF 1069; Board of Mgrs. of 141 Fifth Ave. Condominium v 141 Acquisition Assoc. LLC, 179 AD3d 627 [1st Dept 2020]).

The Sponsor Defendants also moved to dismiss certain of the claims against them (excluding the First and Second Causes of action for breach of contract and breach of warranty asserted against the Sponsor) (see mtn. seq. no. 004). The Board voluntarily withdrew its third through seventh and the fifteenth causes of action against the Sponsor Defendants (NYSCEF Doc. No. 122). By decision and order dated October 15, 2015, the court denied the motion to dismiss the sixteenth cause of action as against the Sponsor, and granted the motion to dismiss the amended verified complaint with respect to the Board's other claims against the remaining Sponsor Defendants (NYSCEF Doc. No. 209).

On February 2, 2016, the Sponsor filed a verified answer with cross-claims and third party complaint, including cross-claims against Mr. Karman for (i) common-law indemnity, (ii) breach of contract, and (iii) professional negligence, and cross-claims against J Construction for (i) contractual indemnity; (ii) common law indemnity, and (iii) breach of contract (NYSCEF Doc. No. 988).

On August 29, 2017, J Construction filed a sixth third-party complaint against all of the various trade contractors including, as relevant to the instant motions, KNS, who allegedly worked on areas of the Project that J Construction alleges are the basis of the Board's and Sponsor's claims (NYSCEF Doc. No. 1045).

Mr. Karman also asserted cross-claims for contribution and common law indemnification against all the other defendants in this action (NYSCEF Doc. No. 989).

Sometime prior to the filing of the Note of Issue (NOI), the Board, Sponsor and the Sponsor Defendants entered into a Confidential Settlement Agreement (the Settlement Agreement). As part of the consideration for the Board discontinuing its claims against the Sponsor/the Sponsor Defendants, the Sponsor agreed to assign to the Board its cross-claims and defenses against J Construction, Mr. Karman, the Cetra Defendants and Seta (NYSCEF Doc. No. 1285, ¶ 31).¹

After NOI was filed on February 14, 2020, J Construction moved for partial summary judgment against two of the trade contractors, Garden State Commercial Services (Garden State) and JM3 Construction LLC (JM3) alleging that Section 8.3(b) of their respective (identical) Trade Contracts obligate these trade contractors to take over J Construction's defense in this litigation. This Section states: “the Contractor will upon request of the Construction Manager [ ] promptly take over the defense of any such claim, action, suit or proceeding at the sole cost and expense of the Contractor” (NYSCEF Doc. No. 861, 866, §§ 8.3[b]). In a decision and order dated July 1, 2020 (the July 1, 2020 Decision), the court (Scarpulla, J.) granted J Construction's motion for partial summary judgment in part, holding that “[p]ursuant to the unambiguous terms of the contract, the Trade Contractors are obligated to assume J Construction's defense” (NYSCEF Doc. No. 1357 at 8).

Inasmuch as the trade contractors argued that this was barred by GOL § 5-322.1, the court rejected the argument, holding that this was an action for economic damages based on claims sounding in breach of contract, and not an action for personal injury or property damage (id. at 9). However, the court held that because J Construction inexplicably delayed enforcement of its contractual defense rights for at least two years, it was not entitled to recoup any defense costs already incurred pursuant to the doctrine of laches. Instead, the court held that it was only entitled to a defense going forward with respect to claims related to the manner or sufficiency of Garden State and JM3's performance of their work.

Discussion

I. Mr. Karman's Motion (Seq. No. 018) For Summary Judgment is Granted as to the Assigned Claim for Common Law Indemnification, the Negligence Claims, and the Unopposed Cross—Claims Only

The Board alleges two causes of action as to Mr. Karman sounding in breach of contract and professional negligence. Specifically, and as discussed above, the Board claims that after Mr. Karman was retained in 2007, he determined that the Building's façade was unsafe and that significant remedial work was necessary. Following completion of certain work which was performed, the Board alleges that he negligently certified in May 2010 that the remedial work completed by J Construction rendered the Building's façade safe and in compliance with Local Law 11. The work did not, however, address the unsafe conditions and various defects remained.

The Sponsor also alleged cross-claims against Mr. Karman for (i) common law indemnification, (ii) breach of contract and (iii) professional negligence, based on the same allegations, which cross-claims it assigned to the Board under the parties' Settlement Agreement.

In moving for summary judgment, Mr. Karman argues, based on the July 16, 2015 Decision dismissing the breach of contract claim (eighth cause of action) against the Cetra Defendants, which decision Mr. Karman argues is the law of the case relative to this motion, that the Board may not recover on its direct claim for breach of contract against him because it is not a third party beneficiary of the agreement between him and J Construction, (see NYSCEF Doc. No. 174). The argument fails.

Contrary to Mr. Karman's argument, the July 16, 2016 Decision with respect to the Cetra Defendants does not compel the result here because that decision concerned a different party and an entirely different agreement (Grullon v City of New York, 297 AD2d 261, 265-66 [1st Dept 2002] [doctrine of law of the case only applies to legal determinations that were necessarily resolved on the merits in the prior decision]). In addition, in rendering that decision, the court relied, in part, on certain express disclaimers in the report and architect's certification issued by the Cetra Defendants that “disclaimed any intent to induce reliance by prospective purchasers” (NYSCEF Doc. No. 174 at 11-12). Thus, the court held that, “[t]hese disclaimers, combined with plaintiff's failure to allege any language in the Architect's Agreement to indicate an intent to benefit plaintiff, fail to show ‘that the contract was intended for his benefit’ ” (id. at 12, citing Alicea v City of New York, 145 AD2d 315, 317 [1st Dept 1988]). No such disclaimers were made by Mr. Karman with respect to his inspection of the Building or work on the Project (see NYSCEF Doc. No. 1222).

A. The Board's Breach of Contract Claims Against Mr. Karman

A party asserting third party beneficiary rights under a contract must establish (1) the existence of a valid contract between the other parties, (2) that the contract was intended for their benefit, and (3) that the benefit to them is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate them in the event of breach (Mendel v Henry Phipps Plaza West, Inc., 6 NY3d 783, 786 [2006]). However, as the party moving for summary judgment, the burden on this motion is on Mr. Karman to establish that the Board is not a third-party beneficiary of the Façade Agreement as a matter of law. Mr. Karman does not meet this burden here as there is, at minimum, a genuine issue of fact as to whether the Board was an intended beneficiary of the Façade Agreement (see MK West St. Co. v Meridien Hotels, Inc., 183 AD2d 312, 313 [1st Dept 1992] [summary judgment dismissal inappropriate where genuine issues of fact exist as to the parties' intent to benefit an another]).

In any event, there is no question that Sponsor assigned its cross-claim for breach of the Façade Agreement against Mr. Karman to the Board as part of their Settlement Agreement. Mr. Karman's argument that because he was paid in full for his service by the Sponsor, his services were necessarily adequately performed and therefore any assigned claim fails, is, in any event, unpersuasive. As detailed in the Greyhawk Report, supra, Mr. Karman allegedly “failed to perform an adequate number of Facade inspections to ensure [J Contruction]'s repairs and restoration work complied with the Contract Documents” and “approved deficient work, [and thereby] failed to protect the OWNER” (NYSCEF Doc. No. 1161). Contrary to Mr. Karman's claims, the findings in the Greyhawk Report, are not conclusory but quite specific (as detailed above). These conclusions, at a minimum, raise a factual issue as to whether Mr. Karman adequately performed the services for which he was retained. Summary judgment dismissal of the breach of contract claims against Mr. Karman must be denied.

B. The Board's Negligence Claims Against Mr. Karman

As to the negligence claim (the eleventh cause of action), Mr. Karman argues the claim must be dismissed because the Board is seeking merely economic loss damages and cannot recover solely for economic loss arising out of negligent construction in the absence of a contractual relationship. It is not disputed that the Board is asserting solely economic loss damages here. This is the law of the case pursuant to several of the court's prior decisions (NYSCEF Doc. Nos. 174, 1357). Mr. Karman further argues that the Board “cannot recover solely for economic loss arising out of negligent construction [or supervision] in the absence of a contractual relationship,” which relationship he argues does not exist (Residential Bd. of Managers of Zeckendorf Towers v Union Square-14th St. Assn., 190 AD2d 636 [1st Dept 1993]).

The court does not need to resolve this issue. The negligence claim is duplicative of the breach of contract claim as it is not alleged that any duty independent of the Façade Agreement has been violated (Board of Managers of Riverview at College Point Condominium III v Schorr Brothers Dev. Corp., 182 AD2d 664 [2d Dept 1992]). Therefore, the claim must be dismissed (id., citing Clarke-Fitzpatrick v Long Is. R.R. Co., 70 NY2d 382, 389 [1987] [“breach of contract is not to be considered a tort unless a legal duty independent of the contract has been violated”]). There is simply no separate duty here absent the obligations undertaken in the Façade Agreement (Dormitory Auth. of the State of NY v Samson Constr. Co., 30 NY3d 704 [2018] [dismissing negligence claim where, as here, “factual allegations in support of each cause of action are identical, except that the negligence claim is framed in terms of [defendant's] failure to comply with professional standards of care”]; compare Amend. Ver. Compl., NYSCEF Doc. No. 725, ¶¶ 104-109 with 110-114). Indeed, even the damages asserted in support of each claim are identical (cf. Dormitory Auth., surpa [dismissing negligence claim as duplicative even though damages sought were different]).

This is supported by the prior decisions in this action, including, most recently, the July 1, 2020 Decision wherein the court unequivocally states that it “dismissed all causes of action sounding in tort and negligence. The only remaining causes of action are for breach of contract” (NYSCEF Doc. No. 1357 at 4; NYSCEF Doc. No. 174).

C. The Board's Common Law Indemnification Claim

The Board/Sponsor's common law indemnification claim against Mr. Karman must also be dismissed as a matter of law. Common law indemnity permits “one who is compelled to pay for the wrong of another to recover from the wrongdoer the damages paid to the injured party” (D'Ambrosio v City of New York, 55 NY2d 454, 460 [1982]). Here, arguably, Sponsor may have been entitled to common law indemnification if it was found vicariously liable to the Board based on Mr. Karman's wrongdoing (see Trump Vil. Section 3, Inc. v New York State Hous. Fin. Agency, 307 AD2d 891, 895 [1st Dept 2003] [explaining that a “predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee”]). However, as Sponsor settled its claim before any finding of liability took place, no common law indemnification is warranted, either to it or to the Board by way of an assignment of the claim (see Midura v 740 Corp., LLC, 31 AD3d 401 [2d Dept 2006] [no common law indemnification where party voluntarily settles an action]).

Nor is a different result required by Promenade v Schindler Elevator Corp. (39 AD3d 221 [1st Dept 2007]). In that action, a general contractor was sued for breach of contract and warranties in connection with its construction of a residential housing complex and the general contractor filed a third party action for contractual indemnification against its subcontractors. Eventually, the general contractor and the property owner settled the main action, and as part of this settlement the general contractor assigned to the owner its claim for contractual indemnification against the plumbing contractor for $1.04 million and paid the owner $1.8 million, i.e., for a total settlement value of $2.84 million, or approximately 60% of the owner's total $4.7 million claim against the general contractor. On appeal, the Appellate Division, First Department, held that that the plumbing contractor could not defeat the assignment because the settlement did not preclude subsequent liability for contractual indemnification because, as part of the settlement, the general contractor “apportioned its own share of liability for the plumbing damages” and “was not a voluntary settlor, but merely satisfying its own liability” to the owner for the defective plumbing work (id. at 223 [citation omitted]) — i.e., it was not double dipping. This analysis simply does not apply to the Board's common law indemnification claim which lacks an appropriate predicate finding (Nesterczuk v Golden Mgmt., Inc., 17 Misc 3d 1133[A] [Sup Ct Kings Cnty November 20, 2007] [contrasting common law and contractual indemnification]).

D. The Cross-Claims Against Mr. Karman

Mr. Karman's motion also seeks summary judgment dismissal of all of the cross-claims asserted against him by J Construction, the Cetra Defendants, JM3 Construction LLC, Garden State Commercial Services, LLC, New Royal Restoration Group, Seta, and Gotham Waterproofing and Restoration, LLC. With the exception of J Construction, none of foregoing defendants have opposed dismissal of the cross-claims. Accordingly, they are dismissed with respect to these non-opposing defendants/third-party plaintiffs.

With respect to the common law indemnification cross-claim asserted against Mr. Karman by J Construction, dismissal at this time is not appropriate. J Construction seeks common law indemnification from Mr. Karman if and to the extent that it is held vicariously liable to the Board and/or Sponsor. J Construction argues that it is entitled to indemnification because the Board seeks to hold it liable for the wrongs committed by Mr. Karman, and because it was required to utilize Mr. Karman's specifications in performing its work under the CMA. Until liability can be established, dismissal of J Construction's common law indemnification claim is inappropriate.

J Construction also asserts a cross-claim for professional negligence against Mr. Karman. A claim for professional negligence “requires proof that there was a departure from accepted standards of practice and that the departure was a proximate cause of the injury” (D.D. Hamilton Textiles v Estate of Mate, 269 AD2d 214, 215 [1st Dept 2010]). Where a claim for professional negligence alleges only economic injury, as here, a contractual relationship or “the functional equivalent of contractual privity” is required (Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 419 [1989]). This functional equivalent of privity may exist where there is “(1) awareness that the reports were to be used for a particular purpose or purposes; (2) reliance by a known party or parties in furtherance of that purpose; and (3) some conduct by the defendants linking them to the party or parties and evincing defendant's understanding of their reliance” (id. at 425 [emphasis added]). J Construction could not possibly be “known” to Mr. Karman at the time of his contract so as to create the “functional equivalent of privity” required for J Construction to maintain its professional malpractice claim against him. Indisputably, the Sponsor did not retain J Construction until July of 2007, a year after Mr. Karman began providing services on the Project. Accordingly, J Construction's professional malpractice claim is dismissed.

II. J Construction's Motions for Summary Judgment (Seq. Nos. 019-022) Are Granted Only as to KNS's Obligation to Assume J Construction's Defense Going Forward and Dismissal of the Board's Assigned Common Law Indemnification Claim

J Construction brings four separate motions for summary judgment: (i) partial summary judgment against third party defendant KNS Building Restoration Inc. (for the costs of defense under the KNS Trade Contract (Mtn. Seq. No. 019),² (ii) summary judgment against the Board dismissing the breach of contract claim (Mtn. Seq. No. 020); (iii) summary judgment against the Board with respect to any claims assigned to the Board by Sponsor (mtn. seq. no. 021), and (iv) to consolidate all the prior motions and dismiss the amended verified complaint pursuant to the merger doctrine and/or for lack of standing.

As concerns J Construction's motion (Mtn. Seq. No. 019) for summary judgment against KNS, J Construction is entitled to partial summary judgment on its claim that KNS must assume its future defense costs for the same reasons stated by the court in the July 1, 2020 Decision. Although KNS was admittedly not a party to that motion, KNS and J Construction entered into an identical trade contract (the KNS Trade Contract; NYSCEF Doc. No. 1266) as was analyzed by the court in the July 1, 2020 Decision (compare NYSCEF Doc. No. 1266 with NYSCEF Doc. Nos. 861, 866). As with the other trade contracts, Section 8.3(b) of the KNS Trade Contract plainly states:

Should any person or persons at any time assert a claim or institute any action, suit or proceeding against the Owner, Lender, Architect, or Construction Manager involving the manner or sufficiency of the performance of the Work contemplated under this Contract, the Contractor will upon request of the Construction Manager or Owner promptly take over the defense of any such claim, action, suit or proceeding at the sole cost and expense of the Contractor and will also indemnify the Owner, Architect, Lender, and the Construction Manager, all other persons and entities mentioned or referred to as Indemnitees or Additional Insureds herein, and save them harmless from and against any and all liability, damages, judgments, costs or expense, including attorneys fees and disbursements, arising out of or in connection with any such claim, action, suit or proceeding.

(NYSCEF Doc. No. 1266, § 8.3[b])

Inasmuch as KNS argues that J Construction cannot satisfy a condition precedent to its defense obligation because it never made the request that KNS “take over the defense” of its claims, this argument is without merit. J Construction tendered a letter concerning its defense and indemnification to KNS's insurers and counsel on or about February 9, 2018 (NYSCEF Doc. No. 1047). This was sufficient notice to meet J Construction's notice requirements. However, as discussed in the July 1, 2020 Decision, it is unclear why J Construction failed to then pursue its defense rights for well over two years. As explained in that decision, such “a long and inexplicable delay” by J Construction in enforcing its rights to a defense renders its demand for attorneys' fees already incurred barred by the doctrine of laches as JNS had no ability to “minimize the burden” of the defense obligations by, e.g., “coordinating and streamlining their legal costs” or to “receive the benefit of controlling the defense of the litigation during that two year period” so as to “efficiently defend[ ]” this action (NYSCEF Doc. No. 1357 at 11).

Accordingly, J Construction is entitled to partial summary judgment on its claim that JNS is obligated to defend it going forward with respect to claims related to the manner in which it performed its work, and the application for reimbursement of previously incurred legal fees is denied.

J Construction second motion (Mtn. Seq. No. 020) seeks dismissal of the Board's twelfth cause of action for breach of contract because it argues the CMA did not intend to create any third party beneficiaries fails. In arguing that the court should dismiss this cause of action, J Construction relies almost exclusively on the express language of the CMA (see NYSCEF Doc. No. 1059) raising largely identical arguments to its prior motion to dismiss, and concludes that “the trial court erred” in its July 16, 2015 Decision finding otherwise. As noted above, the July 16, 2015 Decision was twice considered by this court (on motion and on reargument) and was then affirmed in its entirety on appeal by the Appellate Division, First Department (NYSCEF 1069; Board of Mgrs. of 141 Fifth Ave. Condominium v 141 Acquisition Assoc. LLC, 179 AD3d 627 [1st Dept 2020]). As the First Department explained in its decision:

The motion court correctly determined that discovery was necessary to determine the extent of plaintiff board of manager's rights under defendant J Construction's contract with defendant sponsor (see Diamond Castle Partners IV PRC, L.P. v IAC/InterActiveCorp, 82 AD3d 421, 422 [1st Dept 2011]). While paragraph 22.12 of the agreement provides that “the [sponsor] and [J Construction] do not intend to create any interest in favor of any third party by this Agreement,” paragraph 22.5 of the agreement provides that “[t]his Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Owner,” and the complaint alleges that the sponsor agreed in the offering plan to assign all warranties to the board of managers. Thus, it may be that plaintiff is a successor or an assignee under paragraph 22.5.

(179 AD3d at 627-28).

Nothing in J Construction's moving papers now addresses any discovery that would “determine the extent of plaintiff board of manager's rights” under the CMA (id.).

J Construction's sole new argument, not made on its prior motions and appeal, is that because the Trade Contracts, which were attached to the CMA, expressly granted third party beneficiary rights to the Board (whereas the CMA did not), the Board cannot be an intended beneficiary of the CMA. This is also unavailing. First, this argument was raised before the First Department on appeal and appears not to have been persuasive (see NYSCEF Doc. No. 1183, 1184). Second, the mere fact that the Board may have rights against J Construction and its subcontractors is not inherently contradictory and neither remedy is mutually exclusive. J Construction's motion to dismiss the twelfth cause of action is denied.

In its third motion (Mtn. Seq. No. 021) for summary judgment, J Construction seeks summary judgment dismissing Sponsor's assigned claims as against the Board. The motion is granted solely to the extent that it seeks dismissal of the assigned common law indemnification claim for the reasons set forth above (Mtn. Seq. No. 018).

As to the claim for breach of contract assigned by Sponsor to the Board, J Construction argues that Paragraph 22.13 of the CMA provides for immunity from liability provision precluding the assignment of any claim:

Notwithstanding anything to the contrary provided for in this Agreement, it is specifically understood and agreed that there shall be absolutely no personal liability on the part of the Owner or Construction Manager, or Owner's Representative, and their respective managing agent, manager, parent, affiliates, assigns or its successors, or the directors, officers, members, shareholders, members, or agents of any of the foregoing entities with respect to any of the terms, covenants, obligations and conditions of this Agreement. The Construction Manager agrees to look solely to the Project, the Project Site and the improvements thereon for the payment of any claim which arises under this Agreement and for the satisfaction of each and every remedy of this Agreement and the Contract Documents and, in the event of any breach by Owner of any of the terms, covenants or conditions thereof to be performed by the Owner, such exculpation of personal liability to be absolute and without any exception whatsoever. Construction Manager shall make similar limitations a part of each Subcontract.

(NYSCEF Doc. No. 1101, ¶ 22.13).

J Construction's argument with respect to Paragraph 22.13 strains credulity under any well-settled rules of contract construction (see Greenfield v Philles Records, Inc., 98 NY2d 562 [2002]). Among other things, J Construction's argument reads the word “personal” entirely out of the foregoing Paragraph. Paragraph 22.13 does not say “all” or “any” liability is precluded. The fact this clause is not a total bar to recovery is supported by the fact J Construction never raised this defense in its prior litigation with Sponsor among any of its 17 affirmative defenses, and, in fact, asserted three counterclaims in that litigation against Sponsor, which counterclaims would be barred under its new interpretation of Paragraph 22.13 (NYSCEF Doc. Nos. 1204, ¶ 8; 1196-1198).

In short, the argument advanced by J Construction for the first time since the commencement of this litigation in 2013 in support of motion seq. no. 21 is without merit and the motion is denied except as it concerns the assigned claim for common law indemnification.

J Construction fourth and last motion (Mtn. Seq. No. 022) was filed on July 7, 2020, well past 60 day window for making summary judgment motions expired and without seeking leave for an extension of time from the court. It seeks “consolidation” of all its summary judgment motions and summary judgment dismissal on the basis of standing and the merger doctrine.

As to standing, J Construction argues that the Board lacks capacity to sue even though it never raised this argument in its responsive pleading as is required by CPLR § 3211(e). As to the merger doctrine, J Construction argues that because each of the individual unit owners of the Building executed purchase agreements that terms thereof do not survive delivery of the deed unless expressly set forth otherwise, that the Board's breach of contract claims against the Sponsor predicated on the Purchase Agreement or the Offering Plan are barred by the merger doctrine, and because “the Board's claims allegedly arise from the design and construction of the Condominium units, the claims are barred by the merger doctrine” (NYSCEF Doc. No. 1122 at 7-8).

As an initial matter, this motion is clearly untimely. The scheduling order in this case plainly provided for summary judgment motions to be filed no later than 60 days following the filing of the NOI, which NOI was filed on February 14, 2020. Even accounting for the fact that filing in non-essential matters were suspended due to the COVID-19 Pandemic from March 22 to May, 4, 2020, a motion filed on July 7, 2020, would be untimely by over 30 days. Inasmuch as J Construction claims that it was operating under reduced resources due to the COVID-19 Pandemic, it does not account for the fact that during this same time period, it did manage to file three other summary judgment motions in this matter and never once sought an extension of time from the court.

In any event, the arguments in support of this motion are patently devoid of merit. Putting aside whether J Construction actually raised standing as an affirmative defense by way of its eleventh affirmative defense (see NYSCEF Doc. No. 1089) as is required by CPLR § 3211(e), J Construction fails to actually show that the Board did not have capacity to sue on behalf of the unit owners. The record reflects that the Board members voted to take legal action at a November 14, 2012 Board meeting (NYSCEF Doc. No. 1284, 1283), as required by its by-laws. To the extent that J Construction takes issue with the credibility of the affidavit of David Wasserman, president of the Board, who attests to this and supplies the relevant board minutes (id.), this is, at most, an issue for trial and not a basis for dismissal. In any event, whether the Board is acting within its authority is a matter for the condominium unit owners, and not for J Construction to raise as a shield more than seven years into this litigation. Put another way, J Construction lacks standing to raise this argument.

Likewise, the Merger Doctrine in the deed from the Sponsor has no application to the Board's claims against J Construction. In any event, the purchase agreement did not limit or bar all claims against the Sponsor or those by virtue of Sponsor assigning its claims under the CMA.

Finally, inasmuch as the court may consolidate motions for disposition this is not a mechanism to either bootstrap successive motions for summary judgment to each other, or to render an untimely motion timely by virtue of “consolidation” with an earlier filed motion. The purpose of consolidating motions for disposition is to aid efficiency and to conserve judicial resources. Here, the motion for consolidation does the opposite. As such, this motion is denied in its entirety.

III. The Cetra Defendants' Motion for Summary Judgment is Granted as to the Assigned Claims for Negligence and Common Law Indemnification

The Cetra Defendants seek summary judgment dismissal of Sponsor's assigned claims against them, as well as dismissal of any and all cross-claims asserted against them. In the alternative, they seek an order holding that the maximum damages the Board can recover in connection with the Sponsor's claims is the actual amount paid by Sponsor in connection with the settlement agreement. Both J Construction and the Board oppose this motion (NYSCEF Doc. Nos. 1392, 1394). Inasmuch as no other party opposes the motion, any cross-claims asserted by such non-opposing party are dismissed.

Following dismissal of the Board's direct claims against the Cetra Defendants, the Board only has Sponsor's assigned claims for (i) breach of contract, (ii) professional negligence, and (iii) common law indemnification remaining. The claims for negligence and common law indemnification fail as a matter of law for the reasons set forth above.

As for breach of contract by Cetra Defendants against Sponsor (the assigned claim), the Greyhawk Report asserts that the Cetra Defendants, among other things, failed to provide a comprehensive plan to address conditions at the Cupola, did not properly oversee the work and ensure compliance with the contract documents, and did not obtain approval for installation of certain materials at the Cupola dome (NYSCEF Doc. No. 1189-1191). At a minimum, the Greyhawk Report raises issues of fact regarding the Cetra Defendants' performance on the Project and resulting harm therefrom. The Cetra Defendants' arguments regarding the experts' credentials and conclusions cannot be properly resolved on a motion for summary judgment (see Corcino v Filstein, 32 AD3d 201, 202 [1st Dept 2006] [“motion court appropriately rejected defendant's attach on the qualifications of plaintiff's expert, since such qualifications generally go to the weight of the expert's testimony, not its admissibility”).

In addition, and in any event, the burden on this summary judgment motion is not on the Board to prove its breach of contract claim, but on the Cetra Defendants, as the proponent of the motion, to show “its entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The Cetra Defendants have not met this burden and, accordingly, the motion with respect to the breach of contract claim is denied.

There is also no basis to limit damages by the settlement payment since the settlement contemplated assignment of Sponsor's claims as part of the consideration therefor (see Promenade, 39 AD3d 221).

Turning to that branch of the motion seeking dismissal of J Construction's cross claims and third party claims against the Cetra Defendants, these claims appear to be for common law in indemnification and professional negligence. The professional negligence claim is dismissed for the same reasons set forth above, and the motion for dismissal of the claim for common law indemnification is denied as premature.

IV. New Royal's Motion for Summary Judgment is Denied Only with Respect to the Garden State's Contractual Indemnification Claim and is Otherwise Granted

New Royal Restoration Group (New Royal) motion for summary judgment seeking dismissal of Garden State's fourth third-party complaint and any and all cross-claims asserted as against New Royal was unopposed when it was submitted on November 13, 2020 (NYSCEF Doc. Nos. 1429, 1467). However, without seeking an extension of time or providing any explanation for its failure to file any papers in opposition, Garden State submitted opposition on March 1, 2021, over three months after the motion was marked submitted (NYSCEF Doc. No. 1434-1444). To be clear, Garden State does not oppose the entirety of New Royal's motion. It argues only that the indemnification agreement between Garden State and New Royal is enforceable and opposes only the dismissal of its contractual indemnification cross-claim.

The Subcontractor Term Agreement (the Subcontractor Agreement, NYSCEF Doc. No. 1353), dated Match 3, 2008, by and between Garden State as contractor and New Royal as subcontractor, provides for indemnification as follows:

9. Indemnity: Subcontractor agrees to indemnify and hold harmless the Contractor and all other parties of interest to the Prime Contract, their agents, consultants, and employees, from and against all claims, damages, losses, and expenses, including attorney's fees, arising out of or resulting from the performance of the Subcontractor's, or of any sub-subcontractor's work, or the action of any of their materialmen or suppliers. In any and all claims against the Contractor and/or all other parties of interest to the Prime Contract, their agents, consultants, and employees, by any employee of the Subcontractor, any sub-subcontractor, materialman, or supplier or by anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, the indemnification obligation mentioned in this section shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to the Contractor or Subcontractor, or any sub-subcontractor, materialman, or supplier, under Workers Compensation acts, disability benefits or other employee benefits acts.

(id., § 9).

New Royal argues that Garden State's contractual indemnification claim should be dismissed because it seeks to recover for its own negligence in violation of GOL § 5-322.1 because an indemnification agreement may be unenforceable inasmuch as it contemplates full indemnification of a party for its own negligence (Itri Brick & Concrete Corp. v Aetna Casualty & Surety Co., 89 NY2d 786 [1997]). This principle is not applicable here, however, as nothing in the foregoing indemnification provision impermissibly requires Garden State to indemnify New Royal for Garden State's own negligence. In any event, negligence in this proceeding has not yet been established. New Royal's motion to dismiss Garden State's contractual indemnification claim, therefore, must be denied.

The motion is otherwise granted because Garden State does not oppose dismissal of its claims for contribution, common law indemnification and breach of contract for failure to procure insurance, or any other aspect of New Royal's motion. No other party has opposed dismissal of any of the cross-claims. Therefore, these claims are dismissed.

Accordingly, it is

ORDERED that the motions (018-024) are granted in part and denied in part in accordance with the foregoing, and the parties are directed to settle order on notice and submit to Part 53 within 20 days of this decision and order.

FOOTNOTES

1.   The defendants sought production of the confidential settlement agreement by prior motion practice. After conducting an in camera review, this court (Scarpulla, J.) in a decision and order dated May 16, 2019, held that the Board must produce a redacted copy of the settlement agreement showing only paragraph 4, which provided for the assignment of claims as set forth above (NYSCEF Doc. No. 788). The First Department affirmed (Board of Managers of 141 Fifth Avenue Condominium v 141 Acquisition Assocs., 186 AD3d 1147 [1st Dept 2020]).

2.   J Construction withdrew that portion of Mtn Seq. No. 019 seeking contractual indemnification, without prejudice (NYSCEF Doc. No. 1357).

Andrew Borrok, J.