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ARCH INSURANCE COMPANY and Arch Reinsurance Company, Plaintiffs, v. CONSTRUCTAMAX, INC., New York Stone Co., Inc., Photios Cougentakis, and Despo Cougentakis, Defendants.
On this motion and cross-motion for reargument, plaintiffs and defendants seek reargument of different aspects of a prior order of this court. That order denied the summary-judgment motion of plaintiffs Arch Insurance Company and Arch Reinsurance Company (Arch) on indemnification claims brought by Arch against defendants.
The underlying factual and procedural history of these claims is somewhat complex. In brief, Arch issued a surety bond in 2004 on a New Jersey construction project; defendants, two construction contractors retained for the project and their respective principals, agreed to indemnify Arch for any losses it incurred on its surety obligations. The project did not go as planned. In 2007, plaintiffs and defendants entered a new agreement: defendant Constructamax, Inc. (Cmax) would complete the project as Arch's subcontractor, with defendants’ indemnity obligations remaining in place. Completion of the project did not go as planned, either.
These difficulties led to considerable litigation in federal court in New Jersey. In that action, Arch ultimately agreed in 2016 to pay out tens of millions of dollars to resolve the outstanding claims against it. In this action, stayed pending the New Jersey litigation, Arch is seeking indemnification from defendants for Arch's losses as surety that stemmed from the project and the ensuing New Jersey litigation.
In motion sequence 004, Arch moved for summary judgment under CPLR 3212 on its indemnification claims, seeking a total of $35,635.479.10 (plus interest running from April 2016) against defendants, jointly and severally. Defendants raised three principal arguments in opposition: (i) Arch released its claims against defendants as part of the 2016 settlement agreement; (ii) Arch separately agreed to cap defendants’ indemnity liability at $1.5 million; and (iii) Arch's claims are procedurally barred under New Jersey law because they should have been raised in the New Jersey litigation. This court denied Arch's motion for summary judgment. (See NYSCEF No. 114 [order]; NYSCEF No. 115 at Tr. 19-25 [transcript of oral decision].) The court rejected defendants’ arguments based on the 2016 settlement agreement and the asserted New Jersey procedural bar; it also held, though, that an issue of fact existed on whether Arch had agreed to cap defendants’ indemnity liability, and denied summary judgment on that ground.
On this motion, Arch moves to reargue this court's conclusion on the indemnity cap, and defendants cross-move to reargue the court's conclusion on the 2016 settlement agreement. Defendants’ cross-motion is denied. Arch's motion is granted. On reargument, this court concludes that defendants have not raised a dispute of fact on the indemnity-cap issue. Summary judgment therefore is granted to Arch.
A motion for leave to reargue under CPLR 2221 (d) may be granted only upon a showing “that the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision.” (William P. Pahl Equip. Corp. v. Kassis, 182 AD2d 22, 27 [1st Dept 1992] [internal quotation marks omitted].)
I. Defendants’ Cross-Motion for Reargument
Defendants cross-move for reargument. This court concludes that leave to reargue should be denied. As an initial matter, it is not clear that defendants’ cross-motion is even timely. Reargument motions must be made within 30 days of service of notice of entry of the order determining the prior motion. (See CPLR 2221 [d].) Defendants’ cross-motion here was not filed until July 23, 2021, 60 days after service of notice of entry. And although the parties had entered into a stipulation adjourning briefing deadlines on Arch's reargument motion, that stipulation provided only that the new deadline for defendants’ opposition papers would be July 23—without saying anything about a cross-motion. (See NYSCEF No. 120.)
Regardless, defendants’ cross-motion is without merit. Defendants argue that leave to reargue is warranted because this court's prior order (assertedly) misapprehended the facts and law in finding that the 2016 settlement agreement left intact Arch's indemnification claims against defendants. This court disagrees. Some of defendants’ arguments in support of leave to reargue merely repeat contentions that defendants made—and that this court rejected—on Arch's summary-judgment motion. That defendants disagree with this court's conclusions does not, standing alone, establish that this court overlooked or misapprehended a matter of fact or law for reargument purposes. The remainder of defendants’ arguments were not raised on the initial motion. These arguments therefore are not properly before this court on a motion for leave to reargue. (See Frisenda v X Large Enters., 280 AD2d 514, 515 [2d Dept 2001] [reversing trial-court's grant of reargument based on arguments not made on the original motion].) And those new arguments are unpersuasive in any event.
II. Arch's Motion for Reargument
In moving for reargument, Arch contends that this court overlooked the significance of the integration clause in the 2007 completion agreement for defendants’ argument that the parties had separately reached an accord under which defendants’ indemnity exposure would be capped at $1.5 million. This court finds Arch's contention persuasive.
A. Arch's Request for Leave to Reargue
Defendants’ argument of a separate accord, raised in opposition to the prior motion, drew heavily on the affidavit of Cmax's principal, defendant Photios Cougentakis. (See NYSCEF No. 107 at 19-20.) That affidavit states that Arch's principal offered to limit defendants’ indemnification-related liability to no more than $1.5 million if Cmax agreed to enter into an agreement to complete the underlying construction project—and that “in the subsequent months, the terms of this new agreement with Arch ․ were negotiated and agreed upon.” (NYSCEF No. 106 at ¶ 26.) The affidavit similarly states that “the terms of the new agreement,” including the indemnity cap, constituted “consideration for me consenting to the takeover and completion agreements”; and that this new indemnity-cap agreement was negotiated between Cougentakis and Arch before Arch entered into the February 2007 agreement under which Cmax would complete the project on Arch's behalf. (Id. at ¶¶ 28, 30.) This separate indemnity-cap agreement, Cougentakis asserted, was confirmed by a series of emails sent between him and Arch executives in March and April 2008. (See id. at ¶ 29; see also NYSCEF No. 105 [reproducing emails].)
Defendants’ opposition papers, cited Cougentakis's account of conversations between Cougentakis and Arch's principal and asserted that “in addition to promises by Arch's Chairman and CEO, the above agreement was confirmed by numerous emails and letters from various Arch executives”—namely the 2008 email exchanges. (NYSCEF No. 107 at 20-21.) And this court found defendants’ contention persuasive. After hearing oral argument on the summary-judgment motion, the court concluded that Cougentakis's statements about the existence of an accord, coupled with emails “indicating that an accord and satisfaction may have been reached,” raised material questions of fact about whether the parties had separately agreed to cap defendants’ indemnity exposure. (NYSCEF No. 115 at Tr. 23-24.)
As Arch now contends, though, this conclusion failed to take into account the effect of the integration clause in the 2007 completion agreement. That clause provided that (i) the completion agreement “constitutes the entire agreement by and among the parties”; (ii) “[t]here have been no oral or other agreements of any kind whatsoever as a condition precedent to, or to induce the execution and delivery of, this Completion Agreement”; and (iii) the completion agreement “may not be changed, altered, amended or otherwise modified except by a writing signed and acknowledged by the parties hereto in the same manner as this Completion Agreement.” (NYSCEF No. 80 at ¶ 32 [emphases added].) In other words, the 2008 emails cited by defendants (and by this court) simply could not have supported the existence of an accord preceding the 2007 completion-agreement, because any such accord was foreclosed by the language of the completion agreement itself.
Given that this court's analysis of the presence or absence of an accord did not take into account the legal effect of the 2007 completion agreement, the court grants Arch's request for leave to reargue. The question then becomes whether, on reargument, issues of fact remain about whether the parties reached an indemnity-cap accord. The court concludes that no issues of fact remain—and thus that Arch is entitled to summary judgment.
B. Arch's Request for Summary Judgment to be Granted on Reargument
Defendants contend on the current motion that they have established an issue of fact about whether “the parties reached a written accord after the execution of the Completion Agreement.” (NYSCEF No. 122 at 4 [emphases in original].) In fact, defendants contend, the March and April 2008 emails they submitted “unequivocally demonstrate that the terms of the accord were still being negotiated between Arch and Cmax” at the time. (Id. at 4 [emphasis added].) That is, rather than the emails merely “confirming” an existing accord (as defendants previously suggested), the emails reflect ongoing negotiations about the terms of the accord. But these communications do not mention an indemnity cap at all—let alone an accord constituting consideration for Cmax's prior agreement to complete the underlying construction project.
Moreover, the emails do not show that the agreement being negotiated between the parties—whatever it was about—was, in fact, “consummated” on April 9, 2008, as defendants would have it. (See id. at 5). To the contrary, the very email from Cougentakis to an Arch executive on which defendants rely itself states that a material term of the agreement at issue remains to be worked out. (See NYSCEF No. 105 at 1 [email sent on April 9, 2008, at 10:45 a.m.].) The parties then exchanged three further emails in which they agreed that the outstanding material term was best resolved on a phone call. (See id.) The record does not reflect whether that phone call ever occurred; if so, whether the parties were able to reach agreement on that call; and, if so, whether the terms of the agreement were ever reduced to writing.1 And absent written agreement on all material terms, no reasonable jury could find that the parties had reached a binding accord. (See Silber v New York Life Ins. Co., 92 AD3d 436, 439-440 [1st Dept 2012].)
Finally, defendants argue in the alternative that even if the accord had been reached prior to the 2007 completion agreement (and thus nullified by the completion agreement's integration clause), a fact question exists about whether the spring 2008 emails preserved that accord's binding effect. This argument is without merit.
The spring 2008 emails do not “support a finding of the formation of a new agreement subsequent to the Completion Agreement” (NYSCEF No. 122 at 7-8 [emphasis added]), as defendants assert, for the same reasons discussed above. Nor did the emails ratify an earlier accord. (See NYSCEF No. 122 at 8.) Ratification consists of “the express or implied adoption of the acts of another by one for whom the other assumes to be acting, but without authority.” (Holm v C.M.P. Sheet Metal, 89 AD2d 229, 232 [4th Dept 1982].) Defendants do not suggest that the principals of Cmax and Arch exceeded their authority to act in reaching any pre-completion-agreement accord. In any event, the parties’ “assent” to an earlier, unauthorized act “must be clearly established and may not be inferred from doubtful or equivocal language.” (DiPizio Constr. Co., Inc. v Erie Canal Harbor Dev. Corp., 134 AD3d 1418, 1420 [4th Dept 2015] [internal quotation marks omitted].) No reasonable jury could find this demanding standard to have been satisfied here by an exchange of emails that does not even mention the crucial indemnity-cap term that was assertedly being ratified.
In sum, this court concludes on reargument that no reasonable jury could find on this record that in addition to the completion agreement, the parties separately reached an accord under which defendants’ indemnity-based liability to Arch would be capped at $1.5 million. Arch therefore is entitled to summary judgment for the full amount sought of $35,635.479.10, plus interest. With respect to interest, Arch contended in its summary-judgment papers—and defendants did not dispute—that April 20, 2016, the date of the payment made by Arch under the 2016 settlement agreement constitutes a reasonable intermediate accrual date for purposes of CPLR 5001 (b). This court agrees.
Accordingly, for the foregoing reasons it is hereby
ORDERED that defendants’ cross-motion for leave to reargue Arch's motion for summary judgment is denied; and it is further
ORDERED that Arch's motion for leave to reargue its motion for summary judgment is granted; and it is further
ORDERED that on reargument, this court's order denying Arch's motion for summary judgment, entered May 12, 2021, is hereby vacated, and the summary-judgment motion is granted; and it is further
ORDERED that Arch is awarded judgment against defendants, jointly and severally, in the amount of $35,635.479.10, plus interest at 9% running from April 20, 2016, plus costs and disbursements to be taxed by the Clerk upon submission of an appropriate bill of costs; and it is further
ORDERED that Arch serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.
1. The emails reproduced at NYSCEF No. 105 appear to be a printout of pages 4 and 5 from a longer email thread. Defendants have not submitted pages 1-3 for this court's consideration.
Gerald Lebovits, J.
Response sent, thank you
Docket No: Index No. 650109/2011
Decided: September 01, 2021
Court: Supreme Court, New York County, New York.
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