MS PARTNERSHIP v. WAL MART STORES INC 81

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

MS PARTNERSHIP, Plaintiff-Appellant, v. WAL-MART STORES, INC., 81 & 3 of Watertown, Inc., Bella Vista Group, Inc., Bernier, Carr & Associates, P.C., Defendants-Respondents, et al., Defendants.  (Appeal No. 1.)

Decided: December 31, 2003

PRESENT:  PIGOTT, JR., P.J., PINE, WISNER, AND KEHOE, JJ. Blank Rome LLP, New York (James G. Greilsheimer of Counsel), and Lawrence S. Feld, for Plaintiff-Appellant. Melvin & Melvin, PLLC, Syracuse (Edward J. Sheats, Jr., of Counsel), for Defendant-Respondent Wal-Mart Stores, Inc. Lawrence C. Brown, Buffalo, for Defendants-Respondents 81 & 3 of Watertown, Inc. and Bella Vista Group, Inc. Sugarman Law Firm, LLP, Syracuse (Sandra L. Holihan of Counsel), for Defendant Respondent Bernier, Carr & Associates, P.C.

 Plaintiff appeals from an order granting the motion of 81 & 3 of Watertown, Inc. (81 & 3) and Bella Vista Group, Inc. (collectively, defendants) for summary judgment dismissing the amended complaint against them and denying the cross motion of plaintiff for leave to amend the amended complaint to add a cause of action for breach of contract against defendants.   We conclude that Supreme Court erred in granting that part of defendants' motion for summary judgment dismissing the cause of action for indemnification.   That cause of action is based on an indemnification provision in the contract of sale between defendants and plaintiff, pursuant to which defendants agreed to indemnify plaintiff for any costs and liabilities incurred arising from defendants' acts or omissions before the closing date.   Although defendants met their initial burden by establishing as a matter of law that plaintiff is not entitled to indemnification, plaintiff raised triable issues of fact (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   Correspondence between defendant Wal-Mart Stores, Inc. (Wal-Mart) and plaintiff asserts claims that may be attributable to the design and construction of the property (see American Honda Fin. Corp. v. Progressive Cas. Ins. Co., 290 A.D.2d 850, 852, 736 N.Y.S.2d 517).   Further, an officer of defendants admitted at his deposition that the property was not inspected by defendants prior to the signing of the certificate of substantial completion.   Thus, there are issues of fact whether the defects are the result of defective design and construction and thus whether plaintiff's liability to Wal-Mart for repairs arose from defendants' acts or omissions prior to closing.

 We further conclude that the court properly granted that part of the motion of defendants for summary judgment dismissing the fraud cause of action against them.   Defendants established their entitlement to judgment dismissing that cause of action against them and plaintiff failed to raise a triable issue of fact (see generally Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   Essential to a fraud cause of action is the existence of a material misrepresentation made with the intention of inducing the plaintiff's reliance thereon (see Gizzi v. Hall, 300 A.D.2d 879, 880, 754 N.Y.S.2d 373).   Here, the basis for the fraud cause of action is plaintiff's assertion that the estoppel certificate issued by 81 & 3 and the certificates of substantial completion issued by 81 & 3 and the civil engineering firm hired by it were false and were intended to deceive plaintiff.   Defendants met their initial burden of establishing as a matter of law that there are no material issues of fact with respect to those elements of fraud (see generally Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642).   We conclude that, although plaintiff may have raised an issue of fact whether 81 & 3 acted recklessly in signing the certificate of substantial completion and estoppel certificate without first inspecting the building, there is no evidence that defendants issued the certificates with the intent to deceive plaintiff (cf.  Klembczyk v. DiNardo, 265 A.D.2d 934, 935, 705 N.Y.S.2d 743).

 Defendants also established as a matter of law that there are no material issues of fact with respect to the necessary element of reasonable reliance on the alleged misrepresentation (see generally Gizzi, 300 A.D.2d at 880, 754 N.Y.S.2d 373).   Here, plaintiff had the right to inspect the improvements to ensure that they were “constructed in accordance with all governmental requirements and in accordance with the approved plans and specifications” but failed to exercise that right prior to the closing date.   Thus, because the facts were not peculiarly within defendants' knowledge, plaintiff cannot be said to have reasonably relied on the alleged misrepresentation (see Casey v. Masullo Bros. Bldrs., 218 A.D.2d 907, 908, 630 N.Y.S.2d 599).

Finally, we conclude that the court properly denied plaintiff's cross motion for leave to amend the amended complaint to add a cause of action for breach of contract against defendants.   Despite plaintiff's allegation to the contrary, there is no provision in the contract of sale whereby 81 & 3 agreed “ to develop the Premises according to the Plans and Specifications provided by [Wal-Mart],” and thus the proposed amendment is “patently lacking in merit” (Letterman v. Reddington, 278 A.D.2d 868, 868, 718 N.Y.S.2d 503;  see Nahrebeski v. Molnar, 286 A.D.2d 891, 891-892, 730 N.Y.S.2d 646;  Valley Cadillac Corp. v. Dick, 238 A.D.2d 894, 661 N.Y.S.2d 105).

We therefore modify the order by denying defendants' motion in part and reinstating the fourth cause of action.

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by denying the motion in part and reinstating the fourth cause of action and as modified the order is affirmed without costs.

MEMORANDUM: