RITE AID OF NEW YORK INC v. REAL ESTATE INC

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

RITE AID OF NEW YORK, INC., Plaintiff, v. R.A. REAL ESTATE, INC., etc., et al., Defendants.

R.A. Real Estate, Inc., etc., et al., Third-Party Plaintiffs-Appellants, v. DHI Associates, Inc., Third-Party Defendant-Respondent. [And Other Actions].

Decided: May 24, 2007

SAXE, J.P., NARDELLI, BUCKLEY, SWEENY, MALONE, JJ. Finkel Goldstein Rosenbloom & Nash, LLP, New York (Sarit Shmulevitz of counsel), for appellants. Eschen Frenkel & Weisman, LLP, Bay Shore (Joseph F. Battista of counsel), for respondent.

Order, Supreme Court, New York County (Sherry Klein Heitler, J.), entered April 19, 2006, which, to the extent appealed from, granted third-party defendant DHI's motion to dismiss the third-party complaint and denied as moot third-party plaintiffs' motion to amend that complaint, unanimously affirmed, with costs.

 A cause of action predicated on defective construction accrues on the date of completion of the “actual physical work” (Cabrini Med. Ctr. v. Desina, 64 N.Y.2d 1059, 1061, 489 N.Y.S.2d 872, 479 N.E.2d 217 [1985] ), even if the claimed defect is latent (Yeshiva Univ. v. Fidelity & Deposit Co. of Md., 116 A.D.2d 49, 500 N.Y.S.2d 241 [1986], lv. denied 68 N.Y.2d 603, 506 N.Y.S.2d 1025, 497 N.E.2d 705 [1986] ), and in this instance the landlord's third-party action against the construction contractor was barred by the six-year breach-of-contract statute of limitations.   Nor could any of the causes of action in the proposed amended complaint have been timely.   While a cause of action alleging fraudulent construction may be within the greater of six years from accrual of the cause of action or two years from the time the fraud was or could with reasonable diligence have been discovered (CPLR 213[8];  Cappelli v. Berkshire Life Ins. Co., 276 A.D.2d 458, 713 N.Y.S.2d 756 [2000] ), here the alleged fraud should have been discovered at the time of construction, which took place under the supervision of the landlord's architect, or at the latest when plaintiff tenant discovered foundation issues in 2000 and the landlord retained engineers and architects to alleviate the problem.   For the same reasons, the proposed claims of negligent construction and latent defects would also be untimely.