BROADWAY HOUSTON MACK DEVELOPMENT LLC v. KOHL

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

BROADWAY HOUSTON MACK DEVELOPMENT, LLC, appellant, v. Ted KOHL, et al., respondents.

Decided: March 23, 2010

REINALDO E. RIVERA, J.P., ANITA R. FLORIO, DANIEL D. ANGIOLILLO, and ARIEL E. BELEN, JJ. Arent Fox LLP, New York, N.Y. (Schuyler G. Carroll, David N. Wynn, and Mark A. Angelov of counsel), for appellant. Hiscock & Barclay, LLP, Rochester, N.Y. (Marc S. Brown of counsel), for respondents.

In an action, inter alia, to recover sums paid to creditors of the defendants, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Pines, J.), dated December 22, 2008, which granted the defendants' motion for summary judgment dismissing the complaint and denied its cross motion for summary judgment on the cause of action for subrogation.

ORDERED that the order is affirmed, with costs.

The plaintiff, the ground lessee of certain real property, hired IDI Construction Company, Inc. (hereinafter IDI), of which the defendants were members, as its general contractor to construct an office building on the property.   The plaintiff alleged that, at least in part, because of the defendants' malfeasance, IDI eventually was forced to declare bankruptcy.   As a result, IDI failed to remit to subcontractors money paid to it in trust by the plaintiff pursuant to the Lien Law. The plaintiff, to further its own interests, elected to pay the subcontractors directly despite the fact that it had paid IDI in full.   Thereafter, the plaintiff sought, inter alia, subrogation to the subcontractors' claims against the defendants.

 The equitable doctrine of subrogation “is ‘applicable to cases where a party is compelled to pay the debt of a third person to protect his own rights, or to save his own property’ ” (Gerseta Corp. v. Equitable Trust Co. of N.Y., 241 N.Y. 418, 426, 150 N.E. 501, quoting Cole v. Malcolm, 66 N.Y. 363, 366).   However, while the scope of subrogation is broad, it cannot be invoked where the payments sought to be recovered are voluntary (see Bermuda Trust Co. v. Ameropan Oil Corp., 266 A.D.2d 251, 698 N.Y.S.2d 691;  Cohn v. Rothman-Goodman Mgt. Corp., 155 A.D.2d 579, 580, 547 N.Y.S.2d 881).   A party seeking subrogation can establish that its payments were not voluntary either by pointing to a contractual obligation (see Hamlet at Willow Cr. Dev. Co., LLC v. Northeast Land Dev. Corp., 64 A.D.3d 85, 106, 878 N.Y.S.2d 97) or to the need to protect its own legal or economic interests (see Gerseta Corp. v. Equitable Trust Co. of N.Y., 241 N.Y. at 426, 150 N.E. 501).   When invoking the latter ground, however, the party seeking subrogation must show that the act is not merely helpful but necessary to the protection of its interests (see Cohn v. Rothman-Goodman Mgt. Corp., 155 A.D.2d at 580, 547 N.Y.S.2d 881).

 Here, although the plaintiff pointed to interests which were furthered by its payments to IDI's subcontractors, it failed to demonstrate that those payments were necessary to protect its legal or economic interests (see Perma Pave Contr. Corp. v. Paerdegat Boat & Racquet Club, 156 A.D.2d 550, 552, 549 N.Y.S.2d 57;  H. Verby Co., Inc. v. Plainview Assoc., 6 Misc.3d 1011[A], 2005 N.Y. Slip Op. 50026[U], 2005 WL 119710;  see also Blume, Inc. v. Postal Tel.-Cable Co., 265 A.D. 1062, 39 N.Y.S.2d 539).   Accordingly, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law (see Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718).   Similarly, its conclusory and speculative assertions were not sufficient to defeat the defendants' motion for summary judgment dismissing its causes of action which were premised on the Lien Law (see generally Ayotte v. Gervasio, 81 N.Y.2d 1062, 601 N.Y.S.2d 463, 619 N.E.2d 400).

The plaintiff's remaining contentions are without merit (see Select Constr. Corp. v. 502 Old Country Rd., LLC, 11 Misc.3d 1078[A], 2006 N.Y. Slip op. 50609[U], 2006 WL 948127;  see generally Bermuda Trust Co. v. Ameropan Oil Corp., 266 A.D.2d at 251, 698 N.Y.S.2d 691;  Cohn v. Rothman-Goodman Mgt. Corp., 155 A.D.2d at 580, 547 N.Y.S.2d 881).

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