Opinion
Index No. 151700/2022
03-17-2023
Graham ROSS, individually and on behalf of all other persons similarly situated, Plaintiffs, v. NO PARKING TODAY, INC., and Consolidated Edison Company of New York, Inc., Defendants.
For Plaintiffs, James Emmet Murphy Esq., Virginia & Ambinder LLP, 40 Broad Street, New York, NY 10004 For Defendant Consolidated Edison Company of New York, Inc., Eli Freedberg Esq., Littler Mendelson, 900 3rd Avenue, New York, NY 10022
For Plaintiffs, James Emmet Murphy Esq., Virginia & Ambinder LLP, 40 Broad Street, New York, NY 10004
For Defendant Consolidated Edison Company of New York, Inc., Eli Freedberg Esq., Littler Mendelson, 900 3rd Avenue, New York, NY 10022
Lucy Billings, J. I. INTRODUCTION
According to the complaint, plaintiffs are a class of persons who worked as construction flaggers for defendant No Parking Today, Inc., or defendant Consolidated Edison Company of New York, Inc. Plaintiffs allege that Consolidated Edison contracted with No Parking Today for it to provide construction flaggers for Consolidated Edison construction projects. The contracts between defendants required No Parking Today to pay the flaggers it provided to Consolidated Edison the prevailing wages and benefits set by the New York City Comptroller. See Herman v. Judlau Contr., Inc. , 204 A.D.3d 496, 496, 164 N.Y.S.3d 455 (1st Dep't 2022). Plaintiffs claim that Consolidated Edison received New York City Department of Transportation (DOT) permits to perform Consolidated Edison's work pursuant to New York City Administrative Code § 19-142 and that the permits required plaintiffs to be paid prevailing wages and benefits as set by the Comptroller pursuant to New York Labor Law § 220. Plaintiffs complain that they were not paid the prevailing rates of wages and supplemental benefits for their flagging work and allege a single claim against each defendant.
Plaintiffs designate their claim against No Parking Today as a breach of No Parking Today's contracts with Consolidated Edison. Plaintiffs do not likewise designate their claim against Consolidated Edison, but allege that Consolidated Edison is liable to plaintiffs: "By reason of its breach of the DOT Permits and the promises required to be made pursuant to New York City Administrative Code § 19-142." Aff. of Paul R. Piccigallo Ex. A (Compl.), NYSCEF Doc. No. 6, ¶ 31.
Consolidated Edison moves pursuant to C.P.L.R. § 3211(a)(1) and (7) to dismiss the claim against Consolidated Edison based on plaintiffs’ lack of standing to challenge Consolidated Edison's performance of its obligations pursuant to the permits or New York City Administrative Code § 19-142. Consolidated Edison originally moved to dismiss the entire complaint, but withdrew the portion of the motion aimed at dismissing the claim against No Parking Today on the record August 11, 2022. In their opposition, plaintiffs clarified that their claim against Consolidated Edison is not under New York City Administrative Code § 19-142 or New York Labor Law § 220, but is a breach of contract claim by third party beneficiaries of Consolidated Edison's agreement to pay prevailing wages that emanates from the DOT permits. In reply, Consolidated Edison contends that the DOT permits Consolidated Edison received do not create an actionable contract, and, alternatively, plaintiffs lack standing to enforce any contract that the permits do create.
II. STANDARDS
Upon a motion to dismiss claims, the court considers the complaint's factual allegations as true. Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc. , 37 N.Y.3d 169, 175, 150 N.Y.S.3d 79, 171 N.E.3d 1192 (2021) ; Connaughton v. Chipotle Mexican Grill, Inc. , 29 N.Y.3d 137, 141, 53 N.Y.S.3d 598, 75 N.E.3d 1159 (2017) ; Seaman v. Schulte Roth & Zabel LLP , 176 A.D.3d 538, 538, 111 N.Y.S.3d 266 (1st Dep't 2019). In a motion pursuant to C.P.L.R. § 3211(a)(7), Consolidated Edison bears the burden to establish that the complaint "fails to state a viable cause of action." Connolly v. Long Island Power Auth. , 30 N.Y.3d 719, 728, 70 N.Y.S.3d 909, 94 N.E.3d 471 (2018). Dismissal is warranted if the complaint fails to allege facts that "fit within any cognizable legal theory." Sassi v. Mobile Life Support Servs., Inc. , 37 N.Y.3d 236, 239, 154 N.Y.S.3d 290, 175 N.E.3d 1246 (2021). A motion to dismiss based on documentary evidence pursuant to C.P.L.R. § 3211(a)(1) will succeed only if admissible documentary evidence completely refutes plaintiff's factual allegations, resolving all factual issues as a matter of law. Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc. , 30 N.Y.3d 572, 601, 69 N.Y.S.3d 520, 92 N.E.3d 743 (2017) ; Goshen v. Mutual Life Ins. Co. of N.Y. , 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 (2002) ; Calpo-Rivera v. Siroka , 144 A.D.3d 568, 568, 42 N.Y.S.3d 19 (1st Dep't 2016).
The complaint does not include the actual permits Consolidated Edison obtained for the projects at issue, nor does Consolidated Edison present them as evidence. The parties stipulated on the record August 11, 2022, that, for the purposes of this motion, the court may consider the sample permit presented, with the standard permit terms DOT uses, as documentary evidence of the terms in the permits obtained by Consolidated Edison for the projects at issue. Aff. of Lloyd R. Ambinder Ex. 3, NYSCEF Doc. No. 13. III. CONSOLIDATED EDISON'S BREACH OF A CONTRACT
The sample permit includes the statement, "PERMITTEE SHALL COMPLY WITH ALL OF THE FOLLOWING STIPULATIONS," including one entitled "WAGE," which provides:
A PERSON TO WHOM A PERMIT MAY BE ISSUED, TO USE OR OPEN A STREET, SHALL BE REQUIRED, BEFORE SUCH PERMIT SHALL BE ISSUED, TO AGREE THAT NONE BUT COMPETENT WORKERS, SKILLED IN THE WORK REQUIRED OF THEM, SHALL BE EMPLOYED THEREON, AND THAT THE PREVAILING SCALE OF UNION WAGES SHALL BE THE PREVAILING WAGE FOR SIMILAR TITLES AS ESTABLISHED BY THE FISCAL OFFICER PURSUANT TO SEC. TWO HUNDRED TWENTY OF THE LABOR LAW, PAID TO THOSE SO EMPLOYED.
Id. Plaintiffs sue based on this term in the permits Consolidated Edison obtained from DOT, which echoes New York City Administrative Code § 19-142. Plaintiffs do not seek to enforce the statute directly because it vests its enforcement exclusively with the New York City Comptroller. Plaintiffs claim they may enforce this term in the permits because the permits constitute contracts between the City of New York and Consolidated Edison, of which plaintiffs are third party beneficiaries.
An offer, acceptance of the offer, agreement, mutual consideration, and the parties’ intention to be bound establish a contract. Kolchins v. Evolution Mkts., Inc. , 31 N.Y.3d 100, 107-108, 73 N.Y.S.3d 519, 96 N.E.3d 784 (2018). The parties dispute whether a permit constitutes a contract that plaintiffs may enforce as third party beneficiaries.
Plaintiffs rely on Larkin v. Consolidated Tel. & Elec. Subway Co. , 193 Misc. 1001, 85 N.Y.S.2d 631 (Sup. Ct. N.Y. Co. 1949), for the proposition that the DOT permits to Consolidated Edison qualify as contracts. In Larkin , the court considered a motion to dismiss the defendant employer's defenses to a claim for back wages by the defendant's employee. The plaintiff employee sought the difference between what he had been paid and the prevailing union wage for his work based on New York City Administrative Code § 83-4.0, a predecessor of the current § 19-142. The plaintiff employee claimed the defendant employer had breached its agreement with the City of New York implied by the statute's requirement that permittees agree to pay the prevailing union wage. The court observed, without citation, that the statute required a "permittee to enter into an agreement with the city" to pay the statutory compensation to employees performing the permitted work and considered the permittee's employees beneficiaries of that agreement. Id. at 1003.
The court did not quote any of the statute's or agreement's terms supporting that conclusion. An enforceable contract and the plaintiff's right to enforce it as a third party beneficiary was not at issue and may have been assumed. Larkin also ignored People ex rel. Lodes v. Department of Health of City of N.Y., 189 N.Y. 187, 82 N.E. 187 (1907), which held that a permit to sell milk "contained no contract between the state, or the board of health" and the permittee, id. at 191, 82 N.E. 187, and was not a contract or property, but was merely temporary permission to the permittee "issued in the exercise of the police powers to do that which otherwise would be prohibited," id. at 192, 82 N.E. 187, and was revocable at will. Id. at 193, 82 N.E. 187.
Plaintiffs contend that Lodes is outdated, citing Rossetti v. O'Connell , 10 Misc.2d 453, 454-55, 172 N.Y.S.2d 716 (Sup. Ct. N.Y. Co. 1958), which concluded that Hecht v. Monaghan , 307 N.Y. 461, 469, 121 N.E.2d 421 (1954), holding that a licensee maintained a property interest in the license and was entitled to due process before the license was revoked, overruled prior appellate holdings like Lodes . Therefore permits for operating businesses were now "[i]n principle" considered property rights, rather than privileges, such that their revocation constituted a deprivation of property requiring due process. Rossetti v. O'Connell , 10 Misc.2d at 455, 172 N.Y.S.2d 716. Plaintiffs fail to explain how Rossetti is instructive, let alone dispositive here, where due process for the revocation of a permit is not at issue, but suggest that, if permits may create a property right, then they also may constitute a contract, which here would create a right to prevailing wages.
Plaintiffs provide no support for this leap. Rossetti and its collected authority do not hold that the permits at issue constituted contracts. Moreover, a permit created a property right when it was essential to the permittee's livelihood, "since without it he may not lawfully continue his occupation." Hecht v. Monaghan , 307 N.Y. at 467, 121 N.E.2d 421. The permit was "a condition precedent to his continuation in that occupation," in which "a person has a property right." Id. at 468, 121 N.E.2d 421. Here, the permits issued to Consolidated Edison are necessary to installation or repair of Consolidated Edison's equipment under public streets, but the permits’ revocation would not totally preclude Consolidated Edison from continuing its business of providing utility services. Finally, the rights, if any, at issue in Hecht and Rossetti ’s other collected authority belonged to the permittee, not to any of the other participants in the permitted operations.
Plaintiffs’ suggestion, premised on Rossetti , is a weak basis on which to conclude that the DOT permits constitute contracts enforceable by parties other than the issuer and the permittee, particularly in light of the Court of Appeals’ 2008 decision declining to reach such a conclusion. Brothers v. New York State Elec. & Gas Corp. , 11 N.Y.3d 251, 259, 869 N.Y.S.2d 356, 898 N.E.2d 539 (2008). The court observed, in dictum , but consistent with People ex rel. Lodes v. Department of Health of City of N.Y. 189 N.Y. at 192, 82 N.E. 187, that the consideration for the permit was nominal, the permit was revocable, and the permittee's "breach" of the permit's conditions did not create the normal contractual remedies, thus suggesting that a permit is not an enforceable contract. Brothers v. New York State Elec. & Gas Corp. , 11 N.Y.3d at 259, 869 N.Y.S.2d 356, 898 N.E.2d 539. Absent more persuasive or controlling authority, these instructive Court of Appeals opinions constrain this court to follow them.
In sum, the permit does not constitute a contract that plaintiffs may enforce using a third party beneficiary theory. Therefore plaintiffs misplace reliance on Lewis v. Hallen Constr. Co., Inc. , 193 A.D.3d 511, 141 N.Y.S.3d 857 (1st Dep't 2021), where a contract, rather than any permit, promised prevailing wages in compliance with New York City Administrative Code § 19-142. Although Consolidated Edison obtained permits similar to the permits it obtained here, it and another general contractor entered contracts with subcontractors requiring compliance with prevailing wage laws. Nothing in Lewis suggests that a permit issued by a governmental agency is comparable to a contract that confers rights on third party beneficiaries.
Plaintiffs similarly misplace reliance on Wroble v. Shaw Envtl. & Infrastructure Eng'g of NY, P.C. , 166 A.D.3d 520, 88 N.Y.S.3d 21 (1st Dep't 2018), where the plaintiffs sued their subcontractor employer's general contractor as third party beneficiaries of the prime contract between the general contractor and the New York City Department of Environmental Protection. Here, while there may be a contract between Consolidated Edison and its subcontractor No Parking Today to support a third party beneficiary claim, an equivalent contractual provision between Consolidated Edison and DOT is missing, as the DOT permit to Consolidated Edison does not constitute a contract. The court draws no conclusion whether plaintiffs may enforce the agreement between No Parking Today and Consolidated Edison as third party beneficiaries or whether plaintiffs may pursue remedies under New York Labor Law § 220, such as a compliance investigation pursuant to § 220(7).
IV. CONCLUSION
For the reasons explained above, the court grants the motion by defendant Consolidated Edison Company of New York, Inc., to dismiss plaintiffs’ second cause of action, the sole claim against Consolidated Edison, for breach of a contract. C.P.L.R. § 3211(a)(1) and (7).