Opinion
Index No. 154764/2012 Motion Seq. No. 008
12-23-2022
THE BOARD OF MANAGERS OF 325 FIFTH AVENUE CONDOMINIUM on its own behalf and on behalf of individual unit owners, and 325 FIFTH AVENUE CONDOMINIUM, Plaintiffs, v. CONTINENTAL RESIDENTIAL HOLDINGS, LLC, DOUGLASTON DEVELOPMENT, LLC, 325 FIFTH AVENUE, LLC, 325 FIFTH AVENUE COMMERCIAL, LLC, 325 FIFTH AVENUE INVESTORS, LLC, CONTINENTAL PROPERTIES, CLINTON MANAGEMENT, LLC, JELB 5TH AVENUE, LLC, MARK FISCH, STEVEN FISCH, STEVEN R. CHARNO, JEFFREY E. LEVINE, J.B. LEVINE BUILDER INC. D/B/A LEVINE BUILDERS, THE STEPHEN B. JACOBS GROUP, P.C., STEPHEN B. JACOBS, FAIA, HOWARD I. SHAPIRO & ASSOCIATES CONSULTING ENGINEERS, P.C., JAY P. SHAPIRO, P.E., LAWRENCE KENT SHAPIRO, P.E., CANTOR SEINUK GROUP, P.C., WSP CANTOR SEINUK, I.M. ROBBINS, P.C., MARC ROBBINS, CANTOR & PECORELLA, INC., S&S MANUFACTURING, SKYLINE STEEL CORP., K&M ARCHITECTURAL WINDOW PRODUCTS, INC., EFCO CORPORATION, CROSS COUNTRY CONSTRUCTION, LLC, CROSS COUNTRY CONCRETE, LLC, SILVIAN MARCUS, WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP, FS PROJECT MANAGEMENT, LLC, FIRST SERVICE RESIDENTIAL NEW YORK, LLC, CANIDO BASONAS CONSTRUCTION CORP., Defendants.
Unpublished Opinion
MOTION DATE: 12/17/2021.
PRESENT: HON. KELLY O'NEILL LEVY, Justice.
DECISION + ORDER ON MOTION
KELLY O'NEILL LEVY, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 360, 361, 362, 363, 364, 365, 366, 367, 368, 369, 370, 371, 372, 373, 374, 375, 376, 377, 378, 379, 380, 381, 382, 383, 384, 385, 386, 387, 388, 389, 390, 391, 392, 393, 394, 395, 396, 397, 398, 399, 400, 401, 402, 403, 404, 405, 406, 407, 408, 409, 410, 411,412, 413, 414, 415, 416, 417, 418, 419, 420, 421,422, 423, 424, 425, 426, 427,428,429,430,431,432 were read on this motion for SUMMARY JUDGMENT.
Plaintiffs The Board of Managers of 325 Fifth Avenue Condominium and 325 Fifth Avenue Condominium (plaintiffs) bring this action to recover damages for alleged construction defects in the building located at 325 Fifth Avenue, New York, New York (the building), including the building's balconies.
Defendants FS Project Management LLC n/k/a FirstService Project Management, LLC (FSPM) and FirstService Residential New York, Inc. i/s/h/a First Service Residential New York, LLC (FSR) (together, FS defendants) move, pursuant to CPLR 3212, for summary judgment dismissing all claims against them.
BACKGROUND
FSR was retained as the managing agent of the building, pursuant to an agreement dated August 3, 2006 (the Management Agreement) (NY St Cts Elec Filing [NYSCEF] Doc No. 377 ¶ 1). Article FOURTH of FSR's Management Agreement provides as follows: "The Agent shall perform the following services with due diligence and care:
(a) Cause to be hired, paid and supervised, all persons necessary to be employed in order to properly maintain and operate the Building . . .
(b) Cause the Building to be maintained in such condition as may be deemed advisable by the Owner, including interior and exterior cleaning, and cause repairs and alterations of the building to be made, including, but not limited to, electrical, plumbing, steamfitting, carpentry, masonry, elevator, decorating, and such other incidental alterations or changes therein as may be proper, subject only to the limitations contained in this agreement or in the Condominium Declaration or By-Laws. ..
(c) Recommend and, with the approval of the Owner, cause all such acts and things to be done in or about the Building as shall be necessary or desirable to comply with any orders or violations affecting the Building, as a result of any action by any federal, state, or municipal authority having jurisdiction thereover... except that if failure to promptly comply with any such order or violation would or might expose the Owner of the Agent to criminal liability, the Agent may cause such order or violation to be complied with after consultation, if feasible, with the president, vice-president or treasurer of the Owner (in the order given). . .
***
(v) Generally, do all things deemed necessary or advisable by the Board of Managers of the Owner for the proper management of the Building. However, in the event any such things are not within the services enumerated in
paragraphs FOURTH (a) through FOURTH (u) above (e.g. without limitation compliance with a new administrative or filing requirement), Agent shall be entitled to additional compensation from Owner therefore as owner and Agent mutually agree"(NYSCEF Doc No. 378).
FSR's property manager primarily communicated with the Board president about operations, but communicated with the entire Board regarding urgent and important matters (NYSCEF Doc No. 377 ¶ 3; NYSCEF Doc No. 374, Kirschenbaum tr at 75, 77-78).
The former Senior Property Manager at Cooper Square Realty (which became FirstService Residential), Gustavo Rusconi (Rusconi) testified that, in July 2007, "a couple of the glass panels cracked and fell onto the public space behind the building" (NYSCEF Doc No. 368, Rusconitr at 50). In response, the New York City Department of Buildings (DOB) issued violations to the building (id. at 52, 59).
On August 2, 2007, FSR's senior property manager retained Howard L. Zimmerman Associates, P.C. (HLZA) on behalf of the building to investigate the cause of the incident, including "inspecting] all the balconies (approximately 180 balconies) and associated attachment mechanisms . . (NYSCEF Doc No. 393 at 2).
At the time, the Board was controlled by the Sponsor (NYSCEF Doc No. 364, Moy tr at 22).
On November 15, 2007, HLZA issued a nine-page initial report to FSR, detailing the findings of its investigation into the cause of the balcony glass breakage (NYSCEF Doc No. 380, Zimmerman aff, ¶ 6). HLZA's principal, Howard L. Zimmerman, FAIA (Zimmerman), avers that the report recommended further testing, remedial action and preventative maintenance in connection with the balcony glass panels and railings (id., ¶ 7). The report noted that certain balconies exhibited settlement cracks in the cantilevered concrete slabs of the balconies, which was expected and should be monitored over time, and categorized this as a "low priority" issue (NYSCEF Doc No. 380 at 15).
The Board's president, Monica Tadros (Tadros), testified that the non-Sponsor affiliated members never received a copy of this report (NYSCEF Doc No. 365, Tadros tr at 118-120). However, Tadros later admitted that she probably received the November 15, 2007 report, but did not read it because she could not open attachments on her phone (id. at 141-148).
Plaintiffs allege that the Sponsor Board members directed FSR to give HLZA "instructions" to narrow this report (NYSCEF Doc No. 399 at 2).
On December 10, 2007, HLZA issued a revised report (NYSCEF Doc No. 380, Zimmerman aff, ¶ 8). Zimmerman avers that this report recommended laboratory and site testing, including a mock-up of the balcony glass panel and railing system, to determine the cause of the glass failure and/or the guardrail system as a whole, as well as a thorough examination of relevant industry standards and codes to determine compliance (id.). The testing only pertained to the balcony glass panel and railing systems, but did not pertain in any manner to the cantilevered concrete slabs of the balconies at the building (id.).
In December 2007, Steven Chamo (Chamo), one of the Sponsor's directors, wrote an email to Rusconi, Marc Kotler (Rusconi's supervisor), Tom Epstein, and Adam Mann, stating that "[HLZA] has issued a revised report, which unfortunately, despite our instructions to the contrary, still goes beyond the scope of addressing why the glass may have broken" (NYSCEF Doc No. 399 at 2). Chamo stated that FSR and the Sponsor's representatives should see if they "can get [HLZA] to delete sections that do not relate to possible causes as to why the glass may have broken" (id.).
On June 10, 2008, HLZA issued a final report (NYSCEF Doc No. 380, Zimmerman aff, ¶ 9). This report did not determine why the balcony glass panels broke (id.). However, HLZA determined that the July 2007 glass breakage incident was "not inconsistent with a falling object breaking the upper panels," and that "based on our inspection, reinforced concrete structure does not appear to have contributed to the breakage" (id.). The report also detailed the necessary steps to repair the balcony glass panel and railing systems, which had been completed at the time the report was issued (id.).
In 2008, repairs were made to slab edge cracks in the building's balconies (NYSCEF Doc No. 365, Tadros tr at 296-297).
On July 1, 2009, a glass panel shattered onto Fifth Avenue, causing the Police Department to close the sidewalk and the DOB to issue a vacate order prohibiting access to any of the building's balconies (NYSCEF Doc No. 370, Ostafin tr at 60-64). The Sponsor still controlled the Board at the time (NYSCEF Doc No. 365, Tadros tr at 94, 300).
The Board retained a new engineer, Frank Seta Associates (FSA), to investigate and determine a solution to the glass panel issue (NYSCEF Doc No. 422 at 2). FSA determined that the glass panels of the balconies were breaking because "there were no thermal breaks between the materials", i.e., "the concrete of the balconies, the aluminum railings, and the glass" (NYSCEF Doc No. 373, Foley tr at 22-23, 30-31). The absence of a thermal break did not have an effect on the concrete slab (id. at 31).
Plaintiffs further allege that, in July 2009, FSR learned of a structural crack in the balcony of apartment 32E that had been "overlooked" during the Sponsor's prior patchwork repairs (NYSCEF Doc No. 418 at 2). They allege that it was later determined that the entire concrete slab on that balcony had to be "[d]emolish[ed] and reconstructed]" (NYSCEF Doc No. 419 at 2).
In November 2009, FSR's subsidiary, FSPM, was retained as the owner's representative to replace the glass balconies (NYSCEF Doc No. 374, Kirschenbaum tr at 152-153). FSPM's role was to facilitate the project, i.e., to make sure the work was done efficiently and timely, and that it did not disrupt the building (id. at 157, 160). FSPM was "not there to determine that the specs are followed. That's the engineer's responsibility" (id. at 160).
FSPM's Owner's Representative Agreement provides:
"1. Statement of Purposes and Services
The purpose of this agreement is for Owner to engage Representative as its consultant to provide the professional services as set forth in Exhibit A to this Agreement (the 'Services') in connection with the replacement of the glass partitions on the balconies (the 'Project') at the Property located at and known as 325 Fifth Avenue, New York, NY (the 'Property').(NYSCEF Doc No. 379). Exhibit A required FSPM to provide various services during the preconstruction phase, including selecting engineers, financial planning, and reviewing specifications with engineers (id. at 7). During the construction phase of the balcony glass project, FSPM was required to chair weekly meetings and provide controlled inspections (id.).
FSPM's general counsel, who drafted the Owner's Representative Agreement, testified that he never saw an executed copy of the agreement (NYSCEF Doc No. 374, Kirschenbaum tr at 41, 148).
In a November 18, 2009 email, Tai Eyal (Eyal), the president of Cooper Square Project Development, Inc., now known as FSPM, wrote to the Board after "an incident that occurred on Tuesday, November 17, 2009 where a small piece of glass from the south facing faqade fell onto the neighboring building" (NYSCEF Doc No. 416 at 2). Eyal stated that that FSPM would "learn (at an accelerated pace) the history of the balcony railing glass and help the Board come to a decision in order to rectify this situation" (id.). Eyal indicated that FSPM "understood the severity of the situation" and would report to the Board on a regular basis (id.).
Canido Basonas Construction Corp. (Basonas) performed rigging work, removed the existing glass panels, and installed a new railing system, and Walsh Associates installed the new glass panels pursuant to the plans and specifications prepared by FSA (NYSCEF Doc No. 373, Foley tr at 215-216, 219-220).
According to an email dated May 14, 2010, DOB's representative requested "structural drawings of the composition of the balconies," "[t]o completely discount that there are no structural design defects with the existing defects" (NYSCEF Doc No. 423 at 2). Plaintiffs allege that, in response, FSPM delivered a letter to DOB from the engineer, indicating that it had "performed daily controlled inspections for concrete placement and rebar installation," and that "all concrete placement of the exposed balconies was completed in accordance with the structural drawings and specifications" (NYSCEF Doc No. 424 at 2).
When Basonas was drilling holes in the concrete balcony slabs, it "hit a rebar" on a single line of balconies (NYSCEF Doc No. 373, Foley tr at 232, 250-251). FSPM instructed Basonas "to move [the drill] to the side and then adjust it and go to the side of the rebar" and Basonas "adjusted their positioning and they were able to complete" the railing installation (id. at 233, 236).
The building paid for the balcony glass panel and railing replacement project with contributions from the Sponsor in exchange for a release, the building's insurance carrier in exchange for a release, and a special assessment imposed on the unit owners (NYSCEF Doc No. 363, Bartow tr at 32, 44-45, 59, 106).
In April 2012, FSPM assisted the Board in retaining a licensed engineer to conduct a Local Law 11 inspection prior its due date in February 2013 (NYSCEF Doc No. 369, Seddio tr at 43-44).
The Board retained Lawless & Mangione Architects and Engineers LLP (L&M) as the engineer to perform the Local Law 11 inspection (id. at 63-64, 81-82). During the Local Law 11 inspection, L&M discovered "the concrete issue ... in the balconies" (NYSCEF Doc No. 373, Foley tr at 129-131).
Thereafter, the Board retained Whitlock Dalyrmle Poston &Associates, P.C. (WDP) and Thornton Tomasetti to provide second and third opinions (NYSCEF Doc No. 369, Seddio tr at 79-80; NYSCEF Doc No. 363, Bartow tr at 15). WDP's and Thornton Tomassetti's reports identified various original construction defects in the concrete slabs of the building, including excessive congestion of the reinforcing steel rebar at the edges of the slab, lack of ties anchoring the rebar, improper placement of rebar hooks, inadequate spacing of the rebar, use of an improper size of reinforcing steel rebar, and insufficient air content in the poured concrete (NYSCEF Doc No. 363, Bartow tr at 41-42; NYSCEF Doc No. 365, Tadros tr at 109).
Plaintiffs have been unable to obtain a final certificate of occupancy for the building as a result of the ongoing balcony concrete slab reconstruction work (NYSCEF Doc No. 365, Tadros tr at 340-343).
As relevant here, the complaint asserts the following two claims: (1) breach of contract against FSR (count nine); and (2) breach of contract against FSPM (count twelve) (NYSCEF Doc No. 62, complaint ¶¶ 166-171, 184-187). The complaint requests reasonable costs, expenses, and attorney's fees (id., wherefore clause).
Previously, the FS defendants moved to dismiss certain causes of action against them. However, they did not move to dismiss the breach of contract claims against them (see Board of Mgrs. of 325 Fifth Ave. Condominium v Continental Residential Holdings LLC, 2016 NY Slip Op 31230[U], **3 [Sup Ct, NY County 2016], aff'd as mod 149 A.D.3d 472 [1st Dept 2017]). There is no dispute that the sole remaining causes of action against the FS defendants are for breach of contract.
In their responses to interrogatories, plaintiffs claim damages for costs to inspect and remediate the concrete balcony slabs, including costs to investigate the cause of cracking and spalling, engineer costs, fees paid to Basonas, construction costs, and fees paid to DOB to rescind a stop work order (NYSCEF Doc No. 362 at 12). Additionally, plaintiffs seek damages for costs to inspect and remediate non-balcony defects, including costs concerning the building's mechanical, electrical, plumbing and firestopping systems, defective conditions in the garage, costs relating to fire-stopping and fire-safing, drain piping, a missing valve in the mechanical room, and improper installation of power transformers in the basement electrical room (id. at 13).
Plaintiffs' expert, George B. Fink, Jr. P.E. CCM (Fink), an engineer licensed in Virginia, opines, based upon his review of the record, that FSR breached its contractual duties and did not meet the standard of care in its industry by: (1) failing to disclose the defective conditions in the balconies' glass panels; (2) failing to disclose the cracking and spalling in the balconies; (3) improperly putting the Sponsor's interests ahead of the Board's interests; (4) failing to recommend an objective project manager; and (5) failing to fully investigate issues with the quality of the Sponsor's construction (NYSCEF Doc No. 375, Fink report at 17-20). Fink also opines that FSPM breached its contractual duties and did not meet the standard of care in its industry by: (1) ignoring red flags that the balconies suffered from systemic, structural issues; (2) failing to conduct a comprehensive investigation of all possible causes for the balcony glass failures; and (3) failing to keep the Board adequately informed about the balcony repair project (id. at 20-22). Fink states that, as a result of these failures, 325 Fifth Avenue Condominium "did not discover the extent of systemic construction defects in the balcony slabs and rebar until years after it reasonably should have" (id. at 22).
Defendants' expert, Daniel Hogan, RA, AIA, BSFX (Hogan), states that all of the standards referenced in HLZA's November 15, 2007 report apply to balcony guard rail glass assemblies, and not concrete balcony slabs (NYSCEF Doc No. 376, Hogan report at 24-31).
The FS defendants move for summary judgment, arguing that they did not breach their contracts. The FS defendants contend that FSR acted as a typical managing agent and fully complied with its contractual obligations. They argue that plaintiffs seek to impose a contractual duty upon FSR that does not exist under the Management Agreement, and that was not agreed upon through a course of dealing between the parties. With respect to FSPM, the FS defendants contend that FSPM was appointed the owners' representative in connection with the balcony glass panel and replacement project in 2009. According to the FS defendants, FSPM also assisted the Board in retaining necessary architects and engineers to perform a Local Law 11 inspection in 2012. The FS defendants assert that plaintiffs seek to impose a contractual obligation upon FSPM which is contradicted by the Owners' Representative Agreement and the course of dealing of the parties.
In addition, the FS defendants maintain that plaintiffs' expert report is speculative and conclusory. Furthermore, the FS defendants argue that they did not know or have reason to know of any original systemic defects in the concrete balcony slabs. The FS defendants also contend that any alleged breach of contract was not the proximate cause of plaintiffs' damages, as all of their damages stem from original construction defects. According to the FS defendants, they did not have any involvement in the original construction of the building.
In opposition, plaintiffs contend that there is an issue of fact as to whether the FS defendants breached their contractual duties to plaintiffs. As argued by plaintiffs, plaintiffs' expert engineer opines that the FS defendants failed to meet their industry standard of care either because: (1) they knew of the building's structural issues with the building's concrete balcony slabs and hid those issues from plaintiffs; or (2) they should have known about these issues, since they failed to properly investigate these problems (NYSCEF Doc No. 375, Fink report at 17-23). Further, plaintiffs assert that the FS defendants proximately caused plaintiffs' damages. Plaintiffs assert that the FS defendants' failure to disclose the HLZA report resulted in plaintiffs spending "hundreds of thousands of dollars on investigatory costs alone, paying five separate companies to investigate issues that HLZA had already raised in its November 2007 report" (NYSCEF Doc No. 386 at 28). Plaintiffs argue that the FS defendants' failure to investigate the structural issues delayed remediation of the defects.
Additionally, plaintiffs maintain that there is an issue of fact as to whether FSPM's duties were modified by Eyal's November 18, 2009 email. Plaintiffs argue that FSPM failed to keep plaintiffs adequately informed about the status of the balcony repair project, as agreed to in that email.
In reply, the FS defendants point out that (1) plaintiffs did not file a counter statement of material facts, and, therefore, admitted to all of the facts in their statement of material facts; (2) plaintiffs' opposition does not include a certification of the word count of their papers; and (3) plaintiffs' opposition only discusses the balcony-related defects and they have abandoned claims as to interior original construction defects, accounting issues, and attorney's fees. The FS defendants further contend that plaintiffs have failed to identify contractual duties that were allegedly breached. In addition, the FS defendants argue that any alleged breach of contract was not a proximate cause of plaintiffs' damages, since all of plaintiffs' damages stem from original construction defects, which were the responsibility of the Sponsor.
DISCUSSION
"It is well settled that 'the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact'" (Pullman v Silverman, 28 N.Y.3d 1060, 1062 [2016], quoting Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]). Once such a prima facie showing has been made, the burden shifts to the non-moving party "to establish the existence of material issues of fact which require a trial of the action" (Vega v Restani Constr. Corp., 18 N.Y.3d 499, 503 [2012]). "On a motion for summary judgment, facts must be viewed 'in the light most favorable to the non-moving party'" (id., quoting Ortiz v Varsity Holdings, LLC, 18 N.Y.3d 335, 339 [2011]). "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to raise an issue of fact (Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]).
As a preliminary matter, the court excuses plaintiffs' failure to submit a response to defendants' statement of material facts (see 22 NYCRR 202.8-g [b] ["the papers opposing a motion for summary judgment shall include a correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party and, if necessary, additional paragraphs containing a separate short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried"]; [c] ["Each numbered paragraph in the statement of material facts required to be served by the moving party may be deemed to be admitted for purposes of the motion unless specifically controverted by a correspondingly numbered paragraph in the statement required to be served by the opposing party"]). While it would have been a better practice for plaintiffs to submit a response to defendants' statement of material facts, the court is not required to blindly adhere to the rule and deem facts admitted (see Smith v MDA Consulting Engrs. PLLC, __ A.D.3d __, 2022 NY Slip Op 06389, *1 [4th Dept 2022]; Leberman v Instantwhip Foods, Inc., 207 A.D.3d 850, 851 [3d Dept 2022]; see also Abreu v Barkin &Assoc. Realty, Inc., 69 A.D.3d 420, 421 [1st Dept 2010]; Muscato v Spare Time Entertainment, 74 Mise 3d 1215[A], 2022 NY Slip Op 50127[U], *1-2 [Sup Ct, Schenectady County 2022]). Moreover, even though plaintiffs did not submit a certification of the word count of their opposition papers (see 22 NYCRR 202.8-b), the court finds that this is a technical defect that may be overlooked (see CPLR 2001; Sklar v Itria Ventures, LLC, 2022 NY Slip Op 31800[U], *4 [Sup Ct, NY County 2022]). The court, therefore, turns to the merits.
To prevail on a breach of contract claim, the plaintiff must establish: (1) the existence of a contract; (2) the plaintiffs performance; (3) the defendant's breach of that contract; and (4) resulting damages (Harris v Seward Park Hous. Corp., 79 A.D.3d 425, 426 [1st Dept 2010]; Morris v 702 E. Fifth St. HDFC, 46 A.D.3d 478, 479 [1st Dept 2007]; Furia v Furia, 116 A.D.2d 694, 694 [2d Dept 1986]).
The plaintiff may establish a breach of contract by demonstrating a breach of an express term of the contract (see e.g. Morris, 46 A.D.3d at 479).
The plaintiff may also establish a breach of contract by showing a breach of the contract's implied covenant of good faith and fair dealing (see Parlux Fragrances, LLC v S. Carter Enters., LLC, 204 A.D.3d 72, 91-92 [1st Dept 2022] ["Generally, a breach of the covenant of good faith and fair dealing is a breach of the contract itself']; accord Giller v Oracle USA, Inc., 512 Fed.Appx. 71, 73 [2d Cir 2013], cert denied 511 U.S. 1006 [2013]).
"[I]mplicit in every contract is a covenant of good faith and fair dealing . . ., which encompasses any promises that a reasonable promisee would understand to be included" (New York Univ, v Continental Ins. Co., 87 N.Y.2d 308, 318 [1995]). The covenant "embraces a pledge that 'neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract'" (Dalton v Educational Testing Serv., 87 N.Y.2d 384, 389 [1995], Iv dismissed 85 N.Y.2d 964 [1995], quoting Kirke La Shelle Co. v Armstrong Co., 263 NY 79, 87 [1933]; see also 511 West 232nd Owners Corp, v Jennifer Realty Co., 98 N.Y.2d 144, 153 [2002]; see generally 23 Williston on Contracts § 63:22 [4th ed 2021] ["a party who evades the spirit of the contract, willfully renders imperfect performance, or interferes with performance by the other party, may be liable for breach of the implied covenant of good faith and fair dealing"]; Restatement [Second] of Contracts § 205, Comment d ["A complete catalogue of types of bad faith is impossible, but the following types are among those which have been recognized injudicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party's performance"]). "The duty of good faith and fair dealing, however, is not without limits, and no obligation can be implied that would be inconsistent with other terms of the contractual relationship" (Dalton, 87 N.Y.2d at 389 [internal quotation marks and citation omitted]).
Plaintiffs argue that the FSR "knew or should have known of structural issues with the Building's concrete balcony slabs, and should have, at a minimum, recommended further investigation of these conditions," but instead, "hid this knowledge from Plaintiffs to protect the Sponsor" (NYSCEF Doc No. 386 at 20). However, plaintiffs have not identified breaches of any express provision of the Management Agreement. Moreover, the court finds that any determination that FSR breached the covenant of good faith and fair dealing would be inconsistent with other provisions of that agreement and would create additional obligations not contained therein. Pursuant to the Management Agreement, FSR was required to "Cause the Building to be maintained in such condition as may be deemed advisable by the Owner, including interior and exterior cleaning, and cause repairs and alterations of the building to be made, including, but not limited to, electrical, plumbing, steamfitting, carpentry, masonry, elevator, decoration, and such other incidental alterations or changes therein as may be proper . . (NYSCEF Doc No. 378 at 3 [emphasis added]). In addition, FSR was required to "Recommend and, with the approval of the Owner, cause all such acts and things to be done in or about the Building as shall be necessary or desirable to comply with any orders or violations affecting the Building . ..." (id.}. The Management Agreement further provides that FSR shall "do all things reasonably deemed necessary or desirable by the Board of Managers of the Owner for the proper management of the Building. However, in the event any such other things are not within the services enumerated in paragraphs FOURTH (a) through FOURTH (u). . ., [FSR] shall be entitled to such additional compensation from Owner therefore as owner and Agent mutually agree" (id. at 7 [emphasis supplied]). Thus, with limited exceptions not applicable to investigating or recommending repairs to original structural defects, FSR only acted at the direction of 325 Fifth Avenue Condominium (id.; see also NYSCEF Doc No. 374, Kirschenbaum tr at 128).
Contrary to plaintiffs' contention, the construction of unambiguous contract terms is a judicial function (W. W. W. Assoc, v Giancontieri, 77 N.Y.2d 157, 162 [1990]). The court finds that the terms of the Management Agreement and Owner's Representative Agreement are clear and unambiguous and that expert testimony is inadmissible to interpret their language. "[U]nless the words or phrases as used in a writing which is the subject of controversy are terms of art, science, or trade, or there is something to show that they were not used in their ordinary and plain meaning, opinion testimony to interpret the language is not admissible" (31A Am Jur2d Expert and Opinion Evidence § 294 [2022]). Neither side, argues that the language is ambiguous.
The court finds Commissioners of State Ins. Fund v Photocircuits Corp. (20 A.D.3d 173 [1st Dept 2005]), relied upon by plaintiffs, to be distinguishable. There, the First Department held that there were issues of fact as to whether a workers' compensation insurer performed its contractual duties in a commercially reasonable manner where it paid funds to a known impostor; failed to limit or cap liability to claimants based on preexisting injuries; and frequently failed to appear at hearings (id. at 178-179, 183). The First Department noted that the insured was "relying on more than mere negligence" and was "asserting what amounts to a conscious disregard by the [insurer] of its basic contractual obligations to perform reasonably" (id. at 182).
Moreover, contrary to plaintiffs' contention, the record reflects that the parties intended to be bound by the Owner's Representative Agreement. "[A]n unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound" (Flores v Lower E. Side Serv. Ctr., 4 N.Y.3d 363, 369 [2005]). "In determining whether the parties entered into a contractual agreement and what were its terms, it is necessary to look .. . to the objective manifestations of the intent of the parties as gathered by their expressed words and deeds" (Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 N.Y.2d 397, 399 [1977]). The Owner's Representative Agreement does not indicate on its face that the parties did not intend to be bound absent formal execution. Additionally, FSR's general counsel testified that, even though he never saw an executed copy of the Owner's Representative Agreement, FSPM began performing services on the glass replacement project in or around November 2009 (NYSCEF Doc No. 374, Kirschenbaum tr at 148). The building paid FSPM as its project manager for the replacement of the glass partitions on the balconies (NYSCEF Doc No. 372, Eyal tr at 219-223). Although plaintiffs argue that the Owner's Representative Agreement was modified by an email dated November 18, 2009, that email was addressed to the individual Board members (NYSCEF Doc No. 416 at 2), and was sent before the Owner's Representative Agreement was sent to plaintiffs on November 25, 2009 (NYSCEF Doc No. 374, Kirschenbaum tr at 147-148). In any event, plaintiffs have not offered any evidence that 325 Fifth Avenue Condominium assented to any modification. Further, the Owner's Representative Agreement states that "(t]his Agreement may not be modified except in a writing signed by Owner and Representative" (NYSCEF Doc No. 379 at 6). Plaintiffs have not offered any such writing.
Furthermore, plaintiffs have not articulated any breach of an express provision of the Owner's Representative Agreement. FSPM's alleged failure to perform a comprehensive investigation to rule out structural problems with the balconies is outside the scope of its work, which was limited to serving as 325 Fifth Avenue Condominium's representative on the glass replacement project. FSPM's role as a project manager was limited to ensuring that the work was done efficiently and timely, and that the contractors did not disrupt the building's operations (NYSCEF Doc No. 374, Kirschenbaum tr at 160). Plaintiffs' argument that FSPM breached the covenant of good faith and fair dealing by failing to conduct an appropriate investigation into the building's original structural defects is contradicted by the terms of the Owner's Representative Agreement and creates additional obligations not contained therein. For example, the Owner's Representative Agreement states that: (1) "[FSPM] shall not have control over or charge of and shall not be responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions or programs in connection with the work of Owner's contractors, their subcontractors or other third party contractors"; (2) "[FSPM] shall not be responsible for the failure of Owner's contractors, their subcontractors or other third party contractors to carry out work in accordance with their contractual obligations"; (3) "[FSPM] shall not have control over or charge of the acts or omissions of Owner's contractors, their subcontractors, or third party contractors or any other persons performing portions of the work for the Project"; (4) "[FSPM] shall have no design responsibilities for the Project"; (5) "[FSPM] shall be entitled to rely upon the adequacy, accuracy and completeness of the services, certifications and approvals performed by Owner's design professionals"; and (6) "[FSPM] will not make exhaustive or continuous onsite inspections to check the quality or quantity of the work" (NYSCEF Doc No. 379 at 3 [emphasis supplied]). Essentially, plaintiffs seek to hold FSPM, as the owner's representative, liable for construction defects in the balconies, which is not permitted pursuant to the Owner's Representative Agreement.
Even assuming that the FS defendants breached their contracts, they have established that any breach of their contracts was not a proximate cause of plaintiffs' damages (see Frydman &Co. v Credit Suisse First Boston Corp., 1 A.D.3d 274, 275 [1st Dept 2003] [summary judgment appropriate where "plaintiffs failed to raise any triable issues of fact with regard to defendants' demonstration that the alleged contractual and tortious breaches were not the proximate cause of plaintiffs' failure to acquire the target corporation"]; accord Demetriades v Royal Abstract . Deferred, LLC, 159 A.D.3d 501, 503 [1st Dept 2018], Iv dismissed 32 N.Y.3d 1191 [2019]). To recover general damages in an action alleging breach of contract, the damages must flow naturally and directly from the breach of contract (see Kenford Co. v County of Erie, 73 N.Y.2d 312, 319 [1989]; Rose Lee Mfg. v Chemical Bank, 186 A.D.2d 548, 551 [2d Dept 1992]). "Whether one violates a contractual obligation or a duty imposed by law, the theory is that compensation shall be made for the injury directly and proximately caused by the breach of contract or duty" (Rose Lee Mfg., 186 A.D.2d at 551 [citation omitted]). Plaintiffs claim damages for inspection and remediation work on the concrete balcony slabs (NYSCEF Doc No. 362 at 12). Stated differently, plaintiffs' damages stem from original construction defects, which were the responsibility of the Sponsor.
As argued by the FS defendants, plaintiffs appear to have abandoned claims for non-balcony related defects. Indeed, plaintiffs state that "if the FS Defendants had met their contractual obligations and advised a prompt and thorough investigation of the balconies, Plaintiffs' remediation costs would have been substantially lower and Plaintiffs' property values would have been higher" (NYSCEF Doc No. 386 at 6).
Plaintiffs have failed to raise an issue of fact as to whether the FS defendants' breaches proximately caused their damages. Plaintiffs argue that the FS defendants' failure to disclose HLZA's November 15, 2007 report forced them to spend "hundreds of thousands of dollars on investigatory costs alone, paying five separate companies to investigate issues that HLZA had already raised in its November 2007 report" (NYSCEF Doc No. 386 at 28). However, Zimmerman states that his reports recommended that certain testing be conducted, but it only pertained to the balcony glass panel and railing systems and had nothing to do with the cantilevered concrete slabs (NYSCEF Doc No. 380, Zimmerman aff, ¶¶ 7, 8, 9, 10). Moreover, plaintiffs' argument that, had the FS defendants properly investigated the balconies for potential structural issues, they would have known that their expected remediation costs would be much higher and would have pursued the full cost of the required repairs from the Sponsor is speculative. So, too, is plaintiffs' contention that they would have avoided significant construction costs from prior inadequate repairs and duplicative engineering fees.
Plaintiffs cite Chen v City of New York (194 A.D.3d 904 [2d Dept 2021]), which unlike the instant matter was a personal injury action. In that case, the Second Department held that there were issues of fact as to whether defendants' lack of adequate supervision was a proximate cause of the infant plaintiffs injuries (id. at 906).
In light of the above, the FS defendants are entitled to summary judgment dismissing plaintiffs' breach of contract claims.
The FS Defendants also request dismissal of plaintiffs' request for attorney's fees. Generally, attorney's fees, as incidents of litigation, are not recoverable unless provided for by the parties' agreement, statute or court rule (Matter of A. G. Ship Maintenance Corp, v Lezak, 69 N.Y.2d 1, 5 [1986]). As argued by the FS defendants, the Management Agreement and Owner's Representative Agreement do not allow for recovery of plaintiffs' attorney's fees (NYSCEF Doc Nos. 378, 379). Plaintiffs have not opposed dismissal of their request for attorney's fees.
Accordingly, plaintiffs' request for attorney's fees is dismissed.
CONCLUSION
Accordingly, it is ORDERED that the motion (sequence number 008) of defendants FS Project Management LLC n/k/a FirstService Project Management, LLC and FirstService Residential New York, Inc. i/s/h/a First Service Residential New York, LLC for summary judgment is granted, and the complaint is dismissed with costs and disbursements to said defendants as taxed by the Clerk upon the submission of an appropriate bill of costs, and the Clerk is directed to enter judgment accordingly.
This constitutes the Decision and Order of the court.