| IMS Engrs.-Architects, P.C. v State of New York |
| 2008 NY Slip Op 04813 [51 AD3d 1355] |
| May 29, 2008 |
| Appellate Division, Third Department |
| IMS Engineers-Architects, P.C., Appellant, v State of New York,Respondent. (Claim No. 112628.) |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Michael S. Buskus of counsel), forrespondent.
Spain, J. Appeal from an order of the Court of Claims (Collins, J.), entered February 23,2007, which granted defendant's motion to dismiss the claim.
Hayden-Wegman, Inc., consulting engineers, entered into three contracts (hereinafter theprime contracts) with defendant in the mid-1980s, in which Hayden-Wegman agreed to performspecific work on public road projects in western New York. The contracts required defendant todirectly pay Hayden-Wegman as work progressed, and contemplated that Hayden-Wegmanwould subcontract out some of the work to others, including claimant. Hayden-Wegmanreportedly entered into subcontracts with claimant; claimant alleges that Hayden-Wegmanterminated its relationship with claimant and defaulted on its payment obligations under thesubcontract, and that claimant obtained a judgment against Hayden-Wegman which isuncollectible.
In 2004, claimant filed a verified notice of claim and claim against defendant asserting,among other things, that it was entitled to $779,470.41 in damages from defendant for workperformed under the prime contracts between Hayden-Wegman and defendant. The Court ofClaims granted defendant's motion to dismiss based upon claimant's failure to state a cause ofaction (see CPLR 3211 [a] [7]). Claimant appeals, and we affirm.[*2]
On defendant's motion to dismiss for failure to state acause of action, claimant's claim is liberally construed and all facts asserted therein, as well as itssubmissions in opposition to defendant's motion, are accepted as true (see CPLR 3026;511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]; see also Nonnon v City of New York, 9NY3d 825, 827 [2007]; State ofNew York v Shaw Contract Flooring Servs., Inc., 49 AD3d 1078, 1079 [2008]). Where,as here, the motion is premised upon claimant's failure to state a claim (see CPLR 3211[a] [7]),[FN1]the dispositive inquiry is whether it has a cause of action and not whether one has been stated,i.e., "whether the facts as alleged fit within any cognizable legal theory" (Leon vMartinez, 84 NY2d 83, 87-88 [1994]; accord Nonnon v City of New York, 9 NY3dat 827).
Initially, and contrary to claimant's assertion, the Court of Claims did not, in fact, convertdefendant's motion to one for summary judgment (see CPLR 3211 [c]; cf. Nonnon vCity of New York, 9 NY3d at 827) but, rather, treated and decided the motion under CPLR3211 (a) (7). We agree that the court should not have made reference to an affidavit submitted bydefendant in support of its motion, given that affidavits should be considered on such motions todismiss for failure to state a cause of action only to remedy defects in the pleadings (seeNonnon v City of New York, 9 NY3d at 827; Leon v Martinez, 84 NY2d at 88).However, the error was harmless inasmuch as the affidavit was not necessary to the conclusionreached by the court that claimant was not, as a matter of law, a third-party beneficiary of theprime contracts.
The Court of Claims correctly held that the facts alleged by claimant do not "fit within anycognizable legal theory" (Leon v Martinez, 84 NY2d at 87-88), making dismissal underCPLR 3211 (a) (7) appropriate. Claimant has no viable breach of contract cause of action againstdefendant, given that the prime contracts were solely between Hayden-Wegman and defendant,and claimant was not a signatory on those contracts (see Outrigger Constr. Co. v Bank LeumiTrust Co. of N.Y., 240 AD2d 382, 383 [1997], lv denied 91 NY2d 807 [1998]).Under settled principles, "a subcontractor may not assert a cause of action which is contractual innature against parties with whom it is not in privity" (Martirano Constr. Corp. v Briar Contr.Corp., 104 AD2d 1028, 1030 [1984]; see Barry, Bette & Led Duke v State of NewYork, 240 AD2d 54, 56 [1998], lv denied 92 NY2d 804 [1998]; OutriggerConstr. Co. v Bank Leumi Trust Co. of N.Y., 240 AD2d at 383; Bubonia Holding Corp.v Jeckel, 189 AD2d 957, 958 [1993]). Thus, lacking privity or its " 'functional equivalent' "(City School Dist. of City of Newburgh v Stubbins & Assoc., 85 NY2d 535, 539 [1995];cf. Brownell Steel, Inc. v Great Am. Ins.Co., 28 AD3d 842, 843 [2006]), claimant cannot maintain a breach of contract claimagainst defendant.
Further, claimant is not an intended third-party beneficiary of the prime contract, entitled torecover for breach thereof (see Mendel vHenry Phipps Plaza W., Inc., 6 NY3d 783, 786-787 [2006]). While claimant sufficientlyalleged the existence of valid prime contracts between Hayden-Wegman and defendant, it failedto point to anything supporting the conclusion that the contracts were intended for its benefit andthat the benefit to claimant is immediate and not merely incidental so "as to evince an intent topermit enforcement by [claimant], and the best [*3]evidence ofthis is to be found in the language of the contract[s] [themselves]" (Binghamton MasonicTemple v City of Binghamton, 213 AD2d 742, 745-746 [1995], lv denied 85 NY2d811 [1995] [citations omitted]; see Mendel v Henry Phipps Plaza W., Inc., 6 NY3d at787; Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 44-45 [1985]).Contracts, of course, are construed according to their plain meaning (see Greenfield v PhillesRecords, 98 NY2d 562, 569 [2002]; TDX Constr. Corp. v Dormitory Auth. of State ofN.Y., 306 AD2d 115, 116 [2003]), and claimant fails to identify any provision in thecontracts that contains language evincing an intent to benefit it beyond its status as an incidentalbeneficiary (see Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d at 44;Aymes v Gateway Demolition Inc.,30 AD3d 196, 196 [2006]). Moreover, the express terms of article 9 of each of the primecontracts—specifying that nothing therein "shall create or give to third parties any claim orright of action" against Hayden-Wegman or defendant—effectively negate any implicationof third-party rights to claimant (see Mendel v Henry Phipps Plaza W., Inc., 6 NY3d at786-787; Matter of Baltia Air Lines v CIBC Oppenheimer Corp., 273 AD2d 55, 56[2000], lv denied 95 NY2d 767 [2000]; Edward B. Fitzpatrick, Jr. Constr. Corp. vCounty of Suffolk, 138 AD2d 446, 449-450 [1988], lv denied and dismissed 73NY2d 807 [1988]; cf. Facilities Dev. Corp. v Miletta, 180 AD2d 97, 101 [1992])."Where a provision in the contract expressly negates enforcement by third parties, that provisionis controlling" (Edward B. Fitzpatrick, Jr. Constr. Corp. v County of Suffolk, 138 AD2dat 449-450 [citation omitted]). Thus, claimant lacks standing to bring this action.
Likewise, claimant's argument fails, as a matter of law, that it can recover against defendantunder the rubric of an implied or quasi contract for work performed under the prime contracts,given that "[t]he existence of a valid and enforceable written contract governing a particularsubject matter ordinarily precludes recovery in quasi contract for events arising out of the samesubject matter" (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987];see EBC I, Inc. v Goldman, Sachs &Co., 5 NY3d 11, 23 [2005]; Adelaide Prods., Inc. v BKN Intl. AG, 38 AD3d 221, 225-226[2007]). While claimant asserts that it is entitled to recover in quasi contract for work performedoutside of and in addition to the prime contracts, even crediting all of claimant's assertions, it hasnot identified any work out of the subject matter encompassed by the prime contracts (seeConklin v City of Saratoga Springs, 267 AD2d 841, 842 [1999]).[FN2]
Finally, claimant does not have a maintainable cause of action on the theory that the 5%retainage funds held by defendant, as statutorily required (see State Finance Law §139 [1]; § 139-f), gave rise to an equitable lien in claimant's favor. The contracts containno express or implied agreement that these funds are to fulfill any obligation to claimant, andindeed such a lien would be inconsistent with the express terms of the prime contracts that thefunds (like all payments due under the contracts) are payable to Hayden-Wegman, as part of afinal payment after certification of the audit of Hayden-Wegman's records (see Kaya v B & G Holding Co., LLC,48 AD3d 521, 522 [2008]; Thorne Real Estate v Nezelek, 100 AD2d 651, 652[1984]). Since claimant's claim and submissions in opposition to defendant's motion did "not setforth any [*4]facts or circumstances upon which an equitable lienrecovery could be ordered" (Datlof v Turetsky, 111 AD2d 364, 365 [1985]), no equitablelien was created (see Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514,520-521 [1996]).
We have reviewed claimant's remaining arguments and find none undermines the correctnessof the Court of Claims' dismissal for failure to state a cause of action.
Peters, J.P., Rose, Lahtinen and Kavanagh, JJ., concur. Ordered that the order is affirmed,without costs.
Footnote 1: While defendant asserted othergrounds for dismissal under CPLR 3211 (a), the Court of Claims' dismissal was premised solelyupon CPLR 3211 (a) (7), and defendant has not pursued on appeal any of the alternate groundsfor dismissal.
Footnote 2: Moreover, this 2004 claim forpre-1988 services would be untimely (see Matter of Witbeck, 245 AD2d 848, 849-850[1997] [six-year statute of limitations applies to causes of action in quasi contract]).