| Horwitz v Camelot Assoc. Corp. |
| 2009 NY Slip Op 07724 [66 AD3d 1299] |
| October 29, 2009 |
| Appellate Division, Third Department |
| Marc Horwitz et al., Respondents, v Camelot AssociatesCorporation, Defendant and Third-Party Plaintiff-Appellant. Boswell Engineering New York,P.C., Third-Party Defendant-Appellant, et al., Third-Party Defendant. (And a Fourth-PartyAction.) |
—[*1] Hiscock & Barclay, L.L.P., Albany (Linda J. Clark of counsel), for third-partydefendant-appellant. David A. Harper, Saratoga Springs, for respondents.
Lahtinen, J. Appeals (1) from an order of the Supreme Court (Ferradino, J.), entered October8, 2008 in Saratoga County, which granted plaintiffs' motion for partial summary judgment, and(2) from an order of said court, entered October 20, 2008 in Saratoga County, which partiallygranted plaintiffs' motion for leave to serve an amended complaint.
Plaintiffs entered into a contract to purchase a lot and new house to be constructed thereonby defendant in an area being developed by defendant in the Town of Wilton, Saratoga County.Shortly after the closing in August 2003, plaintiffs allegedly discovered significant problemswith the house, including a constant flow of water in the basement, erosion under one footing,mold and fungal growth and infestation by fungal gnats. Although the engineeringfirm—third-party defendant Boswell Engineering New York, P.C.—used bydefendant had determined that the seasonal high groundwater table elevation (hereinafter SHGE)was 320 feet, experts hired by plaintiffs after the water problems developed stated that thebasement floor, which had been constructed at an elevation of 326 feet, was below the actualSHGE of 326.86 feet. A provision of the Town of Wilton code required any basement to be aminimum of three feet above the SHGE.
Plaintiffs sent a notice of warranty claim to defendant and, when defendant failed to addressthe problems with the house, plaintiffs commenced this action alleging breach of the new houselimited warranty provided when they purchased the house (see General Business Law§ 777-b [3]). Defendant commenced a third-party action against, among others, Boswell.After discovery, plaintiffs moved for partial summary judgment on the liability aspect of thebreach of warranty claim, which Supreme Court granted. Plaintiffs also moved for permission toserve an amended complaint adding a cause of action for gross negligence and a demand forpunitive damages. Supreme Court permitted the additional cause of action, but not the demandfor punitive damages. Defendant and Boswell appeal.[FN1]
We consider first defendant's contention that Supreme Court erred in granting partialsummary judgment. New home sales are covered by a housing merchant implied warranty(see General Business Law § 777-a) and that warranty may, as here, be supplantedby a limited warranty that meets or exceeds the standards set forth in General Business Law§ 777-b (see General Business Law § 777-b [3]; Latiuk v Faber Constr.Co., 269 AD2d 820, 820 [2000]). The limited warranty cannot exclude construction which"does not meet or exceed a relevant specific standard of the applicable building code, or in theabsence of such relevant specific standard a locally accepted building practice" (GeneralBusiness Law § 777-b [4] [e] [i]) or construction which "fails to ensure that the home ishabitable" (General Business Law § 777-b [4] [e] [ii]). In the procedural context of amotion for partial summary judgment, plaintiffs had the threshold burden of establishing abreach of the limited warranty and, if they did so, the burden then shifted to defendant to raise atriable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562[1980]).
Proof in support of plaintiffs' motion included an affidavit from plaintiff Marc Horwitzexplaining that a significant water problem, which had not been apparent before the closing,developed in the basement within one month of when plaintiffs moved into the house. Thisincluded a constant flow of water together with accompanying mold and fungal growth. [*2]Plaintiffs eventually vacated the house because of health concerns.Photographs depicting those conditions were submitted to Supreme Court. Affidavits were alsosubmitted from several experts explaining that the basement floor had been constructed belowSHGE, and this was characterized as a material defect in the construction of the house. Althoughthere ostensibly is not a specific standard regarding SHGE in the state building code, there was arelevant specific local standard. A further material defect related to the water problem included areported footing failure that was compromising the house's foundation. Plaintiffs' proof wassufficient to shift the burden to defendant.
In opposition to the motion, defendant's expert opined that defendant acted reasonably sincedefendant did not determine the SHGE or do the excavating, but instead relied upon anindependent engineer to provide it with the SHGE and relied upon an independent excavator todig the area for the basement. The expert further noted that the building inspector for the Townof Wilton inspected and approved the pertinent work and, subsequently, a certificate ofoccupancy was issued. While establishing reliance upon independent professionals may behelpful in defendant's third-party action, it does not provide a defense to its obligation under thehome warranty. Indeed, the warranty acknowledges that major defects include, among otherthings, those resulting from defective work by an agent or subcontractor and those resulting fromdefective design by professionals engaged by defendant (cf. General Business Law§ 777-a [2] [a]). Upon review of the record, we are unpersuaded that Supreme Court erredin granting partial summary judgment.
We find merit, however, in defendant's argument that plaintiffs' motion to amend theircomplaint to add a cause of action for gross negligence should not have been granted. Initially, itmerits mentioning that making a motion to amend the complaint to add a cause of action at atime when a motion for summary judgment on the original complaint is pending creates apotentially significant procedural problem where, as here, both motions are granted in closetemporal proximity[FN2](see Greene v Hayes, 30 AD3d808, 810 [2006]; State Univ. Constr. Fund v Aetna Cas. & Sur. Co., 169 AD2d 52,54-55 [1991]; Schoenborn v Kinderhill Corp., 98 AD2d 831, 832 [1983]). Moreover,while leave to amend is freely given (see Trupia v Lake George Cent. School Dist., 62 AD3d 67, 68[2009]; Ferran v Williams, 281 AD2d 819, 821 [2001], lv dismissed 97 NY2d653 [2001]), gross negligence requires "a reckless disregard for the rights of others, bordering onintentional wrongdoing" (Haire vBonelli, 57 AD3d 1354, 1358 [2008]). In our opinion, the alleged conduct did not meetthat high standard.
Cardona, P.J., Peters, Malone Jr. and Stein, JJ., concur. Ordered that the order enteredOctober 8, 2008 is affirmed, without costs. Ordered that the order entered October 20, 2008 ismodified, on the law, without costs, by reversing so much thereof as partially granted plaintiffs'motion for leave to amend their complaint; motion denied in its entirety; and, as so modified,affirmed.
Footnote 1: Boswell submitted a letterstating that in its appeal it is relying on the arguments of defendant.
Footnote 2: The notice of motion for partialsummary judgment was dated April 3, 2008 and the notice of motion to amend was dated April22, 2008. The decision and order in the motion to amend was rendered first, dated September 26,2008, and the decision and order in the summary judgment motion was dated October 3, 2008.However, the later decision and order was entered first, on October 8, 2008, followed by thedecision and order on the motion to amend being entered on October 20, 2008.