| Gilpin v Oswego Bldrs., Inc. |
| 2011 NY Slip Op 06794 [87 AD3d 1396] |
| September 30, 2011 |
| Appellate Division, Fourth Department |
| Gary W. Gilpin et al., Respondents-Appellants, v Oswego Builders,Inc., et al., Appellants-Respondents. |
—[*1] Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse (Ann M. Alexander of counsel), forplaintiffs-respondents-appellants.
Appeal and cross appeal from an order of the Supreme Court, Oswego County (James W.McCarthy, J.), entered April 7, 2010. The order, among other things, denied in part the motion ofdefendants for partial summary judgment and denied the cross motion of plaintiffs for partialsummary judgment.
It is hereby ordered that the order so appealed from is unanimously modified on the law bydenying that part of defendants' motion for partial summary judgment dismissing the breach ofwarranty claim with respect to mold, denying partial summary judgment to defendants dismissingthe second cause of action, reinstating that claim with respect to mold as well as the second causeof action, and denying judgment to defendants on their counterclaim and as modified the order isaffirmed without costs in accordance with the following memorandum: Plaintiffs commencedthis action alleging that they purchased a residence in a subdivision from defendant OswegoBuilders, Inc. (Oswego Builders) and that, prior to the closing, defendants agreed to completecertain repairs, including addressing "basement moisture." On the day of the closing, plaintiffsindicated in the "final home inspection check list" that there was, inter alia, water in thebasement. According to their amended complaint, however, plaintiffs closed on the property onthe condition that "all [deficient] items would be corrected." Shortly thereafter, mold wasdiscovered in the basement of the house. When defendants refused to remedy the deficiencies inthe house, including the moisture problem in the basement, plaintiffs commenced this actionasserting causes of action for, inter alia, breach of warranty and fraudulent misrepresentation.Defendants asserted a counterclaim for plaintiffs' breach of the restrictive covenants of thesubdivision by, inter alia, operating a business out of the residence.
Defendants moved for partial summary judgment seeking to dismiss all claims againstdefendant Howard D. Olinsky, the president of Oswego Builders, as well as the claim for breachof warranty with respect to mold. Defendants contended that the "assertion of claims againstDefendant Olinsky personally is little more than an improper effort to restructure the transaction[*2]to insert [him] as an additional party to the Contract."Plaintiffs cross-moved for partial summary judgment with respect to their second cause of action,for fraudulent misrepresentation, and for dismissal of defendants' counterclaim. With respect todefendants' motion, Supreme Court denied that part with respect to Olinsky and granted that partfor partial summary judgment dismissing the breach of warranty claim with respect to mold.With respect to plaintiffs' cross motion, the court denied the cross motion in its entirety andinstead granted summary judgment in defendants' favor dismissing the second cause of action,for fraudulent misrepresentation, and in addition granted judgment to defendants on theircounterclaim.
We agree with plaintiffs on their cross appeal that the court erred in granting that part ofdefendants' motion for partial summary judgment dismissing their breach of warranty claim withrespect to mold. The " '[i]nterpretation of an unambiguous contract provision is a function for thecourt, and matters extrinsic to the agreement may not be considered when the intent of the partiescan be gleaned from the face of the instrument' " (Chimart Assoc. v Paul, 66 NY2d 570,572-573 [1986]; see generally Abramo vHealthNow N.Y., Inc., 23 AD3d 986, 987 [2005], lv denied 6 NY3d 714[2006]). In determining whether a contract is ambiguous, the court first must determine whetherthe contract "on its face is reasonably susceptible of more than one interpretation" (ChimartAssoc., 66 NY2d at 573; see St. Mary v Paul Smith's Coll. of Arts & Sciences, 247AD2d 859 [1998]). It is well settled that, "[i]f there is ambiguity in the terminology used. . . and determination of the intent of the parties depends on the credibility ofextrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsicevidence, then such determination is to be made by the jury . . . On the other hand,if the equivocality must be resolved wholly without reference to extrinsic evidence the issue is tobe determined as a question of law for the court" (Hartford Acc. & Indem. Co. vWesolowski, 33 NY2d 169, 172 [1973]).
Defendants, as the movants seeking partial summary judgment dismissing the claim forbreach of warranty with respect to mold, had the burden of establishing that their "construction of[that part of the contract] is the only construction which can fairly be placed thereon" (Nancy Rose Stormer, P.C. v County ofOneida, 66 AD3d 1449, 1450 [2009] [internal quotation marks omitted]; seeJellinick v Naples & Assoc., 296 AD2d 75, 78-79 [2002]). Here, defendants failed to meetthat burden. Pursuant to the terms of the builder's warranty, any issues with moisture in the houseprior to closing were within the builder's "control" to remedy and correct, while thewaiver of damages for mold in the warranty applies to damages caused by mold after theclosing. The warranty further provides, however, that the builder is not responsible for"any damages caused by mold" (emphasis added). Because we thus conclude that thewaiver for mold in the builder's warranty is ambiguous, extrinsic evidence is admissible toascertain the parties' intent, but defendants failed to submit any such extrinsic evidence toestablish their entitlement to judgment as a matter of law on this issue (see Camperlino v Town of Manlius Mun.Corp., 78 AD3d 1674, 1676-1677 [2010], lv dismissed 17 NY3d 734 [2011]).Indeed, defendants' submissions in support of their motion do not clarify the parties' intent withrespect to the builder's warranty concerning mold, but merely address Olinsky's individualliability. Thus, the court should have denied that part of defendants' motion with respect to moldregardless of the sufficiency of plaintiffs' opposing papers (see Winegrad v New York Univ.Med. Ctr., 64 NY2d 851, 853 [1985]), and we therefore modify the order accordingly.
We also conclude that the court erred in granting summary judgment to defendantsdismissing plaintiffs' fraudulent misrepresentation claim pursuant to CPLR 3212 (b), whichprovides that, "[i]f it shall appear that any party other than the moving party is entitled tosummary judgment, the court may grant such judgment without the necessity" of a cross motion.Here, plaintiffs cross-moved for partial summary judgment on their second cause of action, forfraudulent misrepresentation, but the court instead granted partial summary judgment todefendants dismissing that cause of action. "[A] misrepresentation of a material fact which is[*3]collateral to the contract and serves as an inducement to enterinto the contract is sufficient to sustain a cause of action sounding in fraud" (Introna v Huntington Learning Ctrs.,Inc., 78 AD3d 896, 898 [2010]). Even "[m]isrepresentations included in brochures andother materials, and not in the contract itself, may constitute the basis of a cause of actionsounding in fraud" (id. at 899; see Board of Mgrs. of Marke Gardens Condominium v240/242 Franklin Ave., LLC, 71 AD3d 935 [2010]). Plaintiffs established theirentitlement to partial summary judgment as a matter of law on their fraudulent misrepresentationcause of action, but defendants raised a triable issue of fact inasmuch as the conflicting affidavitsof plaintiffs and Olinsky raise issues of credibility that can only be resolved by a trier of fact (see Burgio v Ince, 79 AD3d 1733,1734-1735 [2010]; Harrington Group,Inc. v B/G Sales Assoc., Inc., 41 AD3d 1161, 1162 [2007]). Additionally, contrary tothe court's decision, the general language in the merger clause in the purchase offer "did notpreclude the plaintiffs' claim of fraud in the inducement or the plaintiffs' use of parol evidence toestablish their reliance upon certain representations made by the defendant[s' real estate agentand Energy Star rater]" (Lieberman vGreens at Half Hollow, LLC, 54 AD3d 908, 909 [2008]; see Miller v Icon Group LLC, 77 AD3d586, 587 [2010]). We therefore further modify the order accordingly.
Finally, the court also erred in granting judgment to defendants with respect to theircounterclaim pursuant to CPLR 3212 (b) when in fact plaintiffs had cross-moved to dismiss thecounterclaim. It is well settled that the doctrine of unclean hands may bar recovery where a partyseeking such recovery "is guilty of immoral, unconscionable conduct" (National Distillers &Chem. Corp. v Seyopp Corp., 17 NY2d 12, 15 [1966]). A party "seeking equity must doequity, i.e., he [or she] must come into court with clean hands" (Pecorella v Greater BuffaloPress, 107 AD2d 1064, 1065 [1985]). Here, the restrictive covenants provide, inter alia, that"[t]he premises shall be used exclusively for single family dwelling purposes and shall not beused or maintained as rental property." Olinsky testified at his deposition, however, that he rented4 Jordan Way, a house also subject to the restrictive covenants alleged by defendants in theircounterclaim to have been violated by plaintiffs. Olinsky therefore was also in violation of therestrictive covenants and was without "clean hands" (Pecorella, 107 AD2d at 1065; see Kaufman v Kehler, 25 AD3d765 [2006]). Thus, we additionally modify the order accordingly.
We have considered defendants' contention on their appeal, i.e., that the breach of warrantyclaim against Olinsky should be dismissed, and conclude that it is without merit.Present—Centra, J.P., Fahey, Sconiers, Green and Martoche, JJ.