| Wildenstein v 5H&Co, Inc. |
| 2012 NY Slip Op 05702 [97 AD3d 488] |
| July 24, 2012 |
| Appellate Division, First Department |
| Jocelyne Wildenstein, Respondent, v 5H&Co, Inc., et al.,Appellants. |
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Carter, Ledyard & Milburn LLP, New York (Lawrence F. Carnevale of counsel), forrespondent.
Order, Supreme Court, New York County (Debra A. James, J.), entered on or about April 11,2011, which, insofar as appealed from as limited by the briefs, denied defendants' motion todismiss the first, sixth and eighth causes of action asserted against defendant 5H&Co, and allcauses of action asserted against defendant Alex Stojanovic in his personal capacity,unanimously modified, on the law, to the extent of dismissing the first, second, sixth and eighthcauses of action in their entirety and the fourth and ninth causes of action as against defendantStojanovic only, striking plaintiff's demand for punitive damages, and otherwise affirmed,without costs.
Plaintiff hired the corporate defendant, 5H&Co, to perform renovations to her apartment.Pursuant to a contract, defendant was to render its services based on an hourly rate and plaintiffwould reimburse it for expenses. Defendants provided an estimate as to how long it would taketo complete the project, but the project ran into serious cost and time overruns. Plaintiff claimsthat defendant Stojanovic represented himself to be an architect and held out 5H&Co, hiscompany, as qualified to perform the home improvement services plaintiff wanted. However,contrary to these representations, plaintiff claims that Stojanovic is neither a licensed architect inNew York nor a licensed New York home improvement salesperson. Plaintiff further claims thatdefendants' work was defective or incomplete and that they left her with "uninhabitable livingspace."
The complaint sets forth nine causes of action, most of which are duplicative of the seventhcause of action for breach of contract. The first cause of action, against 5H&Co, seeks adeclaratory judgment that the contract is void and unenforceable because 5H&Co violatedsection 20-387 of the Administrative Code of the City of New York that requires a contractor toobtain a home improvement license prior to entering into a home improvement contract orperforming home improvement services. The second cause of action, against defendantStojanovic, seeks a declaratory judgment declaring the contract void for violation of the sameprovision.
The third cause of action seeks to remove a mechanic's lien 5H&Co filed against theproperty. However, because defendants have removed the mechanic's lien, the court dismissedthe third cause of action and it is not at issue on this appeal.[*2]
The fourth cause of action, for fraud, alleges thatdefendants intentionally misrepresented their qualifications and undervalued the cost and time tocomplete the renovation work. Attendant to this cause of action, plaintiff seeks punitive damages,attorneys' fees and penalties. Although plaintiff asserted fraud against both defendants, theyappeal the denial of their dismissal motion as to this cause of action only to the extent plaintiffhas directed it against defendant Stojanovic.
Plaintiff asserts the fifth cause of action, for conversion, against both defendants, butdefendants appeal the denial of their dismissal motion as to this claim only to the extent plaintiffhas asserted it against Stojanovic. Plaintiff claims defendants have retained certain items thatbelong to her in an attempt to extort more money from her.
The sixth cause of action asserts that both defendants were negligent in performing homeimprovement services by, inter alia, failing to obtain the necessary permits from the Departmentof Buildings and failing to sequence work properly, resulting in damage to plaintiff's personaltyand necessitating additional work.
The seventh cause of action, for breach of contract against 5H&Co, also seeks a declaratoryjudgment that the contract is void and unenforceable. Defendants have not moved to dismiss thiscause of action.
The eighth cause of action asserts professional malpractice against both defendants. Theninth cause of action, alleging trespass, asserts trespass against both defendants for allegedlyentering into apartment 51A while plaintiff was on vacation in Spain and demolishing theapartment. The ninth cause of action seeks punitive, as well as compensatory, damages.Defendants moved to dismiss the ninth cause of action as against defendant Stojanovic only.Although there are certain claims that defendants have not moved to dismiss as against 5H&Co,they have requested us to strike every demand for punitive damages.
To support her claim for fraudulent inducement, plaintiff alleges that, to induce her to enter ahome improvement contract, Stojanovic misrepresented presently existing facts, including that hewas a licensed architect, and that he and 5H&Co were "qualified" and "licensed as architects oras home improvement contractors or salespersons." Even if defendant's misrepresentations werecollateral to the contract, defendants correctly argue that plaintiff could not have reasonablyrelied on Stojanovic's misrepresentation of possession of the requisite licenses, as thiscircumstance is easy to verify through public records (see Fariello v Checkmate Holdings, LLC, 82 AD3d 437, 437-438[2011]; Urstadt Biddle Props., Inc. vExcelsior Realty Corp., 65 AD3d 1135, 1137 [2009]).
The complaint alleges that Stojanovic also made misrepresentations to the building managerand the condominium board. Generally, however, a plaintiff cannot claim reliance onmisrepresentations a defendant made to third parties (see Briarpatch Ltd., L.P. v Frankfurt Garbus Klein & Selz, P.C., 13AD3d 296, 297 [2004], lv denied 4 NY3d 707 [2005]). Moreover, underestimatingthe cost of the job relates to a future intent to perform that is not actionable as fraud (see GoSmile, Inc. v Levine, 81 AD3d77, 81 [2010], lv dismissed 17 NY3d 782 [2011]). Accordingly, the motion courtshould have dismissed the fourth cause of action against Stojanovic.
Administrative Code of the City of New York § 20-387 (a) forbids the soliciting,canvassing, selling, performance, or obtaining of "a home improvement contract as a contractoror salesperson from an owner without a license therefor." Accordingly, "an unlicensed homeimprovement contractor cannot recover for services rendered either on the contract or in quantum[*3]meruit" (Intrepid Elec. Contr. Co., Inc. v Serure, 34 AD3d 430, 431 [2006];Matter of Metrobuild Assoc., Inc. vNahoum, 51 AD3d 555, 556 [2008], lv denied 11 NY3d 704 [2008]). However,this provision of the Administrative Code does not itself provide grounds for plaintiff to recoupfees already paid, because the law renders the contract "rescinded and generally '[t]he parties. . . should be left as they are' " (see Brite-N-Up, Inc. v Reno, 7 AD3d 656, 657 [2004] [citationomitted]).
Notwithstanding the above, plaintiff retains the right at common law to seek restitution forpayments she previously made for work that defendant failed to perform or for defective work(see O'Malley v Campione, 70AD3d 595 [2010]; Brite-N-Up, 7 AD3d at 657). As we stated in Campione,the Administrative Code "is not a bar to plaintiff's recovery of restitution for payments made"(Campione, 70 AD3d at 595). In this regard, although the causes of action at issue focuson defendants' lack of a license, read broadly, the complaint repeatedly charges defendants withdefective and incomplete work, that if true, would justify restitution.
Although plaintiff may be entitled to seek return of the fees she paid for work that wasincomplete or defective, that does not mean plaintiff can maintain those causes of action thatduplicate the seventh cause of action for breach of contract. For example, the first two causes ofaction seek declarations that the contract is void and unenforceable. The seventh cause of actionfor breach of contract seeks, not only compensatory damages, but also a declaration that thecontract is void and unenforceable. Accordingly, the first and second causes of action shouldhave been dismissed as duplicative.
The motion court also should have dismissed the cause of action for negligence. The alleged"extra-contractual" services upon which plaintiff bases her negligence claim duplicate theallegations concerning breach of contract (see Clark-Fitzpatrick, Inc. v Long Is. R.R. Co.,70 NY2d 382, 389 [1987] [citations omitted] ["(i)t is a well-established principle that a simplebreach of contract is not to be considered a tort unless a legal duty independent of the contractitself has been violated. This legal duty must spring from circumstances extraneous to, and notconstituting elements of, the contract, although it may be connected with and dependent upon thecontract"]). Even the alleged damages are identical in both causes of action, seeking"compensatory damages in an amount to be proven at trial, but not less than $1,333,962."
The ninth cause of action for trespass repeats the same allegations that form the basis ofplaintiff's claim for breach of contract. And, again, seeks the same damages. Accordingly, thecause of action for trespass is duplicative and the motion court should have dismissed it.However, as defendants have not moved to dismiss this claim as to defendant 5H&Co, wedismiss only as to defendant Stojanovic.
Defendants appeal the denial of the dismissal of the fifth cause of action for conversion onlyas against defendant Stojanovic. Although it appears from the record that defendants havereturned plaintiff's personal property, defendants do not rely on that fact in their briefs. Rather,the only argument defendants make on appeal is that Stojanovic cannot be personally liable foracts that are not independent torts. However, taking plaintiff's personal property "in order toextort from Plaintiff the money [they] claim[ ] she owes them" as the complaint alleges, is anindependent tort (cf. I.C.C. Metals v Municipal Warehouse Co., 50 NY2d 657, 663[1980] [if plaintiff were to be successful in proving conversion, defendant would not be entitledto limitation of liability provision in warehouse receipt]). This is because these allegations setforth a wrong separate and distinct from the breach of contract claim. Accordingly, we cannotdismiss this cause of action.[*4]
As the complaint does not allege that defendantscommitted architectural malpractice or that they engaged in the unauthorized practice ofarchitecture, plaintiff's eighth cause of action for professional malpractice is not viable (seeChase Scientific Research v NIA Group, 96 NY2d 20, 29 [2001]).
Finally, plaintiff's demand for punitive damages should have been stricken for failure toplead "a pattern [of conduct] directed at the public generally" (see New York Univ. vContinental Ins. Co., 87 NY2d 308, 316 [1995]). Concur—Tom, J.P., Andrias,Catterson, Moskowitz and Román, JJ.