| International Exterior Fabricators, LLC v Decoplast,Inc. |
| 2015 NY Slip Op 04451 [128 AD3d 1016] |
| May 27, 2015 |
| Appellate Division, Second Department |
[*1]
| International Exterior Fabricators, LLC,Appellant-Respondent, v Decoplast, Inc., et al., Respondents-Appellants, andEast Coast Wall, Ltd., Respondent, et al., Defendants. |
Forchelli, Curto, Deegan, Schwartz, Mineo, & Terrana, LLP, Uniondale, N.Y.(Peter L. Agovino and David A. Loglisci of counsel), for appellant-respondent.
Schwartz Kaufman & Livoti, LLP, Garden City, N.Y. (Frank J. Livoti ofcounsel), for respondents-appellants and respondent.
In an action, inter alia, to recover damages for fraud, the plaintiff appeals from somuch of an amended judgment of the Supreme Court, Nassau County (DeStefano, J.),dated July 3, 2013, as, upon, inter alia, the granting of that branch of the motion of thedefendant East Coast Wall, Ltd., which was pursuant to CPLR 4401 for judgment as amatter of law dismissing the cause of action to recover damages for fraud insofar asasserted against it, made at the close of the plaintiff's case, and a decision of the samecourt (Warshawsky, J.), dated October 25, 2011, made after a nonjury trial, is in favor ofthe defendant East Coast Wall, Ltd., and against it dismissing the complaint insofar asasserted against that defendant and awarding that defendant the principal sum of$114,795 on its counterclaim to recover damages for breach of contract, and thedefendants Decoplast Inc., Frank DiStefano, and Danielle Destadio cross-appeal from somuch of the same judgment as is in favor of the plaintiff and against them jointly andseverally in the principal sum of $744,045.57.
Ordered that the amended judgment is modified, on the law, by deleting theprovisions thereof dismissing the cause of action alleging fraud insofar as assertedagainst the defendant East Coast Wall, Ltd., and awarding that defendant the principalsum of $114,795 on its counterclaim to recover damages for breach of contract; as somodified, the judgment is affirmed insofar as appealed and cross-appealed from, withcosts to the plaintiff payable by the defendants Decoplast, Inc., Frank DiStefano,Danielle A. DeStadio, and East Coast Wall, Ltd., that branch of the motion of thedefendant East Coast Wall, Ltd., which was pursuant to CPLR 4401 for judgment as amatter of law dismissing the cause of action to recover damages for fraud insofar asasserted against it is denied, that cause of action is reinstated against that defendant, andthe matter is remitted to the Supreme Court, Nassau County, for a new trial on the causeof action to recover damages for fraud insofar as asserted against the defendant EastCoast Wall, Ltd., and on that defendant's counterclaim to recover damages for breach ofcontract, and for the entry of an appropriate second amended judgment thereafter.
The plaintiff, a contractor, commenced this action alleging, among other things, that[*2]the defendant Decoplast, Inc. (hereinafter Decoplast),a manufacturer of exterior coatings, the defendant East Coast Wall, Ltd. (hereinafter EastCoast), a contracting company specialized in the installation of exterior finishingsystems, and the individual defendants fraudulently induced it to purchase and use plasterthat was defective and unsuitable for its intended use. The matter proceeded to a nonjurytrial and, at the close of the plaintiff's case, East Coast moved, inter alia, pursuant toCPLR 4401 for judgment as a matter of law dismissing the cause of action to recoverdamages for fraud insofar as asserted against it. The Supreme Court granted that branchof East Coast's motion.
After the trial on the remaining causes of action and various counterclaims, theSupreme Court found that the defendants John DiStefano and Frank DiStefano, whoowned Decoplast and East Coast, and the defendant Danielle DeStadio, a sales managerfor Decoplast (hereinafter collectively the individual defendants), mademisrepresentations concerning the components of the plaster and its suitability forexterior use. Additionally, the court found that the individual defendants, whenconfronted with failures of the plaster on exterior walls, delayed the resolution of theproblem by making misrepresentations which convinced the owner of the constructionproject that East Coast should supervise the continued application of the plaster by theplaintiff. Based on those findings, the Supreme Court concluded that the individualdefendants and Decoplast committed fraud, and that the plaintiff was entitled to damagestherefor. Moreover, it directed the dismissal of the complaint insofar as asserted againstEast Coast, and found that East Coast was entitled to recover damages on itscounterclaim alleging that the plaintiff breached an agreement to pay for East Coast'ssupervision and repair work. The Supreme Court entered an amended judgment againstDecoplast and the individual defendants awarding damages to the plaintiff, dismissingthe complaint insofar as asserted against East Coast, and awarding East Coast damageson its counterclaim against the plaintiff. The plaintiff appeals, and Decoplast, FrankDiStefano, and DeStadio cross-appeal, from the amended judgment.
" 'A trial court's grant of a CPLR 4401 motion for judgment as a matter oflaw is appropriate where the trial court finds that, upon the evidence presented, there isno rational process by which the fact trier could base a finding in favor of the nonmovingparty' " (Clarke vPhillips, 112 AD3d 872, 874 [2013], quoting Szczerbiak v Pilat, 90NY2d 553, 556 [1997]). " 'In considering the motion, the trial court must affordthe party opposing the motion every inference which may be properly drawn from thefacts presented, and the facts must be considered in a light most favorable to thenonmovant' " (Clarke v Phillips, 112 AD3d at 874, quoting Miller v Bah, 74 AD3d761, 763 [2010]; seeMetropolitan Enters. NY v Khan Enter. Constr., Inc., 124 AD3d 609[2015]).
" 'The elements of a cause of action sounding in fraud are a materialmisrepresentation of an existing fact, made with knowledge of the falsity, an intent toinduce reliance thereon, justifiable reliance upon the misrepresentation, anddamages' " (McMorrowv Angelopoulos, 113 AD3d 736, 739-740 [2014], quoting Fromowitz v W. Park Assoc.,Inc., 106 AD3d 950, 951 [2013]; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12NY3d 553, 559 [2009]). "A contract induced by fraud . . . is subject torescission, rendering it unenforceable by the culpable party" (Merrill Lynch, Pierce, Fenner& Smith, Inc. v Wise Metals Group, LLC, 19 AD3d 273, 275 [2005]; see Cusack v American DefenseSys., Inc., 86 AD3d 586, 588 [2011]).
Viewing the facts presented in the light most favorable to the plaintiff, as thenonmoving party, we conclude that the plaintiff established, prima facie, that East Coast'sowners, John DiStefano and Frank DiStefano, knowingly made materialmisrepresentations of fact intended to induce reliance thereon, and that the plaintiff reliedupon the representations, sustaining damages (see generally Eurycleia Partners, LP vSeward & Kissel, LLP, 12 NY3d at 559). The plaintiff's evidence establishedthat, at a meeting held on March 19, 2008, the plaintiff's vice president proposed that theplaster supplied by Decoplast, which goes by the trade name "Pietra," should be replacedwith another product in light of problems experienced with the Pietra plaster. Inresponse, the individual defendants represented, among other things, that they and themanufacturer had used and tested the product, and that they knew that it was suitable forthe plaintiff's use, as long as it was properly applied. The plaintiff's evidencedemonstrated that the individual defendants did not possess any test results from themanufacturer, and never conducted any tests on the product [*3]themselves. As a result of the individual defendants'misrepresentations at the meeting, the plaintiff engaged East Coast to supervise itscontinued use of the Pietra product, and sustained damages when it had to remove theplaster, which continued to delaminate from the walls.
The Supreme Court should have denied that branch of East Coast's motion, made atthe close of the plaintiff's case, which was pursuant to CPLR 4401 for judgment as amatter of law dismissing the cause of action to recover damages for fraud insofar asasserted against it. Furthermore, since East Coast's counterclaim seeking payment fromthe plaintiff for its supervision and repair services is inextricably intertwined with thecause of action alleging that East Coast committed fraud, the Supreme Court should nothave awarded East Coast judgment on its counterclaim (see Cusack v AmericanDefense Sys., Inc., 86 AD3d at 588). Accordingly, it is appropriate to remit thismatter to the Supreme Court, Nassau County, for a new trial on the cause of action torecover damages for fraud insofar as asserted against East Coast, and on East Coast'scounterclaim to recover damages for breach of contract.
"In reviewing a determination rendered after a nonjury trial, the power of this Courtis as broad as that of the trial court, and this Court may render the judgment it findswarranted by the facts, taking into account that in a close case the trial court had theadvantage of seeing the witnesses and hearing the testimony" (Khan v Kaieteur Constr., Inc.,120 AD3d 770, 770 [2014]; see Northern Westchester Professional Park Assoc.v Town of Bedford, 60 NY2d 492, 499 [1983]). Here, the facts adduced at trialwarranted the Supreme Court's determination, made after the nonjury trial, that theplaintiff met its burden of establishing its cause of action alleging fraud insofar asasserted against Decoplast, Frank DiStefano, and Danielle DeStadio, and we find noreason to disturb that determination. Chambers, J.P., Dickerson, LaSalle and Barros, JJ.,concur.