Catlyn & Derzee, Inc. v Amedore Land Devs., LLC · Catlyn & Derzee, Inc. v Amedore Land Devs., LLC...

Catlyn & Derzee, Inc. v Amedore Land Devs., LLC2018 NY Slip Op 33499(U)

February 6, 2018Supreme Court, Albany CountyDocket Number: A00020/2013

Judge: David A. WeinsteinCases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New YorkState and local government sources, including the New

York State Unified Court System's eCourts Service.This opinion is uncorrected and not selected for official

publication.

FILED: ALBANY COUNTY CLERK 02/13/2018 04:07 PM INDEX NO. A00020/2013

NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 02/13/2018

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STATE OF NEW YORK SUPREME COURT ·COUNTY OF ALBANY

CATL YN & DERZEE~ INC.

Plaintiff~

-against-

AMEDORE LAND DEVELOPERS, LLC, and VAN ALLEN APARTMENTS, LLC,

Appearances:

1 Leµiery Greisler, LLC Attorneys for Petitioners By: Peter M. Damin, Esq., and

· Paul A. Levine, Esq. 50 Beaver Street, 2nd Floor A_lbany, Ne~ York 12207

O'Connell & Aronowitz, P.C. Attorneys for Defendants-By: Jeffrey A. Siegel 54 State Street, 9th Floor· Albany, New York 12207

David A. Weinstein, J.:

DefendfllltS.

DECISION AND ORDER Index No.:. A00020/2013 RJI No.: 01-13-110575

This case, which concerns a contractual dispute arising out of a residential development ~ . - . .

in the Town of North Greenbush, New York, has been the subject of three prior trial court ;'

opinions, and one decis_ion by the Appellate Division. It is before this Court once again, for a.

ruling on defendant'_s mcitiQn for leave to amend its counterclaim pursuant to CPLR 3025(b ), and

to conform the pleadings to the evidence pursuant to CPLR 3025(c).

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BACKGROUND

A. Relevant Facts and Procedural History

First, some brief bac~ground: Plaintiff Catlyn & Derzee, Inc. ("C & D") commenced this .

action by summons and complaint filed January 17, 2013. A first amended complaint named as

. defendants Amedore Land Developers, LLC ("Amedore" or "ALD") and Van Allen Apartments,

LLC ("Van Allen"). At the outset of the events at issue, C & D owned 52.97 acre~ of land in .

North Greenbush. In February 2008, defendant Amedore entered into a _contract with C & D for

the purchase of 21 acres -of that land, which set forth a plan to develop the property. The

contract was later amended by an j\greement dated May 25, 2010, which allocated

responsibilitie~ for developing and paying for the property's infrastructure .

.At the time of these agreements, the development was governed by Local ·i;,aw No'. 8 of

2007. On August 23, 2012, the North Greenbush Town Board passed Local Law No. 4 of2012,

_which is the genesis of much of the dispute between the parties. The n~w law increased the

"' number of residential units at the site and provided for additional parking and extensions of

sewer and water. C & D argued that it was entitled to compensation for the additional units, and

objected to the documentation submitted by Amedore in support of a claim to a $210,000 credit.

This litigation followed.

In the amended complaint, plaintiff pled five causes of action: (1) breach of contract for

A~edore's failure to compensate C & D for the 60 additional units it constructed; (2) breach of

contract for Amedore's assertion of the $210,000 credit without proper support; (3) declaratory

judgment that Amedore is in breach of the contract, and C &. D is relieved from further

obligations thereunder; (4) unjust enrichment by Amedore and Van Allen, "[i]n failing to pay C

& P any further compensation for the additional app~oved units or to reimburse C & D the

unjustified credit taken at closing" (Am. Comp.~ 68); and (5) breach of the duty of good faith

and fair dealing. Defendants answered the amended complaint, and counterclaimed for a

declaratory judgment, stating as follows:

"Plaintiff seeks to avoid its obligations with respect to installation of infrastructure as inore partic;ularly set forth in the Contract, as amended. Defendants seek a declaration

· that the Contract has not been breached by defendants and a declaration setting forth plaintiffs continuing obligations thereunder" (Am Ans~ 62).

The parties cross moved for partial summary judgment. On those motions, Judge

McNamara dismissed plaintiffs first cause of action for breach of contract, and denied the

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motions in afi other respects. Plaintiff appealed, and the Third DepartmeJJ.t affirmed (Catlyn &

Derzee, Inc. v Amedore Land Developers, LLC, 132 AD3d 120~, 1207 [3d Dept 2015]). In,

regard to plaintiffs third cause of action for a declaratory judgment relieving it of further

obligations under the parties' agreements, the-Appellate Division held that defendants were not

in breach of contract in regard to the pricing scheme, and the other alleged breaches did not ~ . . .

"defeat the very purpose of the parties in entering into the contract so as to justify its

termbiation'; (see id.). Since defendants had not moved against this cause of action, however, no

order was entered directing its dismissal.

The parties then renewed their suminary judgment motions with resp~ct to the fourth and

fifth causes of action before this Court, differing on the meaning of the Third Department ruling.

_ They also served cross motions on discovery: a motion by plaintiff to compel responses to its

discovery demands, and by defendants to quash certain third-party subpoenas. In a Decision and

Order dated April 7, 2017 ("Apr. 7 D&O"), I granted plaintiffs motion to compel and

defendants' motion to quash in part, granted defendants' motion for summary judgment as to

plaintiffs fourth and fifth causes o£action, and dismissed those claims. In regard to plaintiffs

third cause of action, I noted that while it had never been dismissed, the earlier decisions left "no ·

legal basis for it to remain viable" (Apr. 7 D&O at 10). Plaintiff moved to reargue, and I

adhered to my initial rulings by Decision and Order dated July_ 17, 2017. On the basis of ·

representations made by the parties at a conference before the Court, I understand that an appeal

from these orders is pending.

According to defendant's present application, a conference was conducted at the Third

Department before the Civil Appeals Settlement Program, at which plaintiff took the position

that defendants' declaratory judgment counterclaim, does not encompass a claim for money

damages. C & D reiterated this position at a court conference before me on September 7, 2017.

By its current motion defendants seek to remedy this, and add a new counterclaim for damages

against plaintiff arisi_ng out of C & P's alleged failure to meet its contractual obligations in ' -

regard to infrastructure on the site. The proposed counterclaim also includes various additional '

allegations which-p~ort to reflect the Court's prior rulings in this case.·

B. Defendants' Proposed Amendments

Appended to the motion as Exhibit A is a proposed Second Amended Answer to the

Amended Complaint with Affirmative Defenses and Counterclaims ("Proposed Second

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Amended Answer'' or "Prop Sec Am Ans"). The pleading contains a new twelfth affirmative

defense asserting that "no response is required to the First, Third, Fourth and Fifth Causes of \ .

Action in the Amended Complain(' because "they have either been dismissed or have been held , I .

not to be viable"1 (Prop Sec Am Ans~ 61). In addition, defendants propose to add a fourteenth

affirmative defense and second counterclaim for breach of contract. The essence of the new

counterclaim is that the contract required that plaintiff complete infrastructure work; defendants

made demand upon plaintiff th~t it perform certain work (the installation of "infrastructure and

roadways") (id ~~ 89-91); plaintiff "failed and refused to pay for the infrastrµcture work"

despite such demand (id~ 91);_and as a result defendant was compelled to pay for the work to . -

complete "its project and mitigate damages (id ~ 93). It seeks monetary damages for these

alleged breaches.

The contractual provision which serves as the basis of the co,unterclaim, Paragraph 2 of

the 2008 Amendment, reads as follows (in which the "Seller" is C & D and the "Purchaser" is ,

ALD):

"2) the costs of the site work shall be borne as follows:

A.) Water. i) The water main as depicted on Sheet'"OS-1" Dated 11/13/2009 by

Environmental Design, titled "Offsite Utility Plan", shall be paid for solely by Seller;

ii) · The cost of the water main from the termination of water main depicted on sheet "OS-1" to Station 3+ 25 shown on sheet "S-7" titled "Utility Plan" shall be born2 78.6% by the Purchaser and 21.4% by the Seller.

iii) Each party ~hall bear the cost of any water main from Station 3+ 25 to and through its own property.

B.) Sewer. The cost of the Pump Station and auxiliary facilities for the pump station to be constructed on the Purchaser's Property shall be borne equally by the parties. The cost of-the outflow from the Pump Station to its termination at Rock Cut Road as depicted in Sh~~t "OS-1" shall be borne equally by the parties. Each party shall be_ responsible for any other Sewer in-flow costs incurred. -

1 This aspect of the amendment seems superfluous, since the Court's rulings govern the claims regardless of whether such an affirmative defense is pied. Neither of the parties address the matter, however. In the absence of any opposition to this defense or any apparent harm in allowing it to be pied, and in light of the principle that amendments to the pleading are to be freely given absent prejudice or surprise, I will allow this aspect of the amendment.

2 The different spellings of "born" /"borne" are in the original.

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The parties agree that the Seller may devefop a plan to connect to a line coming through the Commercial Property. If such plan results in lesser costs to the parties, Seller may present such plan to Purchaser for consideration. If Purchaser agrees to said alternative path, the construction of such line shall replace the cost of the line contemplated herein from Station 3+ 25 outflowing from the Pump Station.

C.) Access Road and Storm Water Management System serving the Access Road. Except for the costs set forth above for Water and Sewer, all other costs associated with the construction of the road through the Easement granted by Niagara Mohawk Power Corporation, induding but riot limited to grading, storm water management, pavements, sidewalks, lighting and other improvements required in the Plans or by the Easement agreement shall be borne equally by the parties.

D.). Seller shall undertake the work called for in Paragraph (6),(A)(i) above (Water Line) within 90 days of being requested by Purchaser, weather permitting.

E.) The- party doing the work shall bill the other party in monthly installments. for its share of the cost, if any, and said bill shall be paid within 30 days unless objected to for reasonable cause."

Paragraph 6 provides, in relevant part: "All the representations, covenants and promises by the

Seller and Purchaser contained in the Contract shall survive the Closing contemplated hereunder

arid the delivery and recording of the deed ... " (Defendants' Affidavit in Support of Motion

["Aff in Supp"], Ex B).

Attached to and cited by the Proposed Second Amended An,swer are seve~al letters. On

September 11_, 2013, counsel for defendants wrote to C & D President and General Counsel

Edward Feinberg and one Rex Ruthman, stating: "pursuant to the agreements, the Seller is

required to undertake the work called forin Paragraph 6(A)(i) above (Water Line) within 90 ,

days of being requested by Purchaser, weather permitting" (id.). The letter indicated that it was

a request that plaintiff undertake this work, and asked that C & D meet with Van Allen to

coordinate (id.). According to the proposed amended pleading, plaintiff either did not respond to

the letter or refus~d to do the work (Prop Sec· Am Ans ~~ 86, 88, 90).

A response by Feinberg to this letter, dated September 19, 2013, is contained in

plaintiffs submission (see Feinberg Aff, Ex 1). It asked that defendants provide C & D with a

set of up-to-date plans, although it also noted tlJ.at plaintiff "rel[ies] on the claims set forth in the

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Complaint for resolution of.the legal position of the parties" (id). According to Feinberg, as set

forth in an affidavit submitted by C & D, defendants did not respond to his request for the plans

(Feinberg Affil 38). Feinberg also asserts that except for tJ:ie water line letter, defendants sent no

other letters to C & D "related to any of the other site development/ infrastructure work" (id. ,-i

41), and plaintiff received no information on costs until April 28, 2017, when Amedore turned

over cost information for work already performed as part of a discovery response (id ,-i 45).

The proposed counterclaim references and appends two additional letters: One, from·

Van Allen's attorney to counsel for C & D was sent on April 3, 2014. It.w~s materially the same

as the first, except it stated that Van Allen's previous demands had been ignored, asserted that

"the recent court decision in the pending matter [i.e., Judge McNamara's summary judgment

ruling] ... clarifies that your _clients may not repudiate their obligations" .and "demanded" that

·the work be undertaken (Prop Sec Am Ans, Ex 4). It stated that if C & D did not carry out what

it characterized as the "required Site Work," VanAllen would do so and would "hold [C & D]

and the guarantors, jointly and severally liable, for all qamages" (id). A further letter, dated

June 23, 2015, stated that plaintiff had been giveri. adequate time to act and had failed to do so,

and Van Allen would therefore "proceed in its own best interests" and hold C & D liable for

damages (id., Ex 5).3

Additionally, the proposed second counterclaim alleges that plaintiff commenced this

litigation "[i]n furtherance of its .attempt to avoid its obligations concerning the infrastructure"

(Prop Sec Am Ans ,-i,-i 79-:80). Specifically, it cites plaintiffs Third Cause of Action for the

declaratory relief as the source of this breach. .

Defendants contend that plaintiff will suffer no prejudice from the amended pleading,

since it has already received all discoyery relevant to the counterclaim (Affin Supp ,-i 40). For

the alleged breaches~ defendants seek damages "believed to exceed $500,000" (Prop Sec Am

Ans, Demand for Relief,-i c).

C. Plaintiff's Opposition to the Proposed Amendment

· In opposition to the motion, plaintiff submits a memorandum of law and Feinberg' s

affidavit, which attack the proposed amendment on numerous grounds.

3 Defendants also submit two additional letters dated June 29 and July 31, 2015 which respond to letters by plaintiff not included in the submission, and concern the latter's request that Van Allen provide it with the approved plans for the site (Prop Sec Am Ans, Ex 6).

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Most significantly, plaintiff asserts that the contractual documents make clear there is no

basis to the counterclaim. In support of this argument, C & D points to the requirement in

paragraph 2(E) of the 2010 Amendment that the party performing the work bill the other party

for its costs on a monthly basis.4

Plaintiff contends that the only work specifically assigned to it was construction of the

water line upon notice, and "if Plaintiff did not undertake construction, Defendant could proceed

. in its place" (Pl Mem of Law at 5). In short, it reads the contract as stating that plaintiff had the

right to install the water main, but was not re.quired to do so (Feinberg Aff ii 21). Thus, C & D's

failure to undertake such work did not damage defendants, but merely waived plaintiffs right to

proceed (Pl Mem of Law at 6). Moreover, Feinberg maintains that defendants never billed

plaintiff for any work it carried out, and thus there was nothing for C & D to pay (see id ii 44; Pl

Mem of Law at 13). Put otherwise, plaintiff asserts that the sending of bills is an "express

condition precedent'~ to C & D making payment, ·and defendants; failure to comply with that

condition relieved plaintiff of any contractual obligation it had to pay for the infrastructure (Pl

Mem of Law at 10-11 ). In sum, plaintiff argues that the proposed amendment is meritless,

beeause "neither the Contract nor the Amendment created any duty on the part of Plaintiff to

con§truct arty fac~lities referred to in the contract"; instead, both parties had the right to·

iindertake the work and bill for the other's share of the costs, and no such bills were ever sent

(Feinberg Affil 68; Pl Mem of Law at 5).

Feinberg avers that, following closing, there was no contact between the parties "for

years." Specifically, he maintains that defendants did not communicate with plaintiff regarding

the Contract or site revisions, or the effect of such on the project initially approved (id ii 30).

Instead, in alleged violation of the contract, defendants proceeded without notice to or the

participation of C & D, on the basis of a different set of plans and obligations than those referred

to in the Contract (id ii 32).

Plaintiff also argues that defendants cannot sho~. damages from the alleged breaches as a

result of a series of maneuvers through which they are alleged to have surrendered their .

contractual rights. In 2010, Amedore assigned its claims in the C & D contract to V'an Allen

4Plaintiff also cites Paragraph I 4(b )( 4) of the original contract, which states: "Seller agrees that the costs to be borne

by the hotel are·a, as set forth above, shall be either (A) timely paid by Sellers or its [sic] successors, transferees and /or assigns or (B) shall be a credit against the purchase price.

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(see.Feinberg Aff, Ex 8). Then, on July 15, 2015, Van Allen conveyed the premis~s to North

Greenbush Apartment Partners, LLC5 ("North Greenbush" or NGAP) (ilf. if 49, Ex 8). NGAP

subsequently contracted with Trinity Construction, Inc. to construct the premises and

infrastructure (id.~ 71). A copy oftQ.at contract is appended to the opposition papers, listing

NGAP as the owner of the .property (id., Ex 2). Given the foregoing, plaintiff contends that the

work at issue was paid for and carried out by parties not in privity with plaintiff (NGAP and

Trinity), and defendants therefore have no right to recover damages for such work (Feinberg Aff

ir 72).

C & D also argues that defendants' proposed counterclaim reflects improper "claim

splitting" between this case and a separate action Amedore commenced against Feinberg and

Ruthman on June 21, 2017. Plaintiff submits a copy of the complaint from that case, in which

ALD seeks to recover damages against these individuals for the infrastructure work at issue here,·

in their capacity as guarantors of the Contract (id., Ex 3). That lawsuit alleges, like the proposed

counterclaim here, that the guarantors are liable in damages for C & D's failure to either perform

the infrastructure work provided for by the contract or to pay for Amedore'.s performance (id. if 21). Plaintiff argues that this action. provides grounds for denying the amendment, since

"Defendants cannot recover the same damages twice" (id. if 86).

In general, plaintiff contends that allowing defendants to proceed on the counterclaim for .

damages would be unfair, since they have failed to share information with C & D, including cost

information which would have enabled C & D to secure costs savings; and they gained approval ~

of Local Law No. 4 through.use ofplai):ltiffs intellectual property (id. if 90). Also, plaintiff

asserts that because the ·contract specifically references costs expended pursuant to Local Law

No. 8, there can' be no recovery for Amedore, since all the work at issue was carried out pursuant

to Local Law No. 4 (see Pl.Mem of Law at 8). Plaintiff makes a host of other arguments which

generally seek to portray the transaction.at issue as unfair, and defendants' conduct as improper.

Here are a few examples:

• "Defendants engaged in a systematic pattern of disloyalty and faithlessness in performing their ~ontract duties both as agent and when acting under authority of Plaintiffs development rights" (id. at 17). ·

~In 2017, Van,Allen apparently assigQed any claims against Feinberg and Ruthman back to Amedore (see Affin Opp, Ex 8). .

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• "Amedore owed the duty to-act in good faith under the contract, and because of the inherent conflict it undertook with its roles of agent and purchaser ... the higher duty to act uberrima fides in the matter of incurring and accounting for all expenses" (id at 21);

• "There is no way to know how many other examples of self-dealing, withholding and faithlessness Defendants engaged in" (id at 24).

For the most part, none of these general broadsides have anything to do with the standard

for amending a pleading, although plaintiff tries to connect the dots between what it deems to be . '

defendant's prejudicial conduct in the transaction and the prejudice to itfrom the proposed

amendment (see e.g. id at 22 [defenqants' "pattern of non-cooperation and concealment of . .

expense records .and tran&actions ... constitute[] a fundamental prejudice to.the interests .of

plaintiff.in the Contract and in-the present legal proceedings"]). As detailed below, plaintiff

makes some more specific arguments as to prejudice, in particular that the delay has deprived it

of evidence relevant to the costs of the infrastructure except that which can be obt~ined directly

from defendants (see Pl Mem of Law at 24-25). Finally, plaintiff contends that because of the

delay in defendants seeking the proposed amendment, it should be denied under the doctrine of

!aches (Feinberg Affif 90).

D. Defendants' R,eply

In a reply submi~sion, defendants make several rejoinders to these arg~ents. For one

thing, they conten.d that they properly notified C & D that it should undertake the infrastructure

work at issue. As support for this claim, they provide a copy of another)etter from Amedore to

C & D dated !vfay 23, 2012, prior to enactment of Local Law No. 4. Itstates that Amedore

"hereby requests that you ... commence your scope of work for offsite utility work, in . . ~

accordance with the First Amendment to Contract, dated February 15, 2008" (Reply Aff, Ex A6).

The letter also asked plaintiff to meet with them to discuss and qoordinate the offsite Work, as

well as "onsite shared utility work" (id).

In regard t<;> the sale of the property to North Greenbush, defendants provide the affidavit

of Ge.orge Amedore, Sr., a member of both ALD and Van Allen.· He confi!ffis that on or about

July 30, 2015~ Van Allen conveyed the property at issue to NGAP, a company in.which Van

Allen owns a 50% interest (Amedore Affif 3-4). He states that :A.LD nevertheless is entitled to

6 Exhibit A is a compendium of all of the letters discussed below.

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damages for the alleged breach of contract because it "funded the cost of the infrastructure wor~ -

for which defendants seek reimbursement" (id ~ 6).

Finally, defendants submit the deposition testimony of Gavin Vuillaume, the engineer in

charge of the project; by which they seek to show that the infrastructure at issue was not affected

by the amendment to the Local Law. For example, he attests that the roads being developed are

those approved before the amendment to the Local Law, and the location of the water and sewer

lines were not changed post-Local Law No. 4 (see Reply Aff, Ex B at 59-66).

DISCUSSION ' ' '

I. Standard of .Review

A motion for leave to amend a pleading should be freely granted in the absence of

prejudice or surprise to the opposing party, unless the proposed amendment is "palpably

insufficient" or "patently.devoid of merit" (Ferguson v Hart, 151AD3d1242, 1243 [3d Dept

2017]). Moreover, leave to amend will be granted when the proposed amendment "only changes

the theory of liability without adding any new facts to those pleaded in the original complaint"

(Carco, Inc. v Beltrone Const. Co., 183 AD2d 9~4, 985 [3d Dept 1992], or fleshes out the case

with additional factual averments (see Woodbrook Houses v Hercoform Mktg., 129 AD2d 1001, ·

1001-1002 [4th Dept 1987] [permitting amendment to complaint where party seeks "only to

specify with greater particularity the ,items of damage resulting from the alleged breach of

contract" and "defendants have alwa)rs been on notice of the underlying claim"]).

While plaintiff contends that the movant must set forth a "sufficient evidentiary

showing" in support of the proposed amendment (see Pl Mem of Law at l)~that is not so. There

is indeed caselaw setting forth such a requirement (see e.g. Cowsert v Macy's E., Inc., 74 AD3d

1444, 1445 [3d Dept 2010]), but the Third Department recently joined the other three -

Departments in overturning its prior decisions stating such a rule, and making clear instead that . . ( .

"[n]o evidentiary showing of_merit is required under CPLR 3025 (b)" (NYAHSA Servs., Inc., ' .

Self-Ins. Trust v. People Care Inc., ·156 AD3d 99, 102 [3d Dept 2017]). Rather, "[i]fthe

opposing party [on a motion to amend] wishes to test the merits of the proposed added cause of

_action or defense, that party may later move for summary judgment [or to dismiss] upon a proper

· showing" (id [citation omitted]).

That said, a breach of contract claim cannot be adequately pled on the basis of conclusory

allegations of damages (see Gawrych v Astoria Fed Sav. & Loan, 148 AD3d 681, 684 [2d Dept·

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2017] [trial court "should have granted dismissal pursuant to CPLR 321 l(a)(7) of so much of the

breach of contract cause of action as is predicated on these alleged breaches of the defendant's

contractual obligations, since the complaint only contains conclusory allegations of damages

resulting from the alleged breaches"]; Gordon v Dino De Laurentiis Corp., 141AD2d435, 436

[1st Dept 1988] [dismissing breach of contract cause of action on pleadings since it "contains

only boilerplate allegations of damage"; finding that "[i]n the absence of any allegations of fact

showing damage, mere allegations of breach of contract are not sufficient to sustain a complaint,

·and the.pleadings must setforth facts.showing the damage upon which the action is based"]); see

also Krouner v Travis, 290 AD2d 917, 918 [3d Dept-2002] [conclusory allegations of breach of

contract do not meet CPLR 3025 standard]).

In particular, the pleading must set forth the specific contractual provisions breached (see

Darby Group Cos., Inc. v Wulforst Acquisition, LLC, 130 AD3d 866, 867 [2d Dept 2015]). . /

Further, in assessing the sufficiency of a.breach of contract ·cause of action, i~ ~s appropriate for

the Court to consider the actual contractual language, since a breach of contract claim may be

dismissed on the pleadings if "the contract itself precludes the claim" (Plaza PH2001 LLC v

Plaza Residential Owner LP, 98 AD3d 89, 100 [1st Dept 2012]; see also Smith-Hoy v AMC

Prop. Ev_aluations, Inc., 52 AD3d 809, 810-811 [2d Dept 2008] [denying motion for l~ave to

amend where clear clause in contract limited damages claim]; Corman v LaFountain, 38 AD3d

706, 707 [2d Dept 2007] [denying leave to amend to add breach of contract claim against

particular defendant where agreement was "clear and complete on its face," and made clear that . .

"no valid contract cause of action" existed against that defendant]; West Branch Realty Corp. v I

Exchange Ins~ Co., 260 AD2d 473, 474 [2d Dept 1999] [denying leave to ame:nd when cause of

action barred by "terms of written insurance policy"]). Moreover, in this case the counterclaim

specifically incorporates the terms of the contract by reference, and thus the question of whether . .

the cause of action is consistent with those terms is encompassed by the pleadings themselves

(see Manchester Equip. Co. v Panasonic Indus. Co., 141AD2d616, 617 [2d Dept 1988], Iv

denied 73 N_Y2d 703 [1988] [dismissing breach of contract claim on the pleadings when it was

"_completely undermined and rendered legally insufficient by the very terms of the contract

which was appended to the complaint and incorporated by reference into the complaint."]).

With these principles in mind, I proceed to address the arguments against the amendment

made by plaintiff.

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II. Plaintiff's Arguments Against the Proposed Amendments /

As an initial matter, one aspect of the proposed amendment is clearly without merit.

· Defendants allege that plaintiff breached the contract by the commencement of this action, and

specifically by interposing its third cause of action for a declaratory judgment that "defendants

were in material breach of the contract," and it was therefore "relieved, excused, and/or

discharged from any further obligations or performance" under the Amended Contract (Prop Sec

Am Ans iii! 80-82). This cannot be the basis for a breach of contract claim. A declaratory

judgment action "does not constitute an anticipatory breach ... because a declaratory judgment

action merely seeks to define the rights and obligations of the parties" (Princes Point LLC v

Muss Dev. L.L.C., 30 NY3d 127, 133-134 [2017] [citations and internal quotation marks

omitted]). C & l)' s third cause of action did nothing more than this, and any breach of contract

claim based on this allegation would be meritless on its face.

Plaintiffs remaini~g arguments, however, do not present a basis for denying the motion

as to any other aspect of the proposed amendment. As noted above, much of plaintiffs

submission on this motion consists of an attack on the conduct of defendants during the course

of the parties' contractual relationship, including broad allegations of bad faith, lack of

disclosure and breach of fiduciary duty. In particular, it argues at length that defendants have

repudiated the contract they now seek to enforce, noting that this argument was "laid out" in its

-third cause of action (see Pl Mem of Law at 27). But the Third Department has rejected

plaintiffs contention that it is "entitled to a declaration that it was relieved of al_l o~tstanding

obligations under the contract" based on defendants' alleged wrongdoing (Catlyn & Derzee, 132

AD3d at 1206), and I specifically found that this ruling leaves "no legal basis'\for this claim (see . , . . I

supra p 3). Why plaintiff continues to reassert this 3!gument here as a basis for opposing the

proposed amendment-without noting that it has already been rejected in prior opinions -is a

mystery.7 'n goes without saying that itdoes not provide a ground for denying plaintiffs motion.

Plaintiff also argues that the proposed counterclaim is defective because breach of

contract is either insufficiently pled or at odds with the factual record. First, it argues that since -

7 In noting that its efforts to be relieved of its obligations under the Contract are "set forth as the third caus-e of action," plaintiff expresses regret that this issu; was not "resolved sooner," but suggests it could be resolved on this motion (see Pl Mem of Law at 33). But the issue has been conclusively resolved, just riot in the manner plaintiff would like. ·

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Van Allen has transferred the property where the development is being constructed, neither of . '

the present defendants contracted for performance of the work at issue. Moreover~ the entity that

did contract for that work (NGAP) is not a party to this litigation or the contracts wh_ich set forth

plaintiffs responsibilities. Defendants do not deny the facts set forth by C & D, but rather assert ·

via the Amedore affidavit that "ALD actually funded the work for which defendants seek

reimbursement" (Amedore Aff~ 6).

· This argument requires an evidentiary inquiry inappropriate for consideration. on a

. motion to amend. The role ofNGAP is not apparent from the face or'the pleading, nor is the

extent and m~er in which ALD bore the infrastructure expenses, or whether it pid so under any

legal obligation. These· matters are appropriate fodder for summary judgment or trial, not for a . .

determination as to whether the amended pleading is palpably insufficient (see Thompson v

Cooper, 24 AD3d 203, 206 [ls~ Dept 2005] [standard for granting leave to amend "much less

·exacting than on a motion for summary judgment"]).

· Plaintiffs argument that the amendment is precluded by defendants' non-compliance

with the contractual provision for monthly billing presents a thornier question.

The language of the contract cited in the proposed counterclaim states explicitly that "the

party doing the work shall bill the other party in monthly installments for its share of the cost .. ~

and said bill shall be paid within ~O days unless objected to for reasonable cause" (Prop Sec Am

Ans~ 75). C & D argues that the breach of contract claim is devoid of merit, because Van Allen

never alleges that it billed plaintiff for the work performed in accordance with Contract

Amendment ~ 2(E) (Pl Mem of Law at 11 ).

In its response, defendants do not assert that billings have, in fact, been sent. Instead,

they point to plaintiffs failure to perform under the contract following demand, specifically in

relation to the construction of the water line (Reply Aff~ 24). In addition, they argue that

plaintiff has misconstrued the billing provision, arguing as follows: 8

8 Defendants also argue that because plaintiff breached the contract in not carrying out the water line work, it "cannot use the agreements it breached first as a defense" (id.). Even assuming that the alleged breach by plaintiff could be deemed "so substantial that it defeats the object of the parties in making the contract" so as to excuse defendants' performance (see Catlyn & Derzee, 132 AD3d at 1206), it is not clear how this helps defendants. They are the parties who in the proposed counterclaim are trying to enforce the contract, and the issue therefore is not plaintiffs rights th~reunder, but whether plaintiff's obligations are subject to conditions precedent. I can find no legal principle under which a breach by a party to a contract allows the cbunterparty to rewrite the agreement so as to remove any conditions to which its own enforcement rights are subject.

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"[S]ubmission of periodic billing was not a condition precedent to plaintiffs obligation to contribute to shared costs. All the Amended Contract states is that "[t]he_party doing · the work shall bill the other party in monthly installments for its share of the cost; if any, and said bill shall be paid within thirty days unless objected to for reasonable cause." It does not say what happens ifthere is an objeCtion, reasonable or otherwise, or how an ·objection is resolved. Whether or not defendants sent monthly invoices while the work

· was done has no effect on defendants' entitlement to payment or plaintiffs right to make . reasonable objections to the invoices it now has received. Moreover, it is the sharing of the cost of the work, not the frequency of the invoices, that is material. For plaintiff to claim it is excused from contributing over $500,000 to infrastructure costs based solely on the timing of invoice - and after plaintiff failed to perform any of its infrastructure obligation - it not a position worthy oJ consideration" (Reply Aff~ 25).

Defendants' argument faces a number of problems. While they demanded broadly that

plaintiffperforrri work beyond that of the water line (see DefLtr'of June 23,-2015 in Prop Sec

Am Ans, Ex 5 [demanding that plaintiff "complete installation of infrastructure and roadways"]),

there is no contractual provision cited in the Proposed Second Amended Answer which

authorizes defendants to require plaintiff to carry out infrastructure work beyond the water main.

Nor is it apparent how plaintiff could be in breach for failing to pay i~s share of any specifically

allocated costs, if plaintiff is correct that it ha~ never been billed for them (see John J. Kassner &

Co. v City of New York, 46 NY2d 544, 550 [1979] ['as a general rule, when the right to final

payment is subject to a condition, the obligation to pay arises ... only when the condition has . . been fulfilJed"]). The proposed claim does not seek a declaration of rights, but damages for

plaintiffs failure to hold up its end of the bargain. If the bargain is that plaintiff will pay the

share of the cost for which it is properly and reaso.nably billed, and no bill has been sent, then

there has been no breach and no damage. Whatever hypothetical difficulties might arise from

the assertion, of an objection or an untimely bill does not alter this conclusion.

Nevertheless, I find the proposed amendment is not palpably insufficient, for two

reasons.

First, the question of whether or when billings were sent is a evidentiary matter which

cannot be decided on the face of the proposed pleading or documents which it incorporates by

reference.

Pl,aintiff argues that timely billing is a "condition precedent" to payment (see id.; Pl Mem

of Law at 10-1 I), that is, an act or event "which must occur before a part)r is obliged to perform

a promise made pursuant to an existing contract" (Oppenheimer & Co. v Oppenheim, Appel,

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Dixon & Co., 86 NY2d 685, 690 [1995]). But even if this characterization is 1accurate, it is not a

viable attack on the pleading itself. New Yark law is explicit that to state a breach of contract . .

cause of action, "[t]he performance or occurrence -of a condition precedent in a contract need not \

be pleaded" (see CPLR 3015 [a]). As I am restricted in deciding this motion to the face of the

pleading, I cannot deny th~ motion based on fill issue not addressed within the four comers of the

proposed counterclaim: whether defendants billed plaintiff for infrastructure work.

Second, one basis for t4e proposed amendment - the alleged failure .of C & D to perform

work on the water line following· demand- sets forth a colorable basis for a brea~h of contract

claim at this stage of the proceedings, even if I could find on the present record that no bills have

been s.ent. Notably, the term of the Contract Amendment regarding the water line work (Section

2.D) is different from those allocating responsibility to C & D for a share of the costs of the

wat~r line and for other projects. While the other relevant provisions divvy up the parties' share

of th_e expenses, this term imposes a specific task upon plaintiff. The crux of the counterclaim in

this regard is not that. defendants were damaged from plaintiffs failure to pay a sum owed, but

·that plaintiff harmed defendants in that the latter had to carry out work that C & D was

contractually obliged to perform.

. On the face of the proposed pleading, and the contractual documents incorporated

therein, defendants have sufficiently alleged this breach and damage for pleading purposes to

support a breach of contract cause of action (see generally Clearmont Prop., LLC v Eisner, 58 . .

AD3d 1052, 1055 [3d Dept 2009] [ artictil~ting the elements of a cause of act~on for breach of

contract]). Moreover, it'is unclear from the face of the contract whether the billing provision

.would apply 1n these circumstances;i.e., where recovery is sought not for plaintiffs stated.share

of the costs, but for damages resulting from C & D's alleged failure to meet an explicit

contractual obligation. Nor can I read the contract to say- as C & D suggests - that it had a

choice of whether to perform the water line work or not; paragraph 2(D) states that the seller

"shall'undertak~ the work" upon demand; In light of the foregoing, I cannot find the claim

meritless as a matter of law (see Berkeley Research Group, LLC v FT{ Consulting, Inc., _

AD3d _, 2018 NY Slip Op 00222, *3 [1st Dept 2018] [where there is more than one

reasonable interpretation of contractual provision, trial required on parties' intent]; Ruttenberg v

Davidge Data Sys. Corp., 215 AD2d 191, 196-197 [1st Dept 1995] [denying summary judgment ·

on breach of contract claim where contract is ambiguous as to whether particular term is a

condition precedel?-t]).

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Plaintiffs other challenges to the amendment involve issues well beyond the face of the

proposed pleading. This is true, for example, of plaintiffs argument that Local Law No. 4 and

"the permits and plans, the water and sewer system" were all created after the Contract and

Amended Contract, and therefore are not covered by the contrad (Pl Mem of Law at 9), or that

the allocation of infrastructure costs was based on the development permitted by Local Law No ..

8 (see id. at 31). Defendants contend vfa the testimony ~fVuillaume th~t the new law did not

change the substance of th~ parties' infrastructure obligations, and therefore did nothing to und.o

the prior agreement~ Whatever the merits of these contentions, they reflect evidentiary disputes

appropriate for a summary judgment motion or trial.

'Plaintiff also does not show that because of defendants' parallel action against the ) . .

contract's guarantors, the amendment reflects an improper splittfng of claims. The prohibition

against "claim-splitting" bars the initiation of separate suits on contractual provisions that are

"interrelated and constitute but separate integral parts of the whole," and therefore are part and

parcel of a "single obligation" which "requires the plaintiff to assert its entire claim in one

action" (930 Fifth. Corp. v King, 42 NY2d 886, 887 [1~77]). Typically, this occurs where a party

seeks attorneys'. fees in one action under a contract that is the basis for a separate case (see e.g.

id; Century Factors v New Plan Realty Corp., 41NY2d1040;1041 [1977]; Landmark

Properties v Olivo, 62 AD3d 959, 961 [2d Dept 2009]). I have found no authority for the

proposition that this principle prevents recovery from different parties, on different grounds - in .

one case under the contract itself, in· the other under an individual guarantee. That is particularly I

' so where the breach of contract.Claim at issue is being asserted as a counterclaim in an existing

lawsuit, and thus raising it in this action itself reflects an economy of bringing claims arising out

of the same transaction in a single litigation'. The presence of parallel suits may warrant

consolidat~on, and any award secured by defendants would, of course, be subject to the bar

against double recovery. But neither of those principles render the counterclaim here meritless

at the present time, where consolidation has not be~n sought, and no recovery has been had in

either action.

HI. . Prejudice and Laches

C & D's arguments that I should reject the proposed amendment because the motion will

cause it prejudice, or because it was filed long after the contract dispute arose and is barred by

the doctrine of !aches, are similarly unavailing.

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Prejudice requires "some indication that the [other party] has been hindered jn the

preparation of [its] case or has been prevented from taking some measure in support of his

position"_(see Kocourek v Booz Allen Hamilton Inc., 85 AD3d-502, 504 [1st Dept 2011]

[citations and internal quotation marks omitted]). The nub of plaintiffs prejudice argument is

set f~rth in its memorandum of law as follows: "The passag;e of up to ten years regarding some

transactions or occurrences, the faded or forgotten recollections of witnesses essential to a

meaningful review of construction and billing, matters now long past, cannot be recreated" (Pl . --

Mem of Law at 22). _ C & Dcontends in particular that as a result of such delay, it must now

obtain all, relevant information from defendants (see id. at 25).

There are tw~ problems with this argumep.t. The first is that defendants' counterclaim for __,. - -

declaratory judgment has raised the matter of plaintiffs obligati~ns to supply infrastructure

under the contract since the inception of this suit. Second, the June 2015 letter sent by Van -

Allen to C & D.derrtanding fulfillment of its obligations und_er the contract specifically placed it '

on notice that defendants would seek damages from plaintiff if i~ failed to carry out the work

demanded of it. The present amendment, then, cannot be said to be a surprise to plaintiff, nor

can plaintiff base its prejudice argument on the assertion that it could not prepare itself against

any claim of breach until now (see Thomas, 34 AD3d at 116 [granting leave to amend -after nine

years of litigation to add damages claim for breach of contract, where claim for specific

performance had already been pled]; Barnes Coy Architects, P.C. v Shamoon, 53 AD3d 466, 467

[2d Dept 2008] [granting amendment to existing breach of contract claim when amendment was -

only to add allegations and increase damages; no prejudice or surprise to defendants would

result]; Kocourek, 85 AD3d at 505 [no prejudice when party "had notice_ of the claim from the

inception and should not have to change their strategy in any significant way to defend the new

claim]; Nassau County v Incorporated Vil. of Roslyn, 182 AD2d 678, 680 [2d Dept 1992], Iv

dismissed 80 NY2d 972 [1992] [no prejudice when amendment "mere~y seeks to reflect the

current status of the defendants' indebtedness as a result of the alleged on-going breach of

contract"]). All that is left is a general assertion that evidence is more difficult to obtain with the .

passage of time, which is insufficient to defeat an application to amend a pleading (see Lanpont

v Savvas Cab Corp., Inc., 244 A.D.2d 208, 210 [1st Dept 1997] [conclusocy allegations of

prejudice insufficient basis to deny motion to amend pleading]). - · \

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In addition, plaintiff argues that defendants have engaged in a pattern of "disloyalty and

faithlessness" which imposed "undue prejudice ... upon plaintiff in attempting to secure

evidence and address the issues" in this case (Pl Mem at 17-18). In essence, C & D contends . -

that defendants have prejudiced its ability to respond to the amendment by concealing

information f~om it (id at 22). Much of this argument reiterates positions plaintiff has taken in

this litigation- some of which have already been rejected in the prior opinions of this Court and

the Third Department (see e.g. id at 18 ["There is no question d~fendants acted outside the

Contract when they secured approval of Local Law No. 4"]). In any event, as plain.tiffs ·.

memorandum of law makes clear, this argument is based on a lengthy set of factual claims,

inappropriate for resolution on the determination of whether to allow the proposed amendment. , .

Further, it is apparent from the exhibits submitted by the parties on this motion that some

of the events underlying defendants' claimed damages (such as some of the correspondence

·demanding performance of work by pl~intiff) did not occur until after the litigation commenced.

And plaintiff itself sought a declaratory judgment that it was relieved of any infrastructure

obligations because of defendants' alleged breach- and it was appropriate for defendants tb

delay amendment until that issue was resolved (see Kocourek, 85 AD3d at 505 [party entitled to

wait on amendment until motion to dismiss was decided]).

As to plaintiff's contention that defendants' delay in seeking this amendment bars it

under the doctrine of laches, that is essentially plaintiffs prejudice argument in a different form,

and_ must be denied for the reasons set forth above (see Edenwald Contr. Co. v City of New York,

60 NY2d 957, 959 [1993] [citation omitted] ["Mere lateness is not a barrier" to amencllnent of

pleading; rather "[i]t must be lateness coupled with significant prejudice to the other side, the

very elements of the laches doctrine"]; Thomas v Laustrup, 34 AD3d 1115, 1116 [3d Dept 2006]

[citations om!tted] ["Mere lateness is not a ground for denying leave to amend, unless it is . .

coupled with "significant prejudice~' to the moving party's .adversary]). Plaintiff adds one twist

to its laches claim: the assertion that it was prejudiced by defendants' delay in requesting that it

perform infrastructure wo~k for three years, from May 2010 (~hen plaintiff maintains defendants

. had all requisite permits) to September 2.013 (see PI Mem of Law at 43-45). This argument - .

presumes that defendants should have commenced the construction prior to the approval of

Local Law No. 4, which set forth the present scope of the development and did not occur until 1 August 2012. This is consistent with· plaintiffs position that the adoption of this law was

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improper and a violation of defendants' duties, but it is not.the conclusion the Courts have

reached to date, and it cannot be the factual premise on which leave to amend is denied.

In light of the foregoing, defendants' motion for leave to amend its answer is granted. . '

Defendants may file and serve the Proposed Second Amended Answer within 20 days of the date

of this Decision & Order, omitting paragraph 80.

A conference call with the parties shall take place on February 16, 2018 at 2:o'O p.m., to

, be initiated by the Court.'

This Decision & Order is being transmitted to counsel for defendants for filing, and

service on plaintiff, with such service to be effectuated by both regular mail, and certified mail,

return receipt requested. The signing of this Decision & Order shall not constitute entry or filing ' ..

under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of that Rule

. respecting filing, entry and Notice of Entry.

ENTER.

Dated: .Albany, New York 'February 6, 2018

Papers Considered:

David A. Weinstein Acting Supreme Court Justice

~-~~ '")--13 ~ 1 l '63

1. Defendant's Notice of Motion, <:lated September 14, 2017, Affidavit in Support and Exhibits annexed;

2. Plaintiffs Affirmation in Opposition, dated October 19, 2017 and Exhibits annexed; 3. Plaintiffs Memoraridum of Law in Opposition, dated October 19, 2017; 4. Defendarit's Reply Affidavit, date~ October24; 2017 and Exhibits ann_exed; and 5. Defendant's further Affidavit in Support of Motion, dated October 24, 2017 .

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Catlyn & Derzee, Inc. v Amedore Land Devs., LLC · Catlyn & Derzee, Inc. v Amedore Land Devs., LLC...

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