GymDoor Repairs, Inc. v. Astoria Gen. Contracting Corp.

144 A.D.3d 1093

43 N.Y.S.3d 381

2016 N.Y. Slip Op. 08047

GYM DOOR REPAIRS, INC., etc., plaintiff,

v.ASTORIA GENERAL CONTRACTING CORP., et al., defendants third-party plaintiffs-appellants, et al., defendants;

New York City Department of Education, et al., third-party defendants-respondents.

Supreme Court, Appellate Division, Second Department, New York.

Nov. 30, 2016.

Giaimo Associates, LLP, New York, NY (Joseph O. Giaimo and Roya Namvar of counsel), for defendants third-party plaintiffs-appellants.

Zachary W. Carter, Corporation Counsel, New York, NY (Pamela Seider Dolgow and Victoria Scalzo of counsel), for third-party defendants-respondents.

MARK C. DILLON, J.P., THOMAS A. DICKERSON, SYLVIA O. HINDS–RADIX, and JOSEPH J. MALTESE, JJ.

In an action, inter alia, to recover damages for breach of contract, the defendants third-party plaintiffs appeal from an order of the Supreme Court, Queens County (Kitzes, J.), entered July 3, 2014, which granted that branch of the third-party defendants' motion which was pursuant to CPLR 3211(a) to dismiss the third-party complaint.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the third-party defendants' motion which was pursuant to CPLR 3211(a) to dismiss the third-party cause of action alleging breach of contract, and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

Astoria General Contracting Corp. (hereinafter AGC), a general contractor, entered into three contracts with the New York City Department of Education (hereinafter the DOE) to make repairs in New York City public schools (hereinafter the subject contracts). In August 2012, the DOE conducted an investigation into AGC, during which three of AGC's alleged employees signed complaints alleging underpayment of wages in violation of Labor Law § 220. Pursuant to Labor Law § 220–b, the Office of the Comptroller of the City of New York (hereinafter the Comptroller) ordered that payment be withheld from AGC on the subject contracts pending the Comptroller's determination as to whether AGC violated Labor Law § 220. The DOE thereafter terminated the subject contracts for cause after determining that AGC was in default for violating various contractual provisions, including those provisions that required AGC to pay its employees the prevailing wage rates.

Gym Door Repairs, Inc. (hereinafter GDR), a subcontractor that had performed work in connection with the subject contracts, commenced the main action against, among others, AGC and its sole officer and shareholder, Dimitrios Koutsoukos, to recover damages allegedly arising from AGC's failure as the general contractor to pay GDR for labor, material, and services that it had rendered. AGC and Koutsoukos (hereinafter together the third-party plaintiffs) then commenced a third-party action against the DOE and David N. Ross, as Executive Director of the DOE (hereinafter together the third-party defendants), alleging causes of action to recover damages for breach of contract, conversion, unjust enrichment, and "violation of due process." The third-party defendants moved to dismiss the third-party complaint pursuant to CPLR 3012(b) and CPLR 3211(a)(1) and (7). The Supreme Court denied that branch of the third-party defendants' motion which was pursuant to CPLR 3012(b) to dismiss the third-party complaint, and granted that branch of the third-party defendants' motion which was pursuant to CPLR 3211(a) to dismiss the third-party complaint. The Supreme Court held that the third-party complaint failed to state a cause of action and that the documentary evidence conclusively established that the DOE had a legal right and duty under Labor Law § 220–b to withhold payment from AGC pending the Comptroller's determination on the alleged Labor Law § 220 violations. The third-party plaintiffs appeal.

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ). While a court is "permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7)" (Sokol v. Leader, 74 A.D.3d 1180, 1181, 904 N.Y.S.2d 153 ), "where the motion is not converted to one for summary judgment, ‘the criterion is whether the [third-party plaintiff] has a cause of action, not whether [it] has stated one, and, unless it has been shown that a material fact as claimed by the [third-party plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it ... dismissal should not eventuate’ " (Weill v. East Sunset Park Realty, LLC, 101 A.D.3d 859, 859–860, 955 N.Y.S.2d 402, quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17 ). A motion to dismiss pursuant to CPLR 3211(a)(1) may appropriately be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; see Leon v. Martinez, 84 N.Y.2d at 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ; Mazur Bros. Realty, LLC v. State of New York,

59 A.D.3d 401, 402, 873 N.Y.S.2d 326 ).

Pursuant to Labor Law § 220, laborers employed on public works projects must be paid the "prevailing rate of wages" for their trade or occupation in the New York locality where the work is performed (Labor Law § 220[3][a] ; see Matter of Beltrone Constr. Co. v. McGowan, 260 A.D.2d 870, 688 N.Y.S.2d 783 ; E. Williamson Roofing & Sheet Metal Co. v. Town of Parish, 139 A.D.2d 97, 102, 530 N.Y.S.2d 720 ). The Comptroller is empowered to investigate the failure to pay the prevailing rate of wages and, after a hearing, to make a determination regarding any alleged prevailing wage violations (see Labor Law §§ 220[3][c], [5][e], [7], [8] ). "The ‘determination of a prevailing wage claim is, in the first instance, the exclusive province of the [Comptroller] and must be initially subjected to an administrative proceeding’ " (Brandy v. Canea Mare Contr., Inc., 34 A.D.3d 512, 514, 825 N.Y.S.2d 230, quoting P & T Iron Works v. Talisman Contr. Co., Inc., 18 A.D.3d 527, 529, 795 N.Y.S.2d 306 ). Prior to any hearing, the Comptroller may direct that payment be withheld to the contractor pending the completion of the investigation (see Labor Law §§ 220–b[2][a], [c], [d] ). All hearings conducted pursuant to the provisions of Labor Law § 220 are conducted by an administrative law judge, who issues a written report to the Comptroller with proposed findings of fact, conclusions of law, and recommendations (see 44 RCNY §§ 2–02[c], [d]; 2–03 [a] ). The Comptroller may adopt, reject, or modify the administrative law judge's findings and recommendations (see 44 RCNY § 2–03[c] ).

The Supreme Court erred in dismissing the third-party cause of action alleging breach of contract on the ground that the third-party defendants had a legal right to withhold payment pursuant to Labor Law §§ 220 and 220–b. Based upon the record before us, there is no indication that the Comptroller has rendered a final determination regarding the alleged Labor Law § 220 violation. As such, the court, in effect, determined the prevailing wage issue, which is within the exclusive province of the Comptroller, prior to a determination by the Comptroller (see P & T Iron Works v. Talisman Contr. Co., Inc., 18 A.D.3d at 528–529, 795 N.Y.S.2d 306 ). Thus, the evidentiary material submitted by the third-party defendants, which demonstrated that payment to AGC under the subject contracts was withheld pending the Comptroller's determination, failed to establish that any fact alleged in support of the third-party breach of contract cause of action was undisputedly not a fact, and failed to conclusively establish a defense as a matter of law to that cause of action.

" ‘In order to establish a cause of action to recover damages for conversion, the plaintiff must show legal ownership or an immediate superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question ... to the exclusion of the plaintiff's rights' " (Nugent v. Hubbard, 130 A.D.3d 893, 895, 15 N.Y.S.3d 71, quoting Mackey Reed Elec., Inc. v. Morrone & Assoc., P.C., 125 A.D.3d 822, 824, 6 N.Y.S.3d 65 ). Although " ‘a contracting party may be charged with a separate tort liability arising from a breach of a duty distinct from, or in addition to, the breach of contract’ " (Hamlet at Willow Cr. Dev. Co., LLC v. Northeast Land Dev. Corp., 64 A.D.3d 85, 113, 878 N.Y.S.2d 97, quoting North Shore Bottling Co. v. Schmidt & Sons, 22 N.Y.2d 171, 179, 292 N.Y.S.2d 86, 239 N.E.2d 189 ), a cause of action alleging conversion cannot be " ‘predicated on a mere breach of contract’ " ( Weinstein v. Natalie Weinstein Design Assoc., Inc., 86...