Sprayregen v. A. Gugliotta Dev., Inc.

166 F.Supp.3d 291

Gerald Sprayregen, Plaintiff,

v.A. Gugliotta Development, Inc., and Anthony R. Gugliotta, Defendants.

13-CV-5264(JS) (ARL)

United States District Court, E.D. New York.

Signed February 26, 2016

For Plaintiff: Alex Kriegsman, Esq., Kriegsman PC, 279 Main St., Sag Harbor, NY 11963.

For Defendants: Anton J. Borovina, Esq., Law Office of Anton J. Borovina, 510 Broad Hollow Rd., Suite 304A, Melville, NY 11747.

MEMORANDUM & ORDER

SEYBERT, District Judge:

This case arises out of alleged defects in Gerald Sprayregen's (“Plaintiff”) luxury Hamptons home (the “Property”), which was built and sold by A. Gugliotta Development, Inc. (“AGDI”) and its president, Anthony Gugliotta (“Gugliotta” and, collectively, “Defendants”). Defendants have now moved for summary judgment. (Docket Entry 50.) For the following reasons, Defendants' motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND¹

I. Factual Background²

A. The Property

Plaintiff, a Florida resident, purchased the Property from Defendants under a real estate contract for approximately $5 million (the “Contract”). (Def.'s 56.1 Stmt., Docket Entry 44-1, ¶ 13; Contract, Am. Answer Ex. A, Docket Entry 24-1, at 1.)³ The Property includes a two-story home, a two-story detached garage, an in-ground swimming pool and spa, a wooden deck, and associated landscaping and grading. (Def.'s 56.1 Stmt. ¶¶ 17-19, 21; Bourie Report, Pl.'s Br. Ex. C, Docket Entry 54-4, at 1.) The home also features a wine cellar and a home theater. (Bourie Report at 1.)

Defendants assert that they built the Property on a “speculation basis,”⁴ which left “certain functional and decorative details unfinished.” (Def.'s 56.1 Stmt. ¶¶ 2-3.) The unfinished details can include “unfinished basements, attics and garages, the placement of unterminated low-voltage wiring inside of walls and ceilings, some of which ... protrud[e] to enable the wiring to be visible and easily accessible, bathrooms with no towel and toilet paper holders, unfinished or unpainted wall surfaces and floors and pre-wired, undedicated light switches.” (Gugliotta Aff. ¶ 5.) Gugliotta explained that the objective was “to complete the construction up to the point where the certificate of occupancy ha[d] been obtained.” (Gugliotta Aff. ¶ 4.) In November 2011, the relevant authorities issued a certificate of occupancy and three certificates of electric compliance.⁵ (Def.'s 56.1 Stmt. ¶¶ 5-6.)⁶

B. The Contract

Before signing the Contract, Plaintiff and his home inspector, Ted Bourie (“Bourie”), conducted a final inspection of the Property. (Def.'s 56.1 Stmt. ¶ 36; Sprayregen Aff., Pl.'s Br. Ex. B, Docket Entry 54-3, ¶ 5.) The purpose of the inspection was to uncover any defects that may have occurred during the final stages of construction. (Def.'s 56.1 Stmt. ¶ 35.) Bourie inspected the Property's exterior, interior, site, and the garage. (Bourie Report at 1.) In his review, Bourie made the following observations:

• The exterior was “in good condition” with the exception of doors and windows that did not have screens.

• Generally, the interior, including the plumbing and electrical wiring, was “in good condition,” but one fireplace “could be a potential fire hazard.”

• All of the outside structures, including the landscaping, the swimming pool and spa, and the driveway, are “new” and appear to be “in good working order.”

• The garage contained a few loose wires but otherwise had no observable issues.

(See Bourie Report at 1.) In sum, Bourie found that the Property was “a well constructed house and in good condition.” (Bourie Report at 1.)

Following the inspection, Plaintiff purchased the Property “as is” under the Contract on September 18, 2012. (Def.'s 56.1 Stmt. ¶¶ 10, 13, 41; Contract ¶¶ 2, 12, 32, 38.) The Contract contained a Merger Clause, which provided the following:

“28. Miscellaneous. (a) All prior understandings, agreements, representations and warranties, oral or written, between Seller and Purchaser are merged in this contract; it completely expresses their full agreement and has been entered into after full investigation, neither party relying upon any statement made by anyone else that is not set forth in this contract.”

(Contract ¶ 28(a).) The Contract also provides that “[t]he delivery of the Deed by Seller and the acceptance of same by Purchaser shall be deemed the full performance and compliance with the obligations and covenants to be performed by Seller under the terms and conditions of this contract, except as otherwise specifically provided in this contract .” (Contract ¶ 37(l ) (emphasis added).)

The parties supplemented their agreement with a Rider to the Contract and a Supplemental Rider.⁷ Notably, the Supplemental Rider made certain guarantees at the time of closing:

SR10. Swimming pool, pool heater, and pool equipment, if any, shall be in proper working order at the time of closing. If the pool is NOT open at the time of closing, seller shall deliver to purchaser a letter from seller's pool company who services the pool stating that the pool/heater was in proper working order at the time the pool/heater was closed. However, purchaser shall have the option of paying to open the pool/heater in order to inspect same and seller agrees to allow purchaser's pool company access in order to open said pool/heater.

Sprinkler system, if any, shall be in proper working order at the time of closing. If the sprinkler system is NOT open at the time of closing, seller shall deliver to purchaser a letter from seller's sprinkler company who services the sprinkler system stating that the sprinkler system was in proper working order at the time the sprinkler system was closed. However, purchaser shall have the option of paying to open the sprinkler system in order to inspect same and seller agrees to allow purchaser's sprinkler system company access in order to open said sprinkler system.

* * *

SR13. Prior to closing the Seller shall, at Seller's expense, perform the following work: repair the living room fireplace to be code compliant if after closing found to be non-code compliant; repair and paint the crack in the garage cement; install a gate or arbor in the hedge to provide access to the 17.5 foot strip of land between the hedge and the property line.

(Supplemental Rider ¶¶ SR10, SR13 at 11-12.)

C. The Limited Warranty

Incorporated in the Supplemental Rider was a Limited Warranty, which identifies Defendants' responsibilities for any latent or hidden construction defects:

SR12. BUILDER'S LIMITED WARRANTY

SELLER shall deliver to PURCHASER at closing a Limited Warranty for the new construction performed at the subject premises ....

The provisions of the Warranty annexed to this agreement are intended to limit the Housing Merchant Implied Warranty, contained in Section 777–A, New York State General business Law, by providing the Limited Warranty set forth in the Limited Warrantee annexed to this contract. This contract expresses the full extent of the Limited Warrantees being provided to the Owner and no warranties shall extend beyond those set forth in this contract and the Limited Warrantee attached to this contract. The SELLER makes no other warranties, expressed or implied, in connection with this agreement, and all such warranties are excluded. The provisions of this paragraph shall survive the closing of title. THIS WARRANTY DOES NOT COVER PRODUCTS LIABILITY OR INCIDENTAL OR CONSEQUENTIAL DAMAGES. THIS LIMITED WARRANTY IS GIVEN IN LIEU OF

ALL OTHER WARRANTIES, EXPRESS OR IMPLIED.

(Supplemental Rider ¶ SR12 at 11-12; see Ltd. Warranty at 15.)⁸ The Limited Warranty provides coverage, in relevant part, for the following circumstances:

FIRST YEAR BASIC COVERAGE : for one year from the warranty date, the home will be free from latent defects that constitute:

(a) defective workmanship performed by the Contractor/Builder, an agent of Contractor/ Builder or subcontractor of the Contractor/ Builder.

(b) defective materials provided by Contractor/Builder, an agent of Contractor/ Builder or subcontractor of the Contractor/ Builder; or

(c) defective design provided by an architect, landscape architect, engineer, surveyor or other design professional engaged solely by the Contractor/Builder.

TWO YEAR MAJOR SYSTEM COVERAGE : for two years from the warranty date, the plumbing, electrical, heating systems of the home which have been installed by the Contractor/Builder are warranted to be free from latent defects that constitute defective installation by Contractor/Builder.

SIX YEAR MAJOR STRUCTURAL DEFECT COVERAGE : for six years from the warranty date, the home will be free from latent defects that are major structural defects⁹ as defined below and which constitute:

(a) defective workmanship performed by the Contractor/Builder, an agent of Contractor/ Builder or subcontractor of the Contractor/ Builder.

(b) defective materials provided by Contractor/Builder, an agent of Contractor/ Builder or subcontractor of the Contractor/ Builder; or

(c) defective design provided by an architect, landscape architect , engineer, surveyor or other design professional engaged solely by the Contractor/Builder.

(See Ltd. Warranty at 16-17 (emphasis added).) On the other hand, the Limited Warranty excludes coverage for a number of conditions, including the following:

• Any loss or damages caused by workmanship, defective materials, or defective designs caused by any other person or entity other than Defendants or its agents. (See Ltd. Warranty ¶ 6(a)-(c).)

• Patent defects that “an examination of the home prior to acceptance of the deed or occupancy of the home ought to have revealed.” (Ltd. Warranty ¶ 6(d).)

• Non-home-related defects, including “detached garages and detached carports (except outbuildings which contain the plumbing, electrical, heating, cooling or ventilation systems serving the home); site located swimming pools and other recreational facilities ; driveways ; walkways; patios; boundary walls; retaining walls; bulkheads; fences; landscaping (including sodding,

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