FILED: NEW YORK COUNTY CLERK 09/02/ :59 PM INDEX NO /2016 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 09/02/2016

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1 FILED: NEW YORK COUNTY CLERK 09/02/ :59 PM INDEX NO /2016 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 09/02/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X Hon. Gerald Lebovits ALEXANDER CONDOMINIUM, BY ITS BOARD OF Return Date: MANAGERS, September 27, 2016 Plaintiff, -against- Index No.: /2016 EAST 49 TH STREET DEVELOPMENT II, LLC, 250 EAST BORROWER, LLC, CONTINENTAL FINANCE CORPORATION, CFC SPECIALTY PROGRAM MANAGERS, LLC, CONTINENTAL REALTY, LLC, OCEAN AVENUE CONSTRUCTION, INC., 250 CONSTRUCTION, INC., PAV-LAK INDUSTRIES, INC., GUREVICH & ASSOCIATES, LLP, JANOFF & GUREVICH, LLP, ALEXANDER GUREVICH, MITCHELL GUREVICH, GENNADY KISELMAN, a/k/a GENE KISELMAN, MICHAEL STEINBERG, ELLIOT SPITZER a/k/a ELIYAHU SPITZER, EUGENE TSIRKIN, PETER R. SILVERMAN, MAURICE SETTON, TAUBE MANAGEMENT REALTY, LLC, JOSEPH M. TAUBE, SYDNESS ARCHITECTS, P.C. and K. JEFFRIES SYDNESS, Defendants X MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS WESTERMANN SHEEHY KEENAN SAMAAN & AYDELOTT, LLP The Omni Building, Suite Earle Ovington Boulevard Uniondale, New York (516) Counsel for defendant, PAV-LAK INDUSTRIES, INC. 1 of 18

2 Defendant, Pav-Lak Industries, Inc. (Pav-Lak), by counsel, files this Memorandum of Law in support of its motion, pursuant to CPLR 3211(1), (5) and (6), seeking dismissal of the two causes of action alleged against it in the Complaint the Nineteenth and Twentieth Causes of Actions. I. INTRODUCTION Plaintiff, Alexander Condominium, by its Board of Managers (the Board), has launched a broad-spectrum attack, comprised of 24 separate causes of action, variously aimed at every entity involved in the conception, design, development, construction, promotion and sale, and then the early management of, its luxury condominium building, located at 250 East 49 th Street, New York, New York (the Project). Indeed, the Board s more sensational allegations drew the attention of the New York Post days after the filing. 1 The Board s many complaints range from design omissions and deficiencies, promised but omitted features of the Project, deficient construction, misrepresentations in the sales material, to mismanagement of the Project during the developer s tenure and control of the Project. The Board sued Pav-Lak, a limited-scope agency construction manager, in two causes of action, alleging negligence and breach of contract, more than five years after Pav-Lak s departure from the Project. This litigation promises to be long, drawn out and costly. Pav-Lak s engagement with the Project was initiated by a three-page letter agreement with the sponsor/developer, defendant, East 49 th Street Development II, LLC (East 49 th ). East 49 th initially engaged Pav-Lak under that letter agreement in March 1 A copy of the New York Post article, entitled Luxury condo residents sue over broken promises, dated August 1, 2016, is attached as Exhibit A to the Affirmation of David Westermann, Jr., Esq., dated September 2, 2016 (Westermann Aff.). MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 2 2 of 18

3 2008, to act as its agent-construction manager, providing services with respect to the Project. Pav-Lak s role was soon diminished by East 49 th, who engaged another construction manager for the Project, defendant, Ocean Avenue Construction, Inc. (Ocean Construction), a company affiliated with East 49 th, to act as a conventional construction manager. This eventually left Pav-Lak with the limited role of providing one representative each week to meet with East 49 th, Ocean Construction and the lender s representative, where the latter would report on the status and progress of the work. Pav- Lak last provided this limited service in or about February Thus, in its limited role, Pav-Lak did not obtain the building permit for the Project from the New York City Department of Buildings (or any other permit); did not have care, control or custody over the Project site; and did not engage or contract with any of the trades, whether in its own name or acting in the name and as agent of East 49 th (a normal function for agency construction managers). Pav-Lak also did not design or construct any part of the Project, nor did any entity in privity with Pav-Lak design or construct any part of the Project, and Pav-Lak had no authority, contractual or otherwise, over those entities that did the design and construction of the Project. Pav-Lak s very limited role explains why the full-scope agency construction management agreement contemplated in the letter agreement was never executed. These facts cannot be controverted or overlooked. Pav-Lak was, therefore, not a conventional construction manager or general contractor with responsibility for the construction of the Project. Moreover, the letter agreement defines Pav-Lak s obligations as running only to its principal, East 49 th. It does not mention, much less contemplate, any other beneficiary consistent with the agent-principal relationship. Further, consistent with that relationship, MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 3 3 of 18

4 East 49 th agreed to indemnify and insure Pav-Lak with respect to various liabilities arising with respect to the Project. The Board also does not, and cannot, allege that Pav-Lak ever engaged in any fashion with the Board (notably at the time not yet in existence during Pav-Lak s tenure) or those it represents -- much less that Pav-Lak made any substantive representations to the Board or that it undertook contractual obligations for the Board s benefit. Further, the Board does not, and cannot, articulate the basis for any common-law duty that Pav-Lak might owe to the Board or that such duty was independent of the agency letter agreement where Pav-Lak and East 49 th defined their respective obligations to each other (soon diminished). Even if there were a viable tort theory available to the Board, it has been time barred since February Based on the insufficient allegations in the Complaint, the agency letter agreement, and certain subsidiary facts that are consistent with that agreement and that are beyond debate, Pav-Lak respectfully requests the dismissal of the Complaint against it, based on documentary evidence, the statute of limitations and the failure (and evident inability) to state a cause of action against Pav-Lak. II. PROCEDURAL BACKGROUND The Board commenced this action by filing a Summons with Notice on May 5, Pav-Lak filed a Notice of Appearance and Demand for Complaint on July 8, The Board filed its Complaint on July 27, The Board and Pav-Lak stipulated to 2 A copy of the Summons with Notice is attached to the Westermann Aff. as Exhibit B. 3 A copy of the Notice of Appearance and Demand for Complaint is attached to the Westermann Aff. as Exhibit C. 4 A copy of the Complaint is attached to the Westermann Aff. as Exhibit D. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 4 4 of 18

5 extend Pav-Lak s time to move or answer in response to the Complaint to September 14, No discovery has been conducted. III. DOCUMENTARY EVIDENCE OF FACTS SUPPORTING DISMISSAL On March 11, 2008, East 49 th, acting by its Chief Executive Officer and defendant, Alexander Gurevich, executed a three-page proposal from Pav-Lak, dated March 8, 2008, converting that proposal into an agency construction management agreement (the Agency Agreement). 5 Pav-Lak committed to provide construction management services to [East 49 th ]. for the Project without reference to any other entity. 6 East 49 th had completed the design process and begun construction through others prior to Pav-Lak s introduction to the Project, 7 and it continued that work through completion of the Project using trades or subcontractors that it engaged directly or indirectly. The Agency Agreement specifically acknowledges that East 49 th will pay the trades directly in accordance with [East 49 th s] agreements with them and that if there were a separation between Pav-Lak and East 49 th, [East 49 th ] will remain, of course, responsible to the trades. 8 Indeed, Pav-Lak was not in privity with the trades and, therefore, had no authority over the trades and was not responsible for their performance. Of course, Pav-Lak was not required to, and did not, perform any physical construction work at the Project. 9 5 The Agency Agreement, which was captioned by the parties as a Construction Management/Take Over Proposal, states, in its second sentence, that [a]s the trade work and contract work was started by others is defined, [Pav-Lak] will transition in to the construction management role as agent to [East 49 th ]. A copy of the Agency Agreement is attached to the Affidavit of Peter Pavlakis, sworn to on September 1, 2016 (Pavlakis Aff.), as Exhibit 1. 6 Pavlakis Aff., Exhibit 1, p Id. 8 Pavlakis Aff., Exhibit 1, p See Pavlakis Aff., 6. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 5 5 of 18

6 Further, while the Agency Agreement contemplated that Pav-Lak and East 49 th would execute a full-blown agency construction management agreement, explaining Pav- Lak s construction-related obligations in detail, that agreement was never executed. Instead, East 49 th engaged Ocean Construction, an entity affiliated with East 49 th by common ownership, which performed the conventional construction management functions. 10 Thus, Pav-Lak did not obtain any permits for the Project; did not contract with any of the trades; had no care, custody or control of the Project site or work being executed; did not design or construct any part of the Project; and had no authority, contractual or otherwise, over those entitles that did the design and construction of the Project. 11 In the end, Pav-Lak s tasks with respect to the Project involved interfacing with the lender s representative for the Project. 12 The Agency Agreement also made clear that Pav-Lak had no objective obligation to East 49 th with respect to the cost and on-schedule delivery of the Project. While Pav- Lak did undertake, before its role was diminished, to provide services with certain budgetary and schedule goals for the Project, East 49 th and Pav-Lak stated in the Agency Agreement that the fuller agency construction management agreement that was contemplated, would be executed as a standard agency CM agreement, with no guarantee on price and no objective obligation for [Pav-Lak] to be liable if, despite [Pav- Lak s] proper management, the project is not completed within the current budget or on the current schedule. 13 Thus, even if Pav-Lak had executed the fuller agency 10 See Pavlakis Aff., See Pavlakis Aff., See Pavlakis Aff., Pavlakis Aff., Exhibit 1, p. 1. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 6 6 of 18

7 construction management agreement, and that agreement had been carried out, its liability would have been significantly limited. Finally, consistent with the jural nature of the agent-principal relationship, East 49 th agreed to provide insurance and indemnity to Pav-Lak with respect to certain third-party liabilities arising from the Project. 14 Pav-Lak last rendered services to the Project in or about February IV. ALLEGATIONS OF THE COMPLAINT The Board, in its Complaint, sets forth 24 causes of action against 22 defendants. The causes of action include breach of contract, fraudulent misrepresentation, fraudulent misappropriation, money had and received, fraud in the inducement, breach of fiduciary duty, negligence, violations of New York General Business Law 349 and 350 and fraudulent conveyances. While the causes of action against other defendants are set forth in greater detail, the allegations aimed at Pav-Lak lack essential elements, are phrased in conclusory terms, and are premised on a misunderstanding of the nature of Pav-Lak s role at the Project. Specifically, the Nineteenth Cause of Action in the Complaint is captioned Breach of Contract against Pav-Lak. The Board alleges that: 354. Upon information and belief, Ocean, 250 Construction and Pav-Lak entered into one or more contracts with [East 49 th ] (the Construction 14 Pavlakis Aff., Exhibit 1, p. 2, which states: In light of [Pav-Lak s] advent to the project site before execution of a full agency Construction Management Agreement, we must insist that [East 49 th ] maintain (and provide proof of) insurance for the project, naming and covering [Pav-Lak] to the full extent, and under the same circumstances, as [East 49 th is] covered for third-party liabilities and for casualty to life and property, however described (including to all property other than the work), and death, related to, or arising from, the project. [Pav-Lak] also require[s] that [East 49 th ] defend, indemnify and hold [Pav-Lak] harmless from such liabilities and costs, unless and to the extent such are caused by [Pav-Lak s] fraud, gross or willful neglect. 15 Pavlakis Aff., 5. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 7 7 of 18

8 Contracts ), pursuant to which Ocean, 250 Construction and Pav-Lak 16 agreed, inter alia, to perform construction work in connection with the Building s construction and in accordance with the Offering Plan Plaintiff (including the Unit Owner) is the successor in interest to [East 49 th ] under the Construction Contracts and, as such, has acquired all of the [East 49 th s] contractual rights under the Construction Contracts, including the right to enforce the contract terms and hold Ocean, 250 Construction and Pav-Lak accountable for its breaches thereof The Condominium Unit Owners were also intended beneficiaries of the obligations of Ocean, 250 Construction and Pav-Lak and its performance of the Construction Contracts Ocean, 250 Construction and Pav-Lak breached their obligations under the Construction Contracts in that, among other things, it failed and/or improperly performed construction work at the Building by not constructing the Building in accordance with the Offering Plan and by constructing a building that is rife with defects as detailed herein. The Board concludes by demanding an amount not less than $7,500,000 in damages by reason of Pav-Lak s (and Ocean Construction s) alleged breach of the Construction Contracts. 17 The Twentieth Cause of Action in the Complaint is captioned Negligence against Pav-Lak and others. The Board alleges that: 361. Upon information and belief, Ocean, 250 Construction and Pav-Lak were retained by [East 49 th ] to perform construction work in connection with the Building s construction and in accordance with the Offering Plan Upon information and belief, Ocean, 250 Construction and Pav-Lak accepted and undertook to perform said services, and to perform said services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the construction industry and in accordance with the Offering Plan so that the Building s construction would be accomplished in a good and workmanlike manner, free of material defects and in accordance with the Offering Plan. 16 The Board is evidently unaware of the different roles played by Ocean Construction, 250 Construction and Pav-Lak, including that Pav-Lak s role was extremely limited, as discussed above. For the Court s information, 250 Construction was a company started by Pav-Lak to assist Pav-Lak in its limited obligations. It never entered into any agreement with East 49 th and it has been legally dissolved for several years. See Pavlakis Aff., See Westermann Aff., Exhibit A, 359. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 8 8 of 18

9 363. Upon information and belief, Ocean, 250 Construction and Pav-Lak did not perform the construction work on a good and workmanlike manner, pursuant to and in accordance with accepted practices and standards of the construction industry and in accordance with the Offering Plan, so that the Building s construction would be accomplished in a good and workmanlike manner, free of material defects and in accordance with the Offering Plan, but rather performed said services carelessly and negligently and contrary to accepted practices and standards of the construction industry and contrary to the Offering Plan, as a consequence of which carelessness and negligence the defective conditions hereinabove described are present in the Building. The Board concludes the Twentieth Cause of Action, like the Nineteenth, again by demanding an amount not less than $7,500,000 in damages against Pav-Lak (and Ocean Construction). 18 A. Motion to Dismiss Standard. V. ARGUMENT CPLR 3211(a) provides, in subparts (1), (5) and (7), that a party may move to dismiss a cause of action where (i) a defense is founded upon documentary evidence; (ii) the cause of action is barred by the statute of limitations; or (iii) where the pleading fails to state a cause of action. 19 While the Court must presume that the facts plead are true and provide them every favorable inference (Arrington v. New York Times Co., 55 N.Y.2d 433, 442, 449 N.Y.S.2d 941 (1982)), a pleading containing allegations that are flatly and conclusively 18 See Westermann Aff., Exhibit A, Note that arguments under CPLR 3211(a), subparts (1) and (7), necessarily interlace in this matter. Stated empirically, a competently stated cause of action can be defeated by showing incontestable facts, through documentary evidence, that an essential fact element plead in the cause of action is not true. Conversely, a defectively stated cause of action (missing essential facts) cannot be saved where the documentary evidence shows beyond debate that the plaintiff cannot plea the missing facts. In that latter case, dismissal is appropriate under subpart (7), for failing to state a cause of action, as buttressed by the showing under subpart (1), that the plaintiff cannot plea the requisite facts as such are belied by documentary evidence. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE 9 9 of 18

10 contradicted by documentary evidence should be dismissed. Board of Mgrs. of One Grand Army Plaza v. Seventeen Dev. LLC, 40 Misc.3d 1237(A), 977 N.Y.S.2d 665 (Table) (Sup. Ct., Kings Co. 2013); Igarashi v. Higashi, 289 A.D.2d 128, 735 N.Y.S.2d 33 (1st Dep t 2001). Indeed, a court may consider documentary evidence which is either proved or conceded to be authentic (West 64 th St., LLC v. Axis U.S. Ins., 63 A.D.3d 471, 882 N.Y.S.2d 22 (1st Dep t 2009)) and is not required to accept at face value every conclusory, patently unsupportable assertion of fact found in the complaint (Id., citing Four Seasons Hotels Ltd. v. Vinnick, 127 A.D.2d 310, 318, 515 N.Y.S.2d 1 (1st Dep t 1987)). The Court of Appeals stated, in Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Servs., Inc., 20 N.Y.3d 59, 956 N.Y.S.2d 439 (2012), that: The motion may be granted if documentary evidence utterly refutes [the] plaintiff s factual allegations (Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858 (2002)), thereby conclusively establishing a defense as a matter of law (id., citing Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972 (1994)). One example of such proof is an unambiguous contract that indisputably undermines the asserted causes of action (see generally Greenfield v. Philles Records, 98 N.Y.2d 562, , 750 N.Y.S.2d 565 (2002)). A court may consider facts presented by affidavit on a motion to dismiss to establish facts that are conclusively fatal to a plaintiff s claim. Clarke v. Laidlaw Transit, Inc., 125 A.D.3d 920, 922, 5 N.Y.S.3d 138 (2nd Dep t 2015). Here, contrary to the conclusory allegations of the Complaint, the Agency Agreement establishes the following facts: i. Pav-Lak was in privity with East 49 th and no one else; ii. iii. Pav-Lak was an agent to East 49 th and no one else; Pav-Lak s duties with respect to the Project were defined in the Agency Agreement; MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

11 iv. There are no successors or intended third-party beneficiaries named or contemplated in the Agency Agreement; v. Pav-Lak was not required to perform any construction work at the Project - the trades performing the work were under contract with East 49 th ; and vi. The Offering Plan is not mentioned in the Agency Agreement (and likely did not exist at the time). These incontrovertible facts are fatal to both the Board s breach of contract and negligence claims. Further, the facts supplied by Pav-Lak in its supporting affidavit show that Pav-Lak had a very limited role on the Project, given the role played by Ocean Construction as construction manager, and that Pav-Lak did not obtain the permits for the Project; did not have care, custody or control of the Project site; and was not in privity with, and had no control over, the trade contractors and others performing the actual work at the Project. Indeed, Pav-Lak performed absolutely no physical work at the Project. These facts prove that the Board cannot sustain its alleged causes of action, as stated, and that it cannot circumnavigate these facts by re-pleading. Despite the deference accorded to pleadings under a motion to dismiss, pleadings that do not assert a viable cause of action, or that consist of bare legal conclusions, are not entitled to such consideration. Delran v. Prada USA Corp., 23 A.D.3d 308, 804 N.Y.S.2d 243 (1st Dep t 2005), citing Skillgames, LLC v. Brody, 1 A.D.3d 247, 250, 767 N.Y.S.2d 418 (1st Dep t 2003), Caniglia v. Chicago Tribune-N.Y. News Syndicate, Inc., 204 A.D.2d 233, 612 N.Y.S.2d 146 (1st Dep t 1994). Dismissal is warranted where it is conclusively established that there is no cause of action. See Town of Hempstead v. Sea Crest Constr. Corp., 119 A.D.2d 744, 501 N.Y.S.2d 156 (2d Dep t 1986). MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

12 B. The Breach of Contract Cause of Action Must Be Dismissed. The Board s Nineteenth Cause of Action for breach of contract, which is stated in unsustainable conclusory terms, is utterly undone by the documentary evidence of the Agency Agreement. Indeed, it seems apparent that the Board could do nothing more than plead in conclusory terms, given the facts established by the documentary evidence that show that the Board can have no cause action. i. No Privity. First, the Board is not a party to the Agency Agreement and the Board does not allege any other direct contract with Pav-Lak. Thus, the Board cannot sue Pav-Lak as its contracting counterpart. CDJ Bldrs. Corp. v. Hudson Group Constr. Corp., 67 A.D.3d 720, 889 N.Y.S.2d 64 (2d Dep t 2009) (there is no liability for breach of contract without a contractual relationship or privity between parties); Leonard v. Gateway II, LLC, 68 A.D.3d 408, 890 N.Y.S.2d 33 (1st Dep t 2009) (plaintiff s claim for breach of contract was dismissed as plaintiff was not in privity of contract with defendant). ii. No Third-Party Beneficiary Rights. Second, the Board is not an intended third-party beneficiary under the Agency Agreement, despite the Board s bare legal conclusion to the contrary, and the case law makes clear that third-party beneficiary status under a construction contract should not be implied. To sustain a claim for third-party beneficiary rights, a plaintiff must establish (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [its] benefit and (3) that the benefit to [it] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

13 compensate [it] if the benefit is lost. Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 336, 464 N.Y.S.2d 712 (1983); Castorino v. Unifast Bldg. Prods. Corp., 161 A.D.2d 421, 555 N.Y.S.2d 350 (1st Dep t 1990). The Board makes no attempt to plead the requisite facts and, instead, pleads the unsubstantiated conclusion. Contrary to the Board s conclusory allegations, where, in the construction setting, the construction agreement makes no reference to the condominium board, the board s claim of third-party beneficiary rights routinely fails the benefit a board might eventually derive is not sufficiently immediate or intended specifically for the board such that it should be compensated for deficient performance. 20 In Board of Mgrs. of Riverview at Coll. Point Condo. III v. Schorr Bros. Dev. Corp., 182 A.D.2d 664, 582 N.Y.S.2d 258 (2d Dep t 1992), the court stated that [g]enerally it has been held that the ordinary construction contract i.e., one which does not expressly state that the intention of the contracting parties is to benefit a third party does not give third parties who contract with the promissee the right to enforce the latter s contract with another. Such third parties are generally considered mere incidental beneficiaries, quoting Port Chester Elec. Constr. Corp. v. Atlas, 40 N.Y.2d 652, , 389 N.Y.S.2d 327 (1976); compare, Board of Mgrs. of Alfred Condo. v. Carol Mgmt., 214 A.D.2d 380, 382, 624 N.Y.S.2d 598 (1st Dep t 1995), lv. dism d, 87 N.Y.2d 942, 641 N.Y.S.2d 824 (1996) (unit owners have rights under agreement between sponsor and construction manager that explicitly refers to unit owners as beneficiaries). Indeed, nothing in the Agency Agreement evinces any intent that Pav-Lak might have any contractual liability to a third-party. 20 Indeed, unlike the typical general contractor or construction manager agreement with a sponsor, Pav- Lak did not have the obligation to construct the Project and did not do so, either with its own forces or through trade contractors. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

14 Thus, the Board is, at best, an incidental beneficiary with its interests arising years after execution of the Agency Agreement. Incidental beneficiaries have no standing to sue for breach of contract. In Residential Bd. of Mgrs. of Zeckendorf Towers v. Union Sq.-14 th St. Assocs., 190 A.D.2d 636, 594 N.Y.S.2d 161 (1st Dep t 1993), the First Department stated: The IAS Court also properly dismissed plaintiff s causes of action for breach of contract against defendant Kumagai, which contracted solely with the owner for purposes of monitoring the activities of the construction manager... since plaintiff is only an incidental, not intended beneficiary of defendant Kumagai s contract with the owner (Board of Mgrs. of Riverview at Coll. Point Condo. III v. Schorr Bros. Dev. Corp., 182 A.D.2d 664, 582 N.Y.S.2d 258 (2d Dep t 1992)). Absent privity of contract, plaintiff has no right to recover from defendant Kumagai either for negligence or breach of contract. Similarly, in Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P ship, 50 A.D.3d 503, 504,858 N.Y.S.2d 109 (1st Dep t 2008), the First Department dismissed the cause of action for breach of contract against all the defendants except the sponsor, stating plaintiff had no contractual or other relationship with the general contractor, architect, mechanical engineer or structural engineer on the project and is, at best, only an incidental, rather than an intended, beneficiary of the contracts ; see also Board of Mgrs. Of 255 Hudson Condo. v. Hudson St. Assocs., LLC, 37 Misc.3d 1223(A), 964 N.Y.S.2d 57 (Table) (Sup. Ct., N.Y. Co. 2012) ( Unit owners lack standing to seek relief for damage and defects against general contractors, architects and engineers on a project where at best they are, only incidental rather than an intended, beneficiary of the contracts entered into with a sponsor. ). Finally, Pav-Lak s agency relationship with East 49 th under the Agency Agreement further confirms that it had no obligation to any entity other than East 49 th. An agent for MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

15 a disclosed principal can have no liability unless there is clear and explicit evidence, coming obviously from communications or dealings between the agent and the third-party claimant, that the agent meant to substitute or superadd its personal liability for, or to, the principal s liability. News Am. Mktg., Inc. v. Lepage Bakeries, Inc., 16 A.D.3d 146, 791 N.Y.S.2d 80, 82 (1st Dep t 2005) (citing Savoy Record Co., Inc. v. Cardinal Export Corp., 15 N.Y.2d 1, 4, 254 N.Y.S.2d 521, 203 (1964)). Here, Pav-Lak s agency was a matter of contract and disclosed generally, as it would have been had there been any communications or dealings whatsoever between Pav-Lak and the Board. iii. No Successor in Interest. Third, the Board is not a successor in interest to the rights of East 49 th under the Agency Agreement. Again, the Board s bare legal conclusion that it holds successor status is undone by the documentary evidence of the Agency Agreement. Indeed, the Board points to no legal source of successor status. A similar allegation, advanced by the Board s counsel in another matter, was summarily rejected. In that case, the court stated: [c]ontrary to the plaintiff s suggestion, the allegation that the plaintiff s members are successors of the sponsor is insufficient to establish the requisite contractual privity (see, e.g., Sutton Apts. Corp. v. Bradhurst 100 Dev. LLC, 36 Misc.3d 1205[A], 2012 NY Slip Op 31671[U] [Sup Ct., NY Co. 2012] [dismissing unit owner breach of contract claim against architect despite argument that owner was successor of sponsor]). See Board of Mgrs. of One Grand Army Plaza v. Seventeen Dev. LLC, 40 Misc.3d 1237(A), 977 N.Y.S.2d 665 (Table) (Sup Ct., Kings Co. 2013). MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

16 C. The Negligence Cause of Action Must Be Dismissed. The documentary evidence of the Agency Agreement also undoes the Board s Twentieth Cause of Action against Pav-Lak for negligence. i. No Cause of Action for Negligent Breach of Contract. The First Department has held, on indistinguishable facts, that a claim for negligent performance of contract is not cognizable. Board of Mgrs. of the Chelsea 19 Condo. v. Chelsea 19 Assocs., 73 A.D.3d 581, 905 N.Y.S.2d 8 (1st Dep t 2010), citing City of New York v. 611 W. 152 nd St., Inc., 273 A.D.2d 125, 126, 710 N.Y.S.2d 36 (1st Dep t 2000). In Board of Mgrs. of Soho N. 267 W. 124 th St. Condo. v. NW 124 LLC, 116 A.D.3d 506, 984 N.Y.S.2d 17 (1st Dep t 2014), the court affirmed dismissal of the plaintiff s cause of action for negligence, stating: Breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated, citing Clark- Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653 (1987). The court further determined that [a]llegations of negligence based on defects in construction of a condominium sound in breach of contract rather than tort, citing Sutton Apts. Corp. v. Bradhurst 100 Dev. LLC, 107 A.D.3d 646, 648, 968 N.Y.S.2d 483 (1st Dep t 2013); Board of Mgrs. of the Chelsea 19 Condo., 73 A.D.3d at 582. ii. The Negligence Claim is Duplicative of the Breach of Contract Claim. Moreover, the Board s breach of contract and negligence claims are duplicative both allege improper work and both seek redress for economic loss, reciting that the Board has been injured in a sum to be determined at trial but in no event less than $7,500,000, together with interest thereon 21 In Hamlet on Olde Oyster Bay Home 21 See Westermann Aff., Exhibit A, 359, 364. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

17 Owners Assn., Inc. v. Holiday Org., Inc., 65 A.D.3d 1284, 887 N.Y.S.2d 125 (2d Dep t 2009) (citing Clark-Fitzpatrick, Inc., 70 N.Y.2d at 389 (1987); Old Republic Nat l Title Ins. Co. v. Cardinal Abstract Corp., 14 A.D.3d 678, 790 N.Y.S.2d 143 (2d Dep t 2005)), the court held: The Supreme Court also properly granted those branches of the Holiday defendants motion which were to dismiss the causes of action alleging negligence insofar as asserted against the sponsor based upon construction defects, as these claims were duplicative of the causes of action alleging breach of contract. In Stardial Commc ns Corp. v. Turner Constr. Co., 305 A.D.2d 126, 757 N.Y.S.2d 749 (1st Dep t 2003), the court affirmed the dismissal of a negligence claim, finding that it was duplicative with the breach of contract claim. In that case, the court, quoting Clark- Fitzpatrick, Inc., supra, stated that [m]erely charging a breach of a duty of due care, employing language familiar to tort law, does not, without more, transform a simple breach of contract into a tort claim. In Wildenstein v. 5H&Co., Inc., 97 A.D.3d 488, 492, 950 N.Y.S.2d 3 (1st Dep t 2012), when finding that the plaintiff s negligence claim was duplicative of the breach of contract claim, the court noted that [e]ven the alleged damages are identical in both causes of action Here, too, both causes of action allege $7,500,000 in damages as a measure of economic loss arising from Pav-Lak s alleged deficient performance. iii. No Negligence Claim Allowed Seeking Economic or Contract (Expectation) Damage. Further, a tort cause of action may not be sustained where, as here, the damages sought are for economic loss only. See Ceder & Wash. Assocs., LLC v. Bovis Lend Lease LMB, Inc., 95 A.D.3d 448, 944 N.Y.S.2d 47 (1st Dep t 2012). MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18

18 iv. Any Negligence Claim is Timed Barred. Finally, assuming but not conceding that the Board s negligence claim is sustainable, it is barred by the three-year statute of limitations. See CPLR 214(4). Pav- Lak s last rendition of services with respect to the Project was in February VI. CONCLUSION Based on the well-settled and binding authority stated above, the Board s causes of action for breach of contract and negligence against Pav-Lak must be dismissed with prejudice. Dated: Uniondale, New York September 2, 2016 PAV-LAK INDUSTRIES, INC. By: /s/ David Westermann, Jr. David Westermann, Jr., Esq. Jamie Brody-Johnson, Esq. Jill Greenfield, Esq. WESTERMANN SHEEHY KEENAN SAMAAN & AYDELOTT, LLP The Omni Building, Suite Earle Ovington Blvd. Uniondale, New York Counsel for defendant, Pav-Lak Industries, Inc. 22 Pavlakis Aff., 5. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS PAGE of 18