In motion sequence 003, defendant moves, pursuant to CPLR 3212, to dismiss the complaint or in the alternative to dismiss plaintiff's fraud cause of action. Plaintiff cross-moves, pursuant to CPLR 3212, for partial summary judgment dismissing defendants fifth affirmative defense.

On September 10, 1999, defendant, Mastec North America, Inc. (Mastec), entered into a Backbone Construction Agreement with Telergy and Telergy Metro, LLC (collectively Telergy) whereby Mastec agreed to provide general contract services for the construction and installation of telecommunications equipment. On March 31, 2000, plaintiff, Hugh O'Kane Electric Co., LLC (HOK), as subcontractor, and Mastec, as general contractor, entered into an agreement. Pursuant to the agreement, Mastec agreed to pay for the work and materials and HOK agreed to install telecommunication equipment at various locations throughout New York City. HOK invoiced Mastec for the services rendered under the agreement and it is their belief that Mastec approved those invoices. Section 14 of the agreement provides that "[i]nvoices will be due and payable within forty five days of receipt of the invoice" plus a 10% retainage for ninety days from the date of payment.

Plaintiff claims that defendant materially breached the contract by failing to pay for the invoices totaling $2,862,476.48 plus interest. Mastec refused to pay HOK in reliance upon a pay when paid provision contained in §14 of the Agreement. Pursuant to that provision:

"any and all payments to [HOK] are expressly contingent upon and subject to receipt of payment for the [w]ork by [Mastec] from [Telergy] even if (a) [Mastec] has posed a payment bond with [Telergy] or (b) the [General] Contract is on a "cost plus" or other reimbursement basis requiring [Mastec] to pay [HOK] prior to being reimbursed by [Telergy]."^[FN1]

Plaintiff asserts three causes of action in its amended complaint, breach of contract, fraud and a declaratory judgment that a "pay when paid" clause in the contract is unenforceable as against the public policy of the State of New York. Defendant argues that the contract was expressly governed by a Florida choice of law provision, and that the "pay when paid" clause is valid in under Florida law. Defendant also argues that plaintiff's fraud claim is duplicitive of its contract claim and therefore untenable under New York law.

Pursuant to CPLR 3212(b), a motion for summary judgment "shall be granted if, upon all [*2]the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party." Summary Judgment is appropriate where there are no genuine issues of material fact; if no genuine issues of material fact exist, summary judgment must be granted. See Sillman v Twentieth Century Fox Film Corp., 2 NY2d 395 (1957); Friedman v Pesach, 160 AD2d 460, 461 (1st Dep't 1990). The issues of whether the "pay when pay" clause is enforceable and whether the fraud claim is duplicitive of the contract claim are legal questions and therefore appropriate for summary judgment.

Choice of law provisions are generally followed, except where the law violates a fundamental public policy of New York. Finucane v Interior Constr. Corp., 264 AD2d 618 (1st Dep't 1999). Imposition of such public policy only applies "when New York's nexus with the case is substantial enough that applying foreign law would threaten New York public policy." Brinks Ltd. v South African Airways, 93 F.3d 1022, 1031 (2nd Cir 1996). The New York State Legislature and New York State Courts have unequivocally found pay when paid provisions are against pubic policy.

New York State Lien Law §34 provides:

"Notwithstanding the provisions of any other law, any contract, agreement or understanding whereby the right to file or enforce any lien created under article two is waived, shall be void as against public policy and wholly unenforceable. This section shall not preclude a requirement for a written waiver of the right to file a mechanic's lien executed and delivered by a contractor, subcontractor material supplier or laborer simultaneously with or after payment for the labor performed[.]"

The law was specifically drafted to protect "those who furnish work, labor and services or provide materials for the improvement of real property" who were forced to waive their rights. Mem of Senator James H. Donovan, L 1975, ch 74, at 341. "The Lien Law has been the sole vehicle through which such interests may gain a measure of protection." Id. The New York State Legislature unanimously passed Lien Law §34.

The Court of Appeals has specifically held "a pay when paid provision in a subcontract, which transfers the risk of an owner's default from a general contractor to a subcontractor, violates New York public policy as set forth in the Lien Law." West-Fair Electric Contractors, 87 NY2d 148 (1995). Further, the court found "the Lien Law grants the subcontractor an independent right, separate and apart from a general contractor's remedies, to file and enforce a mechanics' lien against a person liable for the debt upon which the lien is founded, such as the owner, and the real estate being improved." Id. at 158.

This Court the finds the pay when paid provision of the agreement unenforceable as a matter of law. The choice of law provision cannot be enforced where the State Legislature specifically passes a law voiding enforcement of such a provision and in interpreting Lien Law §34, the Court of Appeals specifically found such a provision unenforceable. The Law was designed to protect subcontractors within the borders the State of New York. Therefore defendant's motion for summary judgment is denied and plaintiff's motion to dismiss defendant's fifth affirmative defense is granted.

The fraud cause of action is dismissed. "[A] cause of action for fraud will not arise if the alleged fraud merely relates to the breach of contract." MBW Adv. Network Inc. v Century Bus. Credit Corp.,173 AD2d 306 (1st Dep't 1991). All plaintiff's causes of action arise from non-payment of money owed to them under the contract and therefore, the fraud claim relates only to the breach of the contract.

Accordingly, it is

ORDERED that defendants motion for summary judgment is denied; and it is further

ORDERED that defendant's motion to dismiss the fraud cause of action is granted; and it is further [*3]

ORDERED that plaintiff's cross motion to dismiss defendant's fifth affirmative defense is granted.

Dated: May 6, 2004

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J.S.C.