Before the Court are separate lawsuits filed by Plaintiff Gailrach Realty Company, LLC (hereinafter referred to as Gailrach) and Plaintiff Executive Towers at Lido, LLC (hereinafter referred to as Executive) against Defendant Metro Construction Services, Inc. (hereinafter referred to as Metro) and Defendant Warren Glazer personally (hereinafter referred to as Glazer).

This litigation is in response to five mechanics liens filed against Plaintiffs Gailrach and Executive by Defendant Metro related to allegedly unpaid fees for its carpentry work, [*2]design services and construction management fees provided at Gailrach's commercial office properties in Bethpage, New York and at Executive's two contiguous residential apartment buildings in Long Beach, New York.

To summarize the corporate relationships among the parties, in 1994, the Defendants Metro and its chief executive officer Warren Glazer, were engaged to perform general carpentry work, design services and oversee construction management at the commercial buildings owned by the Defendant Gailrach in Bethpage. Thereafter, in 1995, Metro began to do work at the residential apartment buildings owned by the Defendant Executive in Long Beach.

No written contracts were ever executed by the parties concerning any of the above activities. Indeed, from 1994 until the end of 2001, the bills and invoices submitted by Metro were apparently reviewed and paid by Gailrach and Executive in such a casual and haphazard manner that it could only be characterized as cavalier.

At relevant times, Samuel Walton was the sole owner of both Gailrach and of Executive. He later became a managing member and part owner thereof, together with his son Stuart Walton. His three daughters now also own equity percentages in the companies.

It should be noted that Plaintiff's principal, Samuel Walton, and the Defendant Warren Glazer, president of Metro, are also related. Mr. Glazer is the son of Samuel Walton's first cousin. Numerous trial witnesses, including Stuart Walton, Susan Tombach and Carolyn Fried, are the children Samuel Walton, and thus are also Defendant Warren Glazer's cousins.

Stuart Walton is currently the co-managing member, together with his father, Samuel Walton, of the Plaintiffs Gailrach and Executive, and his sisters are also corporate shareholders of the Plaintiffs Gailrach and Executive, both privately held New York corporations.

The Walton and Glazer families grew up together on the same block in Laurelton, New York, within a few doors from each other's homes. Until the mechanic's liens were filed, Mr. Glazer and all of the Waltons enjoyed an extremely close personal and social relationship. However, these relationships have been completely severed as a direct consequence of this litigation.

Until April 2002, Mr. Glazer had unfettered access to the Plaintiffs Gailrach's and Executive's premises, including possession of keys and access cards to all the buildings and offices. This access privilege also extended to the buildings at Greenway Plaza, a series of three luxury office buildings in Melville, New York. These buildings are the subject of separate pending litigation in Suffolk County Supreme Court. Mr. Glazer was treated as a Walton family member by all Gailrach and Executive employees.

Metro's invoices were paid promptly when submitted, often on the same day they were received. These paid bills would be for any of the following Metro services:

1.Carpentry Services - These were described by witnesses to include minor demolition and construction of interior walls and office spaces, sheet rocking, [*3]taping, spackling, window caulking, door alignment, repair and removal, etc.

2.Design Services - This included working with building management and prospective tenants in determining how to best accommodate their needs, whether these were medical, legal or business offices. The work encompassed preparing layouts, sketches and blueprints, etc.

3.Construction Management Fees - This involved coordinating the work of various other trades and specialty subcontractors involved in completing building, renovation, or construction projects. These could include, among others, electricians, plumbers, heating and air conditioning companies, painters, glaziers, wallpaper hangers and carpeting installation companies. Metro's construction management fees included adding a percentage surcharge onto the invoice amounts submitted by any of these providers or subcontractors for both their services and for all materials they purchased or used. The percentage amount for these surcharge fees are vigorously disputed by the parties, as are the methods by which they were calculated. Concerning the latter surcharge fees for construction management, they varied, and generally ranged from as little as 8% to as much as 20% over the years.

Metro's invoices for these three types of services, commencing from 1994 for Gailrach, and from 1995 for Executive, were introduced into evidence [Defendants Metro's and Glazer's Trial Exhibits E1 (239 pages), E2 (406 pages) and F2 (6 pages) - Concerning Exhibit F2, the Plaintiffs Gailrach and Executive do not stipulate to the accuracy of the charts included therein. These were prepared as an aid for the Court.]

From 1994 through early 2000, Metro's bills were often submitted months, and even years, after the carpentry work, design services, and/or construction management services had been rendered. Simply stated, there was virtually no scrutiny of all Defendant Metro's invoices by Plaintiff Gailrach and Executive from 1994 until the end of 2001.

The Executive Towers and Gailrach complaints contain causes of action against Metro for willfully exaggerating the total sum of the five filed liens; inflating and exaggerating design services; no obligation to pay Metro for materials and labor for August 2001 - April 2002; attorneys fees in excess of $50,000 for this lien litigation; and maliciously intending to damage and interfere with plaintiffs' business by filing the lis pendens. The five mechanics liens total claim is $156,182.23.

The complaints against Defendant Warren Glazer individually accuse him of willful misconduct as manifested by the illegal and malicious billing to plaintiffs.

Metro's answers to both complaints allege unclean hands, failure to mitigate and failure to state a cause of action. Glazer's answers plead economic duress and non-liability for corporate acts.

Metro also counterclaimed against both plaintiffs for breach of the management fees; account stated; unjust enrichment; and conversion of management fees, with damages in the amounts of $74,749.40 against Executive Towers and $81,432.83 against Gailrach.

WARREN GLAZER [D/B: 6/14/49]: is the president and owner of Metro Construction Services, Inc. Samuel Walton, the former sole owner and chairman of Gailrach, Executive Towers, and Greenway Plaza, and his children are Mr. Glazer's cousins.

He attended Queensboro College and graduated with a Bachelor of Fine Arts from Pratt Institute. He later graduated from the Yale School of Architecture in 1976. However, he never completed the necessary 3½ year apprenticeship to become a licensed architect, although he testified that he had passed all the required tests.

At the encouragement of his cousin, Stuart Walton, the vice president of Gailrach, Metro began to perform general carpentry and design services at the Gailrach commercial buildings in Bethpage in 1994. The Gailrach Realty complex then consisted of three buildings with professional suites, with twenty seven tenants in one building and one tenant, Chase Manhattan Bank, in the other. Thereafter, in 1995, Metro also began to work directly for Samuel Walton, the sole owner of Executive Towers at its two residential apartment buildings in Long Beach. Executive Tower's two buildings in Long Beach have 854 residential apartments in one and 860 in the other.

From 1994 through 2002, the work Metro performed for both Gailrach and Executive included general carpentry, design services, and construction management. The projects at Executive Towers involved, at different times, installation of large water tanks, fifty apartment renovations, fireproofing, boiler room renovations, repairs of leaking oil tanks, and hallway ceiling repairs. Metro was given these jobs one at a time. Architectural services at Executive Towers were provided by Sol Seidman, and engineering services were provided by Abe Hertzberg. Both of these individuals had long-term professional relationships with Sam Walton.

With respect to Executive, he generally dealt with Samuel Walton, but he would also work with Willy Veloz, the head superintendent. Some projects required multiple subcontractors.

Mr. Glazer testified that Metro charged a 20% construction management fee, based both on Metro's services and an additional 20% surcharge added onto the third party invoices submitted by the subcontractors for their work and the materials which they purchased.

Metro did not pay the bills of the third party subcontractors directly, but it merely approved them for payment by Greenway (Melville Management Associates) on behalf of Gailrach and Executive. Melville Management Associates was the subsidiary entity from which the controller, Dorothy Gentile, made all payments on behalf of Gailrach, Executive and Greenway Plaza.

In Spring 2001, Sam Walton retained Metro to become involved with the replacement of 1,857 windows at the two Executive Towers residential apartment buildings in Long Beach. Similar to previous transactions, there was no written contract. Metro's work [*5]involved carpentry services, installation of new venetian blinds, and construction management, beginning with the choice of the window manufacturer-installer Tindel through completion of the project. Testimony indicates that at least one Metro construction management fee of 20% was included on a paid Tindel invoice to Executive. [Trial Exhibits C1 (2 pages)] and C2 (183 pages.)].

In relation to non-payment of its invoices, Metro filed five mechanic's liens against Gailrach and Executive. Mr. Glazer signed them in his Metro corporate capacity,

Trial Exhibit A-1 and A-2 related to the two Executive Towers residential buildings at 854 E. Broadway in Long Beach. The total amounts claimed by Metro was $37,374.70 against Executive Towers for construction management fees computed at the customary 20%. [Trial Exhibits A-1 (3 pages); A-2 (3 pages)].

Trial Exhibits B-1, B-2 and B-3 related to the other Gailrach commercial buildings in Bethpage. The total amounts claimed by Metro against Gailrach was $54,960.83 for carpentry, design services and construction management fees computed at 20%.

The relevant invoices are in evidence [Trial Exhibits D8 (60 pages) and E2 (406 pages)].

Mr. Glazer testified that subcontractors' invoices also reflecting a 20% construction management fee to Metro were acknowledged by Gailrach and Executive. [Trial Exhibit E-2 at pages 3225-3230] [Bates Stamp consecutive numbers (hereinafter referred to as Bates No.s)] Those invoices were presented on April 3, 2000, and $11,356.08 (20%) was paid in full on May 1, 2002. Similarly, pages 3175-3183 [Bates #s] reflect a June 13, 2000 invoice against which $31,768.03 was paid on June 22, 2000 for the contractors fee.

Pages 3149-3163 [Bates #s] also show a September 20, 2000 invoice (statement) which includes a $4,494 construction (management) fee. This was paid on October 6, 2000 and also reflects that the prior two invoices, referred to in the previous paragraph, had been paid in the amount of $11,356.08.

Mr. Glazer testified that a contractor's or construction fee was known in the trade as the construction management fee that Metro received. This testimony was never contradicted by any Gailrach or Executive witness or document during the trial. Thus, Metro's construction management fees at 20% had been paid by Gailrach concerning these three invoices submitted by the subcontractors.

Significantly, deposition testimony of Stuart Walton was later read into the record. It related to a lawsuit filed in Gailrach v. Chase Manhattan Bank (Supreme Court, Nassau County) and confirmed the payment of a 20% construction management fee to Metro. This had been claimed by Gailrach as an item of damages in that lawsuit against Chase. Stuart Walton never contradicted this nor attempted to explain this during his trial testimony.

There were also invoices for construction management fees which have never been paid. [Trial Exhibit D8 (60 pages)]. The first page of that exhibit reflects a $42,911.90 fee, which was computed at 20%. Design services, construction management fees and carpentry fees were partially unpaid on other invoices [Trial Exhibit D2 (58 pages); D3 (16 pages); D5 [*6](3 pages)].

A mechanic's lien [Trial Exhibit B1 (3 pages)] was filed for $23,575.50 concerning the Gailrach property at 4230 Hempstead Turnpike in Bethpage, in response to the unpaid invoices representing both carpentry fees and the customary construction management fees of 20% [Trial exhibits D6 (39 pages); D1 (4 pages); D7 (5 pages); E2 (Vol 2- Bates #s 2871-2875 and 2893-2896)]. They have not been paid and are the subject of this litigation.

A mechanics lien [Trial Exhibit B-2 (3 pages)] was filed for $2,896.50. This was for a 20% construction management fee charged for work at the Gailrach building at 4230 Hempstead Turnpike in Bethpage. It has not been paid and is part of Metro's counterclaim herein.

Mr. Glazer testified that both Samuel Walton and Stuart Walton told him that they were absolutely satisfied with Metro's work. This is completely consistent with the trial testimony of both Samuel Walton and Stuart Walton. Indeed, Metro received a $10,000 bonus for its work in 1999. [Trial Exhibit K (2 pages)]. The two $5,000 checks were signed by Samuel Walton.

In July of 2001, Stuart Walton contacted Mr. Glazer and told him that Greenway, Gailrach and Executive needed to tighten up their costs. Upon further inquiry by Mr. Glazer, Stuart said that Sam would accomplish this cost cutting by reducing the construction management fee.

On July 17, 2001, Stuart and Warren Glazer met at the Greenway complex in Melville, and, while walking around the parking lot, Stuart suggested reducing the 20% to a 15% construction management fee for all new work on Walton-owned properties. Mr. Glazer testified that he generally agreed, but nothing was formalized.

Mr. Glazer emphasized that the projects concerning which the five mechanic's liens have been filed in this litigation were already in existence in July 2001 and were not part of this July 2001 discussion. Moreover, Metro was asked by Stuart Walton to delay its billing until after January 2002. The 15% construction management fee is reflected in a July 17, 2001 handwritten memo from Samuel Walton to Stuart Walton. [Trial Exhibit N (1 pages)]. There were no further discussion about this topic through the end of 2002.

In January, 2002, Mr. Glazer asked for payment of $93,253.00 for Metro's previously earned construction management fees. No invoices for its construction management fees had been submitted by Metro since April 2000. Stuart offered a $50,000 payment on account, written on a Greenway Plaza check. He also told Mr. Glazer that "Sam was looking over all your invoices for completed jobs", that Sam was "... on a tear!", and that, " You should take a look at all your completed invoices".

A meeting to discuss the unpaid construction management fees was arranged and took place at the Greenway Plaza offices in Melville on February 21, 2002. Mr. Glazer attended along with Samuel Walton, Stuart Walton and Dorothy Gentile, the corporate controller. Neither before nor during the meeting, which lasted approximately two hours, were proposed documents provided to Mr. Glazer. Samuel Walton came in with a piece of paper [*7]which proposed what he was willing to pay Metro. The tone of the meeting, from Mr. Glazer's point of view, was rather dictatorial. Mr. Glazer was very unhappy, and said directly to Stuart, "How can he do this - where is he coming from?" Sam said to Stuart, "How much money have you put in? - You just sit here!" After that, Stuart said nothing else.

During their testimony at trial, neither Samuel Walton nor Stuart Walton ever contradicted these statements attributed to them. Mr. Glazer said that he felt he had been summoned to be told of their decision rather than to negotiate an agreement. At that point in the trial, Mr. Glazer became too emotionally distraught to testify, and the trial recessed for five minutes. The Court does not believe that his behavior was contrived or insincere. Mr. Glazer's final testimony about this meeting was that there was never a final agreement and that he was being handled in a strident manner by Samuel Walton.

Over the next few days, Mr. Glazer spoke with Stuart and he was told he had to submit a $20,000 invoice (reduced from $93,253.00) for construction management fees for the window replacement project at Executive Towers or he would not be paid. The perceived urgency about this was that Samuel Walton had to increase the Executive Towers rents because of the window replacement. These calculations had been sent to the Long Beach Housing Board as part of the rent increase application documentation, which reflected a $20,000 construction management fee to Metro for that work [Trial Exhibits H-1 (1 page) and H-2 (1 page)].

Samuel Walton also threatened to charge Metro $6,000 per month if the rent increase application was delayed. Nevertheless, Mr. Glazer sent him an invoice for $93,253.00 for Metro's 20% construction fees for the 2001 windows replacement project [Trial Exhibit H-3 (1 page)].

Thereafter, he received a letter from Samuel Walton on March 19, 2002, which terminated all Metro work and vacated them from the various properties, together with an instruction to return all keys and access cards. [Trial Exhibit H-5 (1 page) and H-7 (1 page)].

Mr. Glazer responded to him in writing that the February 21, 2002, $20,000 proposal was unacceptable [Trial Exhibit H-6 (1 page)]. However, he felt trapped, inasmuch as he believed that Metro at that time was owed more than $400,000 for its construction management fees by Gailrach and Executive and $160,000 for labor and materials for ongoing projects.

He testified that Stuart sent him a pre-composed, formatted letter, which stated that the $93,253.50 invoice was issued in error [see Trial exhibit H-3 (1 page)]. Stuart kept asking him for the $20,00 invoice needed for the Long Beach rent increase application. [Trial Exhibit H-10 (1 page)].

Mr. Glazer told Stuart, "Your father's holding a gun to my head!" Stuart replied, "Warren, sign the letter - my father's not a nice guy - he'll tie you up in court for five years!" Stuart further said that with new work from the companies, Metro would still be fine.

It should be noted that these statements attributed to Stuart Walton were never contradicted, explained or addressed in any way by either Stuart Walton or Samuel Walton [*8]when they later testified at trial.

Because of the emotional toll these negotiations were having on him, Mr. Glazer called Samuel Walton at home. He told him that Metro had no funds, that his back was against the wall, and that he was doing whatever he could to retrieve his money. Sam told him to take it up with Stuart.

He called Stuart that same night and was very upset. Metro had been terminated and he was out more than $500,000. Stuart said he would try to do what he could. Later, he called back and told Mr. Glazer he could not help him. He told Warren that he owed Sam $300,000 for his house, and if he helped Mr. Glazer, Sam would call in the debt.

Once again, neither Stuart Walton nor Samuel Walton ever contradicted these statements during their trial testimony and Mr. Glazer's credible testimony in this regard is unrebutted.

Mr. Glazer admitted that he audiotaped a telephone conversation with Stuart towards the end of March 2002. His justification was that he just did not know what to do. He testified that he was dumbfounded as to what they were doing to his company and to him. At that time, his only accounts receivable were approximately $20,000. The six minute tape was played for the Court. He testified that he had never taped Stuart, Sam or Dorothy except for this one conversation with Stuart. The Court finds this conduct quite disturbing but neither probative nor conclusive of anything.

Mr. Glazer explained that he had received a faxed letter from Stuart Walton. It was not on Metro's letterhead. He was told that this was what he had to prepare and it would give him the possibility of being paid the construction management fee he was owed for the Executive Towers windows project. After he sent the letter, Metro was fired. [Trial Exhibit H-10 (1 page)]. Stuart Walton denied at trial that he ever saw this document.

Concerning this letter, Mr. Glazer felt that he was being held up and that he was being told to rescind anything that he had previously said.

There was a continuing flurry of letters being sent or faxed during this time period, including a handwritten recission by Mr. Glazer [Trial Exhibits H-11 (1 page); H-12 (1 page); H-13 (1 page); H-14 (1 page)]. The sequence of these is quite confusing and the Court was not able to reconcile them, even after there was additional testimony by Samuel Walton, Stuart Walton, Dorothy Gentile and Susan Tomback.

Concerning the $20,000 payment for construction management fees involving the Executive Towers window project, the testimony about this is equally perplexing. [Trial Exhibit H-14] Mr. Glazer said that he usually received checks personally or they were sent to Fran Lombardo, his secretary, at Metro's offices. He was emphatic that neither he nor Fran ever received or deposited the $20,000 check, which Gailrach and Executive claim is the final accord and satisfaction concerning any then-outstanding Metro bills for construction management fees. [Trial Exhibit I (2 pages)].

Furthermore, neither he nor Fran Lombardo, nor anyone else at Metro, prepared the deposit slip used for this $20,000 check. He did not authorize anyone else to deposit the [*9]check, including Samuel Walton or his employees. He only found about the check having been deposited when Fran became aware of it from the bank a few days later. At no time in the past had anyone from Mr. Walton's companies ever deposited a check for Metro. Mr. Glazer was absolutely clear that he never asked nor authorized Mr. Walton or his employees to deposit this check.

This testimony is in direct conflict with that of Samuel Walton, Stuart Walton, Dorothy Gentile and Susan Tombach concerning the circumstances surrounding the deposit of the $20,000 check. He further stated that if he had received the check, he would have looked to see whether it was marked final payment or final accord.

After the February 21, 2002 meeting there were continuous telephone calls between Mr. Glazer and both Ms. Gentile and Stuart Walton. They were attempting to renegotiate fees and to amend schedules. [Trial Exhibits 17 (1 page); 19 (1 page); 24 (3 pages); G-1 (1 page); G-2 (1 page); G-3 (1 page); G-4 (1 page)].

On March 25, 2002, Metro resumed working for the Walton companies. Four days later, they were again told to cease work. They were finally terminated on April 18, 2002 [Trial Exhibit H-15 (1 page)].

It is patently clear to the Court, in reviewing these documents and trial testimony, that there never was a contract between the Plaintiffs and the Defendants, or final agreement or settlement of Metro's claims. The entire process, which was constantly changing day-by-day, and even hour-by-hour, was haphazard and frenetic. Mr. Glazer testified that the numerous e-mails between him and Dorothy Gentile illustrate that the renegotiations following the February 21, 2005 meeting were never completed. [Trial Exhibits 17 (1 page); 19 (1 page); 24 (3 pages); G1 (1 page); G2 (1 page); G3 (1 page); G4 (1 page)].

As a result of the letter terminating Metro's services, Mr. Glazer returned all keys and access cards to the buildings on March 21, 2002. He had a receipt acknowledging this [Trial Exhibit H8 (1 page)].

After Metro had returned to work later that month, it began to receive what Mr. Glazer described as backcharges. In other words, they were receiving bills from other companies that they were seeking reimbursement for overpayments to Metro, [Trial Exhibits H-18 (11 pages) and H-19 (35 pages)]. Mr. Glazer testified that none of these backcharge issues had been brought up at the February 21, 2002 meeting, at which all then-existing issues were to have been discussed.

Cross-examination commenced with questioning about Mr. Glazer's use of the word architect on his Metro stationery. He indicated that he thought he was able to use that phrase because his company hired architects and engineers for their work.When it was brought to his attention that using the word architect was not permissible, he immediately removed it. He also stated that both Samuel Walton and Stuart Walton over the years had introduced him during conversations as an architect; however, neither he nor they apparently ever corrected that misimpression. (See, generally, NY Education Law §7302)

Mr. Glazer was questioned about Metro's work from 1994 through 2002. [Trial [*10]Exhibit F (6 pages)]. It included many projects, which often involved construction management fees ranging from 15% to 20%. There were never written proposals or contracts between Mr. Glazer, Samuel Walton or Stuart Walton. When questioned about his construction management fees for lucrative, unrelated jobs Metro was doing in Manhattan during 2000, he indicated they varied between 15% and 20%.

He testified about his understanding of the issue with respect to tenant square foot costs. It was brought to his attention by Stuart Walton in July 2001 that the costs associated with renovations and contraction at Gailrach properties were far exceeding the $25.00 per square foot amount allotted to tenants. Anything in excess became a cost to them as landlord.

Apparently, Samuel Walton was examining any expenses which might be attributable to excessive costs. Metro's 20% construction management fee was a factor being considered in this regard. The first time he ever saw Samuel Walton's handwritten note about his was in approximately September 2001. [Trial Exhibit N (1 page)].

Mr. Glazer further testified that Metro's construction management fee invoices had been submitted through March or April 2000, although the work to earn those fees had been completed earlier. The next time there was a payment for construction management fees was the $20,000 check deposited in March 2002, the circumstances concerning which, as described previously, are seriously disputed by Mr. Glazer and numerous Plaintiffs' witnesses.

Mr. Glazer testified about the February 21, 2002 meeting. He was given a copy of a proposed Final Agreement at its conclusion. [Trial Exhibit 6 (1 page)]. He recalls that Samuel Walton said that he believed construction management fees of 6% to 8% would be very generous. However, Mr. Glazer was emphatic that he never agreed to even a 10% fee.

The tone of the meeting was terrible. He was not given an opportunity to discuss issues. Samuel Walton simply was dictating the terms to him. He felt "totally pressured."

There was some mention of a fixed fee for construction management. In addition , a variable fee scale was also brought up at that time. He felt that there was never a final agreement. At the end of the meeting, they all shook hands. Mr. Glazer was certain that he only received a copy of the proposal on which he wrote his notes. [Trial Exhibit G1 (1 page)].

Mr. Glazer conceded that he had agreed to reduced construction management fees of 15%, 15% and 10% for three new projects in July 2001. He never agreed to reducing the 20% fee for completed work. However, he also admitted that he stated that he did consider a possible agreement of 10% for all past completed (but uninvoiced) jobs and for future jobs.

On further cross-examination, he noted that the sheet had been given to him at the beginning of the meeting [Trial Exhibit 6 (1 page)]. At the top of the document, it said 10%; however, the amounts for the FiServ project and ET window jobs were inaccurate. He recalled having it available to refer to during the meeting.

Mr. Glazer had sent an invoice for $192,273.38 to Stuart Walton on January 24, 2002. This was for general carpentry, construction and labor. It did not include construction management fees [Trial Exhibit 1A (1 page)]. In fact, this amount may have been paid by [*11]the time of the February 21, 2002 meeting.

He received a letter from Samuel Walton on March 12, 2002 concerning Mr. Walton needing the Metro invoice for $20,000 construction management fees. This related to the Long Beach Housing Board "Major Capital Improvement" rent increase application involving the Executive Towers window replacement project. [Trial exhibit 8 (1 page)]. Mr. Glazer did not reply to this letter.

On March 19, 2002, he received another letter from Samuel Walton concerning his failure to submit the Metro invoice for $20,000 as being inexplicable. It also mentioned a conversation between Mr. Walton and Mr. Glazer on March 15, 2002. [Trial Exhibit 10 (1 page)]. Thereafter, on March 19, 2002, Mr. Glazer sent a Metro invoice in the amount of $93,253.00 as his 20% construction management fee "due at this time" for the Executive Towers window replacement project in 2001 [Trial Exhibit 11 (1 page)]. The phrase "due at this time" meant this was the final bill for that project.

Thereafter, Metro's services were terminated that same day in a letter from Samuel Walton [Trial Exhibit 13 (1 page)]. On March 20, 2002, Mr. Glazer sent a letter categorically rejecting the purported agreement [Trial exhibit 13 (1 page)].

There was a series of faxes or e-mails over the next few days. It became clear during this testimony that some of the trial exhibits which had been stipulated to and entered into evidence were not accurate. Font sizes differed and as well type styles. [Contrast trial exhibits 14 (1 page), 17 A (1 page) and 15 (1 page)].

The Court notes that in reviewing thousands of pages of documents in deciding this case, these numerous, critical document inconsistencies have made it impossible to determine the intent and conduct of the parties and witnesses.

Further questioning related to the tape-recorded conversation with Stuart Walton. He testified that he did it because he felt he was being blackmailed and that Sam was trying to renegotiate old contracts.

During the taped conversation, Mr. Glazer stated that the $20,000 amount was not discussed for the Executive Towers windows replacement project because that was Sam's idea and not Stuart's.

The plethora of documents being generated between the parties continued unabated. [Trial exhibits 6 (1 page); 17 (1 page ); 17 a (1 page); 15 (1 page)]. The dollar amounts varied in the documents.

Mr. Glazer testified that all of these exhibits demonstrate that although he sent a Metro letter agreeing to a settlement, he then rescinded it [Trial Exhibits 13 (1 page) and 18a (2 page)]. He stated that there was never a concluded agreement concerning construction management fees as late March 27, 2002.

Another series of purported settlement documents was then sent back and forth [Trial Exhibit 18 (1 page); 18a (1 page); 21 (1 page); 21a (1 page)].

Not only are all of these documents hopelessly confusing to the Court, they are decisively inconclusive, especially when numerous witnesses denied their authenticity at trial. [*12]

Mr. Glazer testified that his conversations with Dorothy Gentile as late as April 24, 2002, reflect that negotiations were ongoing and not final. [Trial Exhibit 17 (1 page); 38 (96 page); 17a (1 page); 15 (1 page); G2 (1 page); 24 (3 page); 25 (4 page).

Payments were made to Metro for carpentry and general contracting during the March - April 2002 period. However, all negotiations ended on April 15, 2002, since Samuel Walton had begun to backcharge Metro for construction management fees going back to 1999. [Trial Exhibits 25a (1 page); D 2 (5 page); and H 18 (11 page)]. These had never been discussed at either the February 21, 2002 meeting or at any other time.

Redirect examination revealed that a construction management fee of 20% had been included in a prior Long Beach Housing Board application submitted by Samuel Walton [Trial Exhibit J 3 (2 page)].

The Court finds Mr. Glazer to have been a witness whose testimony demonstrated the absence of an actual agreed-upon contract. It left him unable to sustain the burden of proof on the counterclaims on behalf of his company, Metro. However, the Court does find trustworthy various statements he attributed to both Stuart Walton and Samuel Walton, which they never chose to deny nor explain.

Portions of Samuel Walton's June 9, 2003 deposition were then read into the trial record as part of Metro's case.

Samuel Walton testified that the subcontractors fees were the basis for Metro's construction management fees. Generally Gailrach project construction management fees were 20% to Metro, although some were less. The first construction management fee for Metro at Gailrach on March 26, 1995 was 20%.

Of significance, and consistent with Mr. Glazer's testimony, was Samuel Walton's admission that he was never dissatisfied with the quality of Metro's work or services in carpentry, design or construction management.

Portions of Dorothy Gentile's July 10, 2003 were then read into the trial record as part of Metro's case. Dorothy Gentile has been the controller of Melville Management since December 1999. This is the corporate management branch of Gailrach Realty, Executive Towers, and Greenway Plaza. She had been assigned by Samuel Walton in December 2001, to research all of Metro's bills from 1999 through December 31, 2001, concerning carpentry, design services, and construction management fees. This was in contemplation of the February 21, 2002 meeting with Warren Glazer of Metro. She prepared a spreadsheet for purposes of the meeting.

Metro's construction management fees were based on a percentage of the subcontractors' invoices. The fees were generally 20%, up until the February 21, 2002 meeting. [*13]

Concerning communications with Warren Glazer after February 21, 2002, there were hundreds of telephone calls between her and Mr. Glazer.

Portions of Stuart Walton's July, 10, 2003 deposition were read into the trial record as part of Metro's case.

Stuart Walton admitted that one of the contractors, FiServ had paid a 20% construction management fee for Metro's services, which had been included in a Gailrach invoice to FiServ. This fee was never reimbursed to FiServ up through the trial.

The reading of the above depositions concluded the Defendant's affirmative case.

SUSAN TOMBACH [D/B: 5/31/46]: is Samuel Walton's daughter and a cousin of Warran Glazer. They had been extremely close their whole lives until this litigation commenced.

Currently, she is a shareholder-member of Executive Towers and Melville Management Associates. She has worked part-time for Melville on Mondays and Fridays for nine years. Her responsibilities include doing general office work, faxing, typing memos and letters, going to the post office, depositing checks, etc.

She recalled receiving a fax on March 22, 2002 in the afternoon. She realized it was important and called her father at home and read it to him. [Exhibit 18a (2 page)]. Like other witnesses, she reflected complete confusion as to the series of faxes, letters and schedules, including their authenticity as well as the times when and the manner in which they were received. [Exhibits 20 (1 page); 21 (1 page); 18a (2 page)].

She recalled seeing Warren Glazer on March 25, 2002. Specifically, she remembers her father saying that he had a check for Metro to be deposited that day. Warren said he could not get to it and she volunteered to take it to the bank to deposit it for him. She further testified that she called Warren's secretary, Fran Lombardo, to obtain the account information. [Exhibit I (2 page)]. This deposit slip is in her handwriting. After she went to the bank, she put a copy in Warren's briefcase, which was at a desk in their office area that he always used.

Cross-examination revealed that no record or log of faxes was maintained. The witness was not sure when she saw the Friday, March 22, 2002 faxes in question. Nearly all faxes, letters, etc., are time-stamped when received. [Exhibit 20 (1 page); 21 (1 page)].

She was aware that there was an ongoing dispute about construction management fees between Warren Glazer and Samuel Walton at that time. However, she was not sure if she was aware of Warren's recission of an agreement. The witness recalled reading the faxes to her father, who did not have a fax machine at his home in Kings Point.

She had no recall of seeing the draft letter sent from Greenway Plaza to Metro at 7:14 p.m. that evening [Trial Exhibit H10 (1 page)]. Interestingly, she had no recollection of the fax being discussed either at the customary Friday night dinner she had with her father or during that weekend.

In June 2003, her father had asked her to prepare a memo about the circumstances [*14]surrounding her deposit of the $20,000 check to Metro. Her father had told her that Warren had testified at his deposition that he had no recollection of the event.

She prepared the memo on Jun 13, 2003 and gave the original to her father. She kept a copy, which she had brought to Court. [Trial Exhibit Q1 (1 page)]

Remarkably, the existence of this memo never surfaced until her testimony in Court, despite numerous Court-ordered and Special Master-ordered turnover of thousands of pages of all documents relevant to this litigation, and despite nearly 15 hours of this Court's time having been spent in marking, reviewing and ruling on the trial exhibits with counsel.

The Court believes that Mr. Rubin and Ms. Roeckel, counsel for Gailrach and Executive, were quite chagrined by this witness' document disclosure. No negative inference was drawn against either counsel, both of whom have exhibited exceptionally professional conduct throughout the trial, as have their colleagues, Mr. Neufeld and Ms. Finkelstein, on behalf of Metro and Warren Glazer.

However, the production of this heretofore undisclosed document significantly damaged the credibility of this witness and of Samuel Walton concerning this critical issue.

She testified she first found out she would be a trial witness in January 2005.

The last time she spoke with her cousin, Warren, was on the day she deposited the check.

DOROTHY GENTILE [D/B 8/13/48]: has been employed as the controller of Melville Management, LLC., the management office for Gailrach Realty and Executive Towers, since December 18, 1999.

Although she has no formal education beyond high school, she has significant training and experience, progressing from bookkeeper to controller at two Long Island firms which closed. Samuel Walton hired her to manage the payroll accounts, to reconcile the 10 bank accounts involved with his companies, and to perform detailed financial analyses as assigned.

In early 2002, she was told by Samuel Walton that he and Stuart wanted to meet with Warren Glazer about Metro's fees. She began to assemble all relevant data from 1999 through December 31, 2001. The nature of her report concerning Metro involved creating Excel computer spreadsheets, and examining the soft costs (rental) and the hard costs (construction-related). She believed the industry standard for total construction costs was $25 per square foot. She first analyzed Metro's total carpentry and construction management costs and felt that they were too high. After discussing this with Stuart Walton, she recalled speaking with Warren Glazer in mid-2000, who said that there were too many jobs going on and they would worry about construction management fees later.

When she initially discussed this with Mr. Glazer, there were more than 30 open projects involving unpaid, uninvoiced, or previously paid amounts for construction management fees. In fact, the last Metro construction management fee invoice had been received and paid in April 2000.

The February 21, 2002 meeting was very cordial. Of interest was her unequivocal [*15]testimony at two different times that nothing was distributed to Warren Glazer prior to or at the meeting. Her own spreadsheet analysis had been shared only with Samuel Walton before it took place.

Initially, Mr. Walton wanted to reach a comprehensive agreement on all past and current construction management fees. Warren Glazer adamantly protested revisiting previously paid work and Mr. Walton agreed that only current, or completed but uninvoiced, projects would be discussed.

Samuel Walton indicated that he had done his own research and that he believed construction management fees should be no more than 6% to 8%. Warren tentatively agreed that construction management fees at various jobs could be billed at different rates, depending on the complexity of the work.

When the meeting concluded, Mr. Walton and Warren shook hands. It had been very cordial throughout. She then prepared what she believed was a final agreement [Trial Exhibit 6 (1 page)]. When she handed it to Warren later that day, he thanked her.

Thereafter, she received two letters from Mr. Glazer concerning two separate projects which mentioned construction management fees of 10% [Trial exhibit 7 (1 page) and 7a (1 page)]. On March 14, 2002, there was another meeting with Warren Glazer, Samuel Walton, Stuart Walton and her.

The document identified earlier in the trial was not the one she created as a result of that meeting [Trial Exhibit G2 (1 page)]. She prepared the one which had her formatting. [Trial exhibit G3 (1 page)]. This was another illustration of the confusion exhibited by the witnesses concerning critical documents. This document addressed the payment of construction management fees to Metro in the amount of $115,209, including the Executive Towers window project fee of $20,000. [also see Trial Exhibit 6 (1 page)].

Ms. Gentile testified that the tone of the March 14, 2002 meeting, similar to the one on February 21, was cordial. Mr. Glazer had still contended that the Executive Towers window construction management fee should be increased [Trial Exhibit 10 (1 page)]. Samuel Walton agreed to go from $10,000 to $20,000 but refused any further negotiation in that regard. However, even though tentative agreements were reflected in updated documents, they continued to be supplemented. [Trial Exhibit 9 (1 page)]. A Metro construction management invoice for $93,253 was received in March 15, 2002 at 3:59 p.m. [Trial Exhibit 11 (1 page)].

As a consequence, Samuel Walton wrote a termination letter to Metro on March 19, 2002 [Trial Exhibit 12 (1 page)]. Thereafter, on March 20, 2002, Warren called Ms. Gentile and said he had made a mistake and still wanted to further negotiate. She prepared another document at the direction of Mr. Glazer [Trial Exhibit 15 (1 page)]. This was during the telephone conversation.

However, increasing the Court's confusion with this cascade of documents was Ms. Gentile's assertion that the copy of this document [Trial Exhibit 15 (1 page)] was not the same one marked at her deposition [Dorothy Gentile EBT Exhibit 17A]. Indeed it has [*16]handwriting which was not hers, includes some different amounts, and has some different language. [The Court notes again that this was another critical, stipulated-to trial exhibit which went awry].

She also prepared another document on March 21, 2002, which she sent to Mr. Glazer by e-mail at 12:54 p.m. This was yet another adjusted schedule. He later telephoned her and said it was acceptable. She did not advise Samuel Walton of this development until the next day, Friday, March 22, 2002. At that point, Samuel Walton threw up his hands and said "Just do it!" Thereafter, she called Mr. Glazer and told him it was done, and he said that was fine.

However, she testified that everything hinged on Mr. Glazer rescinding in writing his previous Metro's Executive Tower invoice for $93,253.00 and sending the Metro invoice for $20,000 concerning the Executive Towers window project construction management fee. The latter was critical to the rent increase application then pending before the Long Beach Housing Board.

Later that day, she received the handwritten recission from Mr. Glazer. From her perspective, the final agreement was sent on Friday, March 22, 2002 [Trial exhibit 24 (3 pages)]. On March 25, 2002, Mr. Glazer was in the Melville office and she said to him that she was glad to have him back. She had given copies of the various documents to Stuart Walton [Trial Exhibits 10 (1 page) and 21 (1 page)].

The witness provided her recollection about the deposit of the $20,000 construction management fee check to Metro for the Executive Towers window project. She recalled that Warren Glazer was standing at Susan Tombach's desk and that Susan offered to deposit the check for him. Warren said for Susan to call his secretary, Fran Lombardo, to obtain the bank account information and she did. When Susan returned from the bank, Susan placed the deposit slip in Warren's briefcase.

By March 26, 2002, Metro was back to its normal work, and on March 28, 2002 Mr. Glazer brought in some open invoices. [Trial Exhibit 25 (4 page); 25a (1 page)].

Occasionally, there were adjustments made to payment of invoices when Ms. Gentile's analysis revealed that there may have been prior partial underpayments or overpayments. These were always addressed in a casual and open manner between Ms. Gentile and Mr. Glazer.

Conversely, if she discovered that Metro was owed money due to a mistake in the payment amount of an invoice, she would remit a check to Metro. Cross-examination revealed that Ms. Gentile had no personal knowledge, based on her own work experience, that the industry standard for tenant renovations was $25 per square foot. Significantly, she conceded that there was never a written agreement entered into at the February 21, 2002 meeting. Indeed, the document concerning the completed design fees which she prepared at the end of the meeting for Mr. Glazer, at the direction of Samuel Walton, was never signed by Mr. Glazer [Trial Exhibit 19a (1 page )].

At the February 21, 2002 meeting, Samuel Walton made it clear that he only wanted to pay 6% to 8% for construction management fees, and he clearly implied that he had been [*17]overpaying. One project in contention was with FiServ, in which a proposed construction management fee was $10,000 and was not based on a percentage. However, FiServ had been billed for a 20% construction management fee to Metro and had paid the bill to Greenway. [Trial Exhibit 6 (1 page)].

She recalled that in January 2002, Greenway paid Metro a total of $50,000 on account for construction management fees related to three separate projects. Either Samuel Walton or Stuart Walton told her that Warren needed money.

No invoices were provided by Metro at that time. Historically, Metro was paid or advance monies on account, and invoices would be submitted later concerning construction management fees. Actually, no invoice was ever received concerning this $50,000 advance.

The Court found Ms. Gentile to be a somewhat credible witness; however, her allegiance to Samuel Walton and to Stuart Walton was readily apparent. Her testimony further underscores the fact that no prior agreement nor final agreement concerning construction management fees had ever been agreed upon.

WILLY VELOZ [D/B: 1/30/41]: has been employed by Samuel Walton, the owner of Executive Towers, for 27 years as the superintendent of the two buildings. He has 6 employees and is responsible to assign them to their duties.

He described the 2001 window replacement project. Tindel was the contractor who manufactured the windows, knocked out the existing windows, and put in the new ones. This company had 2 supervisors and 12 to 17 employees on site, separated into smaller groups for various tasks. These included fabrication, bringing windows upstairs, removal of old windows, installation of new windows, taking old windows downstairs, and caulking the new windows. Each apartment would take approximately 1 to 2 hours. Only about 10% of tenants asked for help from his staff with respect to moving, protecting or securing their furniture and possessions. Sometimes, Mrs. Carolyn Fried, the general manager and rental agent, would speak to a tenant directly if they needed assistance.

Mr. Veloz testified that he saw Warren Glazer from Metro, whom he knew, only during part of the first three days of the project and then towards the very end of the work.

Metro employees were on site at all times, because they had to install the new venetian blinds almost immediately after the installation and caulking of the new windows were completed in each apartment. In approximately 100 apartments, additional caulking had to be done. Tindel sent one man to do the work for nearly a month. Metro's employees were not there during that time.

Cross-examination revealed that after the first three days of the project, Metro employees were there eight hours per day until the final window installation was completed.

Mr. Veloz was a credible witness. His testimony was somewhat at variance with that of Mr. Glazer but was inconclusive concerning the extent of Metro's actual involvement during all phases of the window replacement project.

She was the resident manager at Executive Towers in Long Beach, where she was in charge of renting, applications, tenant complaints, and work orders. Her duties brought her there on various days and she generally work more than 40 hours per week.

Concerning the window replacement project, she was there virtually everyday. The Tindel crew was supervised by Andy, who was fully in charge of his crew and their assignments. Metro's involvement was to replace the venetian blinds. The actual work of Tindel in each apartment was very methodical and repetitive, generally requiring approximately an hour and a half. Metro employees were not in the apartments when the Tindel workers were removing and replacing the windows.

Cross-examination confirmed that Metro was not involved with the subsequent re-caulking of the nearly 100 windows which needed additional work.

The witness' brief, but credible, testimony reflected her interest as a part-owner of the Walton properties. It did vary from the involvement of Metro as testified to by Warren Glazer.

STUART WALTON [D/B: 4/24/50] is the son of Samuel Walton. He is currently the co-managing member and co-owner of Melville Management Associates, Executive Towers, LLC and Gailrach Realty, LLC. He earned a B.S. in Finance from Syracuse University and an M.S. in Real Estate Finance and Appraisal from the University of Wisconsin in 1972. Over the years, he had worked as a mortgage banker and mortgage loan analyst before joining his father's companies in 1979.

He has known his cousin, Warren Glazer, since pre-kindergarten. As a result of this litigation, their relationship has severed. When Stuart's son was a minor, Warren was named a possible guardian on his will and estate papers.

Metro was first retained by him in 1994 for a small carpentry project at Greenway Plaza in Melville. It then began to work as construction manager to coordinate all trades and subcontractors there. Thereafter, in 1995, Metro began to do carpentry work, design work and construction management at both the Gailrach complex in Bethpage and at Executive Towers in Long Beach. There were no written contracts or pre-approvals. When Warren brought in his invoices, they were promptly paid. Metro's construction management fees were billed at 20% of subcontractors bills until January 2002. At that time, Samuel Walton and he began to become concerned about construction costs, which were averaging nearly $35 to $38 per square foot, with construction management fees close to $3 to $4 per square foot. He testified that he had no idea what construction management fee percentages should be, since they had never previously incurred that expense in their work.

In Spring 2000, he discussed his concerns about excessive square foot and [*19]construction management costs with Warren Glazer. Warren agreed to work this out in the future. The witness and his father wanted to reduce their costs to $25 per square foot.

There were never complaints about the quality of Metro's work.

The general manner in which Metro was retained was that he would call Warren to begin a project. There were always constant telephone calls between the two men.

At present, he is in charge of day-to-day operations for all the companies. His father is chairman, while he functions as president. Warren was always at their offices during the years Metro worked for them from 1994 through April 2002. His father and he had told their controller, Dorothy Gentile, to prepare spreadsheets to analyze all costs related to tenant improvement projects on a trade-by-trade basis, including heating and air-conditioning, plumbing, carpeting, construction, electric, and construction management. [Trial Exhibit N (1 page)].

When he told this to Warren, Warren said, "I'm not going to put you in a bad position - don't worry about construction management costs - we'll work it out later." It was a very productive and cordial conversation. Sometime in 2000, he recalled Warren telling him that he wanted to put off discussing construction management fees. This was because Metro had substantial income coming in from New York City jobs and Mr. Glazer did not want to show any more income in 2000.

Consistent with other witnesses, Stuart Walton testified that no documents were distributed prior to or during the February 21, 2002 meeting. In his opening remarks, Samuel Walton said that he believed a very generous construction management fee would be 6%.

Warren vehemently objected to any discussion of re-examining previously paid construction management fees of 20%. His father agreed that only post-December 31, 2001 jobs would be discussed, whether completed but uninvoiced, or in progress but uninvoiced. They all agreed that a "one size fits all" percentage would not be fair, in view of the fact that some jobs were more complex than others. The meeting lasted nearly three hours, and he was surprised that there was agreement on everything except the Executive Towers window project, the FiServ project, and the Executive Towers gymnasium project. FiServ was a problem from the Waltons' point of view, because it was mostly decorative, and they felt the 20% construction management fee based upon the cost of very expensive carpeting was an excessive windfall to Metro.

The Executive Towers window project was not discussed at length, but he believed a $10,000 fee would have been generous. Warren agreed to $20,000 and his father approved that amount.

After the meeting was over, Dorothy Gentile prepared the Excel spreadsheet and distributed copies [Trial Exhibit 6 ( 1 page)].

The witness also discussed the Warren's spreadsheet which Warren had sent to him on February 7, 2002. [Trial Exhibit 3 (3 page)]. It included construction management fees of 10% for the gym and conference center at Executive Towers, 10% for the Executive Towers windows, and 15% for FiServ. For some reason, he shared Warren's figures with [*20]Dorothy but not with his father.

The witness believed Warren's reductions on these percentages were based on the informal conversation which he and Warren had in Spring 2000.

After the meeting on March 21, 2002, he had a telephone conference call with Warren, at which Dorothy was present in the office. They tried re-working the FiServ amount, the L.I. Urological project, and the Christie's job. He was aware that Warren and Sam had numerous telephone calls between February 21, 2002 and March 21, 2002 about construction management fees, etc.

He reviewed the transcript of the telephone call which Warren had allegedly taped on March 25, 2002 between Warren and him. [Trial exhibit 50 (6 page)]. He was emphatic that this conversation could not have taken place on that day, but on March 19, 2002. Because of a reference in the transcript and tape to a luncheon he had with his stepdaughter's father-in-law, Burt, he had checked with Burt's secretary and confirmed the actual date of the luncheon was March 19, 2002. Mr. Walton only became aware of the tape recording during the litigation. He stated that the transcript did not include the beginning of the conversation.

He has never discussed the taping with Warren. After he returned from the luncheon with Bert that day, he found an invoice from Warren and Metro for $93,253.00 for the Executive Towers window project [Trial Exhibit 11 (1 page)].

When he called Warren to ask him to authorize Stuart to rip up it, Warren said, "No!". Thereafter, Stuart faxed the letter to his father. Samuel Walton then sent a letter to Warren. [Trial Exhibit 12 (1 page)]. The next day, March 20, 2002, he checked and confirmed that he was at an all-day meeting on March 25, 2002 with the Bureau of Alcohol, Tobacco and Firearm's personnel about their office lease, the alleged date of the taped call.

When he returned from that meeting, Dorothy told him that she had spoken with Warren several times that day in an attempt to resolve their differences. On March 22, 2002, they had the previously-described telephone call with Warren, who said that he was happy with the percentages they worked out on the L.I. Urological, FiServ and Christie's projects. Thereafter, they went in to Sam's office and he lifted his hands and said, "Go ahead and do it!"

He called Warren and said that Sam had approved the settlement, contingent on Warren rescinding the $93,253.00 invoice for the Executive Towers window project. In addition, Warren had to send in the $20,000 invoice for the Executive Towers windows project, which was critical to the rent increase application pending before the Long Beach Housing Board [Trial Exhibit 18a (2 page)]. Warren faxed them to him. He then called Warren and suggested that he call Sam and "make nice." On March 27, 2002, he received an invoice from Warren concerning the FiServ project, for which Warren was paid pursuant to the March 22, 2002 agreement.

Up until April 2002, the tone of the relationship between Warren and him was the same as it had been for fifty years. Metro stopped working for them in mid-April 2002. Once Warren filed the mechanic's liens, their personal relationship ended. [*21]

Cross-examination revealed that his father told him not to speak with Warren after the mechanics liens had been filed.

He admitted that he told Shirley Hill, the wife of the Commerce Bank president, that Metro was no longer an approved contractor at Greenway Plaza or their other properties.

He was confronted with deposition testimony from February 8, 2002 in the case of Gailrach v. Chase Manhattan. Notwithstanding his testimony on direct examination that he had no idea what construction management fees should be, because they had never paid them, he testified in that examination before trial that here was a $6,140 item of damages alleged for Metro's construction management fees of 20% to coordinate all subcontractors on the project.

This is critical testimony which directly contradicted his direct trial testimony. No attempt to explain or modify this answer was attempted on redirect examination of the witness.

Concerning the percentage for construction management fees, neither he nor Sam ever questioned the 20% amount until Sam spoke with some contractors he knew. Stuart Walton never personally called any contractors about this issue. Even though Samuel Walton agreed at the February 21, 2002 meeting not to review or renegotiate construction management invoices billed prior to December 31, 2001, he conceded that adjustments began to be sent to Metro in this regard. The witness testified that they were not backcharges. [Trial Exhibit H18 (11 page); H 19 (35 page)].

The witness began to be extremely and unjustifiably argumentative at this point in the trial. On three separate occasions, the Court had to admonish the witness about appropriate demeanor and the inappropriate tone of his answers. Mr. Neufeld, during his cross-examination, was very professional and respectful to Mr. Walton, and indeed all other witnesses, throughout the trial.

The witness then admitted that the entire situation with Warren, his father and him was quite awkward, particularly during the February 21, 2002 meeting when his father unexpectedly brought up renegotiating previously paid invoices from the mid 1990's.Continuing cross-examination revealed that Stuart Walton was not aware of the 20% construction management fee charged by Metro for the Executive Towers window project prior to the February 21, 2002 meeting.

He was not personally involved with the management of the Executive Towers buildings at that time. However, he could not respond adequately to further questions when confronted with the February 7, 2002 memo from Warren [Trial Exhibit 2 (6 page)]. At both page 2 and page 6 of this exhibit, it makes three specific references to construction management fees of 20%.

There was testimony that the purposed draft letter Warren had testified that Stuart had sent to Warren was actually not Stuart's. He was certain that he did not draft all of this letter, even though the fax information states that it came from his office at Greenway on March 22, 2002 at 7:15 p.m. The first two paragraphs, however, looked familiar, even though the [*22]last paragraph was definitely not his.

Once again, he, like numerous others witnesses, engaged in thoroughly befuddling testimony about who composed or prepared critically important documents, when they were sent or received, and which ones were the actual or copies of the originals; [Trial Exhibits H10 (1 page); H13 (1 page); 21 (1 page); 18a (2 page); H8 (1 page); H15 (11 page)].

Continued questioning by both counsel concerning documents only highlighted the inexorable and obvious conclusion, that being that there was never a concluded contract, agreement or a settlement among these parties, regardless of the history of "past" dealings. Furthermore, Stuart Walton emphasized that the so-called terms of the February 21, 2002 agreement concerning construction management fee percentages were modified and re-negotiated frequently during in March 2002. Indeed, he testified that between March 26, 2002 and April 18, 2002, when Metro was terminated, there was ongoing analysis with respect to these fees.

Finally, when confronted with the deposition testimony he gave in this litigation, he confirmed that Greenway billed FiServ a 20% Metro construction management fee, which FiServ paid and was never reimbursed.

The Court found Stuart Walton to be an argumentative and even belligerent witness. He was intent on giving only unresponsive answers to questions in a manner which he believed would color the Court's factual interpretation in a manner favorable to his position. In addition, in numerous critical areas, he never attempted to clarify or contradict significant statements attributed to him by Warren Glazer or provided in his own sworn deposition testimony in this and related litigation.

SAMUEL WALTON [D/B: 9/23/19]: is currently the managing co-director of Gailrach Realty and Executive Towers. He was the sole owner and chief executive officer, until recently, when they were reorganized for the benefit of his children. He has been in the real estate business since 1950, as a builder, developer and landlord of residential, industrial and commercial properties. Although he is an admitted attorney and a certified public accountant, he never practiced in those fields. He built the two Executive Towers residential buildings in 1968 and 1969. The three Gailrach buildings he developed in the 1980's.

According to the witness, he never used an outside management company and regularly employed a team of contractors who worked for him for nearly 40 years until they retired.

Warren Glazer is his cousin. Mr. Walton's father and Warren's grandmother were siblings. Answering these questions made the witness quite emotional.

Metro services began to work for him at Gailrach in 1994 and at Executive Towers in 1995. They were initially retained by his son, Stuart.

Of interest was his emphatic testimony that he never paid construction management fees in his work prior to Metro's charges for those services. Furthermore, he never discussed the concept of construction management fees with Warren Glazer before Metro started [*23]working at Executive Towers.

Metro's carpentry fees were calculated cost of labor plus 20%, 10% allocated for overhead and 10% for profit. From 1995 to 1997, Metro's construction management fees ranged from 4.7% to 15% to 20%.

In late 2001 or early 2002, he assigned Dorothy Gentile, his corporate controller, to begin a review of all tenant improvement costs. They would reimburse commercial tenants, who used their own contractors, up to $25 per square foot. Dorothy's spreadsheets demonstrated that their costs were ranging up to $35, and even as much as $40 per square foot.

In July 2001, he gave Stuart a handwritten memo about this, and Stuart spoke with Warren to arrange a meeting [Trial Exhibit N (1 page)]. The witness testified that Stuart told Warren in April or May 2000 not to submit further construction management invoices until these fees were agreed to. This was yet a third version of why they were not submitted, and is distinct from those testified to at trial by both his son, Stuart, and by Warren Glazer.

On February 8, 2002, prior to the agreed-upon meeting of February 21, 2002, Metro submitted a $57,000 construction management fee for the FiServ project, which became a problem.

At the February 21, 2002 meeting, Dorothy Gentile brought a list of all Metro projects for which construction management fees had never been invoiced. He had his own proposed list of fees, varying from 6%, 8%, 10%, and 15%. The contractors he had spoken with about these fees were from the heating-air conditioning, electrical and masonry trades.

Neither Dorothy's nor his sheets were provided to Warren, but after the meeting, she prepared a synopsis [Trial Exhibit 6 (1 page)].

From his perspective, the meeting was collegial and the tone was even-tempered. At the end, they shook hands. All witnesses agreed that Samuel Walton conducts himself in a courtly, and even genteel, manner at all times. He never raises his voice or uses profanity.

He recalled that the next time he spoke with Warren was on March 15, 2002, during which Sam reminded him to submit the $20,000 invoice needed for the Long Beach Housing Board application for rental increases. This was a result of the window replacement project at the Executive Towers buildings. Mr. Walton had sent Warren a letter about this on March 12, 2002.

Thereafter, on March 19, 2002, he received a call at home from Stuart. He was told that Warren had faxed an invoice to the office for approximately a $94,000 construction management fee for the Executive Towers window project.

He then dictated a termination letter to his secretary Pat, which was faxed to Metro. [Trial Exhibit 12 (1 page)].

They began to use an employee, Jim Valsecchi, who is now deceased, to supervise ongoing projects at the Greenway buildings in Melville. He would coordinate the sub-contractors, with the usual sequence being carpentry, electrical, plumbing and heating-air conditioning. [*24]

On Saturday morning, March 23, 2002, Warren came to his home in Sands Point. By that time, Warren had already faxed over the requested $20,000 Executive Towers window project construction management invoice, together with a handwritten recission of the previous $94,000 invoice.

Warren was very apologetic and admitted he had made a terrible mistake.

A few days later, Stuart or Dorothy came to him and said that negotiations had been completed with the other outstanding construction management fees from $115,209.00 to $131,209.00. [Trial Exhibit 24 (2 pages)].

Upon further questioning, the witnesses conceded that this constituted further negotiations.

He next saw Warren on Monday, March 25, 2002 at the Melville offices. It was at that time his daughter, Susan, took the $20,000 check paid to Metro to be deposited at the bank as agreed to by Warren. This related to the construction management fee for the Executive Towers window project.

On that day, Samuel Walton submitted the major capital improvement application to the Long Beach Housing Board. One of the attachments was a copy of the $20,000 check paid to Metro for the windows project.

After March 25, 2002, the witness began to look at construction management invoices. There were no outstanding or unpaid Metro invoices as of March 27, 2002, with the exception of an open invoice for $24,476.10, which had some deductions. That invoice continued to be open as of May 3, 2002, when they received the mechanic's liens Metro had filed.

Specific questioning about the Executive Towers window project revealed that, from his point of view, Metro's work was incidental and involved installing venetian blinds. He believes that a $5,000 fee for Metro's construction management there was warranted, that a $10,000 fee was generous, and that the $20,000 was way over value. The witness says he told this to Warren at the February 21, 2002 meeting.

On April 18, 2002, Metro's construction management services were terminated; however, its carpentry and design services continued. He now relies on an employee, Bob Roden, to coordinate sub-contractors at Greenway Plaza in Melville and at the Gailrach properties in Bethpage.

Cross-examination revealed that the February 21, 2002 meeting was held to discuss Metro's unpaid claims.

The witness agreed that at its beginning, he had brought up previously paid construction management invoices. However, since Warren vigorously objected, he conceded this point and it was then a closed issue.

He described the accounting methods used at the properties. Executive Towers was run on an accrual basis, which recognized cash and disbursements but makes adjustments for unpaid expenses. Gailrach and Greenway were maintained on a cash basis, wherein records were based on actual receipts and disbursements. [*25]

Concerning the March 23, 2002 occasion, when Warren came unexpectedly to his home, he did not want nor expect Warren to be on his hands and knees. Warren pleaded for forgiveness and had wanted to reinstate their relationship, which had been negatively affected by this situation.

Mr. Walton felt that there had been an absolute, unconditional agreement that the Executive Towers window project construction management fee was for $20,000.00

Warren had agreed to this amount on March 21, 2002 and had sent a confirmation on March 22, 2002. [Trial exhibit H10 (1 page)]. He testified that he did not draft this letter nor suggest to Stuart that Stuart should send this draft letter to Warren. He was aware that Stuart had told Warren about the suggested language but it was the witness' understanding that Stuart had not drafted the letter.

This directly contradicted Stuart Walton's testimony on this critical issue, wherein Stuart denied he had ever suggested to Warren what to write in the letter. It also highlights the lack of definiteness of the essential terms of the purported contract and the settlement among the parties.

The witness was further questioned about his testimony on direct that there were no past payments for construction management fees. Documents were introduced to demontrate that these fees had indeed been paid on prior work. [Trial Exhibit U (20 pages); W (11 pages)].

Concerning the thirty backcharge letters which were sent by him to Metro in a series of letters beginning in April 2002, the witness testified that these were normal business letters. However, this was clearly inconsistent with his earlier testimony that he had agreed at the February 21, 2002 meeting not to renegotiate past payments made to Metro for pre-2000 construction management fees. Indeed, Mr. Walton admitted that he had made such a list prior to that meeting but never brought it up.

The witness responses to these questions were not credible, particularly when he characterized these backcharges as adjustments. This testimony was a significant departure from his earlier position.

When he finally terminated Metro on April 18, 2002, the costs he referred to were construction management fees. He testified that he was not annoyed when he wrote the letter. This was also not believable.

Initially, the Court addresses the claims against Warren Glazer.

Both plaintiffs' complaints contain causes of action seeking $5,000,000 against Warren Glazer individually for willful misconduct in furtherance of his "rages, animosity and desire to do harm to plaintiff ..." as well as illegal and malicious overcharges in billings to plaintiffs.

Clearly, the testimony and exhibits clearly indicate that defendant Glazer filed the [*26]five mechanics liens on behalf of Metro. However, he performed the carpentry, construction management, and layout design services, not as an individual, but as an agent, albeit chief executive, of the defendant Metro Construction Services, Inc.

As such, it is axiomatic that as an agent he is not personally liable for these corporate acts which are the subject of this litigation. Weinreb v. Stinchfield __AD3rd __ (2nd Dept. June 13, 2005).

The inclusion of Warren Glazer was unnecessary and borders on frivolous. This Court is empowered to order sanctions against the plaintiffs Gailrach and Executive Tower for frivolous pleadings pursuant to 22NYCRR Part 130.

However, there has been no testimony of any personal damages sustained by Warren Glazer in having been personally named as a defendant. Thus, the Court will not impose any such consequences herein; however, the Court finds as a matter of law that there was no basis whatsoever for him being named as a defendant herein. Accordingly, the claims against defendant Warren Glazer are dismissed in both actions.

The threshold question for the Court to determine, before addressing the specifics of the plaintiffs' complaints, are whether enforceable contracts existed between the parties.

The requirements indicating the existence of a contract are the parties, their legal capacity to enter into a contract, a meeting of the minds as to the contract terms, and consideration. Express Indust., and Terminal Corp v. NY State DOT, 93 NY2d 584 (1999).

Here, the parties never negotiated their fee arrangement with what they regarded as essential terms and elements. Furthermore, over the course of years, performance and payments were made upon an unspoken understanding that agreements on unsettled matters or projects would follow in a similar manner.

No objective criteria can be found from the course of conduct as manifested by the past payments and sworn testimony that a 20% construction management fee was the standard custom and practice between the parties. However, many 20% payments pursuant to that informal arrangement were uncontested. Other similar fees were inexplicably billed at 8%, 10% and 15% for similar work.

The statute of frauds, as codified in GOL §5071 (a)(1), when applied to the facts and circumstances evoked herein, would imply that the parties never entered into a binding contract and their oral agreements would bar any recovery because defendant's obligations could not be performed within one year. Specifically, there was testimony and documentation regarding the installation of windows that have warranty provisions well beyond a year. There were also fees to be earned upon completion of complex commercial construction projects with the fee based on a net cost to defendant. The myriad of documentary exhibits do not constitute an indication that there was a meeting of the minds on a contract for services provided by defendant Metro. Donaldson Acoustics Co., Inc., v. [*27]NAB Construction Corp., 273 AD2d 192 (2nd Dept. 2001).

The formation of an enforceable contract requires parties with legal capacity to contract, consideration, and mutual assent to the contract terms. A flexible standard is used by Courts in determining the "meeting of the minds" element within the context of

specifics of the contract. Express Indus., and Terminal Corp., v. NY State DOT, (supra) 93 NY2d 584(1999).

It is well understood that the intent of the parties is determined by considering the relationship of the parties. A person's unexpressed intent has no bearing; only the intent indicated by words and acts are considered by the Court. However, the Court cannot speculate on the sub-plots and unspoken interfamilial overlay issues to find the requisite manifestation of an intent to enter a contract. Manhattan Theatre Club, Inc., v. Bohemian Benevolent and Literary, 64 NY2d 1069 (1985).

It is clear to this Court that the relationship among these corporations, and indeed, the true parties in interest, is totally labyrinthine. It is interesting to note that Metro's five liens specified that its employers, and the entities to whom materials were delivered and for whom services were performed, were Gailrach, Executive Towers and Sam Walton. This allegation of Sam Walton's personal responsibility for Metro's fees transcends the putative business relationship the parties are seeking the Court to formalize.

However, any attempt to divine an intent, agreement, or actual consideration concerning these construction management and other fees would require pure speculation and surmise by the Court.

Accordingly, the plaintiffs Gailrach's and Executive's claims for a declaration that the five liens are void for willful exaggeration are denied.

Likewise, the Defendant Metro's counterclaims for breach of contract, unjust enrichment and conversion are denied. The vast trial record reveals scores of discrepancies as to dates of services, the percentages due for various construction management fees, as well as other salient elements necessary for a finding that a contract existed between these parties.

In the counterclaims interposed by Defendant Metro, it is alleged that plaintiffs failed to pay for management design services, layout/design services, and construction supervision. Additionally, defendant Metro claims causes of action based upon account stated, breach of contract, and conversion.

With respect to the account stated counterclaims by defendant Metro, seeking payment of $74,749.40 from Executive Tower and $81,432.83 from Gailrach, the Court finds no recovery for defendant, Metro. There is no showing a contract between the parties existed to thereby render the "invoices" indicative of a contractual relationship.

It is well established in New York that failure to protest the information contained in [*28]invoices gives rise to an action for an account stated. Bay Ridge Lumber Co. v. Summit Renovation Corp., 271 AD2d 559 (2nd Dept 2000). There was an abundance of self-serving testimony that the work done by Metro for both plaintiff during the years in question was without benefit of a written contract or set "percentages". Conspicuously missing in this case are many documentary indicators of an actual contractual relationship and mutual obligations.

Rather, there was a plethora of conflicting testimony from both sides establishing multiple areas of disagreements regarding nearly all financial arrangements. Indeed, the general conduct of the parties over the years borders on nonfeasance, if not misfeasance, in virtually every regard of common sense business practices. This was conceded by the plaintiffs' chief executive officer Samuel Walton, who is both an attorney and certified public accountant. All of the counterclaims are dismissed.

Assuming arguendo that the Court found there was a series of valid contracts between the parties, plaintiff's application to vacate the liens would be denied.

New York's Lien law is remedial in nature and intended to protect those who have directly expended labor and materials to improve real property at the direction of the owner or a general contractor. Matter of Niagra Venture v. Sicoli Massaro, 77 NY2d 175 (1990).

In this case, Defendant Metro timely filed two mechanic liens against Plaintiff Executive Towers' two properties on East Broadway in Long Beach, NewYork. Defendant Metro also timely filed three mechanics liens against three Gailrach properties on Hempstead Turnpike in Bethpage, New York.

Lien Law §23 provides that this article is to be construed liberally to secure the beneficial interests and purposes thereof. Thus, substantial compliance with its provisions shall be sufficient. However, because Lien Law §39-a requires an element of willfulness and is construed as penal in nature, the language must be strictly construed.

In evaluating the testimony and thousands of pages of complex and contradictory exhibits submitted in support of Plaintiffs' claims, the Court would not strictly construe the statute in favor of the plaintiffs. Willful exaggeration by Metro cannot be ascribed from evidence of honest differences of opinion as to the amounts due or inaccuracy in computation of the liens. East Hills Metro, Inc., v. J.M. Dennis Corp., 277 AD2d 348 (2nd Dept. 2000). The plaintiffs did not even partially met their burden of proof of showing Metro's intentional, deliberate, or willful exaggeration of the five mechanics liens. Goodman v. Del-Sa-Co Foods 15 NY2d 191 (1965). Executive Towers and Gailrach have failed to sustain their burdens of proving that Metro willfully exaggerated its lien.

The mere fact that the performance of a contract becomes economically unprofitable is insufficient to relieve a party from his contractual obligations, Kel Kim Corp. v. Central Markets, 70 NY2d 900 (1987). Here, there was no believable testimony or probative evidence reflecting willful exaggeration in the filing of the defendants' liens. [*29]

Rather, the issues presented herein surrounded the woefully ambiguous and illusory existence of a real contractual agreement among the parties, in the absence of any writings. The only possible findings of willful exaggeration in filing the liens by defendant would be the analogy that because there were no underlying agreements a lien in any amount is an exaggeration.

It is the speculative terms of the agreement which the Court has to attempt to determine. Quite simply, the record does not support that determination. Thus, plaintiffs' causes of action seeking a declaration that the five liens filed would be void for willful exaggeration pursuant to Lien Law § 39-a are dismissed.

In resolving contractual disputes between the parties, the Court traditionally seeks to identify a presumably valid agreement which has been breached or repudiated in such a way as to entitle recovery to the aggrieved party. However, when the actions and conduct of both parties may render the contract unenforceable, the Court in effect leaves the parties where it finds them.

There are several maxims of jurisprudential equity that have developed over the years in case law. The one most relevant to this case is "equity regards substance rather than form". The Court has carefully listened to extensive witness testimony, examined technical exhibits, and reviewed the pleadings in an effort to define the legal relationship between the parties as well as to determine the appropriate legal and equitable rights and remedies. In the absence of any written agreements or consistent credible testimony, the Court is being called upon to "reform" contracts by finding that they existed with specific terms. Specifically, the parties seek to have the Court ratify their remarkably casual and familial, financial relationships as if they had been in writing with definite agreed-upon terms . The Court finds neither substance nor form indicating a contract.

The affirmative defense contained in both answers is an appropriate characterization of this entire case: "claims are barred by virtue of its own misconduct and the doctrine of unclean hands." Yula v. Yula, 115 AD2d 475 (2nd Dept. 1987).

The equitable concept of unclean hands is relevant in addressing a trial issue critical to the analysis of the putative contracts. Specifically, the $20,000 invoice submitted by Metro to plaintiff Executive Tower was allegedly paid to discharge Metro's bill for the Executive Tower "Window Project". There was a frenzy of letters, e-mails, and testimony regarding this payment and the circumstances surrounding its deposit, including the sworn statements that this $20,000 bill was created solely to facilitate an application to the Long Beach Housing Board, a governmental agency, for rent increases as a result of a capital [*30]improvement. This payment will not be construed as dispositive of any contract or settlement between the parties in this litigation.

Both the ambiguity of the circumstances and the allegations of misstating the actual cost of the capital improvement construction project lead the Court to the ultimate conclusion that a legally enforceable contract did not exist between the parties. Cobble Hill Nursing Home Inc., v. Henry and Warren Corp., 74 NY2d 475 (1989).

Based on the analysis of the testimony of all crucial witnesses, the Court is unable to resolve the dispute presented in favor of either party. There is no consistent or reliable testimony on behalf of any party that would impel the court to apply any restorative principle of equity.

Upon questioning by the Court, the estimated attorneys' fees were placed on the record as of March 10, 2005. Plaintiff's counsel, Herzfeld and Rubin, estimated its legal fees at more than $300,000 to that time. Defendant's counsel, Neufeld and O'Leary, estimated its legal fees at more than $255,000 to that time.

These amounts did not reflect any legal fees encumbered or charged in the similar ongoing litigation in Supreme Court, Suffolk County. Counsel for both sides estimated that those legal fees significantly exceeded that of the matters before this Court.

The plaintiffs Gailrach and Executive claimed purely speculative total damages over $5,000,000. However, their theoretical damages for the allegedly five exaggerated liens would, in any event, have been the amount of the exaggeration of the liens, or approximately $156,182.23 (See Lien Law §39-a.)

The defendants Metro and Glazer claimed its total damages for the five mechanic's liens were $156,182.23.

It is quite troubling that these parties have expanded more than $550,000 in legal fees to date in order to fiercely litigate what amounts to be unresolvable inter-familial squabbles.

The written and testimonial evidence submitted for the Court's consideration on both sides of these controversies is particularly significant. For seemingly close family members, who have enjoyed a somewhat symbiotic financial relationship in the commercial real estate and construction businesses, the current angst over fees is vexing. There was a great deal not revealed at trial regarding the true relationships among these the parties.

The record is replete with conclusory, self-serving statements by witnesses for both sides. The documents and testimony, albeit voluminous, are insufficient to discern a meeting of the minds on the essential terms of defendant Metro's counterclaims presupposing a contract. Specifically, there was testimony from the defendant Metro's president, Warren Glazer, that many of the actions relied on by the defendant as evidencing the existence of a contract were only impliedly undertaken at the request of plaintiff.

Moreover, the record contains evidence that there were several areas of disagreement with respect to various components of subcontracts which were never completely resolved [*31]prior to the defendants' decision to file the liens. There are numerous references in sworn testimony to "verbal handshakes" and significant lapses in billing by Metro after April 2000.

The allegation that plaintiffs requested Metro to continue working on various projects for a yet-to-be determined price is too vague and uncertain to constitute an enforceable contract on Metro's behalf. Martin Delicatessen v. Schumacher, 52 NY2d 105 (1981). This Court cannot find that plaintiffs Gailrach and Executive improperly refused to pay Metro a percent certain for construction management services.

Furthermore, all claims by the plaintiffs Gailrach and Executive Towers are dismissed for failure to meet their burdens of proof. No willfulness has been proven in the filing of the five liens.

Similarly, the five mechanics liens are vacated inasmuch as Metro has failed to sustain its burden of proof that it indeed had valid contracts with the plaintiffs.

Inasmuch as neither party has prevailed, nor has come to this Court with clean hands, the Court declines to award counsel fees.

The de facto sanctions in this case are that both parties are left with uninsured and unreimbursed legal fees in excess of twice the value of their respective damage claims.

In view of the failure of the plaintiffs to have the mechancis liens vacated under the willful exaggeration standard set forth under Lien Law §39-a, they are not entitled to such relief.

The mechanics liens were vacated solely because the defendant Metro, on its counterclaims, was unable to sustain its burden of proof that there was a contract. Willfulness was not proven.

Equity does not see fit to intervene herein on this issue.

This shall constitute the Decision and Order of this Court.

E N T E R

DATED: July 29, 2005

_____________________________

HON. LAWRENCE J. BRENNAN

Acting Supreme Court Justice

TO: