Plaintiff, Opus Vivir, Inc., moves to set aside the jury verdict in this case in the amount of $2,211,000.00 in favor of Defendants/Counterclaimants, John Ehrenkranz and Andra Ehrenkranz, on the grounds that the verdict was against the weight of the evidence and in the interest of justice. In support of its motion, Plaintiff argues that: 1) the verdict clearly reflects an award of punitive damages based on fraud in what the Court ordered to be a pure breach of contract case; 2) the jury was misled by Defendants' suggestion that the subject contract for [*2]construction of a home was $4.65 million rather than $1.4 million, despite the fact that two completely different agreements with merger clauses set forth that the land, owned by Dimitri Boylan, and the initial framing of a structure, would be sold for $3.25 million and that the construction by Plaintiff was limited to only $1.4 million; 3) the expert witnesses' testimony regarding the cost of soundproofing insulation and landscaping, amounting to $1.7 million was speculative and conclusory; and 4) the testimony of the Defendants/Counterclaimants with regard to Opus Vivir's promise not to charge markups on change orders constituted perjury contradicted by their pre trial deposition statements.

Defendants oppose the motion and contend that the verdict should not be set aside because: 1) evidence of the two contracts was admissible both because they refer to each other and set forth both the entire set of transactions occurring and because the evidence of breach was limited in its entirety to the construction contract alone; 2) it was for the jury to determine the credibility of John Ehrenkranz and Andra Ehrenkranz with regard to change order markups and to believe the evidence set forth at trial of the owner of Opus Vivir - in Julian Boylan's e-mails, stating that markups would not be charged; 3) evidence of Julian Boylan's lack of good faith and fair dealing is a concept embedded in all contracts and does not require a separate claim for fraud; 4) the expert and factual evidence of landscaping and soundproofing costs presented by Defendants at trial was uncontradicted as Plaintiff chose not to present any expert evidence of such costs; and 5) all of Defendants' experts as well as Plaintiff's construction expert supported the idea that change order records should be maintained by a contractor and that credits or allowances should be given when work is changed, subtracting the cost of the base contract work. In addition, Defendants note that the jury clearly did not award them the full amount they requested concerning the change order damages; and, given the lack of any objection by Plaintiff to the jury instructions as well as the verdict sheet, any question as to the amount awarded for change orders cannot be now the subject of complaint by the losing party.

Julian Boylan ("Julian Boylan" or "Julian") testified that he began his construction career as a cabinetmaker and became a framer of high-end residential properties on eastern Long Island. Ultimately, after completing college and taking construction management courses at NYU, Julian created his own corporation, the Plaintiff herein, Opus Vivir, Inc ("Opus Vivir" or "Plaintiff"). Julian described a relationship with his brother, Dimitri Boylan ("Dimitri Boylan" or "Dimitri"), as follows: Dimitri would invest in real property and "spec build" and Julian, through Opus Vivir, would perform the construction work on the properties. Julian stated that Dimitri held certain property for sale on Butter Lane in Bridgehampton in 2007, which was listed for $4.5 million, such price to include the real property as well as the construction of a home. Julian testified that at the time he met John and Andra Ehrenkranz ("John", "Andra", "Ehrenkranzs" or "Defendants"), he had already roofed and framed the house, and had it sided along with windows. The Defendants were referred to Julian by a real estate broker and told him they wanted to purchase the property and have him complete the house for them. Julian showed them a spec house he had built, called the Opus House in Remsenburg, which he stated they liked. Thereafter, the parties negotiated and came to the following deal: 1) the Defendants would purchase the land and the house in its partially built condition for $3.25 million; and 2) a separate [*3]contract would then be entered into between the Ehrenkranzs and Opus Vivir to complete construction of the home for $1.4 million.

Julian testified, as stated in the contract (Pl. 2),^[FN1] that the contract work would cost the aforementioned sum and that any changes in the plans, referred to by the witness as change orders, would be in writing signed by John Ehrenkranz and Opus Vivir. According to Julian, the change orders would be considered extras, the cost of which would be added to the $1.4 million. There were numerous change orders, according to Julian, based upon constant and extensive alterations by the Defendants and their design team. Julian described the changes in some detail, including changing bathroom fixtures and towel racks. He set forth that the changes often required enormous effort on Opus Vivir's part and that it was always understood between him and the Defendants that his own time and overhead would be included within the change order amounts to be paid. He described a course of dealing where he received hundreds of e-mails from Andra Ehrenkranz, concerning things such as design questions, advice, descriptions of what he was to do, how to do it, and how long it would take. He stated that she was still providing him with revisions from her design team long after the contract was supposed to have been completed. Julian testified that he spent weekends, days and nights considering and deciding how to arrange these requested revisions and that this time and effort was factored into his change order charges. He stated that the Ehrenkranzs never complained about the number of change orders or the prices therefor after they signed them. (Tr. 8/13/13 at 44).^[FN2]

The change orders, contained within Pl's 3, were all in writing and, according to Julian, signed by all the parties. He discussed change order B-9, which charged the Defendants $8,600 for the installation of a "whole house insulation sound barrier" (Tr. 8/13/13 at 41). The change order itself does not state a particular type or brand of sound barrier, and the witness stated that when he left the site, the house had a sound barrier and it was insulated with Batt insulation, which he had used in other top tier homes. He testified that after spending several weekends in the home, the Ehrenkranzs never once complained about any sound proofing or insulation problem.

Julian testified that the construction went well for most of the time he was involved with the project and that he received copies of several complimentary e-mails from Andra Ehrenkranz, including one in September 2008, stating that the fixtures and floor tiles look great (Pl. 14); one in November 2008, stating that the house is wonderful (Pl. 15); and another in November of 2008, stating that she had spent another weekend in the house and was loving it. (Pl. 17). Andra, at the time, allegedly characterized what was left as follows: "[a]lthough shower doors and a few other items would help a bit". (Pl. 17).

According to Julian, the original contract also required Opus to provide landscaping for the home. He claimed he brought the Defendants to a neighbor's house, which had been built as a spec house ten years before, and that they told him they wanted similar landscaping. Julian testified that he explained to the Ehrenkranzs that he could provide them the same types and numbers of trees but that the Defendants should be aware that the house was already ten years old [*4]and he could not provide them with trees the size they were at that time at the neighbors' house. In March 2007, the parties entered into a rider to the construction contract. The rider to the contract (Def. 1),^[FN3] which sets forth that it would control over the original contract in case of an inconsistency, stated that: "[t]he Contractor acknowledges and agrees that the single family residence and associated improvements to be constructed on the Owners' Premises by the Contractor. . . shall be equal or superior in quality of materials, fit, finish, and detail as another house constructed by the Contractor and shown to the Owner, said other house located at 124 Old Country Road, Remsenburg, New York and hereinafter referred to as the Opus House' . . . .". It states further that: "[C]ontractor agrees to provide Owner with a landscaping and hardscape package that is equal or better in quality and scope to the landscape and hardscape that presently exists at 594 Butter Lane, Bridgehampton, New York."

According to Julian, he presented the Defendants with several landscape designs but they wanted fully-grown trees, which was not, according to him, what he contracted to do nor what he felt he was capable of completing. Therefore, Julian suggested they retain an independent contractor to do the landscaping and that he would give the Defendants a credit toward what it would have cost him to provide landscaping similar to that of the neighbor's house. A series of e-mails between Julian and John in the Summer of 2008, contain a discussion of the amount of the credit Opus should provide the Defendants, who had decided to use an independent landscaper. (Pl. 11). According to Julian, John was taking the position that Opus should credit Defendants for the Defendants' upgraded landscaping and Julian was telling him that based upon his discussions with his original supplier of trees and plants, the credit should be much smaller -i. e., in the range of $21,000.

Julian testified that sometime in mid-November, 2008, his relationship with the Ehrenkranzs started to sour. Julian had begun e-mailing the Ehrenkranzs to tell them that the home was ready for its certificate of occupancy, entitling him to his final payment of approximately $150,000; and he was trying to negotiate a credit that he would subtract from that amount as a result of the Defendants having another contractor provide landscaping. He testified at length concerning e-mails in November and December 2008 between him and John. In November, 2008, John was telling Julian that he believed he should be afforded a credit of more than $100,000 for the landscaping (Pl. 18) and that he remembered an additional credit he was entitled to as a result of a lower broker's fee paid by Dimitri based upon his purchase of the house at a lower price than originally contemplated. A number of additional emails in December, 2008 demonstrate, according to Julian, a continuation of this negotiation. On December 9, 2008, John wrote an e-mail essentially offering Julian a final payment of $60,000 based upon the $150,000 final payment minus a $90,000 credit for the landscaping, which credit John claimed was extremely low as he had received information that a complete landscape plan at wholesale rates was between $150,000 and $275,000. (Pl. 19). In this series of e-mails, John also asks Julian for the written change orders on the project. The last set of e-mails discussed during Julian's direct examination were in January 2009, where John stated that Opus still had not completed construction necessary to obtain a certificate of occupancy ("CO") nor confirmed payment of vendors nor provided change order details, all required by the parties' contract and that if he did [*5]not hear shortly from Julian, he would be required to contact his attorney. (Pl. 20). Julian responded by stating that he was still owed $150,000; that he could not obtain the CO because the Ehrenkranzs were performing additional work outside the contract including doing things that required walls to be reopened. According to Julian, Martin Anderson, who had been Opus's major subcontractor on the job, had by then been separately retained by the Defendants and he was doing work for them that prevented Opus from obtaining the CO.

During extensive cross-examination, Julian stated that during this period in December 2008 and January 2009, in addition to his final payment, he was also asking John for payment on a $166,000 change order for which he had not sent the back up papers. By the end of January 2009, John sent Julian another e-mail essentially threatening legal action as his final option as Julian had not responded to him regarding finishing work on the project. (Def. 33). While Julian admitted that he believed he had already received the $166,000 on the final change order by this time, he responded to John on January 28, 2009 that "[O]pus has closed its doors". Although John had paid Julian for the final change order and was still asking for the paperwork, Julian claimed he sent it to him. He did not have any records to back up this claim, although he set forth that all his records were somehow taken.

Early e-mails (3/7/07) between the parties right before the signing of the construction contract contain a statement by Julian to John that the parties needed to continue to move forward with the construction and that the parties could later work out things that the Defendants were not comfortable with, stating: "[A]ll of the specs can be changed if you have other ideas - at cost, no mark up." (Def. 12). The contract provision itself which refers to change orders states that necessary changes in labor and/or materials for the construction must be made in writing agreed to and signed by both the builder and the owner in a form attached as exhibit D to the parties' contract. (Def. 1). Julian admitted that there was nothing in the parties' written contract that contained any statements concerning markups in change orders. In going through the specific change orders, Julian was shown certain change orders (Pl. 3) that actually stated only "labor" and "material" and others that merely set forth a number. Julian testified that in each one of these there was a mark up included for his time and effort but that no number identifying the amount is stated. He claimed, for example, that each of these change orders would have a different markup charged depending on the amount of work that Opus Vivir was required to do, such as additional design, and expenses attached to delay. Julian was shown examples of bills he received from his main subcontractor, Martin Anderson, which set forth the amount he was charging Opus Vivir for his work and specifically the amount of his mark up in each case. (Def 8). Yet, Julian admitted that he never provided the Defendants with the same type of information in his change orders to them. Julian insisted that there was a markup included for each of the change orders and that although the amount of such was not specified on the change order documents, the Ehrenkranzs were well aware that each of the numbers contained a markup for his company (Tr. 8/14/13 at 111). While Julian took the position that the Defendants failed to question his change orders as the job progressed, he was shown certain e-mails during cross-examination in which John attached handwritten notes to the change orders with comments, such as "to be reviewed" (regarding a $124,480 change order relating to bathroom tile and counter-[*6]tops Pl. 3 B25 and a change order regarding certain beige trim for $92,900 Pl. 3 B 26),^[FN4] or "to be discussed" (regarding the pool house Pl. 3 B 27). Julian stated he never followed up on such comments and would not admit that such were actually requests by John for more information on major change order amounts.

During cross-examination, Julian was shown an extensive e-mail he sent to John on July 31, 2008, where he discusses the idea of the Defendants having the landscaping performed by another contractor not subject to his supervision. The e-mail sets forth in some detail that if another contractor is to perform this large task through his company that there could be substantial overhead charged. (Def. 21). It states that "[g]eneral contractors add in the neighborhood of 25 percent to 38 percent plus extras on basic home contract." The e-mail continued to inform the Defendants that if there were change orders to such landscaping, the markup could rise to 100%. The witness stated that he wrote this because he wanted to flag for John's benefit that a 100% markup was significant. (Tr.8/14/13 at 142). The same e-mail goes on to state after raising the specter of a potential 100% mark up that: "[I]f I were charging for my time or Marty's [referring to Martin Anderson] the numbers would be far different." In the same e-mail Julian goes on to state that "I have spent a tremendous amount of time on this job from design decisions to sourcing products and custom installation: All of which is uncompensated time". (Def. 21).

In another e-mail on March 16, 2007, John did write to Julian reminding him that a credit would be due him at a future date to split the savings that Dimitri had realized on his payment of real estate commissions due to the decrease in the sale price of the house. (Def. 17). Once the contract was signed and the job was in progress, on August 16, 2007, Julian sent the Ehrenkranzs an e-mail attaching the first change order and stating that the Ehrenkranzs were due a $60,000 credit. (Def. 16). According to Julian, this credit was in connection with the brokerage savings that Dimitri realized. Yet Julian admitted during cross-examination that the Defendants were never afforded any credit for this decrease in the brokerage fee.

Julian was referred to the terms of his contract regarding final payment during cross-examination. The agreement states, in pertinent part, that;"[u]pon completion of the construction and complete cleanup of the structures and property,. . . A closing shall be held and final payment shall be made by the owner to the builder. Simultaneously, the builder shall deliver the certificate of occupancy, the fire underwriter's certificate, the final survey, all warranties received from subcontractors and suppliers, and final lien releases from all subcontractors who work on the job, acknowledging that they have been paid in full". (Def. 1). Yet Julian stated that he did not have the lien releases, the CO nor a final survey at the point that he was e-mailing John insisting that he was due final payment (Tr. 8/14/13 at 179). Julian did e-mail John on December 9, 2008 at the height of the parties' dispute, stating that he was in need of the final payment in part because he was "[g]etting lots of heat from vendors" (Def. 26). Shortly after this e-mail, John mailed Julian both the final change order payment of $166,000 plus a $60,000 final payment based upon the Defendants' view of the credit for landscaping and Opus deposited these amounts. (Tr. 8/14/13 at 190). Julian Boylan admitted that in January 2009 all of these funds were paid out by Opus to cover various bank loans, Boylan's automobile and regarding properties [*7]having no connection with the Defendants. (Tr. 3/14/13 at 204).

John Ehrenkranz testified that he has been in the field of finance for approximately 27 years; that he currently works as a financial advisor in his own firm; and that he worked in the mergers and acquisition field for Morgan Stanley for 16 years. He and his wife learned about the property on Butter Lane sometime in late 2006 or early 2007, when visiting a friend on the same block. Through a real estate broker he and his wife learned that the property and a house to be completed were listed for $4.65 million. In early 2007, the witness stated the house was framed and the roofing had been begun. He and his wife met at the property with two real estate brokers and Julian Boylan. John testified that as the brokers did not appear to be able to reach a deal, he ultimately began his own discussions with Julian and ultimately reached an agreement. According to John, he and Julian reached a final number, as originally proposed of $4.65 million but that it was then placed into two separate contracts. The first contract for construction set forth a number of $1.4 million and the second contract stated that the purchaser was purchasing the premises with a partially completed house to be completed pursuant to the terms of the construction contract. (Pl. 1 and Pl. 2). The purchase price of the premises and partially completed house was $3.25 million. John testified that it was he who came up with that figure based upon his knowledge of what his friend/neighbor had paid for his home in the previous year. Once the parties reached a verbal deal and while the attorneys were preparing the written agreements, John stated that Julian asked him for funds up front so he could finish the construction quickly since the Ehrenkranzs wanted to move in as quickly as possible. He stated that he wired Julian funds both for the premises purchase and for the first installment on the construction even before the contracts were finally completed. John essentially agreed with the testimony of Julian that he and his wife were brought to the Opus house and agreed that their home would be the same or better quality. In addition, he set forth that Julian agreed that the landscaping would be the same in design and scope as presently existing at the neighbor's home at 594 Butter Lane. These two agreements were placed in a rider to the construction contract. According to John, he never met nor spoke to Dimitri and learned about him for the first time at the closing in May of 2007, when his attorney told him that Julian's name was not on the deed; but, rather it contained the name of Dimitri Boylan. He stated that in all his discussions with Julian, including his introduction by the brokers, both they and Julian referred to Julian as the owner of the property.

John testified that prior to the closing he had conversations with Julian concerning the fact that the Ehrenkranzs were going to want changes to the house and were told by Julian that he would do these changes at no markup but, rather, for labor and material costs. Julian sent John an e-mail stating, "[a]ll the specs can be changed if you have other ideas at cost, no markup." During the course of construction, John did question some of the change orders, (such as one for $124,480 and another for $92,000) with questions such as "to be reviewed" (Pl. 3 B 25 and B 26). He would follow up by allegedly telephoning Julian and asking for more detail. However, he stated that Julian always answered by stating that he didn't have time to get all the invoices from everybody and that to do so would just take up time and slow down the construction. John never got answers to his questions. According to John, the final change order, for which he was charged and paid $166,000, was especially disturbing since he never received anything in writing for it. He claimed that when he received the e-mail from Julian stating that his vendors were [*8]hounding him and that he needed to be paid, he sent Julian the check so that the job could get completed.

John testified at length concerning the e-mail of July 31, 2008 from Julian where he claimed that under the contract he was to provide the Ehrenkranzs with the same plants as his neighbor, except that they would be smaller, and that if he had to perform the work, there would be a markup running from 25 to 38 percent that could even rise to 100 percent (Def. 28). This allegedly took John by surprise because he had read the rider to the contract to mean that he was to receive landscaping equal or better in quality and scope to that presently existing at his neighbor's home (Pl. 2). John stated that despite his surprise at Julian's statements, he wanted the project completed so he tried to compromise with Julian. Since, at that time, Julian was claiming he was entitled to a final payment of $150,000 and would be willing to give the Defendants a credit against the landscaping cost if another contractor were to perform that work, John began to inquire as to how much the landscpaping work would cost. He asserted that he then learned that the numbers were easily over $400,000. At that point, he was afraid that Julian would walk off if he told him that he, in fact, owed the Defendants money, so he tried to make a deal. He claimed that the numbers Julian came up with, such as the $21,000, were absurd and that the relationship with Julian had definitely begun to fray. Ultimately, John sent Julian an e-mail in December 2008 in which he proposed to send Julian a check for $60,000, which would translate into a credit to the Ehrenkranzs of $90,000 (far less than he now knew he was entitled to) which amount would be subtracted from the $150,000 Julian was claiming he was owed. According to John, there were several items that were to be taken care in exchange for the $60,000, including Julian sending him the outstanding change orders and verifying that all the vendors who had performed work on the project had been paid in full (Def. 28). Although Julian responded that if the check was sent he would take care of the rest, he never did another thing on the project. John also sent Julian the $166,0000 check for the final change order for which he never received paperwork. John ultimately hired his own landscaper and paid over $700,000 to have the work completed (Def. 44, 45).

In January 2009, after having paid over $226,000 and getting no response from Julian regarding his requests, he received the e-mail from Julian stating that Opus had closed its doors (Def. 33). Because the project had not been completed, John contacted Martin Anderson ("Anderson"), the major subcontractor on the job who Julian had removed from the job in December 2008 during the parties' negotiations, and asked Anderson if he could finish the work. John claimed to have learned that Anderson and some of his subcontractors had not been paid. John testified that he made the outstanding payments and had the claims assigned to him so the work could be completed. John claims to have paid all the invoices he received for completion of the construction (Def. 41), and the invoices demonstrate that he was paying Anderson a markup of 12% on the various change orders.

Additionally, John testified that certain items called for in the contract with Opus had either never been provided or needed to be fixed or replaced. Of significance was the alleged lack of sound proofing in the insulation. John learned that the sound barrier insulation had never been provided, and he testified that the house did not appear to have any sound barriers whatsoever. He also learned that no water filter had been installed and that some of the appliances were not in good shape as they had been floor models. [*9]

John was cross-examined at some length concerning the interrelationship between the two contracts. According to John, Julian was intimately involved in the entire deal and made his profit on the $3.25 million despite the fact that Dimitri's name was on the deed at the closing. John testified that Julian spoke to him several times and told him that he had purchased the property for $800,000 and had sold it for over $4 million (taking the whole deal into account) and was, therefore, making a great profit. When John was read portions of his deposition testimony in which he stated that he believed Julian was marking up his costs at about 15%, he explained that he was referring to the subcontractor, Martin Anderson's markups. John also stated that he did not agree with his wife's deposition testimony in which she stated that Julian was entitled to a reasonable mark up for any work beyond the scope of the original contract.

Andra Ehrenkranz testified that following graduation from Brown University, she obtained graduate degrees in marketing and international relations. She then worked in a marketing role at both Ann Taylor and Macy's, where she is currently employed. She testified that some time in 2006 she and John saw a for sale sign near the couple's friends' house, called the broker and were put in contact with Julian, who told them he was the builder. Andra confirmed John's testimony that Julian brought them to the Opus House as a sample of the quality of home he intended to build on the site and they liked it. She stated that she really had no role in negotiating the terms of the parties' contract, a job left to her husband, but that she was involved with the day to day management of the project. Andra was also not involved in any conversations with Julian regarding his right to mark ups on any change orders. When asked about her deposition testimony in which she stated that Julian should receive a mark up for work not in the original contract, she stated that she should have answered that she did not know based upon her lack of involvement in actual contract negotiations. Like John, Andra claimed she never heard of Dimitri Boylan until the attorneys informed John that Dimitri's name was listed on the deed to the property.

Andra testified that during construction Julian was involved in the changes and design, and that Julian never stated that there existed too many changes being requested by Defendants. Each time a change was authorized, Julian would send them a bill and they would pay it. However, she stated that as the project progressed there were times when she waited long periods of time before receiving drawings prepared by Julian on changes. She often had her own interior designer work on such items. However, architectural drawings went through a woman named Dolores, who made changes to the initial stairway and the pool house, and were delayed.

Andra testified that although she and John spent several days in the house in the late Fall of 2008, many things were still unfinished, such as the front door, shower doors, electrical plates and switches, as well as some plumbing fixtures. Once Opus closed its doors and Julian stopped coming to the project, they found several problems with the house, including the need to replace kitchen closet doors which were not in accordance with the plans and, most significantly, the required insulation sound barrier. According to Andra, when they heard that Opus was out of business, they called the subcontractor, Anderson, who told them he had been told to stay off the job by Julian. When they began discussing what could be done to complete the house, they mentioned the idea of putting video games for their children downstairs which would not bother them due to the sound insulation. In response, Anderson told them that no sound barrier insulation had ever been installed in the home. When Andra showed Anderson the change order [*10]that allegedly encompassed installation of the sound barrier, Anderson told her that none had been installed and that the price of the change order was twice the amount he had charged for the entire insulation, without any sound barrier.

In addition, according to Andra, once she began to go through the change orders, Anderson told her and John that in one-quarter to one-third of the change orders they were being double charged. She compiled a list of the change orders with the actual contractors' invoices attached (Def. 6). She also stated that in doing her comparison she could not find a single change order where the Ehrenkranzs had been given a credit for the original design work. Andra also found change order charges, which had been paid, such as for radiant floors in the kitchen, that were part of the original design plan for the house. She also found change orders where they were charged for replacement of items, such as a closet that had been improperly installed. Andra agreed with John's testimony that when either she or John wanted information about a particular change order and asked Julian for such, he never provided them with any documentation in response.

When asked during cross-examination about the inconsistency between her deposition testimony and trial testimony concerning mark ups, Andra responded that she delegated that sort of authority to John. She was unable to confirm that portion of John's deposition testimony in which he stated that a large sum of money was paid at the closing to Dimitri.

Martin Anderson testified that he was a general contractor who owned his own company and built new residential homes and performed renovations. He worked on homes for Opus Vivir in the Hamptons area from 2004 through 2008. It was his understanding that these properties and homes were owned by Julian and his brother Dimitri. He testified that he worked for Julian on the Opus House and described it as "high quality" (Tr. 8/19/13 at 12). Anderson was hired by Opus to act as the general contractor on the construction of the home purchased by the Ehrenkranzs. He stated that he provided invoices for his work and work for subcontractors hired by him, always indicating a mark up of 10% over cost. He testified that the mark up was essentially for the daily supervision that he, and not Julian, provided on the project.

Anderson disagreed with Julian regarding the issue of whether the number of change orders was excessive and stated that the number and type were not significantly large for an upper end construction job in the Hamptons. Anderson testified at length concerning the change orders for which the Ehrenkranzs paid Julian. He was shown numerous change orders, some of which were performed by him as general contractor. When he compared his invoices which contained his costs plus mark up, to the change orders, he demonstrated that in almost each instance, Julian took Anderson's figures and significantly increased and/or doubled them in the change orders that Julian submitted to the Ehrenkranzs (Def.7 and Pl.3). This was true, for example, whether his costs of $308 were marked up to $616 or $6,183.36 were marked up to $11,366 (Id.). Anderson also pointed out change orders where he had hired the subcontractor and Julian had charged the Ehrenkranzs for changes, such as in stairs and banisters, where the change to the material did not, in his opinion, increase either the labor or material, and yet no credit had been afforded the Defendants (Pl. 3 B5). He pointed to work he arranged to be performed to clear some of a neighbor's property, where he charged $4050 and Julian charged the Ehrenkranzs $7400 (Pl.3 B 11). Anderson pointed to a change order where the electrical subcontractor's charge and mark up for radiant heat in the bathrooms was $13,645 including his markup; yet, [*11]Julian charged the Defendants $16,800 after stating to them that this contained no charge for two of the bathrooms where it was already in the contract with no explanation of the increase (Pl. 3 B 13). Anderson pointed to a $49,000 change order, which involved cabinets which were improperly installed and which he was asked to replace (Pl 3 B 20). He did not understand why the Ehrenkranzs should be charged anything for this. In another change order, where Julian charged the Ehrenkranzs $124,480 for what he termed upgraded marble, Anderson countered that the change order material was of the same quality as that in the Opus House (Pl. 3 B 25). He made the same comment concerning a trim upgrade of $90,000 for trim he found to be inferior to that of the Opus House (Pl. 3 B 26). Most significantly, Anderson testified that he did not learn of a request by the Ehrenkranzs to put in sound installation until after Julian had left the job. He stated that his subcontractor had installed the insulation; that Julian had never told him to install sound barriers; and that what was installed was standard fiberglass insulation, which was relatively inexpensive and had no sound barrier qualities.

According to Anderson, Julian told him to stop working on the job in October of 2008, while Julian was purportedly having problems getting paid. Shortly thereafter Julian paid him some of the money he was owed but still owed him $74,916. John paid him that money and Anderson assigned his claim against Plaintiff to John (Def. 4 and Def. 43). In addition, Anderson viewed invoices of one of his own subcontractors, Lowell Electric, and testified that this subcontractor was also not paid over $41,000 for work it had completed and that Opus had not paid for the work.^[FN5] At the time he left the job at Julian's direction, it was Anderson's opinion that the house was not yet ready for a certificate of occupancy because there were many items to complete, such as a fireplace screen and self-closing doors, as well as certain minor items. While Anderson did remove a basement door and enlarge an opening to make way for game machines to get to the basement for the Ehrenkranz children before he was told to leave the job, the other work would have taken less than a week to complete.

Anderson testified that in or around February 2009, one of the Ehrenkranzs telephoned him and asked if he would come and finish the home. They then came to agreement that Anderson would charge them his costs for work he performed and a markup of 12% where he subcontracted for another entity to perform the remaining work. When he began working directly for the Defendants in early 2009, Anderson gave the Ehrenkranzs a list of all the items that he believed were required to be completed before a certificate of occupancy could be issued (Def. 48). He submitted copies of all his invoices to the Ehrenkranzs in 2009 for work he performed (Def. 41). He testified that when he started the remaining work there was still no driveway; that there was equipment left in the home, as well as machinery and storage containers; and a lot of what he termed "little detail" needed to be completed (Tr. 8/19/13 at 121). Anderson identified a "LIST OF PUNCH LIST ITEMS" in Def. 35, which he described as all the final items that had been completed by June 2010.

On cross-examination, Anderson stated that he believed that markups of 12 to 20 percent were common in the construction industry and that he assumed that the Ehrenkranzs knew that Opus was charging them markups. However, he stated that he never saw their written contract [*12]nor was he aware of any conversation they had regarding this issue. With regard to the insulation provided by Opus, he stated that what was installed, while having no soundproofing qualities, did meet code. He stated that the home still did not have a CO, but he blamed that on the lack of a file, which he stated belonged to Julian.

Cosmo Veneziale ("Veneziale") testified on behalf of the Defendants as an expert in the field of architecture and high-end construction. He stated that he has overseen the construction of many high-end residences in the New York and Hamptons areas. Mr. Veneziale reviewed many of the larger change orders contained within Plaintiff's 3, including whatever back-up material had been provided to the Defendants by Opus. According to Veneziale, the 35 change orders contained within Plaintiff's 3 are not at all unusual for the type of home constructed for the Ehrenkranzs. The witness described a change order as a change in the contract work that is originally proposed that reflects either an increase or a decrease in the cost. He stated that in his experience a change order should demonstrate this increase or decrease and contain backup information, including invoices, time sheets as well as markups charged for overhead and profit. His firm will not approve a change order on a project it is overseeing without such information. He opined that the 35 change orders contained within Plaintiff's 3 were deficient due to the lack of back up information and he testified that he had never seen such lack of backup in his entire 30 years of practice. He also stated that the form used by Opus does not comply with the American Institute of Architect's Form G701.

Mr. Veneziale discussed certain of the more expensive change orders during his testimony. He stated with regard to the $236,745 change order for electrical work that it contains no backup, no discussion of what the original work was supposed to encompass and no indication that any credit was given the Defendants. With regard to the change of flooring from white oak to walnut, contained in B4, he estimated the change in the cost of material in his experience would be from $15,000 to $20,000; yet the change order, without explanation, charged the Defendants $66,000. He discussed change order B10, which stated that it was for a skim coat for the first and second floor, which would, in his opinion, be base work for this kind of house. He set forth that no back up was provided for the $121,529.50 change order in B16 for a change in plumbing fixtures. The witness stated that his review of change order B17, which states it is providing tile and marble for all baths excluding the sauna floor bath, only states that it is $98,500 and contains no credit for some tile which should be base contract work. The witness had the same criticism for a $124,480 change order for an upgrade of bath counters and waterproofing, stating there was no credit given for the cost of the original material and that waterproofing should have been base work and not a change order in this type of project (B25). The witness saw no back up nor credit given for a $92,900 change order for what was referred to as a trim upgrade. Veneziales testified that a typical markup for a builder is approximately 25%. In his 30 years of construction oversight he never came across a 100% mark up and stated that such would simply be unacceptable.

Mr. Veneziale described in some detail various types of sound barrier insulation. He testified that the thermal insulation provided to the Defendants by Opus was not sound barrier insulation; but, rather, for thermal purposes. He testified further that to provide what was required by the Defendants would entail the removal of the thermal insulation. Since the house is now finished, he stated that this would entail taking apart one side of every wall, removal of the [*13]ceiling, and repair of holes existing in the walls. The witness opined that this could easily cost one million dollars since it affects every surface in the home.

Donald Mahoney, Jr. testified that he has been involved in the landscaping profession for fourteen years and was one of the owners of Mahoney Associates, Inc., which performs full scope landscaping services in the Hamptons area. His firm performed the landscaping for the Ehrenkranzs home commencing in the Fall of 2008 through its completion. He testified that Chris Monpetit, who provided Opus with the $23,000 estimate, was not, in his opinion, a landscaper; but, rather, a retailer. Mr. Mahoney described in detail the steps his company took from breaking up heavy clay soil and installing subsoil through performing what he called a rough grade, planting trees, putting in irrigation, final grading the soil, installing sprinkler system, placing sod down, planting the smaller items and providing some topsoil. He testified that based upon the disrupted condition of the site when he began, which he described as typical for a construction site before landscpaping goes in, this was a complicated process. Mahoney was provided the invoices from his firm (Def. 44) and viewed photographs he took of the subject property. He also viewed photos he took of neighboring property at 594 Butter Lane and was asked to assume that the Ehrenkranzs landscpaping was to be of the same quality and scope as that property. He opined both that the cost would be between $700,000 and $850,000 and that at this juncture the landscaping of the two properties were in fact of the same or similar scope and quality. Mahoney stated that the two properties had similar Belgium block aprons surrounding driveways; a number of similar birch trees; mixture of smaller trees and shrubs; planting in front that created similar screens to block the road and headlights; plantings to provide a hedge form neighbors in the rear; and willow trees. Mahoney stated that landscaping of the quality provided could be installed in approximately four months.

Michael Mignone, a certified public accountant, testified on behalf of the Defendants. He stated that he has performed a fair amount of work in financial analysis of construction projects. In preparing for his testimony, Mignone reviewed two years worth of bank statements, cancelled checks, invoices, change orders, and the construction contract relative to the project. He also reviewed the expert testimony of several witnesses. Based upon Mignone's review of these documents as well as his review of expert testimony and statements by the general contractor on the job, Martin Anderson, he prepared a summary of damages asserted by the Defendants against the Plaintiff in this case. (Def. 100). Mignone calculated that the Ehrenkranzs were overcharged $856,783 for the amounts they paid for change orders on the subject project. He calculated this amount as follows: 1) where the witness was told or found from review of the contractor's invoices for work performed that a mark up was charged by Opus for a particular change order, the witness calculated the entire markup; 2) where the witness was told that the contractor failed to provide a credit for the work that was changed, the witness calculated 50% of the change order; 3) where the witness was told that the work that was the subject of a change order was included in the original base contract, he calculated the entire amount of the change order; and 4) where the witness was told that no records were provided by Opus for the subject change order, the witness included the entire amount in his calculation. He added these four sets of calculations as the first subset of the Ehrenkranzs' damages. The witness then calculated the costs to complete the project by reviewing the invoices from Anderson Construction from January through May of 2009 (Def. 100 and Def. 41) to arrive at a total of $111,684.73. Based on expert [*14]testimony of Veneziale, the witness calculated the amount of $1,000,000 as the cost to provide the soundproofing that he was told was not provided. He was also advised, based upon the expert testimony of Mahoney, that the cost to perform the landscaping that Opus did not perform was $700,000. Finally, based upon his review of invoices from Anderson Construction ( showing an amount ultimately paid by Defendants of $74,916) and Lowell Electric (showing an amount ultimately paid by the Defendants of $46,185), the witness included an amount of $121,101. Mignone then added all of these categories of alleged damages together to reach a total that Defendants/Counterclaimants were seeking against Opus Vivir of $2,789,568.

Mignone admitted during cross-examination that to the extent that the amounts provided to him by the Defendants' witnesses and by Defendants' counsel were incorrect, that his ultimate calculation would be altered.

Richard Bosworth testified on behalf of Opus as expert rebuttal witness in the construction field. He stated that he has been involved in the construction and renovation of homes in Eastern Long Island, including the Hamptons for about 25 years. The witness stated that he always charges a markup for his work and that it ranges from a minimum of 40%. According to Bosworth, once an owner signs a change order, setting forth the total amount, such signifies both acceptance and satisfaction on the owner's part. The witness submitted a series of his own change orders on various jobs, none of which specified the amount that was included as a markup (Pl. 30). On the jobs set forth in Plaintiff's 30, the witness testified that he believed his markup was 40%. The witness reviewed the 35 change orders that were the subject of the project at issue and stated that they looked like typical change orders that he is accustomed to seeing in the work that he performs which is similar to that of Opus on the Ehrenkranz project. The witness also stated that he generally uses written contracts with his owners and that the contract does not set forth the amount of his markup.

On cross-examination, Mr. Bosworth stated that he regularly keeps records of his change orders on a job for a period of seven years. He also stated that where a change is made over an existing product, he does give the customer what he termed an allowance for the original work and charges for the new product plus a markup. He would demonstrate the price of the new item with an invoice.

CPLR 4404(a) provides, in relevant part:

"[T]he court may set aside a verdict or any judgment entered thereon and direct that judgment be entered in favor of a party entitled to judgment as a matter of law or it may order a new trial of a cause of action or separable issue where the verdict is contrary to the weight of the evidence, in the interest of justice or where the jury cannot agree after being kept together for as long as is deemed reasonable by the court."

With regard to setting aside a verdict as against the weight of the evidence, the Appellate Division, Second Department recently stated:

"A jury verdict should not be set aside as contrary to the weight of the evidence unless the jury could not have reached the [*15]verdict by any fair interpretation of the evidence (see Lolik v Big V Supermarkets, 86 NY2d 744 [1995]; Cohen v Hallmark Cards, 45 NY2d 493 [1978]; Nicastro v Park, 113 AD2d 129 [1985]). Where a verdict can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view' (Handwerker v Dominick L. Cervi, Inc., 57 AD3d 615, 616 [2008]; see Johnson v Yue Yu Chen, 104 AD3d 915, 915 [2013]; Liounis v New York City Tr. Auth., 92 AD3d 643, 644 [2012]). The jury's determination of witness credibility is entitled to great deference, as it had the opportunity to see and hear the witnesses (see Salony v Mastellone, 72 AD3d 1060, 1061 [2010]; Filipowich v Tavano, 23 AD3d 519 [2005]).

(Cinao v Reers (109 AD3d 781, 782 [2d Dept 2013]).

With regard to setting aside a verdict in the interest of justice, the Appellate Division, Second Department has stated:

"A motion pursuant to CPLR 4404(a) to set aside a verdict and for a new trial in the interest of justice encompasses errors in the trial court's ruling on the admissibility of evidence, mistakes in the charge, misconduct, newly discovered evidence, and surprise (see Matter of De Lano, 34 AD2d 1031, 1032 [1970], affd 28 NY2d 587 [1971]; see also Rodriguez v City of New York, 67 AD3d 884, 885 [2009]; Gomez v Park Donuts, 249 AD2d 266, 267 [1998]). The trial court must decide whether substantial justice has been done, and must look to common sense, experience, and sense of fairness in arriving at a decision (see Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 NY2d 376, 381 [1976]; Bush v International Bus. Machs. Corp., 231 AD2d 465 [1996]).

(Allen v Uh, 82 AD3d 1025 [2d Dept 2011]).

A breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated and the legal duty springs from circumstances extraneous to, and not constituting elements of, the contract (Sommer v Federal Signal Corp., 79 NY2d 540 [1992]; Clark-Fitzpatrick, Inc. v Long Island R. Co., 70 NY2d 382 [1987]; D'Ambrosio v Engel, 292 AD2d 564 [2d Dept 2002]).

Within every contract is an implied covenant of good faith and fair dealing (511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002]; Dalton v Educational Testing Service, 87 NY2d 384 [1995]; Lonner v Simon Property Group, Inc., 57 AD3d 100 [2d Dept 2008]). The implied covenant embraces a pledge that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract (511 West 232nd Owners Corp. v Jennifer Realty Co., supra; 6243 Jericho Realty Corp. v AutoZone, Inc., 71 AD3d 983 [2d Dept 2010]). A breach of the covenant is a breach of the [*16]agreement or contract itself (Boscorale Operating, LLC v Nautica Apparel, Inc., 298 AD2d 330 [1st Dept 2002]).

The proper measure of damages in cases involving breach of construction contracts, especially where substantial performance has not been achieved and where a construction defect cannot be explained as an accident is the amount of money necessary to replace the defective condition (Lyon v Belosky Construction, Inc., 247 AD2d 730 [3d Dept 1998].

When viewed in its entirety, the testimony and documentary evidence in this case demonstrates that the verdict was completely appropriate and that no basis has been demonstrated to set it aside. There was clearly no prejudice resulting from evidence of the fact that there were two separate contracts arising out of an original, openly advertised sale of the property and the construction of a home for $4.65 million. Indeed, Julian Boylan himself testified on direct examination that he had a long standing business relationship with his brother Dimitri, whereby his brother would invest in and own real property and he, through his own corporation, Opus Vivir, would construct residential homes thereon. Moreover, even John Ehrenkranz admitted that two separate contracts were entered into - one for the land and framing for $3.25 million and a separate one for construction of his home for $1.4 million. All of his testimony and that of every other fact and expert witness in this case concerned problems with the construction, and not with the real property nor the initial framing.

The testimony of many witnesses clearly could be utilized by the trier of fact to demonstrate that Opus Vivir had breached the parties' construction contract, as well as the rider incorporated therein, involving both the quality of the construction and the quality and scope of the landscaping. John Ehrenkranz and Andra Ehrenkranz testified that questions were posed about some of the large change orders and that Julian Boylan refused to provide any back up whatsoever, stating only that such would delay the job's completion. Martin Anderson testified and demonstrated through documentary evidence that he always provided backup and invoices as well as setting forth his markups in his construction work. His view was supported by Cosmo Veneziale, an expert witness in the field of architecture and construction. The contract itself sets forth what had to be accomplished to be paid in full, including delivery of a certificate of occupancy, a fire underwriter's certificate, the final survey, warranties and releases from subcontractors setting forth that they were paid in full. Based on the testimony of John Ehrenkranz and Julian Boylan none of this was performed. The jury was specifically asked both whether Opus Vivir performed its obligations under the contract and, if they answered in the negative, whether the Defendants' acted to prevent Opus Vivir from performing. They had sufficient testimony and exhibits to consider these questions and to answer both questions, as they did, in the negative. The testimony of John Ehrenkranz supported by e-mails in December 2008 and January 2009 demonstrate that the Ehrenkranzs sent Julian Boylan the money he requested - over $200,000-; yet, when they tried to get him to return to the job site to complete the project, he communicated to them that his company, Opus Vivir, had closed its doors. All of these asserted acts, if found to have occurred by the jury, support a finding that Plaintiff breached its agreement with the Defendants and did not in any way require an instruction on a claim for fraud. As set forth in the Defendants/Counterclaimants' post-trial memorandum, all contracts contain within their ambit the covenant of good faith and fair dealing. To the extent that the testimony as well as Julian Boylan's own e-mails demonstrate his intent not to perform the terms [*17]of the contract, they do not state a separate claim for fraud; rather they are evidence, if believed, of breach of such covenant which, as set forth above, constitutes a breach of contract. Thus no basis exists to set aside the verdict in the interest of justice under the standard set forth.

Moreover, there are no grounds to set aside the verdict as against the weight of the evidence. While Plaintiff urges that there was no basis for the $1 million award for the lack of sound proof insulation, there was ample testimony concerning the same. Martin Anderson testified that no such insulation was ever installed by his own subcontractor and the Ehrenkranzs' expert, Veneziale, set forth, without contradiction by any expert on behalf of Plaintiff, that to remove the existing insulation and provide Defendants what was required was a major task that would cost a minimum of $1 million. With regard to Plaintiff's assertion that there was no basis for the Ehrenkranzs' claim for $700,000 to perform the landscaping work, such is also not supported by the record in this case. John Ehrenkranz testified that he paid over the amount sought and Donald Mahoney explained in detail both the extent of work he performed in providing landscaping equal in scope to that of the Ehrenkranzs' neighbors on Butter Lane and, as an expert, on the cost to perform such extensive work. Again, Plaintiff produced no expert to contradict this testimony.

With regard to the amounts sought for work completion as well as payment for subcontractors who were not paid by Opus Vivir, both Anderson and Fragola's testimony along with their invoices support those awards.

With regard to the issue of change orders, there was testimony from Anderson both with regard to the need to set forth a markup and based upon his review of change orders with which his company was involved, a demonstration that for many of them Plaintiff charged the Ehrenkranzs markups of near or greater than 100%. While there was contradictory evidence concerning the amount of an appropriate markup, with Anderson setting forth a rage of 12% to 20%, even Plaintiff's expert, Bosworth, introduced an exhibit which demonstrated markups of 40%. Viewing the jury's verdict, which awards the Defendants/Counterclaimants over $500,000 less that they sought in this case, there is ample evidence to support an award on the change orders which took into account the testimony of experts for both sides.

The verdict sheet as well as the charge was provided to both attorneys. No objection was set forth to the verdict sheet nor was the Court ever asked to charge the jury on fraud. Indeed, had it been requested, the Court would have denied such request based upon the fact that any claims of fraud in this case were entirely duplicative of the claims for breach of contract.

Accordingly, based upon the Court's extensive review of the testimony as set forth and the law applicable to the issues raised, the motion on behalf of Plaintiff to set aside the jury's verdict is denied.

This constitutes the DECISION and ORDER of the Court.



Dated: December 23, 2013

Riverhead, New York