Hall v Krohmer (2014 NY Slip Op 50101(U))

Hall v Krohmer

2014 NY Slip Op 50101(U) [42 Misc 3d 1220(A)]

Decided on January 23, 2014

County Court, Suffolk County

Tarantino Jr., J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

This action was commenced by filing a Summons and Verified Complaint in November 2005. Plaintiff's first cause of action sought return of an overpayment of $8,000.00. The second cause of action alleged breach of contract in that the Defendants defaulted under the terms of an agreement causing Plaintiff to incur additional expenses to finish the subject project. In the Verified Answer, Defendants asserted the affirmative defenses that Plaintiff failed to properly prepare the subject property, and that there were subsequent separate and distinct agreements made by and between the parties. Defendants interposed a counterclaim without any specific demand for damages. The matter was referred on March 15, 2013, to this Court, pursuant to NY Civ. Pract. Laws & Rules (CPLR) §325(d) for trial. A trial without jury was conducted over three days beginning November 13, 2013, and concluding December 5, 2013. The Court reserved decision.

Bruce Hall owned the building located 156 E Main St, Pt Jefferson, NY. The building was classified a mixed use commercial-residential building. In 2004 he wanted to extend the building so he hired architects to draw plans and acquire permits. The plans were ultimately approved by the Zoning Board of Appeals. Hall began hiring contractors, and had pilings placed on the property. In October 2004, the pilings were cement capped, and a steel company erected the steel framing. In March 2005, the steel company then lifted the frame and added piers on each corner to raise the addition. Three concrete floors were completed.

Hall explained that Defendant Krohmer-Corley won the contract bid based on a recommendation from the architect. Hall met with Defendant Corley on the site early in 2005. Hall stated he met Corley four-to-five times before signing the contract. Defendants had the opportunity to examine the grounds and the interior before entering into the contract. Hall stated there were no changes to the interior of the structure from the time that the parties entered the contract until the time the Defendants began work.

The contract was prepared by Corley, and was signed, only by Hall, May 28, 2005. The contract provided:

Except for these categories, the contract was not itemized in much more detail. For example, it did not distinguish labor from materials. The contract total was $88,927.00; Hall paid a $10,000 deposit. Defendants began work in about June 2005. Hall believed that the project would take about 2 ½ months to complete. Hall stated that in the beginning everything was going fine, that the Defendants were really "banging out" the job. The roof was put on fast; Hall went for a 50 year roof, and a skylight, both changes to the original contract. Hall said he paid the $4,467.00 charged for that work. Hall then made payments as Corley requested. Hall testified that his payments were as follows: 38580

38499	$10,000	by check
38506	$10,000	by check
38513	$11,927	by check
38527	$11,000	by cash
38532	$ 5,500	by cash
38541	$11,000	by cash
38548	$ 5,500	by cash
July 23, 2005 plus	$10,000 $ 1,000	by cash credit
Aug 10, 2005 plus	$10,000 $ 1,000	by cash credit
$10,000	by check

After the first two payments by check, Hall would cash a check and give Corley the cash. He then would have Corley sign the contract. Hall pointed to a copy of the contract upon which were written the dates and amounts of payments, with initials. Hall said that on August 10, 2005, he paid Corley $11,000.00 cash, but did not have the contract available for Corley to initial. Hall stated that he paid a total of $96,927.00.

Hall's testimony continued with review of various additional documents. He acknowledged additional charges for reframing transom windows for another $421.00. When shown a framing change order for $8,800.00, Hall said that he never discussed that with Defendants, nor did he approve it. He said he first saw the document at the examination before trial. In addressing the allegation that there were additional costs for the building being "out of plumb," Hall explained that the building was old, had variations in dimensions, and was not square. He emphasized that even so, the Defendants had an opportunity to examine the property several times before entering into the contract and that those variations existed at the time the Defendants bid on the project. As for the windows, Hall was adamant that he and his men installed the windows, not the Defendants.

When asked to describe the incomplete work, Hall said that areas of the walls needed siding, [*4]fascia was missing on the west and south walls, freeze board was missing on the east and west walls, and more. Not one of the four walls was completed. When Hall approached Corley, Hall was told that the job would be finished in an additional 2 weeks. Through September and October, Corley kept saying he would have the job completed, but it never was. On November 8, 2005, through his attorney, Hall advised Corley and his workers "not to come back to the property."

In December 2005, Hall took his men from his job in the city and had them continue with some of the work on the project. Hall entered into evidence 17 checks drawn from his personal account and dated from May 15, 2006 to December 6, 2006. The checks were made payable to:

Serguie K. $14,980 ($12,120 of which was endorsed by Hall) Nick A. 925 Gunnar J. 875 ($875 of which was endorsed by Hall) George L. 525 Bruce Hall 1500 Cash 9000 ($9,000 of which was endorsed by Hall) TOTAL $27,805 ($23,495 of which was endorsed by Hall)

As for his workers, Hall had no 1099s or W2s for his workers, and he had no records of their hours worked. Initially, the workers focused on stopping leaks. Hall then made a detailed punch list of items unfinished by Defendants so that he could obtain bids from other contractors. He received two bids but because he was "tapped for money," he continued to finish the project little by little with his own employees. Hall submitted into evidence 7 invoices for materials purchased during this period totaling $2,686.71. The building was completed in about December 2006.

On cross examination, Hall testified that he was in construction for over 35 years. He owned and operated BCH Management Corp (Restoration and Remodeling) / BCH Construction Management. He also acknowledged that he had no project records, nor a project file. When questioned about his "failure to backfill" soil around the building, Hall repeated that there was no backfilling of soil needed. Again he emphasized that the Defendants inspected the property several times before entering into the contract, and there were no changes to the property during that time. If it was an issue, it should have been itemized in the plans, but there was no requirement by the Defendants that Plaintiff complete any backfilling. In response to questions that lifting the steel frame would have caused the building dimensions to change, again Hall pointed out that the lifting was completed well before the Defendant inspected the property. Upon reviewing the cancelled checks used to pay for the project, Hall acknowledged that of the 11 checks, only 3 were made payable to Defendants. The remaining checks were cashed by Hall, after which he gave the Defendants the cash. He also stated that he got a 10% credit from Defendant for paying in cash. Plaintiff rested. [*5]

The Defendant called Jessica Giovachino to testify. An architect since 1991, Giovachino had been registered in NY since 2000. She has done work for Corley, and was asked to review the plans for this project. She testified that it is customary to backfill around a foundation 28 days after the concrete cured. She also testified that the steel frame structure was out of tolerance. But when asked by the Court what the tolerances were, Giovachino stated that she did not know. As a result, she acknowledged she could not state whether the tolerance deviations would have required shims as alluded to by Defendants' counsel. On cross examination she further acknowledged that if grading around the foundation was an issue, the contractor would have seen it before erecting scaffolding. Further, the contractor should have had measurements taken during the bidding on the job to determine if the building was out of plumb as alleged.

Defendants' next witness was Michael Mart who owned the property immediately adjacent to Plaintiff's. He saw the steel frame being lifted and placed on new footings. While he testified further, there was nothing else Mart could testify about from his personal knowledge that was material to the issues herein.

Defendants' last witness was John Corley. Corley stated he was in the construction business and part owner of Cromer Corley Construction since 1982. He was referred to Hall by the architects and when he went to the property the steel structure was already erected. He met with Hall, reviewed the plans, inspected the premises, and ultimately offered a proposal. He acknowledged that he did not take accurate measurements of the structural dimensions because it "would have taken a day or so." Windows and doors were not included; Hall said someone else would do the windows. When asked about offering Hall a discount for cash, Corley denied such an arrangement. Referring to his records, Corley acknowledged the following payments received from Plaintiff:

38499 $10,000 by check 38506 $10,000 by check 38513 $11,927 by check 38527 $11,000 by cash 38532 $ 5,500 cash or check 38541 $11,000 by cash 38548 $ 5,500 by cash 38555 $11,000 by cash

38580

At the close of Defendants' case, both counsel stipulated to allowing what "would have been" the testimony of two additional witnesses. The first was that of Pedro Escobar. Counsel stipulated that Escobar would have testified that he was Defendants' employee, that he accepted delivery of the windows, and that he installed the outside doors and windows. The second was that of Edward Krohmer. Counsel stipulated that Krohmer would have testified that he and his workers installed the outside doors and windows.^[FN1]

In a matter such as this, it is the province and indeed the obligation of the trial court to assess and determine matters of credibility. Morgan v McCaffrey, 14 AD3d 670, 789 N.Y.S.2d 274 (2d Dep't 2005); Matter of Liccione v John H., 65 NY2d 826, 493 N.Y.S.2d 121 (1985). Here, the burden is upon the Plaintiff to plead and prove its direct case by a fair preponderance of the credible, relevant and material evidence with the same burden imposed upon the Defendant respecting his claim against the Plaintiff. Prince-Richardson on Evidence, §3-210; Torem v 564 Cent. Ave. Rest., 133 AD2d 25, 518 N.Y.S.2d 620 (1st Dep't 1987). Credible evidence has been defined as evidence that proceeds from a credible source and reasonably tends to support the proposition for which it is offered and is evidentiary in nature and not merely a conclusion of law, nor mere conjecture. Baudille v Kelly, 31 Misc 3d 1232(A), 932 N.Y.S.2d 759 (NY Supreme, NY County, 2011).

Based upon the court's observations of Bruce Hall's and John Corley's demeanor, as well as the manner and unsubstantiated nature of their testimony, it does not find either of them to be credible. Most significantly, the testimony by each of these individuals established almost $50,000 of cash was exchanged between them in payment for this project. Further calling into question Hall's credibility was the submission of almost $27,000 of payments made by personal check which were co-endorsed by him and his "employees" without any explanation, and without any indication that payroll and other withholding taxes were deducted. Under the doctrines of falsus in uno and unclean hands, this Court discredits the testimony of both parties.^[FN2]

The elements of a cause of action for breach of contract are: (1) formation of a contract between the parties: (2) performance by plaintiff; (3) defendant's failure to perform; and (4) resulting damage. [*7]Furia v. Furia, 116 AD2d 694, 498 N.Y.S.2d 12 (2d Dept 1986). A contract is formed when there are at least two parties with legal capacity to enter into a contract who give their mutual assent to the terms of a contract and there is consideration. 2 PJI 3d 4:1 at 638 (2011); see, Maas v. Cornell University, 94 NY2d 87, 93, 699 N.Y.S.2d 716 (1999). Mutual assent is often referred to as "a meeting of the minds" of the parties on all essential terms of the contract. 2 PJI 4:1 3d at 639 (2010); Matter of Express Industries and Terminal Corp. v. New York State Dept. of Transportation, 93 NY2d 584, 693 N.Y.S.2d 857 [1999] Farago v. Burke, 262 NY 229 (1933), Arliss v. Herbert Brenon Film Corporation, 230 NY 390 (1921). The manifestation of mutual assent must be sufficiently definite to assure that the parties are truly in agreement with respect to all material terms. Matter of Express Indus. and Term. Corp. v. New York State Department Transportation, supra. The central issues regarding whether the parties had entered into a binding contract are: (1) meeting of the minds (mutual assent to the terms of the agreement by the parties); (2) definiteness (does the agreement establish the intention of the parties with sufficient certainty as to be enforceable by a court); and (3) consideration (was there a bargained for exchange of something of value between the parties). 28 New York Practice Series, Contract Law § 2:1. See also, T.H. Cheshire & Sons, Inc. v. Berry, 37 Misc 3d 1220(A), Slip Copy, 2012 WL 5512544 (Table), November 13, 2012. The burden of proving compliance with the contract terms and conditions is upon the party suing for damages for its breach, and if he relies on the theory of substantial performance he has the burden of showing the nature of his defects and omissions, their unsubstantiality and the expense of making them good. Fisch on New York Evidence, Second Edition, §1098, Lond Publications 1977/2008.

Plaintiff alleged that the Defendants ceased performing any work at the premises which forced Plaintiff to retain a new contractor. We know this to be false because the undisputed evidence was that Plaintiff told the Defendants to not return, and that Plaintiff, either alone or with his "employees" finished the project over the following several months. Defendant testified that about 97% of the project was completed. At that point, Plaintiff had paid either $85,927.00 or $96,927.00, depending on the testimony. If the Court accepted Plaintiff's testimony that he paid $96,927.00, it begs the question why did he make those payments if he knew the contract to only be $88,000.00? Then again, if Defendants did install the windows (as was stipulated), then the additional payments covered the additional $8,800.00 requested by Defendants. Further, Plaintiff then presented checks totaling $27,805 for the period after he discharged the Defendants, which undoubtedly included the $2,686.71 cost of materials he purchased. Not only was it unexplained how he incurred over $25,000 in labor involving only the use of $2,686.71 in materials, but there was also no breakdown of the hours worked for the labor paid which would allow the Court to determine reasonable value for the services rendered. Under the circumstances, the Court finds that the Plaintiff failed to prove by a preponderance of credible evidence that the Defendant defaulted in the performance of the contract.

Regarding the Defendants' counterclaim, they alleged that the Plaintiff defaulted by failing to prepare the property for the work to be done under the initial contract. Had this issue been paramount in order for the Defendant to perform under its contract, then the obligation of the Plaintiff to "prepare the property" should have been included in the contract. It was not, either in the original agreement or in any subsequent writing. The testimony was undisputed that Defendant visited the property several times before preparing the contract; had the property conditions been critical the Defendant ought to have seen it. Further, while claiming that the project cost much more, no proof of the additional work was provided. Even if it had, because of the lack of itemization in the original contract the Court could not determine which parts of the contract were completed, nor in what percentages. Under the circumstances, the Court finds that the Defendant failed to prove by a preponderance of credible evidence that the Plaintiff defaulted in the performance of the contract. [*8]