City Court of Middletown, June 8, 2022

Alan J. Odze, plaintiff pro se.

Gary Goldstein for defendant.

This is a small claims action by Alan J. Odze (the plaintiff) against Orange County Builders, LLC (the defendant). The plaintiff appeared pro se, and the defendant appeared with Gary Goldstein, Esq. The plaintiff alleges the defendant attempted three times to repair deep cracks in the front concrete steps (the steps) of a new home the defendant built for the plaintiff and further alleges the steps were not built correctly. As a result, the plaintiff is seeking $3,000 in damages from the defendant.{**75 Misc 3d at 1050}

The plaintiff submitted his application to file small claims on July 15, 2020. The parties appeared in court for a virtual conference through the Microsoft Teams application on May 21, 2021, and the court originally dismissed this action based on a belief the plaintiff was alleging the same claim against the defendant as the plaintiff raised in an earlier case the plaintiff brought against the defendant, but the court reversed that decision upon further review of the claim in this action compared to the claim raised in the earlier case.^[FN1] The court then scheduled the trial for June 29, 2021. The court conducted a trial on that day and reserved decision.

At the trial, the plaintiff testified, very credibly, under oath. The defendant chose not to testify. There were no other witnesses. The plaintiff and the defendant also submitted documentary evidence for the court's consideration. [*2]

Prior to the commencement of the trial, the defendant, by counsel, moved to dismiss the plaintiff's claim. The defendant asserted the concept of res judicata and claimed this action was identical to and resolved by the prior action brought by the plaintiff against the defendant. The defendant also claimed that any warranty period associated with the steps had already expired.

The court denied the claim of res judicata based on the fact the instant action involved an entirely different set of facts and circumstances than the first action. The court reserved decision on the second aspect of the defendant's motion in order to hear testimony and review evidence produced at the trial.

At the conclusion of the trial, the defendant again moved to dismiss the plaintiff's claim based on res judicata and based on the fact the plaintiff experienced issues with the steps before the prior action but did not raise the steps as an issue in that action. The court denied the defendant's motion but reserved decision on the plaintiff's claim.

For the reasons set forth below, and pursuant to UCCA 1808 (a small claims judgment "shall not be deemed an adjudication of any fact at issue or found therein in any other action"), the court denies both aspects of the defendant's motion, determines that this claim is separate and apart from any prior claim by{**75 Misc 3d at 1051} the plaintiff, holds that the warranty applicable to the steps, by law, allows the plaintiff to go forward with his claim, and grants judgment to the plaintiff.

The credible evidence at the trial showed the following:

The defendant constructed a new, single family house for the plaintiff on property located at 229 Sands Road, Town of Wallkill, New York (the property) pursuant to a contract between the parties dated May 26, 2017 (the contract, accepted into evidence as defendant's exhibit A).

Attached to the contract was a "Builder's Rider to Contract of Sale" (the builder's rider). Paragraph 3 of the builder's rider stated, in part, "that none of the terms hereof, except those specifically made to survive title closing, shall survive such title closing" (emphasis supplied).

Paragraph 5 of the builder's rider notes that the seller's responsibility, after closing of title or when the purchaser takes possession, whichever is sooner, is limited to completion of pre-closing punch list items and "[p]erformance of warranty obligations under the provisions of the Limited Warranty annexed hereto and made a part hereof." According to paragraph 11 of the builder's rider,

"[t]he seller makes not [sic] housing merchant implied warranty or any other warranties, express or implied, in connection with this contract of sale other than the warranty annexed hereto and made a part hereof. The purchasers [sic] acknowledge that they are aware of the warranty provisions as provided by Article 36-B of the New York General Business Law and agrees that said provisions are modified by the limited warranty annexed hereto."

There is no language in either paragraph 5 or paragraph 11 of the builder's rider stating that the terms of those paragraphs "specifically . . . survive title closing" as required in paragraph 3 of the builder's rider. The only provisions of the contract that were described as specifically surviving closing are paragraph 18 of the builder's rider and paragraph 1 (e) of a separately [*3]attached document entitled rider to contract of sale.^[FN2]

{**75 Misc 3d at 1052}Attached at the end of the contract are 12 pages.^[FN3] The first of those pages is captioned "GENERAL ONE-YEAR WARRANTY," and in the first paragraph on that page it states, in part, the following:

"the seller guarantees the purchaser against defects described below provided that such defects are brought to the seller's attention in writing^[FN4] during the one-year warranty period commencing with the date of possession or closing of title, whichever occurs first, or within such shorter period as may be specifically stated herein. These guarantees are designed to protect the purchaser from faulty construction and defective materials; they do not apply to defects caused by normal wear and tear . . . . No steps taken by the seller to correct defects shall act to extend the warranty period beyond the initial term of one year. . . . This warranty, is applicable only to the matters guaranteed herein and only if the noted defects are reported in writing before the end of the one-year warranty period or such shorter period as may apply."

The rest of that page, and the following two pages, list guarantees for various components of the house (such as roofs, heating, and masonry) and also list "non-warrantable items." For example, the masonry category guarantees against structural defects for a period of one year and states "[o]nly those cracks which are of such a magnitude so as substantially{**75 Misc 3d at 1053} to interrupt the place^[FN5] of the surface, or affect its structural value, will be the responsibility of the seller to repair." The remaining nine pages thereafter deal with "ACCEPTED STANDARDS" and "PERFORMANCE STANDARDS" for various components (such as site work, concrete, masonry, doors and windows, and finishes), and some components, such as concrete and masonry, are limited to "first year only." For example, in paragraph 2 (B) (7) under "CONCRETE" it states "[s]toops, steps or garage floors shall not settle, heave or separate in excess of 1 inch from the house structures. Builder-Seller will take whatever corrective action is required to meet the Performance Standard." In paragraph 3 (A) (2) under "MASONRY COVERAGE (First Year Only)," for "[c]racks in masonry wall or veneer" it states "[s]mall [*4]hairline cracks due to shrinkage are common in mortar joints in masonry construction. Cracks greater than 3/8 inch in width are considered excessive."

The 12 pages attached to the contract do not include all of the language required under General Business Law § 777-b (3) and (4) to exclude the housing merchant implied warranty as set forth in General Business Law § 777-a. Omitted from the warranty provisions contained in the 12 pages attached to the contract is language specifically required under General Business Law § 777-b (4) (a), (b), (c), (g) and (h).^[FN6]

{**75 Misc 3d at 1054}The parties closed on the transaction in March 2018, and the plaintiff took possession of the property in March 2018. Not long after the plaintiff took possession of the property, the steps developed hairline cracks next to the landing. Representatives of the defendant told the plaintiff the cracks were normal. In September or October 2018, however, some of the defendant's workers came to the property, chipped the cracks, and filled in the cracks on the steps.

A few months after the defendant's workers attempted to repair the cracks in the steps, the steps developed larger cracks in the front stoop area and on the sides. In May 2019, one of the defendant's workers again came to the property, chipped the cracks, and filled in the cracks on the steps.

The cracks in the steps continued to appear and spread. In September 2019, "Keith," representing the defendant, came to the property, chipped the cracks, and filled them again. (See plaintiff's exhibit 4, in evidence, which was a copy of a text message on Sept. 16, 2019, from "Keith @ Catalyst" to the plaintiff asking "[w]hat time is a good time for me to come by and take care of the stoop.")

Despite the defendant's three separate attempts to fix the steps (the plaintiff, on cross-examination, admitted the defendant's workers tried to fix the problem), the cracks continued to appear, as shown by pictures taken by the plaintiff on January 5, 2020, and accepted into evidence as plaintiff's exhibit 1. The pictures showed large cracks along both sides of the steps as well as large cracks in the steps where the steps met the sidewalk. On January 5, 2020, the plaintiff sent the following text message to "Keith": "I was wondering if you know why the front stoop keeps cracking? It was fixed three times." Accompanying the text was a photograph of the steps showing a large crack or cracks along the front portion of the bottom step (part of plaintiff's exhibit 3, in evidence). [*5]

The plaintiff did not receive a response from "Keith." On March 18, 2020, the plaintiff sent an email to "Denise" at "catalystconstructiongroup.com" with the following message:

"Please inform Sal that the front steps that were repaired three separate times have cracked in the{**75 Misc 3d at 1055} exact same place for a fourth time. I sent the photos to Keith last month but I have not received a response. I had a concrete man over. The step that keeps cracking has to be taken apart. Gravel needs to be placed inside the step and a board needs to be formed right behind the step. This is the only way to stop the cracking. Please inform me if you will do the repairs or if I should take other measures" (part of plaintiff's exhibit 6, in evidence).

The plaintiff followed the email with a letter dated March 22, 2020, to the defendant (part of plaintiff's exhibit 6, in evidence), repeating much of the same information contained in the March 18, 2020 email. At the end of the March 22, 2020 letter, the plaintiff wrote: "I am reaching out to you to see if you want to repair these steps correctly. Please advise if you intend to repair the step correctly or not. If not, please note that I will have no choice but to bring this matter to a small claims hearing."

The plaintiff received no response to his March 2020 correspondence. Thereafter, the plaintiff obtained two estimates to fix the steps—one from MFS Masonry for $5,000, and one from Raymond Burton for $3,400. The plaintiff thought the MFS Masonry estimate was too high, so the plaintiff hired Burton to do the work.

Burton did the work on the steps in April 2021, and the plaintiff watched while the work was being done. The plaintiff saw there was no rebar and no pins connecting the walkway to the front stoop and further observed under the steps had not been backfilled. The plaintiff took photographs while Burton was working on the steps (plaintiff's exhibit 2, in evidence). Once Burton finished the work, the plaintiff paid Burton $3,400 in cash.

[1] The purported limited warranty consisting of 12 pages attached to the contract does not apply to the work performed on the steps for two reasons. The first reason is this: Paragraph 3 of the builder's rider to the contract stated, in part, "that none of the terms hereof, except those specifically made to survive title closing, shall survive such title closing" (emphasis supplied). The only terms of the contract that specifically survived the closing of title are paragraph 18 of the builder's rider and paragraph 1 (e) of a separately attached document entitled rider to contract of sale, and those paragraphs have{**75 Misc 3d at 1056} nothing to do with a limited warranty regarding construction of the house. Neither paragraph 5 nor paragraph 11 of the builder's rider (which contain references to the purported limited warranty provided by the defendant) indicate they specifically survive closing, and there is nothing on the 12 pages attached to the contract indicating the content of those pages specifically surviving closing of title. As a result, the defendant's purported limited warranty applicable to the construction of the plaintiff's house did not survive the closing of title.

[2] Even if the defendant's purported limited warranty were deemed to survive the closing of title, there is a second reason why the purported limited warranty does not apply to the construction of the steps: the purported limited warranty does not satisfy the requirements of General Business Law § 777-b in order to replace the housing merchant implied warranty required under General Business Law § 777-a.

General Business Law § 777-b (3) and (4) set forth specific requirements to exclude or [*6]modify the housing merchant implied warranty found in General Business Law § 777-a. Omitted from the warranty provisions contained in the 12 pages attached to the contract is language specifically required under General Business Law § 777-b (4) (a), (b), (c), (g) and (h). As described in footnote 6 above, General Business Law § 777-b (3) (d) states "[t]he limited warranty shall meet or exceed the standards provided in subdivisions four and five of this section," while section 777-b (4) states

"[a] limited warranty sufficient to exclude or modify a housing merchant implied warranty must be written in plain English and must clearly disclose:

"a. that the warranty is a limited warranty which limits implied warranties on the sale of the home; the words 'limited warranty' must be clearly and conspicuously captioned at the beginning of the warranty document;

"b. the identification of the names and addresses of all warrantors;

"c. the identification of the party or parties to whom the warranty is extended and whether it is extended to subsequent owners . . .

"g. the term of the warranty coverage and when the term begins . . . [and]

"h. step-by-step claims procedures required to be{**75 Misc 3d at 1057} undertaken by the owner, if any, including directions for notification of the builder and any other warrantor" (emphasis supplied).

None of the requirements set forth in section 777-b (4) (a), (b), (c), (g) and (h) were contained in the defendant's purported limited warranty. In addition, section 777-b (4) (g) specifically requires that the term of any limited warranty "shall be equal to or exceed the warranty periods of a housing merchant implied warranty, as defined in subdivision one of section seven hundred seventy-seven-a of this article." Section 777-a (1) (a) through (c) require warranties to last from one to six years, depending on the particular warranted item, but the defendant's purported limited warranty restricts all warranties to one year.

Because the defendant's purported limited warranty did not survive the closing of title and/or does not satisfy the requirements of General Business Law § 777-b, the warranty applicable to the defendant's construction of the house, and particularly the steps at issue in this case, is not the defendant's purported limited warranty attached to the contract but the statutory housing merchant implied warranty contained in General Business Law § 777-a.^[FN7]

General Business Law § 777-a (1) (a) states that the housing merchant implied warranty includes the following: for "one year from and after the warranty date^[FN8] the home will be free from defects due to a failure to have been constructed in a skillful manner." Section 777-a (2), in relevant part, states:

"a housing merchant implied warranty does not extend to:

"a. any defect that does not constitute (i) defective workmanship by the builder or by an agent, employee or subcontractor of the builder, [or] (ii) defective materials supplied by the builder or by an agent, employee or subcontractor of the builder."

If there are issues with a home that is covered by the housing merchant implied warranty, written notice must be received{**75 Misc 3d at 1058} by the builder before any action is commenced "and no later than thirty days after the expiration of the applicable warranty period," and the builder must have a[*7]"reasonable opportunity to inspect, test and repair the portion of the home to which the warranty claim relates" (§ 777-a [4] [a]). In this case, it is clear the plaintiff gave written notice to the defendant prior to this action being commenced and prior to the expiration of the warranty period.

Section 777-a (4) (b) notes that if a homeowner were to start an action against a builder on a warranty claim, that action "may be commenced prior to the expiration of one year after the applicable warranty period, as described in subdivision one of this section, or within four years after the warranty date, whichever is later." Furthermore, section 777-a (4) (b) states that

"[i]f the builder makes repairs in response to a warranty claim under paragraph a of this subdivision, an action with respect to such claim may be commenced within one year after the last date on which such repairs are performed. The measure of damages shall be the reasonable cost of repair or replacement and property damage to the home proximately caused by the breach of warranty."

The plaintiff's credible testimony and documentary evidence show that within months of the closing of title, and certainly less than one year from the closing of title (which was within the original one year warranty period), the steps developed hairline cracks next to the landing. Despite the fact that representatives of the defendant told the plaintiff the cracks were normal, in September or October 2018, some of the defendant's workers came to the property, chipped the cracks, and filled in the cracks on the steps.

The steps developed larger cracks in the front stoop area and on the sides. In May 2019, one of the defendant's workers again came to the property, chipped the cracks, and filled in the cracks on the steps, but the cracks continued to appear and spread. In September 2019, "Keith," representing the defendant, came to the property, chipped the cracks, and filled them again, but that did not fix the problem and the cracks continued to appear, as shown by pictures taken by the plaintiff on January 5, 2020, and accepted into evidence as plaintiff's exhibit 1. The plaintiff continued to reach out to the defendant or the defendant's agents, and even passed on to the defendant a{**75 Misc 3d at 1059} "concrete man's" assessment of what was required to completely fix the steps, but the defendant took no further action, even after the plaintiff, in a March 22, 2020 letter, informed the defendant that if the defendant did not resolve the issue with the steps, the plaintiff would commence this action.

As noted above, the statutory housing merchant implied warranty under section 777-a (1) (a) applies to the construction of the steps. The plaintiff's credible testimony and documentary evidence, which the defendant did not refute or rebut, show the issues with the steps were attributable to and proximately caused by either defective workmanship by the defendant or the defendant's agents, employees, or subcontractors, or defective materials used in the construction of the steps, satisfying the requirements of section 777-a (2) (a) (i) and (ii). The plaintiff certainly gave ample notice of the warranty claim as required by section 777-a (4) (a), and the plaintiff commenced this action within the time frame established by section 777-a (4) (b).

Because the defendant failed to take the necessary actions to repair or replace the steps as required under the housing merchant implied warranty other than mere patchwork which did not take care of the problem, the plaintiff obtained two estimates to fix the steps and eventually accepted the lower estimate from Burton for $3,400. Burton did the work on the steps in April 2021, and the plaintiff paid Burton $3,400 in cash. Under section 777-a (4) (b), "[t]he measure of damages shall be the reasonable cost of repair or replacement and property damage to [*8]the home proximately caused by the breach of warranty"; in this case, the measure of damages normally would be the $3,400 paid by the plaintiff to Burton, but the plaintiff only requested $3,000 in his application to file small claims.

The court, in this small claims action, must "do substantial justice between the parties" (Uniform City Ct Act § 1804). The defendant attempted to fix the steps on three separate occasions by simply filling the ever-enlarging cracks, but that was nothing more than a "Band-Aid" approach. To satisfy the defendant's obligation under the housing merchant implied warranty and based on the worsening condition of the steps, the defendant should have replaced the steps in their entirety. The plaintiff ultimately had to take on that responsibility himself. Although the plaintiff testified that he paid $3,400 for Burton to repair and replace the steps, the plaintiff's application to file{**75 Misc 3d at 1060} small claims requests a judgment against the defendant in the amount of $3,000. As a result, and based upon all of the above, it is the court's determination that "substantial justice between the parties" requires the court to grant judgment to the plaintiff against the defendant in the amount of $3,000.

After hearing and giving appropriate weight to the plaintiff's testimony at the trial and reviewing all documentary evidence produced by the parties at the trial, it is ordered that the defendant owes the sum of $3,000 to the plaintiff, and it is further ordered that judgment shall issue for the plaintiff against the defendant in the amount of $3,000, plus costs.

"[a] limited warranty sufficient to exclude or modify a housing merchant implied warranty must be written in plain English and must clearly disclose:

"a. that the warranty is a limited warranty which limits implied warranties on the sale of the home; the words 'limited warranty' must be clearly and conspicuously captioned at the beginning of the warranty document;

"b. the identification of the names and addresses of all warrantors;

"c. the identification of the party or parties to whom the warranty is extended and whether it is extended to subsequent owners . . .

"g. the term of the warranty coverage and when the term begins . . . [and]

"h. step-by-step claims procedures required to be undertaken by the owner, if any, including directions for notification of the builder and any other warrantor" (emphasis supplied).

In addition, section 777-b (4) (g) specifically requires that the term of any limited warranty "shall be equal to or exceed the warranty periods of a housing merchant implied warranty, as defined in subdivision one of section seven hundred seventy-seven-a of this article." Section 777-a requires warranties to last from one to six years, depending on the particular warranted item, but the defendant's purported limited warranty restricts all warranties to one year.

Footnote 7: Under section 777-a (1), "a housing merchant implied warranty is implied in the contract or agreement for the sale of a new home and shall survive the passing of title."

Footnote 8: General Business Law § 777 (8) defines "warranty date" as "the date of the passing of title to the first owner for occupancy by such owner or such owner's family as a residence, or the date of first occupancy of the home as a residence, whichever first occurs." As noted in the Findings of Fact, the parties closed title, and the plaintiff took possession of the property, in March 2018.