Supreme Court, Greene County, September 3, 2024

Hogan & Cassell, LLP, Jericho (Shaun K. Hogan of counsel), for defendants.

Freeman Howard, PC, Hudson (Paul M. Freeman of counsel), for plaintiff.

Presently pending before the court is the motion of defendants Maura Sheridan, as executrix of the estate of John T.{**85 Misc 3d at 328} Driscoll, and Cathleen Driscoll (defendants) to vacate the judgment entered on April 29, 2024, following this court's decision after a bench trial on the ground that the judgment improperly includes prejudgment interest. Plaintiff Gerard Buckley doing business as GNJ Home Improvement (plaintiff) opposes. For the reasons that follow, defendants' motion is denied.

As relevant to the present motion, plaintiff commenced his action in 2013 to recover [*2]damages for restoration work he performed to defendants' vacation home in Hensonville, New York, in 2011 following a fire.^[FN1] After the court (Mott, J.) decided defendants' motion for summary judgment, the matter proceeded to a bench trial on plaintiff's quantum meruit claims for his restoration work, as well as defendants' counterclaims. Trial commenced on December 18, 2023, and concluded on January 17, 2024. Thereafter, on April 24, 2024, the court issued a written decision in which it awarded plaintiff $49,310.02 in damages on his quantum meruit claim and rejected defendants' counterclaims. The court did not grant or otherwise address plaintiff's request for prejudgment interest in its posttrial decision. On April 29, 2024, plaintiff filed a judgment with the Greene County Clerk for a total sum of $104,694.60, consisting of $49,310.02 in damages awarded in the court's decision after trial; $54,349.58 in prejudgment interest from "the date of the breach of contract, January 31, 2012"; and costs of $1,035.00 (NY St Cts Elec Filing [NYSCEF] Doc No. 6).

On May 13, 2024, defendants moved by order to show cause, supported by a memorandum of law and attorney's affirmation with exhibits, to vacate the April 29, 2024 judgment and/or stay any efforts to enforce it on the ground that it improperly included prejudgment interest (see NYSCEF Doc Nos. 3-10). Plaintiff submitted a letter brief in support of his entitlement to prejudgment interest on May 14, 2024 (NYSCEF Doc No. 11). After considering the parties' submissions, the court executed the order to show cause on May 15, 2024, and set the deadline for submissions in opposition as May 24, 2024 (see NYSCEF Doc No. 12). Plaintiff submitted a memorandum of law in opposition (see NYSCEF Doc No. 18), and defendants submitted a memorandum of law in reply (see NYSCEF Doc No. 19).{**85 Misc 3d at 329}

Defendants contend that the April 29, 2024 judgment must be vacated on the ground that inclusion of prejudgment interest was improper because the court did not award plaintiff such interest. Defendants acknowledge that plaintiff's posttrial memorandum of law and posttrial response requested prejudgment interest. But, relying on Precision Founds. v Ives (4 AD3d 589 [3d Dept 2004]), defendants contend that prejudgment interest on a claim of quantum meruit is within the discretion of the court and, under the circumstances here, the court properly denied plaintiff's request for 12 years of prejudgment interest. Plaintiff contends that prejudgment interest on his quantum meruit claims is mandatory under CPLR 5001 (a). Citing Ogletree, Deakins, Nash, Smoak & Stewart v Albany Steel (243 AD2d 877 [3d Dept 1997]), in addition to authority outside the Third Department, plaintiff argues that Ives is an outlier case that this court should decline to follow.

CPLR 5001 (a) provides, in relevant part, that "[i]nterest shall be recovered upon a sum awarded because of a breach of performance of a contract, . . . except that in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court's discretion" (CPLR 5001 [a]). The courts of New York are in disarray on the issue of whether prejudgment interest is mandatory, as in breach of contract actions, or is discretionary, as in most equitable matters.^[FN2][*3]

The Third Department

This court is bound under the doctrine of stare decisis by the case law of the Third Department, unless the Court of Appeals has spoken, even where there are conflicting decisions from the other Departments. But the Third Department itself has conflicting decisions on the issue of mandatory versus discretionary prejudgment interest in quantum meruit cases.

The Third Department's most recent decision squarely deciding the issue is Precision Founds. v Ives, decided in 2004. Like this action, Ives involved a quantum meruit claim for money damages for residential construction work performed by the{**85 Misc 3d at 330} plaintiff for the defendant (see Ives, 4 AD3d at 591). The Third Department affirmed the trial court's decision, following a nonjury trial, to award damages to the plaintiff on its cause of action for quantum meruit, but reversed so much of the award as included prejudgment interest (see id. at 592). Citing CPLR 5001 (a), the Court held that awards of prejudgment interest "are discretionary for a quantum meruit claim" (id. at 593). And observing that the plaintiff waited nearly four years after rendering its services before bringing its action against the defendant, the Third Department concluded that, "[u]nder the particular circumstances herein, [it] do[es] not find a sufficient basis for a discretionary award of pre[judgment] interest on plaintiff's quantum meruit claim" (id.). The Court neither cited any authority, nor provided any rationale. Nor did it overrule, nor even reference, the Third Department's prior decision in Ogletree, which held to the contrary.

In Ogletree—a decision rendered seven years prior to Ives—the Third Department "reject[ed the] defendant's categorization that [the] plaintiff's [quantum meruit] claim [wa]s equitable and, therefore, any award of interest was discretionary" under CPLR 5001 (a) (Ogletree, 243 AD2d at 879 [internal quotation marks omitted]). The Court relied on Hudson View II Assoc. v Gooden (222 AD2d 163 [1st Dept 1996] [holding quantum meruit actions seeking damages are quasi-contract actions subject to jury trials]). The Court in Ogletree concluded that prejudgment interest was mandatory under CPLR 5001 (a) because the "[p]laintiff's quantum meruit action is essentially an action at law, inasmuch as it seeks money damages in the nature of a breach of contract, 'notwithstanding that the rationale underlying such causes of action is fairness and equitable principles in a general[,] rather than legal, sense' " (Ogletree, 243 AD2d at 879, quoting Gooden, 222 AD2d at 168).

More recently, in Matter of David Frueh Contr., LLC (BCI Constr., Inc.) (129 AD3d 1285 [3d Dept 2015]), the Third Department noted the conflict between Ives and Ogletree. But it had no occasion to resolve the issue of mandatory versus discretionary prejudgment interest under CPLR 5001 (a). In that case, the interest dispute was governed by CPLR 5002, as it pertained to interest from the date of an arbitration award to the date of entry of the judgment confirming the award (see 129 AD3d at 1287).

While the Third Department's decision in Ives has recency weighing in defendants' favor, Ives did not address or overrule{**85 Misc 3d at 331} Ogletree, or otherwise set forth a rationale for its holding. Ogletree, on the other hand, provided rationale for its holding. Under these circumstances, this court does not consider itself bound by either Third Department precedent, and will look to authority and reasoning outside the Third Department's jurisdiction to determine the weight of authority.

The Sister Departments

The Fourth Department has treated prejudgment interest on quantum meruit claims as discretionary under CPLR 5001 (a). In Crane-Hogan Structural Sys., Inc. v State of New York (88 AD3d 1258[*4][4th Dept 2011]), the Fourth Department, citing to Ives, held that an award of prejudgment interest was a matter within the "discretion" of the trial court (88 AD3d at 1262). The Fourth Department reached that same result in a case three years prior, Home Insulation & Supply, Inc. v Buchheit (59 AD3d 1078 [4th Dept 2009]), without relying on Ives. In Buchheit, the Fourth Department cited the Second Department's decision Bank of New York v Spiro (267 AD2d 339 [2d Dept 1999]), to hold that the "plaintiff [wa]s entitled to a discretionary award of preverdict interest" on its quantum meruit cause of action (see Buchheit, 59 AD3d at 1079, citing Spiro, 267 AD2d 339). In Spiro, citing CPLR 5001 (a), the Second Department had reasoned that "[i]n an action of an equitable nature, an award of interest is within the court's discretion" and "[u]nder the circumstances of this case, we decline to award interest" (Spiro, 267 AD2d at 340).

But in TY Elec. Corp. v DelMonte (101 AD3d 1626 [4th Dept 2012]), the Fourth Department held that the plaintiff's claim for money damages alone based on a theory of quantum meruit was legal, rather than equitable, in nature (see 101 AD3d at 1626, citing Gooden). But the Court applied such reasoning to determine whether the Rochester City Court had jurisdiction over the plaintiff's quantum meruit claim, which it concluded it did (see id.). And though the Fourth Department affirmed the entirety of the Monroe County Court's affirmance of the City Court's award, which included statutory interest on the plaintiff's quantum meruit claim, the Fourth Department did not specifically address the issue of prejudgment interest.

The First and Second Departments have held that prejudgment interest is mandatory under CPLR 5001 (a) on quantum meruit claims where the relief sought is money damages on the ground that such claims are legal rather than equitable in nature. In Leroy Callender, P.C. v Fieldman (252 AD2d 468 [1st{**85 Misc 3d at 332} Dept 1998]), the First Department held that plaintiff established its entitlement to prejudgment interest on its quantum meruit verdict (see 252 AD2d at 469). And in Tesser v Allboro Equip. Co. (73 AD3d 1023 [2d Dept 2010]), and Brent v Keesler (32 AD2d 804 [2d Dept 1969]), the Second Department has, articulating more robust rationale, held that prejudgment interest is mandatory in quantum meruit cases seeking damages (see Tesser, 73 AD3d at 1027-1028; Brent, 32 AD2d at 805).

The Second Department's rationale finds its footing in former Civil Practice Act § 480, CPLR 5001 (a)'s predecessor. Tesser and Brent relied on Neimark v Martin (7 AD2d 934 [2d Dept 1959]), which, under the former Civil Practice Act § 480, held prejudgment interest mandatory based on the language of Civil Practice Act § 480. The former provision provided for mandatory prejudgment interest "upon a cause of action for the enforcement of or based upon breach of performance of a contract, express or implied" (former Civ Prac Act § 480). Recodification at CPLR 5001 (a) intended no substantive change. In replacing former Civil Practice Act § 480 with CPLR 5001, the Third Preliminary Report of the Advisory Committee on Practice and Procedure to the Legislature (1959 NY Legis Doc No. 17) explained that "[t]he provision for contract actions [contained in CPLR 5001 (a)] is a simplification of the second sentence of § 480 of the civil practice act with no change in meaning intended" (Legis Studies & Reps, McKinney's Cons Laws of NY, CPLR 5001 [emphasis added]).

Inasmuch as a claim of quantum meruit, as a quasi-contractual claim, may be considered a species of implied contract (see Villnave Constr. Servs., Inc. v Crossgates Mall Gen. Co. Newco, LLC, 201 AD3d 1183, 1184-1185 [3d Dept 2022]; Kapral's Tire Serv. v Aztek Tread Corp., 124 AD2d 1011, 1012-1013 [4th Dept 1986]), the weight of current state court authority holds that quantum meruit claims for damages are governed by the mandatory interest provision for contract claims under CPLR 5001 (a).

One final observation about New York case law. The official practice commentary to [*5]CPLR 5001 cites Ives and Crane-Hogan Structural Sys. to reach the conclusion that interest on a quantum meruit claim is discretionary under CPLR 5001 (a) (see Mark C. Dillon, Prac Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5001:6). But in the 2024 updated pocket part, the commentary notes that the mandatory{**85 Misc 3d at 333} prejudgment interest rule applicable to breach of contracts "has been applied where the plaintiff's recovery is based upon quasi-contract" (Mark C. Dillon, 2023 Supp Prac Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5001:2, citing Chicago Tit. Ins. Co. v Crossroads Abstract Corp., 75 Misc 3d 1223[A], 2022 NY Slip Op 50647[U] [Sup Ct, NY County 2022]).

The Federal Courts Applying New York Law

In Agence France Presse v Morel (645 Fed Appx 86 [2d Cir 2016] [unpublished]), the Second Circuit, citing to Tesser, Ogletree, and Gooden, held that "New York case law holds that prejudgment interest is mandatory with respect to a quantum meruit cause of action" (645 Fed Appx at 88 [emphasis omitted]). In Stillman v InService Am., Inc. (455 Fed Appx 48 [2d Cir 2012] [also unpublished]), the Second Circuit similarly relied on Tesser, Ogletree, and Gooden, as well as on its earlier decision in United States Fire Ins. Co. v Federal Ins. Co. (858 F2d 882 [2d Cir 1988]), to conclude that prejudgment interest is mandatory under CPLR 5001 (a) on quantum meruit claims (see Stillman, 455 Fed Appx at 51-52). In United States Fire Ins. Co. v Federal Ins. Co., the Second Circuit reached that conclusion in a published decision after fully analyzing both the doctrinal nature of quantum meruit as quasi contract and the history of CPLR 5001 (a) (see United States Fire Ins. Co. v Federal Ins. Co., 858 F2d at 888-889). The Stillman court acknowledged that the Third Department in Ives held to the contrary, but concluded that "the New York Court of Appeals would likely agree with the reasoned analysis set forth in cases holding that pre-judgment interest on quantum meruit claims is mandatory under [CPLR] 5001(a)" (Stillman, 455 Fed Appx at 51).

The Appellate Division, Third Department has issued conflicting decisions on the issue whether prejudgment interest is mandatory in quantum meruit claims seeking damages. The weight of persuasive authority leads this court to conclude that under CPLR 5001 (a), prejudgment interest is mandatory in quantum meruit claims seeking damages.

Accordingly, it is hereby ordered that defendants' motion to vacate the award of prejudgment interest (mot No. 3) is denied.