Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on July 22, 2026

2024-06310, (Index No. 64743/21)

Angela G. Iannacci, J.P.

Linda Christopher

Carl J. Landicino

Phillip Hom, JJ.

[*1]

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from an order of the Supreme Court, Westchester County (Rolf M. Thorsen, J.), dated March 15, 2024. The order, insofar as appealed from, granted those branches of the defendants' motion which were for summary judgment dismissing the first through sixth, eighth, and ninth causes of action and, in effect, declaring that a waiver provision in the subject contract is enforceable, and, in effect, denied those branches of the plaintiff's motion which were for summary judgment on the first through sixth, eighth, and ninth causes of action and declaring that a waiver provision in the subject contract is void and unenforceable.

ORDERED that the order is modified, on the law, (1) by deleting the provision thereof granting those branches of the defendants' motion which were for summary judgment dismissing the first and fourth causes of action insofar as asserted against the defendants Urban Office Architecture, PLLC, and Carlo Frugiuele and the sixth, eighth, and ninth causes of action, and, in effect, declaring that a waiver provision in the subject contract is enforceable, and substituting therefor a provision denying those branches of the motion, and (2) by deleting the provision thereof, in effect, denying that branch of the plaintiff's motion which was for summary judgment declaring that a waiver provision in the subject contract is void and unenforceable, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that a waiver provision in the subject contract is void and unenforceable.

In October 2020, the plaintiff entered into a design services agreement with the defendant Urban Office Architecture, PLLC (hereinafter UOA), which is solely owned by the defendant Carlo Frugiuele. Pursuant to the agreement, UOA promised to provide architectural and construction services in connection with the renovation of certain real property located in Dobbs Ferry. The agreement contained a provision stating that "THE OWNER AND ARCHITECT AGREE TO MUTUALLY WAIVE EACH OTHER [sic] RIGHT TO SUE OR PLACE CLAIMS AGAINST EACH OTHER" (hereinafter the waiver provision). Allegedly unbeknownst to the plaintiff, UOA retained the defendant Urban Office Builds Corp. (hereinafter UOB), which was solely owned by Frugiuele's wife, the defendant Wamaris Rosario, to act as the general contractor [*2]for the project. In August 2021, the plaintiff terminated the agreement before the project was complete.

Thereafter, the plaintiff commenced this action against the defendants, inter alia, to recover damages allegedly incurred in connection with the project. Specifically, as relevant here, the plaintiff asserted causes of action alleging breach of contract (first cause of action), unjust enrichment (second cause of action), breach of fiduciary duty against UOA and Frugiuele (third cause of action), negligence (fourth cause of action), fraud (fifth cause of action), and professional malpractice against UOA and Frugiuele (sixth cause of action), causes of action seeking to pierce the corporate veil as to Frugiuele and Rosario (eighth and ninth causes of action, respectively), and a cause of action for a judgment declaring that the waiver provision is void and unenforceable (eleventh cause of action). The defendants subsequently moved, among other things, for summary judgment dismissing the first through sixth, eighth, and ninth causes of action and, in effect, declaring that the waiver provision is enforceable. The plaintiff moved, inter alia, for summary judgment on the first through sixth, eighth, and ninth causes of action and declaring that the waiver provision is void and unenforceable. In an order dated March 15, 2024, the Supreme Court, among other things, granted those branches of the defendants' motion and, in effect, denied those branches of the plaintiff's motion. The plaintiff appeals.

The Supreme Court improperly determined that the defendants were entitled to summary judgment dismissing the first, second, fourth, and fifth causes of action insofar as asserted against UOA and Frugiuele and the third, sixth, and eighth causes of action based upon the waiver provision and, in effect, to summary judgment declaring that the waiver provision is enforceable. "Freedom of contract prevails in an arm's length transaction between sophisticated parties such that courts generally may not relieve them of the consequences of their bargain" (New York Commercial Realty Group, LLC v Beau Pere Real Estate, LLC, 216 AD3d 793, 797 [internal quotation marks omitted]). "However, this right is not and has never been without limitation" (Smith v Smith, 129 AD3d 934, 934 [internal quotation marks omitted]). "Aside from the defenses relating to the circumstances surrounding the formation of a contract, a party may seek to avoid the consequences of an otherwise valid contract on the ground that it is void against public policy" (Matter of New Brunswick Theol. Seminary v Van Dyke, 184 AD3d 176, 182). However, courts may only void an agreement upon "'balancing' the public interests favoring invalidation of a term chosen by the parties against those served by enforcement of the clause and concluding that the interests favoring invalidation are stronger" (159 MP Corp. v Redbridge Bedford, LLC, 33 NY3d 353, 360, quoting New England Mut. Life Ins. Co. v Caruso, 73 NY2d 74, 81). "Only a limited group of public policy interests has been identified as sufficiently fundamental to outweigh the public policy favoring freedom of contract," and courts "regularly uphold agreements waiving statutory or constitutional rights" (id. at 361).

Here, the waiver provision is not limited but rather purports to completely foreclose the possibility of any form of judicial or nonjudicial review. Although, as the defendants contend, the agreement was negotiated at arm's length between sophisticated parties, freedom of contract is not merely an individual right, and enforcing the waiver provision has implications beyond the individual choices of the contracting parties (see id. at 364). In 159 MP Corp. v Redbridge Bedford, LLC (33 NY3d 353), the Court of Appeals upheld a waiver precluding the plaintiffs from commencing a declaratory judgment action. The Court of Appeals noted that "[c]ritically, the waiver clause at issue here does not preclude access to the courts but leaves available other judicial avenues through which plaintiffs may adjudicate their rights under the leases" (id. at 364). The Court of Appeals specified that "the waiver does not impair plaintiffs' ability to seek damages on breach of contract or tort theories" (id.).

Here, in contrast, the waiver provision precludes access to the courts and leaves no judicial or nonjudicial avenues through which the plaintiff may adjudicate his rights under the agreement. Thus, the waiver provision is void and unenforceable as against public policy (see generally id.). Accordingly, the Supreme Court improperly determined that the defendants were entitled to summary judgment dismissing the first, second, fourth, and fifth causes of action insofar as asserted against UOA and Frugiuele and the third, sixth, and eighth causes of action, as well as, [*3]in effect, with respect to the eleventh cause of action, on the basis that the waiver provision is enforceable and precluded litigation commenced by the plaintiff against UOA and Frugiuele.

Furthermore, the plaintiff demonstrated his prima facie entitlement to judgment as a matter of law declaring that the waiver provision is void and unenforceable, and the defendants failed to raise a triable issue of fact in opposition. Therefore, the Supreme Court should have granted that branch of the plaintiff's motion which was for summary judgment declaring that the waiver provision is void and unenforceable.

Contrary to the defendants' alternative contention (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545-546), they failed to demonstrate, on the merits, their prima facie entitlement to judgment as a matter of law dismissing the first and fourth causes of action insofar as asserted against UOA and Frugiuele and the sixth and eighth causes of action (see Zuckerman v City of New York, 49 NY2d 557, 563). The defendants similarly failed to demonstrate their prima facie entitlement to judgment as a matter of law dismissing the ninth cause of action (see id.). Accordingly, the Supreme Court should have denied those branches of the defendants' motion which were for summary judgment dismissing the first and fourth causes of action insofar as asserted against UOA and Frugiuele and the sixth, eighth, and ninth causes of action.

With respect to the first and fourth causes of action, alleging breach of contract and negligence, respectively, insofar as asserted against UOB and Rosario, however, "[l]iability for breach of contract does not lie absent proof of a contractual relationship or privity between the parties" (Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp., 64 AD3d 85, 104). Further, "a plaintiff cannot recover solely for economic loss arising out of negligent construction in the absence of a contractual relationship" (Sacks v Knolls at Pinewood, LLC, 157 AD3d 917, 918-919 [alteration and internal quotation marks omitted]). The defendants established, prima facie, that there was no contractual relationship between the plaintiff and UOB and Rosario, and that the plaintiff was not in privity with those defendants (see id.; Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp., 64 AD3d at 104-105). In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted those branches of the defendants' motion which were for summary judgment dismissing the first and fourth causes of action insofar as asserted against UOB and Rosario.

"[A] conventional business relationship, without more, is insufficient to create a fiduciary relationship" (Board of Mgrs. of Country Pointe at Smithtown N. Condominium v Country Pointe at Smithtown Homeowners Assn., Inc., 240 AD3d 650, 651 [internal quotation marks omitted]; see AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 21). "[A] plaintiff must make a showing of special circumstances that could have transformed the parties' business relationship to a fiduciary one, such as control by one party of the other for the good of the other" (Board of Mgrs. of Country Pointe at Smithtown N. Condominium v Country Pointe at Smithtown Homeowners Assn., Inc., 240 AD3d at 652 [internal quotation marks omitted]; see AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d at 21-22). Here, the defendants established their prima facie entitlement to judgment as a matter of law dismissing the third cause of action, alleging breach of fiduciary duty against UOA and Frugiuele, by demonstrating that those defendants and the plaintiff had a conventional business relationship, which did not create a fiduciary relationship or special circumstances (see Board of Mgrs. of Country Pointe at Smithtown N. Condominium v Country Pointe at Smithtown Homeowners Assn., Inc., 240 AD3d at 651-652; Board of Mgrs. of Highpoint Condominium v East/West Venture, Haseko [40th], 278 AD2d 55, 56). In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the third cause of action.

"The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter" (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388; see Avery v WJM Dev. Corp., 216 AD3d 887, 889-890). This bar also precludes recovery in quasi contract against third-party nonsignatories (see Randall's Is. Aquatic Leisure, LLC v City of New York, 92 AD3d 463, 464; Bellino Schwartz Padob Adv. v Solaris Mktg. Group, 222 AD2d 313, 313). Here, the [*4]defendants made a prima facie showing of their entitlement to judgment as a matter of law dismissing the second cause of action, alleging unjust enrichment, by submitting, inter alia, the agreement, which covered the subject matter at issue. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the agreement was valid or whether it governed the subject matter at the heart of the second cause of action. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the second cause of action.

"The elements of a cause of action to recover damages for fraud are a material misrepresentation of fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff, and damages" (Summit Dev. Corp. v Interstate Masonry Corp., 140 AD3d 1152, 1153). Here, the defendants established their prima facie entitlement to judgment as a matter of law dismissing the fifth cause of action, alleging fraud, insofar as asserted against UOB and Rosario by demonstrating that the plaintiff's allegations with respect to those defendants did not amount to fraud. Moreover, "where, as here, a claim to recover damages for fraud is premised upon an alleged breach of contractual duties and the supporting allegations do not concern representations which are collateral and or extraneous to the terms of the parties' agreement, a cause of action sounding in fraud does not lie" (McKerin v Fanny Farmer Candy Shops, 176 AD2d 233, 234). The defendants established, prima facie, that the application of this principle to the facts of this case mandated the dismissal of the fifth cause of action insofar as asserted against UOA and Frugiuele (see Oceanview Assoc., LLC v HLS Bldrs. Corp., 184 AD3d 843, 845-846; McKerin v Fanny Farmer Candy Shops, 176 AD2d at 234). In opposition, the plaintiff failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the fifth cause of action.

The parties' remaining contentions either need not be reached in light of our determination or are without merit.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the waiver provision is void and unenforceable (see Lanza v Wagner, 11 NY2d 317, 334).

IANNACCI, J.P., CHRISTOPHER, LANDICINO and HOM, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court