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Yenem Corp v. 281 Broadway Holdings

February 14, 2012

YENEM CORP., APPELLANT,
v.
281 BROADWAY HOLDINGS, ET AL., RESPONDENTS, (AND OTHER ACTIONS.) RANDALL CO., LLC, APPELLANT,
v.
281 BROADWAY HOLDINGS, ET AL., RESPONDENTS, JOHN DOE, ET AL., DEFENDANTS. 281 BROADWAY HOLDINGS LLC, ET AL., THIRD-PARTY PLAINTIFFS,
v.
HUNTER-ATLANTIC, INC., THIRD-PARTY RESPONDENT, ET AL., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Ciparick, J.:

This opinion is uncorrected and subject to revision before publication in the New York Reports.

On this appeal, we consider whether former Administrative Code of the City of New York § 27-1031 (b) (1) imposes absolute liability on defendants whose excavation work caused damage to adjoining property. We hold that it does, and that plaintiffs are entitled to summary judgment.

Plaintiff Randall Co. (Randall) is the owner of a landmark cast iron and masonry building located at 287 Broadway in Manhattan. Plaintiff Yenem Corp. (Yenem) was a commercial tenant operating a pizzeria in the building. In 2006, defendant The John Buck Company (JBC) through its subsidiary, defendant 281 Broadway Holdings LLC (281 Broadway Holdings), purchased the lot adjacent to the south and west sides of 287 Broadway and began developing an L-shaped commercial and condominium complex. JBC and 281 Broadway Holdings hired defendant Hunter-Atlantic, Inc. (Hunter-Atlantic) to excavate the site. The excavation occurred at a depth of 18 feet below curb level. As the excavation progressed, 287 Broadway shifted out of plumb, tilting out of verticality. On November 28, 2007, the Department of Buildings (DOB) found that the building leaned to the south by approximately nine inches. The following day, DOB issued a vacate order deeming the building unsafe for occupancy. As a result, Yenem was forced to close its business, and Randall's building remains vacant.

Yenem commenced an action against JBC, 281 Broadway Holdings and Hunter-Atlantic claiming that defendants were negligent and strictly liable under the Administrative Code of the City of New York § 27-1031 (b) (1) for causing damage to 287 Broadway, resulting in the loss of Yenem's business. Randall commenced a separate action against JBC and 281 Broadway Holdings*fn1 asserting similar claims. Hunter-Atlantic cross-claimed against its co-defendants and asserted third-party claims against various subcontractors and engineering companies.

Randall moved for partial summary judgment against JBC and 281 Broadway Holdings seeking lost rent and other damages, and Yenem moved for summary judgment against all defendants. JBC and 281 Broadway Holdings opposed plaintiffs' motions and cross-moved for summary judgment against Hunter-Atlantic. In support of their respective summary judgment motions, plaintiffs submitted, among other things, a letter and affidavit of managing agents of 281 Broadway Holdings and a report by defendants' structural engineers, all of which stated that 287 Broadway shifted increasingly out of plumb during the course of defendants' excavation work despite defendants' various remedial efforts. Specifically, one of defendants' engineers stated that "[t]he movement of the building during excavation was caused by settlement due to undermining of the existing footings and a loss of soil under the footing."

In the Yenem action, Supreme Court denied Yenem's motion for summary judgment with leave to renew at the close of discovery. The court found that violation of the Administrative Code of the City of New York § 27-1031 (b) (1) did not result in strict liability but constituted some evidence of negligence. The court also found potential factual issues regarding the proximate cause of the building's movement. In the Randall action, however, a different Supreme Court Justice granted Randall's motion for partial summary judgment and denied defendants' cross-motion in its entirety. The court held that defendants were strictly liable under section 27-1031 (b) (1).

In consolidated appeals, a divided Appellate Division upheld the order denying plaintiff's motion for summary judgment in the Yenem action and reversed the order granting plaintiff summary judgment in the Randall action (see Yenem Corp. v 281 Broadway Holdings, 76 AD3d 225, 231 [1st Dept 2010]). The court rejected plaintiffs' argument that because section 27-1031 (b)

(1) was originally enacted as a state law imposing absolute liability, it should continue to be so construed (see id. at 228-229). Citing Elliot v City of New York (95 NY2d 730 [2001]), the Appellate Division found that as a municipal ordinance, the code provision was an "unsuitable candidate for elevation to the status of a state statute imposing per se liability" (Yenem Corp., 76 AD3d at 230). The court further held that plaintiffs failed to demonstrate that "defendants' actions were the proximate cause of the damage to the building or that the precautions taken by defendants in connection with the excavation were inadequate" (id. at 231).

Two Justices dissented on the ground that section 27- 1031 (b) (1), having its origins in state law, imposes strict liability where a plaintiff demonstrates that a violation of the provision proximately caused injuries to the plaintiff's property (see id. at 233). The dissent opined that Elliot expressly recognized that a local law with state law origins could invoke statutory treatment and, providing a thorough review of the provision's legislative history, concluded that section 27-1031

(b) (1) fit that rule "to the proverbial tee" (id. at 237). The dissent further concluded that defendants violated the code provision; that the building's prior condition was irrelevant to the issue of proximate cause; and that, as a strict liability provision, section 27-1031 (b) (1) did not permit an affirmative defense of reasonable precautions (see id. at 242-246).

The Appellate Division granted plaintiffs leave to appeal, certifying the following question to us: "Was the corrected decision and order of this Court, which affirmed the order of the Supreme Court entered September 18, 2008, and reversed an order of said Court entered January 29, 2009, properly made?" We now reverse and answer the certified question in the negative.

"As a rule, violation of a State statute that imposes a specific duty constitutes negligence per se, or may even create absolute liability. By contrast, violation of a municipal ordinance constitutes only evidence of negligence" (Elliot, 95 NY2d at 734 [internal citations omitted]). We have "however, acknowledge[d] that certain sections of the Administrative Code have their origin in State law and, as such, they might be entitled to statutory treatment in tort cases" (id. at 736 [internal citation omitted]). Thus, "[i]n analyzing whether a violation of [an] Administrative Code section should be viewed as negligence per se or some evidence of negligence, we consider the origin of [the] provision" (id. at 733).

Former Administrative Code of the City of New York § 27-1031 (b) (1)*fn2 provides:

"When an excavation is carried to a depth more than ten feet below the legally established curb level the person who causes such excavation to be made shall, at all times and at his or her own expense, preserve and protect from injury any adjoining structures, the safety of which may be affected by such part of the excavation as exceeds ten feet below the legally established curb level ...


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