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Schmidt & Schmidt, Inc. v. Town of Charlton

Supreme Court of New York, Third Department

February 21, 2013

SCHMIDT & SCHMIDT, INC., Respondent,
TOWN OF CHARLTON et al., Defendants, and J. PAUL VOSBURGH ARCHITECT, P.C., Appellant.

Calendar Date: January 10, 2013.

Harter, Secrest & Emery, LLP, Rochester (Michael Damia of counsel), for appellant.

Fox & Kowaleswski, LLP, Clifton Park (Laurence I. Fox of counsel), for respondent.

Before: Peters, P.J., Stein, Garry and Egan Jr., JJ.


Egan Jr., J.

Appeal from an order of the Supreme Court (Ferradino, J.), entered January 12, 2012 in Saratoga County, which denied a motion by defendant J. Paul Vosburgh Architect, P.C. for summary judgment dismissing plaintiff's fifth cause of action.

Beginning in October 2004, defendant Town of Charlton entered into a series of contracts in connection with the construction of its new town hall. Defendant J. Paul Vosburgh Architect, P.C. (hereinafter defendant) was retained to provide design and contract administration services, defendant AKW Consulting, Inc. was hired to oversee and administer the construction project and plaintiff was awarded the general construction contract for the project. Insofar as is relevant here, defendant's responsibilities included visiting the construction site at appropriate intervals, keeping the Town apprised as to the progress and quality of the work, guarding against defects and deficiencies in the work and reporting any deviations from the contract documents and construction schedule to the Town.

In December 2006, AKW sent a letter to the Town expressing its "continuing concern regarding the lack of progress" on the project and discussing - at some length - what it viewed as plaintiff's "general disregard of accepted construction means and methods" and "willful[] violat[ion] [of] the law as well as the approved project plans and specifications." Specifically, AKW asserted that plaintiff had failed to provide a detailed construction schedule, disregarded the recommendations made by a particular engineering consultant and ignored project specifications governing the placement and protection of concrete at the site. In the months that followed, concerns regarding plaintiff's progress and performance continued to mount and, in June 2007, plaintiff and its surety were advised that the Town was considering declaring plaintiff to be in default.

Prior to doing so, the Town retained Paul Carr, a consultant and engineering professor at Cornell University, to act as a "[p]roject [n]eutral" and, in that capacity, ascertain the cause of the construction delays and offer solutions. Following a visit to the site, review of pertinent documents and interviews with project participants, Carr issued a lengthy report in August 2007 wherein he concluded that "a heavy burden of responsibility for the current state of the... [p]roject rest[ed] with [plaintiff] and [its] failure to perform in accordance with the terms of the[] contract." According to Carr, plaintiff failed to provide a schedule that satisfied "even the most rudimentary requirements of the [c]ontract [d]ocuments," delayed in tendering required paperwork (bonds, insurance documents, executed contracts and the like), neglected to devote "adequate attention" to an issue concerning the roof trusses, [1] provided "an inadequate workforce" and demonstrated an "inability to coordinate the delivery of critical materials," thereby evidencing "a pattern of performance failures."

On September 5, 2007, the Town's governing body met with the relevant entities - including plaintiff - to discuss Carr's report, at which time plaintiff and its counsel were advised of certain requirements that needed to be met in order for plaintiff to continue as the general contractor. The parties reconvened one week later and, after finding that plaintiff's submissions "did not represent an adequate, sufficient or satisfactory response" to the requested materials, the Town exercised its rights under section 14.2.2 of its contract with plaintiff and declared plaintiff to be in default. [2]

Plaintiff thereafter commenced this action against defendant, the Town and AKW setting forth, insofar as is relevant here, a cause of action against defendant for tortious interference with contract. Following joinder of issue, Supreme Court granted defendant's motion to dismiss the complaint against it for failure to state a cause of action. On appeal, this Court modified and reinstated the claim for tortious interference with contract (68 A.D.3d 1314 [2009]). Defendant then moved for summary judgment dismissing that cause of action and Supreme Court denied the motion, prompting this appeal.

When this matter was last before us, we found that plaintiff's submissions - liberally construed - were sufficient to survive defendant's motion to dismiss for failure to state a cause of action ( id. at 1315; see generally CPLR 3211 [a] [7]). However, in opposing defendant's subsequent motion for summary judgment pursuant to CPLR 3212, plaintiff was held to a higher burden; once defendant demonstrated its entitlement to judgment as a matter of law ( see infra ), plaintiff was required to come forward with sufficient admissible proof to raise a genuine question of fact - a burden that, in turn, cannot be satisfied with "conjecture, speculation or surmise" ( Oefelein v CFI Constr., Inc., 45 A.D.3d 1002, 1004 [2007]). As plaintiff's proof fell short in this regard, we now reverse and grant defendant's motion.

To sustain a cause of action for tortious interference with contract, a plaintiff must show "(1) the existence of a valid contract between the plaintiff and a third party, (2) the defendant's knowledge of that contract, (3) the defendant's intentional [and improper] inducement of the third party to breach that contract, and (4) damages" ( Rosario-Suarz v Wormuth Bros. Foundry, 233 A.D.2d 575, 577 [1996]; see White Plains Coat & Apron Co., Inc. v Cintas Corp., 8 N.Y.3d 422, 426 [2007]; 68 A.D.3d at 1316; Murray v SYSCO Corp., 273 A.D.2d 760, 761 [2000]). "This tort is not satisfied by conduct that is merely negligent or incidental to some other, lawful, purpose" ( Harris v Town of Fort Ann, 35 A.D.3d 928, 929 [2006] [internal quotation marks and citation omitted]); rather, "the plaintiff must establish that the defendant's procurement of the alleged breach was solely malicious" ( Rosario-Suarz v Wormuth Bros. Foundry, 233 A.D.2d at 577 [internal quotation marks and citation omitted]; see Montano v City of Watervliet, 47 A.D.3d 1106, 1109-1110 [2008]; Murray v SYSCO Corp., 273 A.D.2d at 761-762). More to the point, "where, as here, an agent is alleged to have induced its principal to breach a contract, the agent cannot be found liable unless it does not act in good faith and commits independent torts or predatory acts directed at another for personal pecuniary gain" (68 A.D.3d at 1316 [emphasis added; internal quotation marks and citations omitted]; see First Am. Commercial Bancorp., Inc. v Saatchi & Saatchi Rowland, Inc., 55 A.D.3d 1264, 1266-1267 [2008], lv dismissed and denied 12 N.Y.3d 829 [2009]; Bradbury v Cope-Schwarz, 20 A.D.3d 657, 659 [2005]).

In support of its motion for summary judgment, defendant tendered, among other things, a copy of its contract with the Town (outlining its obligations and responsibilities to guard against defects and deficiencies in the work), correspondence from AKW (documenting plaintiff's role in the project's delay and questioning plaintiff's ability to successfully complete the work required under its contract) and a copy of Carr's detailed report (documenting plaintiff's failure to meet or comply with various contract ...

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