Calendar Date: November 16, 2017
Picciano & Scahill, PC, Bethpage (Robert J. Lally of
counsel), for appellants-respondents.
& Christensen, Goshen (Harold M. Pressberg of counsel),
for RBG Design-Build, Inc., respondent-appellant, and Charles
Elser Moskowitz Edelman & Dicker LLP, White Plains (James
F. O'Brien of counsel), for Robert E. Zampolin &
Sonet & Siegel LLP, New York City (Steven G. Sonet of
counsel), for Reger Designs, Inc. and another, respondents.
Before: McCarthy, J.P., Lynch, Devine, Mulvey and Aarons, JJ.
MEMORANDUM AND ORDER
appeal from an order of the Supreme Court (Gilpatric, J.),
entered January 5, 2017 in Ulster County, which, among other
things, granted motions by defendants Reger Designs, Inc.,
Patricia Reger and Robert E. Zampolin & Associates for
summary judgment dismissing the complaint against them.
April 2007, plaintiff Stefanie Luckow entered into a
design-build agreement with defendant RBG Design-Build, Inc.
to provide turnkey design and building services for
construction of a large ski house. The design-build agreement
provides that defendant Robert E. Zampolin & Associates
(hereinafter RZA) would perform all architectural services. A
few months later, Stefanie Luckow entered into a construction
agreement with RBG to build the residence in the Town of
Windham, Greene County for $4, 460, 000 and within 14 months.
The scope of RBG's work was later expanded to include
interior design services. The interior design agreement
between Stefanie Luckow and RBG provided that defendant Reger
Designs, Inc. (hereinafter RDI) would "perform all
interior design services under the management and
administration of [RBG]." Plaintiff Robert Luckow has no
ownership interest in the property and is not a party to any
of the contracts related to the property, but acted as an
agent for Stefanie Luckow, his daughter, on all aspects of
the construction project. Stefanie Luckow terminated the
construction agreement in July 2010, a decision allegedly
reached after months of communications and meetings with RBG
by her family and representatives notifying RBG of problems
that were not addressed.
commenced this action in March 2011. RBG and its president,
defendant Charles Rose, moved for summary judgment dismissing
Robert Luckow as a plaintiff, and to dismiss the causes of
action asserted against those two defendants on the ground
that the pleading fails to state causes of action or,
alternatively, for summary judgment. RBG and Rose further
requested that Supreme Court grant them their reasonable
costs and counsel fees. RZA moved for summary judgment
dismissing the complaint against it. RDI and its president,
defendant Patricia Reger, similarly moved for summary
judgment. Supreme Court granted summary judgment dismissing
Robert Luckow as a plaintiff and dismissing all causes of
action against all defendants, except the first cause of
action against RBG alleging breach of contract. Plaintiffs
appeal, and RBG cross-appeals.
undisputed that neither plaintiff entered into a contract
with RZA nor RDI. Rather, RBG entered into contracts with
each of those entities, as would be expected in a turnkey
project. "In turnkey or design-build construction
projects, an owner contracts with one entity to both design
and build the project and the turnkey builder is responsible
for every phase of the construction from final design through
subcontracting, construction, finishing, and testing. The
design-builder generally cannot shift liability and is the
single point of responsibility under a design-build contract,
because" the design-builder is responsible for all
phases of construction, including "the responsibility
for holding the contracts with its trade contractors"
(797 Broadway Group, LLC v Stracher Roth Gilmore
Architects, 123 A.D.3d 1250, 1251  [internal
quotation marks, brackets, emphasis and citations omitted].
a party may not assert a cause of action for breach of
contract against a person or entity with whom it is not in
privity (see Spectrum Painting Contrs., Inc. v Kreisler
Borg Florman Gen. Constr. Co., Inc., 64 A.D.3d 565, 576
; IMS Engrs.-Architects, P.C. v State of New
York, 51 A.D.3d 1355, 1357 , lv denied 11
N.Y.3d 706 ). Without a contractual relationship and
the resulting privity, plaintiffs could proceed against RZA
or RDI only if plaintiffs were third-party beneficiaries of
RBG's contract with those entities or had the functional
equivalent of privity (see Lake Placid Club Attached
Lodges v Elizabethtown Bldrs., 131 A.D.2d 159, 161
). "[O]rdinarily, construction contracts are not
construed as conferring third-party beneficiary enforcement
rights" (id. at 162; see Port Chester Elec.
Constr. Corp. v. Atlas, 40 N.Y.2d 652, 656 ).
prevail as third-party beneficiaries, plaintiffs had to
establish "'(1) the existence of a valid and binding
contract between other parties, (2) that the contract was
intended for [their] benefit, and (3) that the benefit to
[them] is sufficiently immediate... to indicate the
assumption by the contracting parties of a duty to compensate
[them] if the benefit is lost'" (Mandarin
Trading Ltd. v Wildenstein, 16 N.Y.3d 173, 182 ,
quoting Mendel v Henry Phipps Plaza W., Inc., 6
N.Y.3d 783, 786 ; accord Saratoga Schenectady
Gastroenterology Assoc., P.C. v Bette & Cring, LLC,
83 A.D.3d 1256, 1257 ). The existence of the relevant
contracts (one between RBG and RZA, and one between RBG and
RDI) is not disputed. There is no indication that the parties
to those underlying contracts intended to benefit Robert
Luckow. Those contracts were entered into for the purpose of
completing the construction project on Stefanie Luckow's
property, so they were intended for her benefit.
Nevertheless, there is no indication that RZA or RDI assumed
any duty to compensate Stefanie Luckow if any benefit from
those contracts was lost. Indeed, the turnkey contract
between Stefanie Luckow and RBG indicates that RBG bears the
responsibility for its subcontractors and their potential
errors or failure to perform (see 797 Broadway Group, LLC
v Stracher Roth Gilmore Architects, 123 A.D.3d at 1251).
Therefore, plaintiffs cannot recover against RZA or RDI under
a third-party beneficiary theory. For the same reasons, to
the extent that the concept of functional equivalent of
privity is applicable to any of the causes of action,
plaintiffs did not have the functional equivalent of privity
with RZA or RDI. Accordingly, Supreme Court properly granted
summary judgment dismissing the complaint against those
Supreme Court properly granted summary judgment to Reger.
Plaintiffs alleged that Reger wrongfully accepted payments
for services that were not adequately performed and
participated in a fraud conducted by RBG. Reger was not
personally a party to any contract, but signed on behalf of
RDI for its contract with RBG and performed interior design
services in her capacity as an agent for RDI. Moreover, the
record lacks factual information supporting ...