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County of Suffolk v. Suburban Housing Development & Research, Inc.

Supreme Court of New York, Second Department

April 4, 2018

County of Suffolk, respondent,
v.
Suburban Housing Development & Research, Inc., appellant. Index No. 12311/12

          Submitted - November 27, 2017

         D54954 O/htr

          Raymond G. Keenan, Shirley, NY, for appellant.

          Dennis M. Brown, County Attorney, Hauppauge, NY (Elaine M. Barraga of counsel), for respondent.

          CHERYL E. CHAMBERS, J.P. SHERI S. ROMAN ROBERT J. MILLER COLLEEN D. DUFFY, JJ.

          DECISION & ORDER

         Appeal by the defendant from an order of the Supreme Court, Suffolk County (Joseph C. Pastoressa, J.), dated November 12, 2015. The order, insofar as appealed from, denied that branch of the defendant's motion which was for summary judgment dismissing so much of the complaint as sought to recover alleged overpayments made on or before April 18, 2006.

         ORDERED that the order is modified, on the law, (1) by deleting the provision thereof denying that branch of the defendant's motion which was for summary judgment dismissing so much of the first cause of action as sought to recover alleged overpayments made on or before July 1, 2004, and substituting therefor a provision granting that branch of the defendant's motion, and (2) by deleting the provisions thereof denying those branches of the defendant's motion which were for summary judgment dismissing so much of the second and third causes of action as sought to recover alleged overpayments made on or before April 18, 2006, and substituting therefor provisions granting those branches of the defendant's motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

         The County of Suffolk and Suburban Housing & Development Research, Inc. (hereinafter Suburban), entered into two agreements pursuant to which Suburban agreed to provide emergency housing services to homeless residents of Suffolk County. The first agreement was from July 1, 2002, through June 30, 2004, and provided the County with two one-year options to renew. The second agreement was from July 1, 2006, through June 30, 2010, and also provided the County with two one-year options to renew.

         Both agreements required Suburban to submit monthly claims for compensation, which the County was obligated to pay after approval by its comptroller. The agreements provided that all payments made under the agreements were ''subject to audit by the Suffolk County Comptroller.'' The agreements further provided: "[Suburban] shall maintain full and complete records of services ... for a period of seven (7) years, which shall be available for audit and inspection by . . . the Suffolk County Comptroller." The agreements stated that in the event "such an audit disclose[d] overpayments by the County to [Suburban], " Suburban "shall repay the amount of such overpayment" within 30 days after the issuance of the "official audit report." The agreements further stated that the provisions requiring Suburban to repay the amounts of overpayment would "survive the expiration or termination" of the agreements.

         The County commenced this action on April 18, 2012, asserting three causes of action. The first cause of action sought to recover damages for breach of contract, alleging that the County issued an audit report on July 1, 2011, and that the report disclosed overpayments from the County to Suburban in the total sum of $884, 798. These overpayments allegedly were made from August 1, 2003, through July 31, 2007. The first cause of action further alleged that, despite the County's demand for repayment of the amount specified in the audit report, Suburban failed to make the requested repayment, thereby breaching the parties' agreements and causing the County to sustain damages in the total sum of $884, 798.

         The second cause of action sought to recover $884, 798 under a theory of money had and received. The second cause of action specified that the sums to be recovered were paid from August 1, 2003, through July 31, 2007.

         The third cause of action sought to recover damages for fraud. As relevant here, the third cause of action alleged that Suburban made false representations to the County regarding "costs and expenses in its financial statements, " and that the "actual costs and expenses incurred" by Suburban "during the audit period were $884, 798 less than [Suburban] stated."

         After issue was joined, Suburban moved, inter alia, for summary judgment dismissing so much of the complaint as sought to recover alleged overpayments made on or before April 18, 2006. Suburban contended that all three causes of action were governed by six-year statutes of limitations, and that all three causes of action were untimely to the extent that they sought to recover overpayments that were allegedly made on or before April 18, 2006. In the order appealed from, the Supreme Court, among other things, denied that branch of Suburban's motion.

         A cause of action to recover damages for breach of contract is governed by a six-year statute of limitations (see CPLR 203[a]). As a general principle, the statute of limitations begins to run when a cause of action accrues (see CPLR 203[a]), that is, "when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court" (Aetna Life & Cas. Co. v Nelson,67 N.Y.2d 169, 175; see Hahn Automotive Warehouse, Inc. v American Zurich Ins. Co.,18 N.Y.3d 765, 770). "In contract cases, the cause of action accrues and the Statute of Limitations begins to run from the time of the breach'' (John J. Kassner & Co. v City of New York,4 ...


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