J. PAUL OETKEN, District Judge.
Dena Lenard ("Plaintiff") brought claims for breach of contract, negligence, fraud, deceptive trade practices, and conversion of property against Design Studio Inc. and Rose C. Christo ("Defendants"). Defendants failed to respond to the Complaint, and Judge Richard J. Holwell. to whom this case was previously assigned, entered a default judgment against Defendants on November 17, 2009, for an amount that was to be determined by an inquest.
Magistrate Judge Debra Freeman issued a Report and Recommendation ("R & R") on June 21, 2012, in which she recommended that no damages be awarded to Plaintiff because Plaintiff's submissions were inadequate to support her damages claims. Magistrate Judge Freeman further recommended that the Court vacate the default judgment that had been entered with respect to the negligence, fraud, deceptive trade practices, and conversion of property claims because these claims were inadequately pleaded. She also recommended granting leave to replead the claim for conversion of property. No party has filed any objections to the R & R and the time for filing such objections has passed.
This Court "may accept, reject, or modify, in whole or in part, the findings or recommendations" of a magistrate judge. The Court reviews de novo those parts of the R & R to which objections are made and reviews the remainder for clear error. 28 U.S.C. § 636(b)(1); see also Fed. R.Civ.P. 72.
After reviewing Magistrate Judge Freeman's thorough and thoughtful R & R, to which no objections were filed, this Court concludes that there is no clear error and, accordingly, adopts the R & R in its entirety. For the reasons set forth in the R & R, it is hereby
ORDERED that no damages are awarded to Plaintiff as a result of Defendants' breach of contract; and it is further
ORDERED that the default judgment entered against Defendants with respect to the claims for negligence, fraud, deceptive trade practices, and conversion of property is hereby-vacated; and it is further
ORDERED that Plaintiff's claim for conversion of property is hereby dismissed without prejudice. Plaintiff is granted leave to file an amended complaint only with respect to the claim for conversion of property. Any such amended complaint shall be filed no later than September 24, 2012. If Plaintiff does not file an amended complaint on or before September 24, 2012, this claim will also be dismissed with prejudice.
SO ORDERED.
DEBRA FREEMAN, United States Magistrate Judge.
This matter is before this Court for a damages inquest on a default judgment entered in favor of plaintiff Dena Lenard ("Plaintiff") against defendants Design Studio Inc. ("Design") and Rose C. Christo a/k/a Roseda Desborder ("Christo") (collectively, "Defendants"), on Plaintiff's claims for breach of contract, negligence, fraud, deceptive trade practices, and conversion of property. (See Dkt. 8.) For the reasons set forth below, this Court finds that, regardless of any liability established by Defendants' default, Plaintiff's submissions to this Court are wholly inadequate to support her damages claims, and I therefore recommend that no damages be awarded.
Plaintiff resides in New York, in a cooperative apartment that she owns (Apt. 22-D, or the "Apartment"), located at 504 Grand Street, New York, New York 10002 (the "Building"). (Compl. ¶¶ 1, 9; see also Plaintiff's Proposed Findings of Fact, dated June 7, 2010 ("Proposed Findings"), at 1
Plaintiff alleges that, on or about November 20, 2006, she received a proposal from Defendants offering to provide general contractor services for a project to renovate the Apartment (the "Renovation Project"). (Id. at ¶ 7.) At all relevant times, Defendants represented to Plaintiff that they were "licensed to act as a general contractor to install heating, air-conditioning, plumbing, electrical systems, and to perform general contractor work," including the full renovation of the Apartment. (Id. at ¶ 6.) Plaintiff accepted Defendants' proposal, purportedly entering into a contract with Defendants (the "Contract"), on or about November 20, 2006. (Id. at ¶ 8.) As described by Plaintiff, the Contract required Defendants.
(Id. at ¶ 9.)
Plaintiff claims that she fully performed all promises and conditions under the Contract (id. at ¶ 10), but that Defendants negligently failed to exercise ordinary and reasonable care and skill in planning, designing, supervising, and managing the Renovation Project, and thereby breached the Contract (id. at ¶ 21). Further, Plaintiff alleges that, after negligently executing the Renovation Project, Defendants abandoned the project and returned none of the money that Plaintiff had paid to them under the Contract. (Id. at ¶ 11.) Plaintiff describes the work performed by Defendants on the Apartment as "grossly inadequate." (Id. at ¶ 21.) She also claims that Defendants intentionally misrepresented their ability to renovate the Apartment, their ability to perform the requisite construction and electrical tasks, and their willingness to complete these tasks. (Id. at ¶¶ 28, 31.) Although she provides no details, Plaintiff also asserts that Defendants have misrepresented their abilities as general contractors to other property owners and have failed to complete other construction projects. (Id. at ¶ 32.)
The Complaint alleges that the Building's Cooperative Board (the "Board") cited Plaintiff for "several violations" that were the result of Defendants' negligent execution of the Renovation Project, and also required her to hire a contractor and electrician to repair Defendants' work and complete the Renovation Project. (Id. at ¶¶ 12, 13.) Plaintiff claims that she paid the substitute contractor and electrician a total of $50,000 to complete the necessary work, and that she also paid an attorney $10,000 in legal fees to resolve issues with the Board that were related to the violations. (Id. at HI 13, 14.) Plaintiff further claims that, as a result of Defendants' negligent execution of the Renovation Project, she was constructively evicted from the Apartment for 21 months. (Id. at ¶ 15.) During that period, Plaintiff could not sublet the Apartment (id. at ¶ 19), and, although she does not break down these figures, she claims, in her Complaint, that she spent a total of $105,000 ($5000 per month for 21 months) on "carrying costs" for the Apartment and "alternate housing" (id. at ¶¶ 16-18). Finally, Plaintiff alleges that Defendants failed to return cabinet hardware to her, including "original latches and catches circa 1929," all of which, she claims, had been "professionally rechromed." (Id. at ¶ 35.)
In her Complaint, Plaintiff asserts claims against Defendants for: (1) breach of contract, (2) negligence, (3) fraud, (4) deceptive trade practices, and (5) conversion of property.
(Proposed Findings at 4-5.)
Plaintiff commenced this action by filing her Complaint in December 2008. (Dkt. 1.) When, after being served with process, Defendants failed to respond to the Complaint, the Court (Holwell, J.) entered a default judgment against them, as to liability, and referred the matter to this Court to determine the appropriate amount of damages and attorneys' fees, if any, to be awarded. (Dkt. 8.) This Court then issued a Scheduling Order for submissions for a damages inquest (Dkt 11), and, upon Plaintiff request for an extension of time, the Court issued an Amended Scheduling Order (Dkt. 11). In both the Court's original and amended Scheduling Orders, the Court expressly informed Plaintiff that she should submit proposed findings of fact and conclusions of law, which
(Dkt. 10, at ¶ 2; Dkt. 11, at ¶ 2.) The Court's Amended Scheduling Order required Plaintiff to serve and file her submission no later than June 21, 2010. (See Dkt. 11, at ¶ 1.)
On June 21, 2010, Plaintiff delivered her Proposed Findings to my chambers, although she apparently did not file them.
Although "a default judgment entered on well-pleaded allegations in a
Where a defaulting defendant has not made any submission on a damages inquest, the Court must assess whether the plaintiff has provided a sufficient basis for the Court to determine damages. See Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir.1997) (noting that the Court "should take the necessary steps to establish damages with reasonable certainty"). While the Court may hold a hearing to assess the amount of damages that should be awarded on a default, see Fed. R.Civ.P. 55(b)(2) (court may conduct hearings on damages as necessary), the Second Circuit has consistently held that "[b]y its terms, [Rule] 55(b)(2) leaves the decision of whether a hearing is necessary to the discretion of the district court," Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir.1989); accord Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir.1993) (judges are given much discretion to determine whether an inquest need be held); Action S.A v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir.1991) (Fed.R.Civ.P. 55(b)(2) "allows but does not require ... a hearing"). Where, on a damages inquest, the plaintiff makes a damages submission and the defaulting defendant makes no submission in opposition and does not request a hearing, the court may determine the adequacy of the plaintiff's damages claim based on its submitted proofs. See, e.g., Garden City Boxing Club, Inc. v. Hernandez, No. 04 Civ.2081(LAP)(DF), 2008 U.S. Dist. LEXIS 115454, at *5 (S.D.N.Y. Oct. 15, 2008) (determining the adequacy of the plaintiff's damages claim based solely on its submitted proofs where defendant neither responded to plaintiff's submissions with respect to its claimed damages nor requested a hearing with respect to damages), report and recommendation adopted, 2008 U.S. Dist. LEXIS 95503, at *2 (S.D.N.Y. Nov. 19, 2008).
Where, on a damages inquest, a plaintiff fails to demonstrate its damages to a reasonable certainty, the court should decline to award any damages, even though liability has been established through default. See Griffiths v. Francillon, No. CV 10-310KJFB) (GRB), 2012 WL 1341077, at *1, 2012 U.S. Dist. LEXIS 54681, at *2 (E.D.N.Y. Jan. 30, 2012) (recommending that no damages be awarded because motion papers alone were insufficient to support an award of damages), report and recommendation adopted, 2012 WL 1354481, at *1, 2012 U.S. Dist. LEXIS 54683, at *3 (E.D.N.Y. Apr. 13, 2012); Dor Yeshurim, Inc. v. A Torah Infertility Medium of Exch., No. CV 10-2837(JFB)(WDW), 2011 WL 7285038, at *5, 2011 U.S. Dist. LEXIS 153153, at *14-15 (E.D.N.Y. Aug. 10, 2011) (finding that "Complaint and plaintiff's papers in support [were] woefully inadequate to support any monetary relief," and thus recommending that neither profits nor damages be awarded), report and recommendation
Without a response from Defendants, this Court must first determine whether the allegations in Plaintiff's Complaint are sufficiently pleaded to establish Defendants' liability. See Bambu Sales, Inc., 58 F.3d at 854 (stating that "[a] default judgment entered on well-pleaded allegations in a complaint establishes a defendant's liability" (citation and internal quotation marks omitted; emphasis added)); see also PSG Poker, LLC v. DeRosa-Grund, No. 06 Civ. 1104(DLC)(JCF), 2008 WL 2755835, at *3, 2008 U.S. Dist. LEXIS 59214, at *7 (S.D.N.Y. July 14, 2008) ("Where an inquest is conducted following a default judgment, it is generally necessary for the Court to determine whether the allegations of the complaint, taken as true, are sufficient to establish the defendant's liability."), report and recommendation adopted, 2008 WL 3852051, at *1, 2008 U.S. Dist. LEXIS 62379, at *1 (S.D.N.Y. Aug. 15, 2008).
Here, as discussed further below, the allegations of Plaintiff's Complaint, taken as true, are sufficient to establish Defendants' liability for breach of contract under New York law,
To state a claim for breach of contract under New York law, a plaintiff must allege four elements: (1) the existence of a contract; (2) the performance of that contract by one party; (3) the breach of that contract by the other party; and (4) damages. Terwilliger v. Terwilliger, 206 F.3d 240, 245-46 (2d Cir.2000). In this case, Plaintiff has pleaded, first, that she and Defendants entered into the Contract, under which Defendants agreed to provide general contractor services to renovate the Apartment (Compl. ¶¶ 7, 8); second, that Plaintiff fully performed all promises and conditions under the Contract, including payment of $54,000 to Defendants (id. at ¶ 10); third, that Defendants negligently failed to exercise ordinary due care and skill in planning, designing, supervising, and managing the Renovation Project, and thereby breached the Contract (id. at ¶¶ 11, 12);
Unlike her contract claim, Plaintiff's negligence and fraud claims cannot be maintained, as pleaded. To state a negligence claim under New York law, a plaintiff must plead (1) a duty owed to the plaintiff by the defendant; (2) a breach of that duty; and (3) an injury "substantially caused" by that breach. Lombard v. Booz-Allen & Hamilton, Inc., 280 F.3d 209, 215 (2d Cir.2002). As a threshold matter, "[a] simple breach of contract is not to be considered a tort unless a duty independent of the contract itself has been violated." Macmillan, Inc. v. Federal Ins. Co., 764 F.Supp. 38, 41 (S.D.N.Y.1991); see also Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992) (merely alleging that the breach of a contract duty arose from a lack of due care will not transform a simple breach of contract into a tort) (citations omitted). While Plaintiff alleges that Defendants negligently and defectively planned, designed, supervised, and managed the Renovation Project (Compl. ¶ 11), she has not alleged that Defendants owed her any duty independent of the Contract. For this reason, Plaintiff cannot maintain a negligence action, and no award of damages on such a claim would be appropriate. See Lanzafame v. Dana Restoration, Inc., No. 09-CV-0873 (ENV)(JO), 2011 WL 1100111, at *2, 2011 U.S. Dist. LEXIS 29341, at *5 (E.D.N.Y. Mar. 14, 2011) (stating that "awarding damages in the face of insufficient allegations, even after default judgment is entered, would be inconsistent with the threshold requirement that a complaint be well-pleaded," and adopting recommendation that recovery be denied due to insufficiency of pleadings).
Similarly, Plaintiff cannot maintain her fraud claim, which is duplicative of her contract claim. Under New York law, the elements of a fraudulent misrepresentation claim are: "(1) [that the] defendant made a material misrepresentation of fact; (2) that the misrepresentation was made intentionally in order to defraud or mislead the plaintiff; (3) that the plaintiff reasonably relied on the misrepresentation; [and] (4) that the plaintiff suffered damage as a result of its reliance on the defendant's misrepresentation." Harding v. Naseman, No. 07 Civ. 8767(RPP), 2009 WL 1953041, at *20, 2009 U.S. Dist. LEXIS 58149, at *71, *72 (S.D.N.Y. July 8, 2009) (citations omitted). A fraud claim, however, "cannot exist when [it] arises out of the same facts as a breach of contract claim with the sole additional allegation that the defendant never intended to fulfill its express contractual obligations." Pl, Inc. v. Quality Prods., Inc., 907 F.Supp. 752, 761 (S.D.N.Y.1995), accord Astroworks, Inc. v. Astroexhibit, Inc., 257 F.Supp.2d 609, 616 (S.D.N.Y. 2003) (noting that "a plaintiff cannot disguise a breach of contract claim as a fraud claim"). The "critical question" in determining whether a plaintiff can maintain separate breach-of-contract and fraud claims is whether the defendant's alleged misrepresentation was "`collateral or extraneous'" to the contract in question.
Plaintiff also cannot maintain her claim for deceptive trade practices, under the applicable New York law, which prohibits "[d]eceptive acts or practices in the conduct of any business." N.Y. Gen. Bus. L. § 349(a); see also id. § 349(h) (providing for private right of action under statute).
Therefore, to make out a prima facie case under this law, a plaintiff must plead facts capable of establishing that "(1) the defendant's deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result." Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir.2000) (citing Oswego Laborers, 85 N.Y.2d at 25, 623 N.Y.S.2d 529, 647 N.E.2d 741). Moreover, the plaintiff must also allege that the deceptive acts complained of took place within the State of New York. Goshen, 98 N.Y.2d at 325, 746 N.Y.S.2d 858, 774 N.E.2d 1190; see, e.g., Kaufman v. Sirius XM Radio, Inc., 751 F.Supp.2d 681, 686-88 (S.D.N.Y.2010) (holding that plaintiffs could not maintain a viable suit under Section 349 because plaintiffs failed to plead that defendant's deceptive acts transpired within the boundaries of the State of New York) (following Goshen), aff'd, 474 Fed. Appx. 5, 7 (2d Cir.2012).
Plaintiff's deceptive trade practices claim, as alleged in the Complaint, has two fatal flaws. First, Plaintiff has not alleged where the supposed deceptive act took place. See Siotkas, 594 F.Supp.2d at 277 (stating that, as plaintiffs had failed to plead where the allegedly deceptive acts occurred, plaintiffs should either withdraw their claims voluntarily or provide a supplemental memorandum containing this necessary allegation) (citing Goshen).
Second, even if the Court were to infer from Plaintiff's pleading that any deceptive act by Defendants likely took place in New York (the location of the Apartment), Plaintiff has still not adequately pleaded that Defendants actually directed "deceptive acts" (i.e., misrepresentations or omissions) at consumers at large, nor has she attributed any specific deceptive statement or act to Defendants. Plaintiff does allege in her Complaint that, in her case, Defendants "engaged in deceptive trade practices [by] intentionally misrepresenting their ability to perform under the agreement between the parties" (Compl. ¶ 31), and she further alleges, in general terms, that Defendants have "engaged in this practice with several other parties" (id. at ¶ 32). In addition, in support of these allegations, Plaintiff has now submitted a copy of a newspaper article, reporting that Christo was charged by a New Jersey prosecutor for selling home improvements to a property owner without registering with the New Jersey Department of Consumer Affairs. (Id. at ¶ 32.) The sparse and conclusory allegations of Plaintiff's Complaint, however, are insufficient to plead that Defendants directed deceptive acts at consumers in New York within the meaning of the statute, and Plaintiff cannot save her pleading by relying on a news article that is hearsay and that, in any event, focuses on Christo's alleged violation of New Jersey law.
Based on the Complaint, the parties' dispute in this case is best characterized as a private contract dispute, which the statute does not cover. See id. at 25 ("Private contract disputes unique to the parties ... would not fall within the ambit of the statute."). Accordingly, Plaintiff cannot maintain a deceptive trade practices action, and no award of damages for this claim would be appropriate.
"[C]onversion is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights." Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 403-04 (2d Cir.2006) (citation omitted). Under New York law, "[t]o state a claim for conversion, [a] plaintiff must allege that `(1) the party charged has acted without authorization, and (2) exercised dominion or a right of ownership over property belonging to another[,] (3) the rightful owner makes a demand for the property, and (4) the demand for the return is refused.'" Sabilia v. Richmond, 11 Civ. 739(JPO)(MMD), 2011 WL 7091353, at *19, 2011 U.S. Dist. LEXIS 152228, at *58-59 (S.D.N.Y. Oct. 26, 2011) (alteration in original) (quoting Seanto Exps. v. United Arab Agencies, 137 F.Supp.2d 445, 451 (S.D.N.Y.2001)). "When the original possession is lawful, `conversion does not occur until the defendant refuses to return property after demand or until he sooner disposes of the property.'" Schwartz v. Capital Liquidators, Inc., 984 F.2d 53, 53 (2d Cir.1993) (quoting Johnson v. Gumer, 94 A.D.2d 955, 464 N.Y.S.2d 318, 319 (4th Dep't 1983)). "Only the refusal to the demand makes the defendant a wrongdoer." 23 N.Y. Jur. Conversion, and Action for Recovery of Chattel § 47 (2011).
Although there are certain exceptions to the requirement that "demand and refusal" be pleaded for a conversion claim, see 470 West End Corp. v. East River Sav. Bank, 102 Misc.2d 1024, 424 N.Y.S.2d 859, 861 (N.Y.City Civ.Ct.1980) (holding that demand and refusal need not be pleaded where the lawful custodian of property "commits an overt and positive act of conversion") (citation omitted); Del Piccolo v. Newburger, 9 N.Y.S.2d 512, 513 (Sup.Ct. App. Term 1st Dep't 1939) (noting that pleading of demand and refusal is not required where the lawful custodian "exercises an act of ownership inconsistent with the ownership and dominion of the true owner"); State v. Seventh Regiment Fund, Inc., 98 N.Y.2d 249, 260, 746 N.Y.S.2d 637, 774 N.E.2d 702 (2002) (stating that pleading of a demand is not required where making a "demand would be futile because the circumstances show that the defendant knows it has no right to the goods," as when the defendant "is a thief), Plaintiff has alleged no facts that could meet the requirements of any of these exceptions. Accordingly, Plaintiff cannot maintain her conversion action as pleaded, and no damages should be awarded on this claim.
In its Order directing Plaintiff to file Proposed Findings of Fact and Conclusions of Law, the Court noted that, in her submission, Plaintiff "should specifically tie [her] proposed damages figure(s) to the legal claim(s) on which liability has now been established." (Order, dated June 14, 2010 (Dkt. 11), at 1) In her Proposed Findings, however, Plaintiff merely lists several categories of requested damages, making no effort to tie any of those purported damages to her particular legal claims. As the Court cannot discern whether Plaintiff is seeking only certain categories of damages on her contract claim (the one claim she has adequately pleaded), the Court will consider each damages category in turn, in relation to that claim.
Plaintiff first seeks reimbursement of the fees that she paid to Defendants, which she asserts totaled $54,000. (Proposed Findings at 4.) In support of this damages demand, Plaintiff has submitted, through a declaration of counsel: (1) copies of five cancelled checks apparently written by her and made payable to Christo, totaling $34,000 (id. Ex. E (copies of checks bearing dates from Sept. 30, 2006 to Feb. 9, 2007)); (2) a letter from a bank stating that, on November 16, 2008, Plaintiff initiated a wire transfer in the amount of $15,000 to Christo (id.); and (3) an apparent checking account receipt, dated "11/29," indicating that a check was written in the amount of $5,000 and made
First, the Court notes that the Contract, as attached to Plaintiff's Proposed Findings (Proposed Findings Ex. A), is stated to be an agreement between Plaintiff and "Rose C. Christo Design Studio Inc." (id.). It is not even clear that this entity is the same as "Design Studio," the entity named as a defendant in this action, but, assuming it is, Plaintiff has provided no explanation as to why she apparently made payments, by check, directly to the principal of that company (i.e., Christo), as opposed to the company with which she had actually contracted. Certainly, Plaintiff's Complaint does not include any well-pleaded allegations that explain this or that separately would support holding Christo personally liable for the conduct of the corporate defendant.
Second, nowhere does the Contract state that Design's work on the Renovation Project was to be performed for a contract price of $54,000. To the contrary, the Contract, on its face, states: "[Plaintiff] [a]grees to pay Rose C. Christo/Design Studio Inc. [t]he sum of [$]20,000/[$]10,000 (half) to start the Project and the balance of $10,000 to be paid in full upon completion of the project." (Id.) Another amount — perhaps $1,500 — is also written in below this, by hand, and marked "paid" (see id.), but the writing is not entirely legible, and Plaintiff has provided no explanation of this handwritten addition. The Contract goes on to state that "[t]his Agreement constitutes the entire Agreement between both parties and shall not be supplemented, modified or amended unless executed in writing by both parties." (Id.) Based on this, it appears that, in the absence of written change orders (none of which have not been provided to the Court), Plaintiff was only contractually obligated to pay defendant Design $10,000 (or perhaps $11,500, although the additional amount is not explained) until the job was satisfactorily completed.
Third, although a "Materials List," with stated prices, is attached to the Contract and arguably incorporated therein, it is not clear from this list, standing alone, that (a) Plaintiff paid Defendants to supply all of the itemized materials, (b) Plaintiff paid the listed prices, or (c) the materials were not supplied by Defendants or, if they were supplied, they were unsuitable or unusable for the job, as eventually completed by another contractor. On these points, the Court notes that the listed total for the itemized materials, plus "Electrical Supplies," is $17,538.10 — a sum that, even added to the fees specified on the face of the Contract, would still not total the $54,000 that Plaintiff claims to have paid for the Renovation Project. Moreover, two of the items have handwritten question marks after them, and one has no price, suggesting that the list may have been only a preliminary price list. Also, at the end of the list,
$10,000.00 Supplies
LABOR: $10,000.00 LABOR
__________ ________
$20,000.00
(Id.) The Court also notes that the listed materials include, inter alia, a French door, a bathroom door, a garbage disposal, kitchen and bathroom cabinets, and closet shelves and rods. (See id.) Plaintiff offers absolutely no information as to whether these types of materials, if paid for by her, were delivered and ultimately installed in her apartment, whether by Defendants or a substituted contractor. The Court, however, notes that an exhibit attached to Plaintiff's Complaint (Compl. Ex. B), which appears to describe the work needed to complete the Renovation Project after it was abandoned by Defendants, lists numerous materials — including items such as bathroom cabinets and closet shelves — as "already purchased" (see id.). Plaintiff has not articulated any theory under which she could possibly be entitled to a refund of amounts she paid for items that were actually provided to her and were eventually installed for her benefit and enjoyment.
Finally, even assuming Plaintiff paid $54,000 to Defendants, she has not demonstrated that she would be legally entitled to reimbursement of this sum, or any portion thereof, as a remedy for Defendants' claimed breach of contract. In a contract case involving deficient construction work, "[t]he general rule," under New York law, "is that the measure of damages is the market value of the cost to repair the faulty construction," Rivers v. Deane, 209 A.D.2d 936, 619 N.Y.S.2d 419, 420 (4th Dep't 1994) (citation omitted). Even where the defect arising from the breach of contract "`is so substantial as to render the finished building partially unusable and unsafe, the measure of damage[s] is the market price of completing or correcting the performance.'" Id. (quoting Bellizzi v. Huntley Estates, 3 N.Y.2d 112, 115, 164 N.Y.S.2d 395, 143 N.E.2d 802 (1957)). Plaintiff has offered no law to suggest that, on the facts alleged, the reimbursement of her contract payments would be a proper measure of her damages, as opposed to the market price that she would have been required to pay to any substitute contractor(s) to repair or complete the defective work performed by Design.
As to her repair/completion costs, while Plaintiff alleges in her Complaint that she paid another $50,000 to repair and complete the defective work, she does not, in her Proposed Findings, seek that sum as damages. In connection with this damages inquest, she has also not submitted any affidavit or declaration by anyone with person knowledge of these costs or of the scope of the work that was necessitated by Defendants' breach; she has not submitted any documentary support for her claim that she, in fact, paid $50,000 to complete the work for which she originally contracted; and she has not submitted any evidence to demonstrate that, if paid, $50,000 was a reasonable market rate for the services performed. In fact, the only document before the Court that relates to these issues is the above-referenced exhibit to Plaintiff's Complaint (Compl. Ex. B), and while that exhibit supposedly supports Plaintiff's allegation that she "incurred additional expense of approximately Fifty Thousand Dollars to have said second contractor and electrician repair and complete [the] work" (Compl. ¶ 13), the exhibit actually appears to be a contract for certain work to be performed for the price of $26,500 (see id., and Ex. B thereto).
Under the circumstances, this Court cannot recommend that Plaintiff be awarded either the fees she claims to have paid to Christo or the amount she allegedly
In support of her damages claim for fines purportedly levied on her by the Board as a result of Defendants' defective work on the Apartment, Plaintiff relies, without explanation, on a document that seems to be a statement of an account in Plaintiff's name, dated March 18, 2010. (Proposed Findings at 4 and Ex. F.) This account statement, however, merely shows a "previous balance" in the amount of $63,200.14, and certain charges related to taxes and utilities. (Id.) The document provides no details regarding the source of this previous balance, and makes no mention of any fine or violation. As such, it is patently insufficient to support Plaintiff's damages claim.
The only evidence submitted by Plaintiff that even references "fines" is a copy of a letter dated June 7, 2007, to Plaintiff, from an attorney for the Building's Cooperative Corporation. (Proposed Findings Ex. D.) This letter states that a report from an electrician retained by the Cooperative Corporation had "reveal[ed] numerous violations" with respect to "improper and unauthorized electrical alteration work that was done in [Plaintiff's] apartment." (Id. at 1.) Although the letter purports to attach a copy of this electrician's report (see id. ("as the annexed inspection report reveals, the work was not performed in conformance with the applicable laws and codes ....")), no such report has been provided to the Court. In any event, the letter does not state that any fines were being assessed against Plaintiff, much less the specific basis for, or the amount of, any such fines. Rather, the letter merely indicates that counsel for the Cooperative would be sending a copy of his letter "to the Board for its review and consideration as to whether fines will be imposed as a results of your breach of the alteration agreement and the damages it has caused...." (Id. at 2.)
In the absence of any documented — and explained — support for the nature and amount of any fines levied on and paid by Plaintiff, I recommend that her request for reimbursement for the payment of fines be denied.
In her Proposed Findings, Plaintiff states that she is demanding damages for
(Proposed Findings at 4.) Nowhere, however, does Plaintiff explain whether the construction, if properly performed, would have enabled her to remain in the Apartment, or whether she would have been required to vacate the premises, in any events given the substantial nature of the work. She also fails to explain how she was "constructively evicted" for 21 months, as she does not state when Defendants
Plaintiff also fails to itemize how much of her requested damages constitute her mortgage and maintenance payments for the Apartment, and she further fails to explain how, in the absence of any contract breach, she would have been relieved from making such payments. She also fails to explain how she could possibly be entitled to recover both the "carrying costs" of the Apartment (see Proposed Findings at 4) and the cost of obtaining "alternate housing," as suggested in her Complaint (see Compl. ¶ 17), given that she undoubtedly would have had to pay housing costs, in one place or another, regardless of any breach.
Moreover, to the extent Plaintiff may be seeking lost profits from anticipated rental income, Plaintiff has submitted no evidence to support such a damages claim. In a breach-of-contract action, "a plaintiff is entitled to recover lost profits only if he can establish both the existence and amount of such damages with reasonable certainty." Schonfeld v. Hilliard, 218 F.3d 164, 172 (2d Cir.2000). "Projections of future profits based upon `a multitude of assumptions' that require `speculation and conjecture' and few known factors do not provide the requisite certainty." Id. (citation omitted). In this case, Plaintiff has not demonstrated a history of subletting the Apartment; she has not shown that she had any right to sublet, under the rules of her Cooperative; she has not shown a ready tenant; and she has not demonstrated anything about the market rates for rentals of comparable apartments. She has also represented to the Court that she, herself, resides in the Apartment (see Proposed Findings at 1), and she has offered no documentary evidence to demonstrate that she would have incurred additional costs, or enjoyed any cost savings, had she sublet her Apartment and resided elsewhere. Under these circumstances, Plaintiff's submissions do not support her damages claim for any period of mortgage, maintenance, or alternate housing costs, or lost profits, and I therefore recommend that Plaintiff's request for all such damages be denied.
Plaintiff also appears to seek recovery for the rental income she supposedly would have received by renting the Apartment for 22 months (i.e., nearly another two years) after the construction work was repaired and complete. (See Proposed Findings at 5.) Although her submission on this point is extremely vague, it seems that Plaintiff is arguing that the Board would have permitted her to sublet the Apartment for that period, but for a souring of the Board's relationship with Plaintiff caused by Defendants' negligent and defective work. Plaintiff has submitted absolutely no evidence, of any kind, to support such claimed damages, and I recommend that none be awarded.
Plaintiff appears to seek the estimated value of the antique hardware retained by Defendants as damages for her conversion claim, not her contract claim (see Proposed Findings at 4, 5), and, indeed, the factual basis for Plaintiff's demand for these damages
Plaintiff has failed to demonstrate that she is entitled to attorney's fees for prosecuting this action. "Generally, absent express contractual or statutory provisions to the contrary, attorney's fees are not recoverable as damages," Nationwide Auction Co. v. Lynn, No. 90 Civ. 7643(AGS)(THK), 1996 WL 148489, at *9, 1996 U.S. Dist. LEXIS 4006, at *29 (S.D.N.Y. Apr. 1, 1996) (citation omitted), and Plaintiff has cited no contractual or statutory provision that would warrant an award of attorney's fees in this case. Nor is the Court aware of any such provision. Moreover, "[t]here is no ... right to an award of attorney's fees on an ordinary claim of breach of contract," United States Naval Inst. v. Charter Communications, Inc., 936 F.2d 692, 698 (2d Cir.1991) (citing Alyeska Pipeline Service Co, v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975)), which is the only claim that Plaintiff has adequately pleaded (see Discussion supra at Section II). Accordingly, I recommend that Plaintiff's request for attorney's fees be denied.
Finally, Plaintiff has failed to show that she is entitled to $1,984 in fees that she allegedly paid to an attorney "for negotiations with the Board of Directors." (Proposed Findings at 5.) In support of this damages demand, Plaintiff has submitted a collection of documents that neither individually nor together establish to a reasonable certainty that she is entitled to recoup the fees she seeks.
First, Plaintiff has submitted a copy of a retainer letter dated October 29, 2007, addressed to her from Theresa Racht, Esq. ("Racht"), and bearing Plaintiff's signature. (See id. Ex. ¶ (copy of letter dated Oct. 29, 2007, printed on Racht's firm's stationery).) On its face, though, this letter states that Plaintiff was retaining Racht not only "to advise [Plaintiff] and represent [Plaintiff] with respect to ongoing renovation issues concerning [the Apartment]," but also "to provide such advice and consultation on other legal matters as [Plaintiff] may require from time to time." (Id. (emphasis added).)
Second, Plaintiff has submitted copies of nine invoices (including a duplicate copy of an invoice dated November 6, 2008), totaling $2,001, for legal services purportedly provided by Racht to Plaintiff. (Id. (copies of invoices bearing dates from Dec. 6, 2007 to Feb. 6, 2009).) These invoices, however, appear to bill for services well beyond any "negotiations with the Board," for which Plaintiff claims to seek reimbursement. (See Proposed Findings at 5.) For example, one invoice contains a charge for Racht's review of a summons and complaint, and another lists a charge for time that Racht spent discussing the election of Board members. (See id. Ex. H.) In fact, not a single one of the nine invoices even mentions "negotiation." While Plaintiff might be entitled to recover from Defendants for certain of the work that Racht performed, she is certainly not entitled to recover for work that was not reasonably necessary to make her whole for Defendant's contract breach. Moreover, it is
Finally, Plaintiff has submitted a copy of an email exchange she had with Racht, regarding the amount of Racht's billing. (See id. (copy of an email exchange between Plaintiff and Racht).) In this exchange, Plaintiff first asks, on June 2, 2010, whether there is an "[e]asy way for you to determine how much money I've spent on your legal services in TOTAL?... It's for my suit against [Christo]." (Id.) In response, and without explanation, Racht provides the figure of $1,984. (See id.) Not only does this email exchange fail to focus on fees incurred for negotiations with the Board — i.e., Plaintiff's claimed damages — but the stated total of Racht's fees, per her email, does not match the total amount shown in the invoices Plaintiff has separately submitted.
Given the lack of clarity inherent in these documents, they do not demonstrate, with reasonable certainty, that Plaintiff incurred $1,984 in legal fees for counsel's negotiations with the Cooperative Board. Nor do they demonstrate, with reasonable certainty, that some other sum was incurred for such negotiations, and I therefore recommend that Plaintiff's request for any such amount in damages be denied.
In sum, despite the Court's explicit direction to Plaintiff that her damages submission "should demonstrate how [she] has arrived at [her] proposed damages figure(s)," and "should be supported by an affidavit ... containing an explanation of any documentary evidence that helps establish the proposed damages" (see Dkt. 11, quoted supra at 15), Plaintiff has neither provided an adequate basis for the calculation of her contract damages nor provided an explanation, by anyone with personal knowledge, of the meager documentary evidence that she has submitted in support of her application for such damages. Under the circumstances, this Court finds that Plaintiff has not satisfied her burden of demonstrating her contract damages to a reasonable certainty, and has therefore not demonstrated her entitlement to any damages, on this inquest.
For the foregoing reasons, I respectfully recommend that the Court award no contract damages to Plaintiff as a result of Defendants' default. I further recommend that the default judgment against Defendant be vacated with respect to Plaintiff's inadequately-pleaded negligence, fraud, and deceptive trade practices claims, and that these claims be dismissed with prejudice. As to Plaintiff's claim for conversion of property, I also recommend that the default judgment be vacated, but I recommend that Plaintiff be granted leave to replead this claim if she is able to allege that she demanded the return of her property and that the demand was refused. (See supra at 14 and n. 8.)
Pursuant to 28 U.S.C. § 636(b)(1) and Rule n(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable J. Paul Oetken, United States Courthouse, 500 Pearl Street, Room 630, New York, New York 10007, and to the chambers of the undersigned, United States Courthouse, 500 Pearl Street, Room 525, New York,
