TELLER v. BILL HAYES, LTD.
213 A.D.2d 141 (1995)
630 N.Y.S.2d 769
Judith Teller, Respondent-Appellant, v. Bill Hayes, Ltd., et al., Appellants-Respondents
Appellate Division of the Supreme Court of the State of New York, Second Department.
August 21, 1995
Stim & Warmuth, P. C., Huntington (
Joseph D. Stim of counsel), for appellants-respondents.
Tanner Propp & Farber, New York City (
Lester J. Tanner and Deborah A. Gunset of counsel), for respondent-appellant.
ROSENBLATT, J. P., THOMPSON and FLORIO, JJ., concur.
The central question to be answered on this appeal is whether the defendant corporation and its principal, a home
The facts underlying this appeal may be stated as follows. The plaintiff owned a home in East Hampton. While walking her dog one day, she happened upon the individual defendant general contractor performing renovations on a nearby house. After lengthy negotiations, the plaintiff hired the defendants to undertake significant renovations on her home. The plaintiff contends, inter alia, that the defendants performed their contractual obligations in a substandard manner, overbilled for work done, billed for work not done and, in essence, engaged in a course of fraudulent conduct which resulted in her allegedly paying the defendants approximately $1,250,000 for work the defendants estimated could be done for $350,000.
The plaintiff's complaint alleged seven causes of action against the corporate defendant Bill Hayes, Ltd., and six against Bill Hayes in his individual capacity. On the parties' prior appeal (see, Teller v Bill Hayes, Ltd.,
By the instant motion, the defendants sought to dismiss the plaintiff's sixth cause of action sounding in negligence pursuant to CPLR 3211 (a), and summary judgment on the third cause of action asserting claims of consumer fraud in violation of General Business Law § 349. The Supreme Court denied this relief finding that it was precluded from considering these issues. The court held that these issues had been previously litigated and was of the opinion that this Court's prior order reversing the earlier dismissal of the General Business Law cause of action precluded an order awarding the defendants summary judgment thereon. Procedurally, we disagree with the court's reasoning that the defendants' motion is barred by the law of the case or any other variety of res judicata since the issues raised by the instant motion were never raised on
The defendants contend that dismissal of the sixth cause of action alleging theories of negligence was appropriate since the prior motion did not seek to dismiss this cause of action and therefore the prior order and appellate determinations were not law of the case as to this issue. On the merits it is clear that the defendants are correct. The plaintiff's claims are grounded in the breach of a construction contract and as a general rule, the breach of a contract does not give rise to tort liability unless a legal duty independent of the contract itself has been violated. This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract (see, Clark-Fitzpatrick, Inc. v Long Is. R. R. Co.,
The more significant issue presented by this appeal concerns the defendants' motion for summary judgment on the plaintiff's consumer fraud causes of action under the General Business Law. On the parties' prior appeal, we reinstated the plaintiff's third cause of action alleging a violation of General Business Law § 349, "[a]ccording the complaint every fair and reasonable intendment" (Teller v Bill Hayes, Ltd., 172 AD2d, supra, at 605). Contrary to the Supreme
Once again, reaching the merits of an issue not reached by the Supreme Court, we find that the defendants have demonstrated their entitlement to judgment as a matter of law. The third cause of action alleged that the defendants committed acts of "consumer fraud". General Business Law § 349 (a) proscribes "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state". While at first blush one might conclude that the defendants deceived the plaintiff regarding the costs of the renovation of her home, section 349 of the General Business Law has generally been construed so as to be inapplicable to private contract disputes of this kind.
Section 349 of the General Business Law was intended to be a consumer protection statute. As stated by the court in Genesco Entertainment v Koch (
Prior to the Court of Appeals decision in Oswego Laborers', the courts had imposed a requirement that the plaintiff prove that the conduct of the defendant was a recurring act (see, Myers, Smith & Granady v New York Prop. Ins. Underwriting Assn.,
Courts have traditionally applied General Business Law § 349 in the context of consumer sales transactions. "The typical violation contemplated by the statute involves an individual consumer who falls victim to misrepresentations made by a seller of consumer goods usually by way of false and misleading advertising" (Genesco Entertainment v Koch,
That General Business Law § 349 was primarily intended to
At the other end of the spectrum, and clearly not cognizable under the statute, are large, private, single-shot contractual transactions. The archetype of this kind of transaction is the contract for the rental of Shea Stadium discussed in Genesco Entertainment v Koch (supra). There, the court held that because of the "complex arrangements, knowledgeable and experienced parties and large sums of money" involved, the parties did not need the protection of General Business Law § 349 (Genesco Entertainment v Koch, supra, at 752).
In the same vein is the contract discussed in Quail Ridge Assocs. v Chemical Bank (
Most recently, in Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank (
The Court of Appeals reviewed the governing case law and held that the allegations of fraud fell within the ambit of the General Business Law: "The record indicates that defendant Bank dealt with plaintiffs' representative as any customer entering the bank to open a savings account, furnishing the
The plaintiff contends that the holding of Oswego Laborers' marks a liberalization of the General Business Law and an expansion of its reach. She invites this Court to herald its expansion by applying it to the facts of this case. We decline the invitation. As the case law makes clear, this enactment was not intended to turn a simple breach of contract into a tort. The statute permits the recovery of treble damages and attorney's fees "to a prevailing plaintiff" (General Business Law § 349 [h]). The statute was intended to empower consumers; to even the playing field in their disputes with better funded and superiorly situated fraudulent businesses. It was not intended to supplant an action to recover damages for breach of contract between parties to an arm's length contract. Indeed it has been observed: "GBL §§ 349-350 should not be permitted to become an adjunct to ordinary commercial litigation, arbitrarily raising the stakes through their one-way attorney's fees provisions. The goals of GBL §§ 349-350 were major assaults upon fraud against consumers, particularly the disadvantaged" (Givens, Practice Commentaries, McKinney's Cons Laws of NY, Book 19, General Business Law § 349, at 574-575).
Application of the foregoing principles to the facts of this case leads to the conclusion that while the commercial relationship between the parties exhibited characteristics of both a large-scale single-shot transaction outside the scope of the statute, as well as those of a consumer-oriented deal within the reach of the law, we are persuaded that it is more akin to the large-scale, one-shot kind of transactions to which the law has generally been held inapplicable.
Notably, the plaintiff has failed to adduce any evidence that the claimed fraudulent behavior is repetitive or is even capable of repetition. The parties met while the plaintiff was walking her dog. There was no solicitation by the defendants, and no indication that they possessed or acted upon any defrauding intent. The plaintiff has wholly failed to demonstrate
Furthermore, the plaintiff has failed to adduce any evidence that the defendants' alleged practices would have any impact upon similarly situated consumers. The plaintiff essentially contends that she was defrauded and unless she is afforded relief the defendants will go on defrauding others. However, the plaintiff has adduced no evidence to support this claim.
It is significant that on the parties' prior appeal, we sustained the dismissal of the plaintiff's first two causes of action sounding in fraud for reasons stated by Justice Underwood who correctly held that "no cause of action to recover damages for fraud arises when the only fraud charged relates to a breach of contract" (see, Kotick v Desai,
Finally, since the thrust of the plaintiff's cross motion for leave to serve an amended complaint was to enable her to plead with greater specificity her causes of action sounding in
Accordingly the order must be modified by deleting the provisions thereof which denied the defendants' motion and substituting therefor (1) a provision granting the branch of the defendants' motion which was for summary judgment dismissing the plaintiff's third cause of action, and (2) a provision, upon searching the record, awarding summary judgment to the defendants dismissing the plaintiff's sixth cause of action.
Ordered that the order is modified, on the law, by deleting the provisions thereof which denied the defendants' motion pursuant to CPLR 3211 (a) and 3212 to dismiss the plaintiff's third and sixth causes of action, and substituting therefor (1) a provision granting the branch of the defendants' motion which is for summary judgment dismissing the third cause of action, and (2) a provision, upon searching the record, awarding summary judgment to the defendants dismissing the plaintiff's sixth cause of action; as so modified, the order is affirmed insofar as appealed and cross-appealed from, with costs to the defendants.
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